Final referendum result: Yes – 38.7%, No – 61.3%
If nothing else happens as a result of the dramatic “Oxi” (no) vote in Greece’s referendum today, can we at least finally disabuse ourselves of the notion that Angela Merkel, Germany’s chancellor, is somehow a formidable and effective world leader?
We hear time and again how Merkel is the most powerful woman in Europe (or sometimes the world), and how she is such a shrewd and canny operator, driving hard bargains in the EU and commanding respect on the world stage. But Margaret Thatcher she ain’t. The European Union may like to think of itself as a warm, fuzzy family of nations, but in reality there is only one country, Germany, which plays the role of parent when it comes to economic matters, particularly within the eurozone. And Angela Merkel’s “bad cop” Pyrrhic victory in keeping the door closed to any form of debt relief for Greece, even in the face of entreaties from President Obama and mounting evidence that some form of debt restructuring is an essential precursor to the return of growth, has just driven Europe off a cliff.
As the eurozone goes into meltdown and the European Union faces what could become an existential crisis, everyone is looking to cover their backs as the recriminations fly. And Lord knows that Greece shoulders some of this blame, having governed itself irresponsibly over many successive decades and governments, as this blog has repeatedly acknowledged. But what excuse do the sharp-suited EU bureaucrats and eurozone politicians have for their collective failure to contain the Greek situation? What excuse does Angela Merkel have?
Be under no illusion, this is a collective failure. The Greek people and their elected politicians are responsible for governing their country irresponsibly, failing to implement market reforms and build the strong institutions required for democratic capitalism to work. But European politicians are guilty of a far worse crime – allowing Greece to join the euro having either failed to do their due diligence on the country’s finances, or having realised the risks of Greek participation in the euro but ignored them for political reasons.
The driving forces behind the European Union and further EU integration want to gradually break down the remaining structures that define the traditional nation state and vest these powers in the Brussels institutions instead, all as part of the ever-closer union promised in the Treaty of Rome. The relentless drive, despite any weak protestations to the contrary, is toward a European superstate, a country called Europe. This may make sense in the minds of the European political elite when they gather together to plot strategy, but it is doomed to failure and popular rejection so long as the people of Europe do not feel themselves to be European first and foremost. And of course they do not.
If the much-vaunted common European identity really existed, as the pro-Europeans love to claim, the voters of other eurozone members and their elected leaders would grumble a bit but ultimately do what was necessary in terms of financial aid, liquidity support and debt restructuring to allow Greece to return to economic growth within the euro. Take the example of successful fiscal and monetary union, the United States. Some American states manage their finances well and others are fiscal basket cases, but the United States government does not threaten to rescind the dollar from debt-ridden states like California, or cities like Detroit. Ultimately, the United States government stands behind all of its constituent states and regions. Because they are all one and the same country.
Never has it been more starkly demonstrated that the peoples of Europe are not united, do not want to be united and will never be united to the extent that they will acquiesce to becoming part of a superstate. The voters of France, Germany and other major eurozone countries have absolutely no desire to give further financial support to the Greek people, no matter how much they may personally sympathise with their plight. Reflecting this popular opinion, eurozone leaders have been quite happy for Greece to exist in permanent depression with no hope of economic growth, just so long as it did not destabilise their shared currency. But when the limits of Greek endurance were reached, as they have been over this tumultuous week culminating in tonight’s “no” vote, many powerful voices in Europe would rather see Greece unceremoniously kicked out of the club rather than commit to the hard and unpopular work of financially supporting a Greek recovery.
The eurozone leaders insist that they always wanted to come to a fair agreement enabling Greece to return to economic growth. So why was the idea of debt forgiveness or restructuring totally off the table until Greek prime minister Alexis Tispras decided to walk away from negotiations at the eleventh hour? And why were EU leaders so keen to suppress the IMF analysis which proved that the level of Greek debt was unsustainable and impossible to repay?
Greece’s political leadership is a shambles, but this is not a new state of affairs and comes as no surprise to anyone. What does come as a surprise is the fact that supposedly mature world leaders like Angela Merkel and Francois Hollande, drivers of the Euroepan Union, allowed a crisis in Greece to destabilise the whole eurozone and the foundations of the EU project. It is surprising that Greece was ever allowed to join the euro in the first place. It is surprising that anyone thought that Greek sovereign debt was a good investment given the political and cultural issues long at play there. It is surprising, frankly, that so many people in positions of European leadership, from heads of state and central bank governors on downwards, have been so desperately incompetent.
As the Guardian rightly notes:
All the eurozone leaders have their own mandates and domestic pressures, but those in the prosperous north should have grasped how much less room for manoeuvre there was for a Greek government presiding over a society which hardship has pushed to the edge of ruin. Having scotched one referendum plan under the altogether more clubbable George Papandreou government, northern leaders seeing the plebiscite resurface in less palatable form should have done a little soul-searching, about whether it is sustainable for Europe to allow itself to be pitted against “the people” in any one state. Above all, the creditors should have shown humility about the abject failure of five years of imposed austerity, which have not even succeeded in the very narrow terms of making it feasible for Athens to pay its debts.
In fact, all pro-Europeans come away from this crisis hugely discredited, caught in the awkward position of having to explain their love for an international institution (the EU) which has behaved in so high-handed and callous a way, as this blog recently noted:
Pro-Europeans in general have an awful lot to answer for, because it is their blind and unswerving support for the EU’s unaccountable form of government which has so weakened the nation state and empowered the unaccountable forces who pushed Greece into this desperate position. It will be very interesting, in the coming days and weeks, to observe the cognitive dissonance of the pro-European Left as they seek to reconcile their instinctive love of all things EU-related with the brutal way that their beloved organisation treats small countries at their time of maximum need.
There is only one course of action left open to eurozone finance ministers as they plot their next move in the wake of the Greek “no” vote: capitulate, and perhaps finally show some contrition for having been so willing to throw Greece – and democracy itself – under the bus in order to preserve their shared currency. Pick up the phone and call Alexis Tsipras, invite him back to Brussels and at long last put real, substantive Greek debt restructuring on the table. And do it quickly so that this whole sorry episode can be put to bed once and for all.
And when voters in the other eurozone countries, particularly Germany, balk at being expected to bear the costs of Greek profligacy and economic mismanagement? Well, that’s the perfect time to explain to them that huge transfer payments from wealthy areas to poor areas are an integral part of sharing a currency, a clear expression of the “ever-closer union” between member states which the EU embodies.
Then let’s see what happens across the continent to public attitudes about the European Union.
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