Something's happening in Europe.
Sure, there's been discontent bubbling for years. There always seemed to be some group, somewhere, unhappy about something, but it has always appeared to be a minority concerned about a minor issue, and they have disappeared in time. Over the past year, though, it's become clear that the collective grievances of the European nations' inhabitants are reaching boiling point.
The first obvious sign was the European Parliament elections. Traditionally these have been a way for people to register their unhappiness with major parties at a level where the voters know it doesn't truly matter too much. But when Eurosceptic parties come first in these elections, as they did in a number of countries in 2014 (most notably in the United Kingdom), something is clearly different.
Now, the lid is off. The refugee crisis, the mixed messages from governments, the inability to absorb the latest waves of migrants and, above all, the all too real threat of terrorism have combined to create a Eurosceptic surge like never before. It isn't particularly focussed, and the beneficiaries greatly vary in ideology from country to country, but all of them have a significant bone to pick with the European Union and its associated people and policies.
Eurosceptics are rapidly rising up the polls. You can see for yourself at the excellent European polling aggregator Electograph. The most significant move in the opposite direction from this new norm is Finland, where the Eurosceptic Finns Party have dropped 6% since the most recent election. The most likely reason for this is their involvement in the governing coalition. Elsewhere, this has not been the case. Netherlands? Eurosceptic Party for Freedom is topping the polls. Sweden? Eurosceptic Swedish Democrats topping the polls. Germany? Eurosceptic Alternative for Deutschland is eating into the CDU/CSU numbers. France? Eurosceptic Front National pulling ahead. Italy? Direct democracy Eurosceptic 5-Star Movement are still as popular as ever, while Lega Nord has succesfully moved into the national sphere with its southern sister party. Poland? Eurosceptics won a general election two weeks ago. Portugal? Eurosceptics are part of a coalition government. These are not coincidental.
The shifting status quo is not that European leaders will continue to pursue the policies that they have been for the past two decades. The emerging status quo is that this will be done in direct opposition to an expanding number of people. As the borders shut one by one across Europe, it does not appear that this unhappiness will go away.
Showing posts with label european union. Show all posts
Showing posts with label european union. Show all posts
Friday, 20 November 2015
Monday, 27 July 2015
A note on European democracy
As we learn on this day how prepared Greece was to use a parallel liquidity system if necessary after their great referendum, it is curious to see what was being said about the impeding failure of the European Union some 21 years ago. Listen to the words used around the two minute mark, and wonder why nothing has changed.
Note: the rest of the video is worth watching for historical enjoyment alone.
Note: the rest of the video is worth watching for historical enjoyment alone.
Tuesday, 7 July 2015
The three choices facing the troika
Well, as it turns out, the Greeks did indeed say όχι. The size of the victory, especially (60/40), has undoubtedly brought great joy to those who care about democracy and good economics. It has also, for the same reasons, undoubtedly annoyed the troika even more, as they now have to go through their options.
As I see it, they can go one of three ways.
1) Ignore
This is the option where the troika simply continue to offer the same 'deal' to the Greeks as though no referendum had ever happened.
Currently, it seems to be the favoured option of the northern economies in the Eurozone. Jeroen Dijsselbloem, head of the Eurogroup, has said today that "regardless of the outcome, difficult measures are necessary in Greece." The Finnish foreign minister, Timo Soini, has been more unequivocal: "If they want to hang on in the euro, which I think they do, they must obey the rules and play by the rules. It is a big moral hazard if they can vote in Greece and send the bill of that result to Finland."
That phrase, 'moral hazard', is often used in such arguments. The claim being that by agreeing to negotiate with Greece to bring down their debt (that they can't pay), they are paving the way for Greece to be profligate in the future, as they know that they will be rescued. But what is the alternative? That the Greek people are weighed further down by a debt imposed on them and austerity measures that have only shrunk the economy? That seems to be more of a genuine moral issue, rather than the hypothetical of the greedy Greeks. Furthermore, has the initial moral hazard not already been pushed through anyway? The initial bailout was not of Greece. It was of their lenders. So, way back in 2010, the moral hazard of saving the various banks that had lent out money they shouldn't have was apparently not that important.
This scenario is entirely political, as the hardliners cannot be seen to back down domestically, lest their approval ratings plummet. It uses the underlying assumption that because Greece is wedded to the idea of remaining in the Euro, they will have no choice but to agree to the demands being put forward, no matter how much they dislike or disagree with them.
2) Spin
This option was dependent on the strength of the result. Had turnout been lower and the result been closer, we may have heard language along the lines of 'Greece has not really voted no,' such as was used when France and the Netherlands voted against the European Constitution.
Because of the strength of the result, it cannot be spun this way. Instead, there may simply be spin of a different kind. With Yanis Varoufakis gone, some of the more conciliatory creditors may seek to at least offer to resume 'extending and pretending' for a little while longer, in order to see if the two groups at loggerheads will come to an agreement.
Other spin that will continued to be used will be the idea that the Greek people are the ones to blame for this crisis, another politicised claim that takes advantage of some of the backwards parts of the Greek economy to suggest that it is those parts of the economy that caused Greece to enter into a debt that is 180% of their GDP. This is, of course, simply not true, but it has been a politically useful tale to tell. Just look at the opinions on the BBC live updates blog to see how widespread the idea is.
3) Accept
This option may well be in the realm of pigs flying. The Eurogroup, in particular, seems most unwilling to accept that the Greek people deserve a say over something they have never had a say over. But fractures may be emerging amongst the troika. The release by the IMF of a document which clearly states that debt relief is necessary was the first indication. The second indication(s) can be seen in the responses of the governments of other southern European nations. While the northerners are taking a hard line of austerity and rules, the French, Spanish and Italians (amongst others) have indicated a greater openness to meeting Greece part way. Why? Partly, as with the previous options, it is political. These nations do not have such fiscally conservative governments in place. For those that see politics in the old left vs right spectrum, the southern countries currently lean towards the left, just like Syriza.
The other reason is economic. These nations are the ones that will be affected the most by Greece exiting the Eurozone. Once the Euro ceases to be an indissoluble monetary union and instead becomes a currency peg, the question will become not "will it survive?" but instead "who is next?" This means that attention will turn to the other PIIGS - Portugal, Ireland, Italy and Spain - and if they, too, are sent flying out of the Eurozone, the future of not merely the Euro, but the European Project too, is at stake. National sovereignty has already played a vital role in the most recent part of this crisis, and it could well totally re-establish itself on the continent if the dominoes fall one by one.
So, which of these is most likely? I don't think spin is a realistic possibility any more, as it seems like its time has been and gone. Ultimately it will depends on who gets their way. Greece holds the moral card of referendum, but it is the Eurogroup who will have the final say. If they do not budge, the ECB will do nothing. If neither of those troika members do anything, the IMF will be loathe to go it alone. If none of the troika members do anything, it's off to the Drachma. This may well be a decade defining moment.
As I see it, they can go one of three ways.
1) Ignore
This is the option where the troika simply continue to offer the same 'deal' to the Greeks as though no referendum had ever happened.
Currently, it seems to be the favoured option of the northern economies in the Eurozone. Jeroen Dijsselbloem, head of the Eurogroup, has said today that "regardless of the outcome, difficult measures are necessary in Greece." The Finnish foreign minister, Timo Soini, has been more unequivocal: "If they want to hang on in the euro, which I think they do, they must obey the rules and play by the rules. It is a big moral hazard if they can vote in Greece and send the bill of that result to Finland."
That phrase, 'moral hazard', is often used in such arguments. The claim being that by agreeing to negotiate with Greece to bring down their debt (that they can't pay), they are paving the way for Greece to be profligate in the future, as they know that they will be rescued. But what is the alternative? That the Greek people are weighed further down by a debt imposed on them and austerity measures that have only shrunk the economy? That seems to be more of a genuine moral issue, rather than the hypothetical of the greedy Greeks. Furthermore, has the initial moral hazard not already been pushed through anyway? The initial bailout was not of Greece. It was of their lenders. So, way back in 2010, the moral hazard of saving the various banks that had lent out money they shouldn't have was apparently not that important.
This scenario is entirely political, as the hardliners cannot be seen to back down domestically, lest their approval ratings plummet. It uses the underlying assumption that because Greece is wedded to the idea of remaining in the Euro, they will have no choice but to agree to the demands being put forward, no matter how much they dislike or disagree with them.
2) Spin
This option was dependent on the strength of the result. Had turnout been lower and the result been closer, we may have heard language along the lines of 'Greece has not really voted no,' such as was used when France and the Netherlands voted against the European Constitution.
Because of the strength of the result, it cannot be spun this way. Instead, there may simply be spin of a different kind. With Yanis Varoufakis gone, some of the more conciliatory creditors may seek to at least offer to resume 'extending and pretending' for a little while longer, in order to see if the two groups at loggerheads will come to an agreement.
Other spin that will continued to be used will be the idea that the Greek people are the ones to blame for this crisis, another politicised claim that takes advantage of some of the backwards parts of the Greek economy to suggest that it is those parts of the economy that caused Greece to enter into a debt that is 180% of their GDP. This is, of course, simply not true, but it has been a politically useful tale to tell. Just look at the opinions on the BBC live updates blog to see how widespread the idea is.
3) Accept
This option may well be in the realm of pigs flying. The Eurogroup, in particular, seems most unwilling to accept that the Greek people deserve a say over something they have never had a say over. But fractures may be emerging amongst the troika. The release by the IMF of a document which clearly states that debt relief is necessary was the first indication. The second indication(s) can be seen in the responses of the governments of other southern European nations. While the northerners are taking a hard line of austerity and rules, the French, Spanish and Italians (amongst others) have indicated a greater openness to meeting Greece part way. Why? Partly, as with the previous options, it is political. These nations do not have such fiscally conservative governments in place. For those that see politics in the old left vs right spectrum, the southern countries currently lean towards the left, just like Syriza.
The other reason is economic. These nations are the ones that will be affected the most by Greece exiting the Eurozone. Once the Euro ceases to be an indissoluble monetary union and instead becomes a currency peg, the question will become not "will it survive?" but instead "who is next?" This means that attention will turn to the other PIIGS - Portugal, Ireland, Italy and Spain - and if they, too, are sent flying out of the Eurozone, the future of not merely the Euro, but the European Project too, is at stake. National sovereignty has already played a vital role in the most recent part of this crisis, and it could well totally re-establish itself on the continent if the dominoes fall one by one.
So, which of these is most likely? I don't think spin is a realistic possibility any more, as it seems like its time has been and gone. Ultimately it will depends on who gets their way. Greece holds the moral card of referendum, but it is the Eurogroup who will have the final say. If they do not budge, the ECB will do nothing. If neither of those troika members do anything, the IMF will be loathe to go it alone. If none of the troika members do anything, it's off to the Drachma. This may well be a decade defining moment.
Saturday, 4 July 2015
Will the Greeks say όχι?
After years of lurching here and there, it appears Greece may be reaching some kind of ending. Maybe, possibly. The situation seems to change by the minute, but at this stage a referendum seems likely (though not guaranteed) for Saturday.
The Greek government has been the master of the mixed signal of late. On the one hand, Prime Minister Alexis Tsipras has been consistently pointing out how terrible Greece's creditors are. On the other, his government continues to offer further concessions, well beyond their original intentions.
As it stands, no-one really knows what will happen. Not Syriza, not the troika, not the Greek people, not economists and certainly not you or me. This is territory untravelled. No economy within the Eurozone has defaulted since joining, and there is no mechanism to leave the Euro. There is also no conceivable end to Greece's depression if they continue the pattern of scraping through their monthly repayments with continued austerity at the level of debt they have.
Should the referendum happen? I see no reason why not. Syriza was elected on a platform of ending austerity. Given that the acceptance of the troika proposals would mean further austerity, it is reasonable that the government should want the people to decide whether they want the government to renege on this promise. It would also be a rare occasion in the history of the European Project where the people get a say in their future. Generally when this happens, it doesn't go the way those inside the EU want, which is precisely why it is a rare occurrence.
That the referendum is rushed and somewhat unplanned goes without saying. The entire response to Greece for the past five years has seemed fairly unplanned. Certainly, there has never been established a point at which Greece will have returned to having a functioning economy. That a referendum should happen in a similar manner in order to decide the fate of such a lack of planning seems appropriate. (This is assuming that the troika were not entirely complicit the whole way through of ensuring that there wouldn't be an end to the crisis, a point which some would argue. Personally, I doubt the troika have such far-sighted abilities, though it seems clear they were quite happy to place an enormous burden on Greece for personal gain.)
So in the case it does happen, as it should, what will the result be?
It will be a matter of which emotion is stronger: fear, or pride. Fear what could result from the saying no to the troika, institutions which have essentially controlled Greece for five year; or pride in the belief that enough is enough, and no matter the consequences, it cannot be worse than what they are already experiencing.
It's a tough choice, but it's one they should never have been put in the position to make in the first place. It is hard to believe that Germany's finance minister, Wolfgang Schäuble, genuinely believes that further austerity is truly the solution to Greece's woes. You do not get that far by being unintelligent, and anyone can see that austerity is what has caused Greece's economy to spend years shrinking, putting them in an even worse position to pay off the debt that has been loaded onto them than when they started.
But the primary reason Schäuble and his compatriots across the Eurozone have been pushing austerity harder and harder has little to do with economics, and much more to do with politics. Austerity in other countries is popular at home. Schäuble's personal approval rating in Germany is through the roof, so why would he not continue down that path? There are no bad domestic political consequences for him in doing so, and thus his personal stake in the matter is secure, and the same is true for the rest of those pushing austerity.
Does it seem right that the future of a nation and its people should be used as a political device by other sovereign states who routinely intervene in the nation's affairs? Of course not. It completely contradicts the idea of sovereignty, and indeed of statehood. That this is a regular theme of the actions European Union should not go unnoticed. At this point, it is clear what a yes vote means for Greece: further austerity, further intervention with no end in sight. When such an option is given, the unknown suddenly becomes less fearful.
This, I believe, is why the polls are so close. Fear is a powerful emotion which many politicians and other powerful people have used to their advantage since time immemorial. But the Greeks have now known fear for so long that even such a strong emotion may have lost its power.
The Greek government has been the master of the mixed signal of late. On the one hand, Prime Minister Alexis Tsipras has been consistently pointing out how terrible Greece's creditors are. On the other, his government continues to offer further concessions, well beyond their original intentions.
As it stands, no-one really knows what will happen. Not Syriza, not the troika, not the Greek people, not economists and certainly not you or me. This is territory untravelled. No economy within the Eurozone has defaulted since joining, and there is no mechanism to leave the Euro. There is also no conceivable end to Greece's depression if they continue the pattern of scraping through their monthly repayments with continued austerity at the level of debt they have.
Should the referendum happen? I see no reason why not. Syriza was elected on a platform of ending austerity. Given that the acceptance of the troika proposals would mean further austerity, it is reasonable that the government should want the people to decide whether they want the government to renege on this promise. It would also be a rare occasion in the history of the European Project where the people get a say in their future. Generally when this happens, it doesn't go the way those inside the EU want, which is precisely why it is a rare occurrence.
That the referendum is rushed and somewhat unplanned goes without saying. The entire response to Greece for the past five years has seemed fairly unplanned. Certainly, there has never been established a point at which Greece will have returned to having a functioning economy. That a referendum should happen in a similar manner in order to decide the fate of such a lack of planning seems appropriate. (This is assuming that the troika were not entirely complicit the whole way through of ensuring that there wouldn't be an end to the crisis, a point which some would argue. Personally, I doubt the troika have such far-sighted abilities, though it seems clear they were quite happy to place an enormous burden on Greece for personal gain.)
So in the case it does happen, as it should, what will the result be?
It will be a matter of which emotion is stronger: fear, or pride. Fear what could result from the saying no to the troika, institutions which have essentially controlled Greece for five year; or pride in the belief that enough is enough, and no matter the consequences, it cannot be worse than what they are already experiencing.
It's a tough choice, but it's one they should never have been put in the position to make in the first place. It is hard to believe that Germany's finance minister, Wolfgang Schäuble, genuinely believes that further austerity is truly the solution to Greece's woes. You do not get that far by being unintelligent, and anyone can see that austerity is what has caused Greece's economy to spend years shrinking, putting them in an even worse position to pay off the debt that has been loaded onto them than when they started.
But the primary reason Schäuble and his compatriots across the Eurozone have been pushing austerity harder and harder has little to do with economics, and much more to do with politics. Austerity in other countries is popular at home. Schäuble's personal approval rating in Germany is through the roof, so why would he not continue down that path? There are no bad domestic political consequences for him in doing so, and thus his personal stake in the matter is secure, and the same is true for the rest of those pushing austerity.
Does it seem right that the future of a nation and its people should be used as a political device by other sovereign states who routinely intervene in the nation's affairs? Of course not. It completely contradicts the idea of sovereignty, and indeed of statehood. That this is a regular theme of the actions European Union should not go unnoticed. At this point, it is clear what a yes vote means for Greece: further austerity, further intervention with no end in sight. When such an option is given, the unknown suddenly becomes less fearful.
This, I believe, is why the polls are so close. Fear is a powerful emotion which many politicians and other powerful people have used to their advantage since time immemorial. But the Greeks have now known fear for so long that even such a strong emotion may have lost its power.
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