What's good for the European project is not always good for the people of Europe
Left wing populism has come to Europe at long last, and it could not have landed in a more appropriate country. There has been no other nation more kicked around by the troika (that is the terrible three: the European Union, International Monetary Fund, and European Central Bank) than Greece, and the people of that country have spoken: enough is enough of imposed austerity measures.
After falling short of an overall majority by just two votes, Alexis Tsipras of Syriza, now the Prime Minister of Greece, has formed a government with the help of Panos Kommenos of the Independent Greeks. But now the hard work really begins: to bring the change that is needed to his country.
To be sure, Tsipras is being thrown right into the deep end. In just a fortnight the newly elected left winger will join the top table at an EU summit in Brussels with Angela Merkel of Germany, Francois Hollande of France, and David Cameron of Britain, and all eyes will be on the Greek.
Already David Cameron has given his two cents, saying the election of Syriza will bring economic uncertainty to Europe, while chancellor George Osborne has gone one further saying the promises of the new governing party will be ‘very difficult to deliver and incompatible with what the eurozone currently demands of its members’.
But can Cameron be serious? What economic certainty is he measuring this election against? Have the people of Greece enjoyed certainty? Does the elite in Europe believe there is certainty in the economy? Why else would Benoit Coeure, a member of the executive board of the ECB, warn on Saturday that unemployment and low growth are undermining the foundations of the European Union?
Nowhere in Europe have these problems been felt more than by the majority of people in Greece.
As we know, the ECB recently launched its QE programme of €60 billion per month, €1,140 billion in total, which while accepting that governments must play the principle role in their country’s growth plan, is designed to spur on growth in the Eurozone. How will this be done? According to Tomas Hirst for Business Insider, it is:
“launching a QE programme into a credit expansion cycle. Given that the unemployment rate across the eurozone was 11.5 per cent in November, and over 20 per cent in Spain and Greece, the central bank could do worse than fanning the embers of a credit boom to raise demand in the region and close its gaping output gap.”
The European elites have accepted that there is a mismatch between output in the Eurozone and the capacity by individuals to raise demand, and unemployment is closely related to this, as is austerity. But there will be no reversal or backdown of the latter, just plastering over the cracks with an artificial credit boom.
These same elites might be concerned with how appealing Syriza have been to the Greek people, but that is simply because they have better ideas for their people than the unelected nobodies in Brussels.
As for what Chancellor Osborne has said about incompatibility with what the Eurozone demands of its members (how? Why? And with what mandate?), any sensible person need only look at what the troika has done to improve Greece: an economy that has shrunk by 25 per cent, wages down by the same amount and youth unemployment of 60 per cent. With this in mind, it’s no wonder that the Greek people have chosen a party that will stand up against EU hegemons, Merkel, and the other austerity advocates.
Just consider for a second what a renegotiated plan for Greece with its creditors would look like. Believe it or not, before taking into account debt payments, Greece will achieve a budget surplus in 2015 of three per cent of GDP. That is to say that government spending is lower than government income.
With a decent debt write-off programme, the pressures on the Greek economy can be dramatically reduced. But this seems like common sense too far, and instead economic recovery in Greece is pushed further and further away which benefits no one, neither Greek nor creditor, in the long run.
Commentators today such as Zoe Williams in the Guardian have said that the British left must look at what’s happened in Greece and make a stand themselves to ‘the money men’. Certainly the result in Greece will be used as a springboard for anti-establishment types in Spain, Italy and Ireland. But what can the British left learn from this?
Essentially it can learn two things: that being bold and calling for an economic programme that is deliberately contrary to the prevailing European elite is not such a turn-off for the electorate. Also, what’s good for the European project, is not always, or indeed typically, good for the people of Europe.
Even before the Maastricht agreement, European economic policy was about forcing the hand of European government’s spending, no matter the state of the economy. The neoliberal consensus sees no positive impact of government intervention in delivering nations from financial crisis. And yet there is a strangely lacklustre agreement by the left that the European Union is a positive thing.
Dare we even ask ourselves whether the European Union passes Tony Benn’s five point test of a democracy, that concludes by asking whether we can get rid of the people who govern us?
If you feel I’m being a little hasty then maybe we should hold back a little. But we should ask ourselves this question about democracy again when the new government of Greece tries to renegotiate its relationship with the EU – it’s possible the only way they’ll get a good deal is to leave altogether.
Carl Packman is a contributing editor to Left Foot Forward and the author of Loansharks: The rise and rise of payday lending
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