What would you do this morning if you were a Greek? Would you agree to your government cutting public-sector jobs, pay and pensions?
What would you do this morning if you were a Greek? Would you agree to your government cutting public-sector jobs, pay and pensions, and increasing taxes? Or would you do what thousands of Greeks are doing and take to the streets, calling the bluff of Germans and the French and making them dig deeper into their pockets?
I would not hesitate. I would take to the streets. Britain may not have that option, but Greece does. Eurozone bankers have been lending the Greeks loads of money for years, knowing they could not repay and assuming Europe’s taxpayers would come to the rescue.
The rescue now costs $155-billion and is rising. This is not to save Greece’s economy but merely to service the loans it already has. Why should Greeks accept the anguish of austerity when they know their extravagance will be financed from across Hamlet’s ‘bourn from which no traveller returns”—from foreign taxpayers beyond the grave?
The so called ‘closer European union” was a bad idea for precisely the reason now seen on the streets of Athens. It was an attempt by a supranational economic authority to supersede national democracy.
Bluntly, it assumed the commercial culture of ‘greater Germany” could be imposed on a wide variety of cultures by virtue of geographical propinquity. Countries with a high propensity to work and save would discipline those with a lower one. Banks would finance it all. It was the perfect precondition for a sovereign credit bubble.
Greece is to a united Europe what Northern Ireland is to the United Kingdom. It forms just 2% of the European economy, having been admitted in the latter’s most imperial earlier phase in 1981 and richly subsidised ever since.
Greek politics has adjusted to half of all workers being reliant on the state. Eight hundred thousand civil servants have their jobs protected by the Constitution. Prevented by euro membership from devaluing its currency, Greece has found the cost of financing its budget deficit way beyond its capacity. But this is no problem, as Europe continues its subsidies and stands behind its loans.
In particular, Germany always pays.Now Germany is fed up, but it is fed up with the inevitable consequence of its own unionism. The EU admitted Greece when it was just seven years from corrupt military dictatorship. Thirty years since, it still produces governments addicted to external support. There is no way Greece can sustain an overnight shift to Germanic efficiency, with an overvalued currency, slashed wages and hundreds of thousands thrown out of work. The parallel with Weimar Germany is too uncomfortable.
Sometimes political theory meshes with practice to serve a nasty message. If you invent a federation that requires nations to converge their economies, you must accept what happens when convergence fails. The Greeks were openly encouraged to believe that EU taxpayers would ease them painlessly into a modern economy, a foolish, implausible and now dangerous prospectus.
Europe’s paymasters can huff and puff, just as Greece’s politicians can pledge and promise, but come the July meeting of the eurozone financiers, they will do what the politics of the moment demands, which is to keep the money flowing down Europe’s arteries into Greece’s bank balances.
There may be some ‘debt reordering”, but the banks have already insisted they will help only in a ‘purely voluntary” role in this. As during the credit crunch, they expect their risk-taking to be underpinned by Europe’s taxpayers. The banks will play their old trump card, promising a ‘global credit meltdown” if Greece is not helped to finance its debts.
The Greek predicament is as a result of system failure. Democracy works only where accountability bites, where taxing and spending within a given time frame are related to voting for party representatives. It arose in Greek city states, where people knew and could discipline each other in the arts of war and peace. It is thus within Britain’s ‘united kingdom”. No one talks about a Northern Irish budgetary crisis because that budget is subsumed under a general consensus.
However economically rotten parts of the UK may be, London always pays. European union requires richer nations to subsidise poorer ones. These cross-subsidies, especially those supporting sovereign debts in Greece, Portugal and Ireland, enjoy no democratic accountability. They are the creation of banks and browbeaten ministers at late-night meetings.
Everyone seems to agree that what should happen will not happen, that is, a shrinking of the eurozone, a devaluation of Europe’s peripheral ‘currencies” and a corresponding cut in their indebtedness. Germany and France, the joint custodians of ‘Europe”, are not ready for such a step. A union is a potent thing. It usually takes a war to break one up, and Europe is not at war.
European union was a commendable bid to rectify the failings of the past. But it is now something quite different, a bid to dump the failings of the present on the heads of the future. One cynical motto should be hung round the neck of every EU institution: ‘Don’t worry, the children will pay.”—