Few countries elevate rejection as far as celebrating a national “No” day. But every October 28th Greece’s Oxi Day holiday commemorates the No with which it replied to a humiliating Italian ultimatum in 1940, a refusal to acquiesce that led to invasion. Greece is also the country whose stereotype is plate-smashing. The New York Times recently ran a story recalling doughty Greek fighters in the early 1800s who blew themselves up rather than submit to the Ottoman; in the mountains of Zalongo, by legend, women flung their children off a cliff and then danced off after them rather than be sold as slaves. And yet feisty contrarianism may be just what the twin hegemonic systems of free markets and undue influence by the demands of capital, deserve in exhausting 2015.
Greece’s negativity has gone global after a No vote to a referendum on whether it should approve an already lapsed offer from eurozone finance minister for a new bailout.
When it comes to it most people’s view on the Greece tragedy is rooted in their psychology: do they favour the underdog and the romantic, or the powerful and the financial. Above all it is rooted in their desire for change. If you think the world, presumably symptomised by your own situation, is in good shape, you will be nervous about it; if not you may be more open to radicalism. Village tends to be critical of prevailing politics and economics and is open to radical change. But even for the cautious the weight of evidence suggests we must stop bullying the admittedly traditionally profligate Greeks.
On a human level certainly Greece commands our sympathy as, five years into the debt crisis, the country has suffered a loss of 25% of its GDP and a debilitating rise in immiseration and the unemployment rate – which now stands at over 50% among young people.
However, even on a basic practical level, Nobel Prize-winner Paul Krugman, for example, says austerity is also probably shrinking Greece’s economy faster than it reduces debt, so all the suffering serves no purpose.
According to the conservative IMF’s analysis, Athens’ debts are unsustainable and require large-scale relief: a 20-year grace period, or a haircut that yields a reduction in debt of more than 30% of GDP. Otherwise even if the economy managed to grow at close to its historical long-term average of 1pc a year, Greece’s debt ratio would still top 100pc of GDP in three decades. “Facts are stubborn. You can’t hide the facts because they may be exploited”, one IMF official told Reuters. If discomfiting, this analysis at least has the determining virtue of being the truth. As Village went to press the normally practical Germans were finally coming around to this truth, though confusingly they did not seem to incline to being a consensual partners to any write-off.
More fundamentally for non-Greeks, the debacle has certainly undermined those who claim either global capitalism or the European project are exercises in democracy.
For example if you wondering why the IMF favours the markets and keeping taxes down, when dealing with the likes of Ireland and Greece, it is important to know that IMF decisions require an 85% majority, and the US holds 17% of the votes.
The IMF will not allow Greece to raise taxes on the rich or on corporations. It interfered with Greece’s fiscal authority to insist on a change to any possible bailout to reflect this concern. A previous Greek government was forced out when it called a referendum and a change of leadership was foisted anti-democratically by the eurogroup on Italy when the Euro-technocrat Mario Monti was imposed as Prime Minister in 2011. In Ireland the process where in 2010 at a conference call with the G7 finance ministers, a haircut for Irish bank bondholders was vetoed by US treasury secretary Timothy Geithner, shows closer to home just how undemocratically decisions that affect all of us can be taken. How often do we see policy driven by resigned, indeed sometimes enthusiastic, deference to the markets. It is alleged you cannot buck them.
Moreover, whatever government the cradle of democracy chooses it must, like all eurozone countries, defer to the decision taken in December 2011 by the European Council to adopt a new fiscal compact, imposing on all members of the eurozone a rule that “government budgets shall be balanced or in surplus”. The rule had to be transcribed into national law, and to “contain an automatic correction mechanism that shall be triggered in the event of deviation”.
Decisions on Greece have been dominated by ‘the eurogroup’, an informal group not bound by treaties or other laws that actually does not consider itself bound by those long-lucubrated European treaties.
The European Financial Stability Facility (EFSF) is an anonymous and unelected body, passing itself off as a robotic ‘Facility’ that has acquired the power to bankrupt an entire country and effectively expel it from the euro zone. It recently issued a formal threat to call in Greece’s loans from the EFSF early. It simply has no mandate.
Why should we be in thrall to a bureaucracy supporting that has now shown itself willing to support kleptocracy?
In 2015 Ireland will spend over €8bn on interest alone on debt repayments. That’s roughly the same as we spend on the entire education budget. It is unsustainable, mini-boom notwithstanding.
On ethical and selfish grounds, and because Ireland uniquely can see that global capitalism, represented by the extraordinary boom, crash and enforced payments to unsecured bondholders, and democratic deficits represented by our vulnerability to decisions taken elsewhere.
In an interview with Die Zeit in early July French Thomas Piketty suggested that we need a conference on all of Europe’s debts, just like after World War II: “A restructuring of all debt, not just in Greece but in several European countries, is inevitable. Just now, we’ve lost six months in the completely intransparent negotiations with Athens”.
A new European institution would be required to determine the maximum allowable budget deficit in order to prevent the regrowth of debt. For example, this could be a committee in the European Parliament consisting of legislators from national parliaments. Budgetary decisions should not be off-limits to legislatures”. ‘Europe’ and global capitalism (and of course the IMF) have long disregarded this fundamental imperative.
Time to say No to them, and create a new paradigm. •