Can Greece’s democratic institutions keep it in Eurozone?

Eurogroup meeting. March 2015. Yianis Varoufakis, Greek Minister for Finance (in the middle), Klaus Regling, European Stability Mechanism Managing Director (on the right). (European Council - Council of the European Union Audiovisual Services, Shoot location: Brussels – Belgium, Shoot date: 09/03/2015).

Eurogroup meeting. March 2015. Yianis Varoufakis, Greek Minister for Finance (in the middle), Klaus Regling, European Stability Mechanism Managing Director (on the right). (European Council – Council of the European Union Audiovisual Services, Shoot location: Brussels – Belgium, Shoot date: 09/03/2015).

Paris, Washington and Brussels categorically reject the idea of a Grexit, while Berlin is still loudly insisting that the Eurozone can weather at a cost Greece’s secession. Behind closed doors though, the German decision makers are also not at all sure about that. Greece’s exit from Eurozone has lately become the talk of the town not without good reason. It seems that during the last two weeks negotiations between Greece and its euro area partners have hit the reef and an experienced observer could conclude that even the Graccident that is an accidental and more dangerous Grexit, has come closer than ever. But is it like that?

On such a mystifying backdrop, colored more darkly by the rising tensions between Athens and Berlin, a lot of important people thought it was high time they intervened. The tensions between Greece and Germany hit a boiling point last week. The Greeks went so deep in the risky terrain and remembered that they have received nothing from the Germany as WWII indemnities. On top of that they say that Berlin still has to repay Athens in full a 1942 standard loan which Germany ‘mysteriously’ stopped servicing in 1953.

It was high time they intervened

Frictions between the two governments seemed getting out of hand last Thursday when the German minister of Finance Wolfgang Schäuble said that his Greek counterpart Yianis Varoufakis is “stupidly naïve”. The statement provoked a diplomatic incident with the Greek embassy in Berlin officially demanding clarifications. Finally the issue was settled after the German side blamed the translation of a complex Schäuble narration about the tête-à-tête dialogue he had with Varoufakis. The problem is that the state of internal public opinion in the two countries in relation to each other may reach a dangerous steaming point at any moment.

The cycle of interventions

At that conjuncture, a cycle of interventions opened mainly aimed at supporting Greece. It was Pierre Moscovici who spoke first and he didn’t chew his words. The EU Commissioner for finance and the euro speaking at an interview with the most relevant media for this affair, the ‘Der Spiegel’ magazine, went that far as to warn that “a Grexit could be the beginning of the end for Eurozone”. This is in direct contrast with what Berlin believes.

Of course the question of how and if Eurozone can withstand a Grexit is not new. However, it acquires special importance every time Greece is struggling to stay afloat, while negotiating its financial survival with her euro area partners. Inappropriately though all and every Greek government of the past five years used the negative answer to the above question as its strongest argument in order to get the maximum from their peers.

2015 is not 2012

Nonetheless this time Eurozone is not the same as in the spring of 2012, the last time that Greece had the same problems. The most important variation in today’s frame is that Italy and France have grasped the fact that their economies cannot start growing again under the austere Teutonic economic orthodoxy. The beginning of the new era in Eurozone dawned last January with the €1.14 trillion that ECB decided to spend over the next nineteen months buying sovereign bonds. The ECB in this way is indirectly helping the languishing with the fiscal restrictions Eurozone governments to borrow cheaply and spend more on growth policies. For this reason Italy, France, Belgium and some more euro area countries cannot and would not follow the Germanic inspiration fiscal restrictions and incomes austerity any more.

Then Moscovici’s warning that a Grexit may mean the end of Eurozone has more meaning in it. What Germany demands from Greece in order for the Eurozone to continue helping the latter is that Athens continues applying harsh austerity. This is exactly though what the new government of Alexis Tsipras cannot accept. In a way then, Moscovici, in supporting Greece so plainly, is making it clear to Germany that his own country France and some others cannot play any more by Teutonic rules.

Save Greece to save yourself

Last week Jean – Claude Juncker the President of the European Commission in a less unwavering manner followed Moscovici’s remarks. Juncker, after hosting Tsipras for more than 90 minutes in his Berlaymont office last Friday said “This is not a time for Division, this is the time for coming together”. He obviously opposed in this indirect way the Germanic animosity against Greece which has assumed very nasty forms during the last few days.

The Commission is now clearly on the Greek side for one more good reason that Germany itself doesn’t deny. Well informed sources in Berlin say that despite the fact that a Grexit doesn’t represent any more an infeasible financial exercise, the German government is very much worried about the geostrategic repercussions such a development may have. In the troubled regions of southern Balkans and in the Eastern Mediterranean a distanced from Eurozone Greece may drastically destabilize everything. Athens may even side with Moscow in return for cheap oil and gas.

Alarm bells in Washington and New York

There are more problems though a Grexit can cause. Last Friday the well known economist Nouriel Roubini said that “a Grexit is out of question” because he added that “the repercussions are immense”. He also mentioned the geopolitical danger if Athens sided with Moscow. Not to forget what Barack Obama told Angela Merkel some weeks ago about Greece. He said: “Angela, the United Sates expect soon the German appraisal of how could Greece return to growth remaining within the Eurozone”. By saying this, Obama, made Merkel responsible for Greece’s position in Eurozone.
In short both the Washington top decision makers and the New York bankers who run the western world and that Roubini authentically represents want Greece to stay in the euro area. None of them would buy a German argument that Greece failed Eurozone’s fiscal austerity rules by a few percentage units of GDP. The same seems now to be true for Brussels and Paris. And nobody cares how much this may cost to Berlin.

Dark skies in Athens

Of course this doesn’t mean that Athens is to have a sunny stay in Eurozone. Even the most important ally of Athens in the Eurogroup, the French minister of Finance Michel Sapin, doesn’t miss the opportunity to mock the Greek fixation with some words like ‘Troika’ (EU-ECB-IMF) and ‘Memorandum’ (a deal providing so far bailout finance and enforcing austerity). Already in Athens they talk about ‘quartet’ (plus the paymaster that is the European Financial Facility-EFSF) and a ‘new agreement’ instead of a memorandum.

The serious problems for Alexis Tsipras and the Eurozone will appear soon when they will start writing down the new agreement. It’s impossible that the new contract contains financing without austerity, much like in the recent past. Then the Greek government will have to pass it from the Athens Parliament. Undoubtedly a lot of people will surely denounce it as a thing of the past, just introducing austerity in the old manner.

Can the Greeks do it?

This is not a problem only for Tsipras but for Brussels too. Politically it may prove easier for the government to pass such a new arrangement with the euro area through a referendum, rather than relying on its own Parliamentary group. The 149 SYRIZA MPs in a house of 300, comprise a lot of people from the not so far away times, when SYRIZA was the extreme leftist group of activists struggling to remain in Parliament by attracting a mere 3% + one vote. Then many of them have already explained they are not going to support a new agreement with old contents. Predictably a referendum may become the only democratic way to keep Greece in Eurozone.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

the European Sting Milestones

Featured Stings

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Libya: EU efforts should focus on protecting migrants, MEPs say

This new way of understanding disease is changing medicine

Action needed to end deadly clashes between African herders and farmers: UN chief

The four top Americans who flew to Europe perplexed things about Trump’s intentions

“A Junior Enterprise is run only by students.. there are no professors or managers that can help you solve your problems”

EU-India summit: Will the EU manage to sign a free trade agreement with India before Britain?

Africa-Europe Alliance: first projects kicked off just three months after launch

The German automotive industry under the Trump spell

Fight against climate change and poverty will fail without overhaul of global financial system, says major UN report

Eurozone closer to a deflation – stagnation trap

Why Commissioner Rehn wants us all to work more for less

Syrian Refugees in Germany face distinctly different challenges than those in Lebanon

Consumers suffer three defeats

Is a full course lunch, a new Commissioner and 2 million anti-TTIP citizens what you would call a “Fresh Start”?

What we take for granted: The EU is not perfect

Who the US and China have trade disputes with

EU makes key TTIP document public as protests get louder

ILO’s Bureau for Employers´Activities to publish new study on women in business and management

3 autonomous vehicle trends to follow in 2019

Second Facebook-Cambridge Analytica hearing: impact on privacy, voting and trust

This is what a planet-wide network of ocean sanctuaries could look like

EU budget: the Common Agricultural Policy beyond 2020

‘Global care crisis’ set to affect 2.3 billion people warns UN labour agency

Guatemala: UN anti-corruption body will continue working, as Constitutional Court blocks Government expulsion

COP21 Breaking News_03 December: Unprecedented Global Alliance for Buildings and Construction to Combat Climate Change

Why the ECB prepares to flood the markets with more and free of charge euro; everybody needs that now

This is our chance to completely redefine the meaning of work

Greece and Ukraine main items on EU28 menu; the course is set

Eurozone: The crisis hit countries are again subsidizing the German and French banks

The Indian miracle state pointing the way to global sustainability

EU Commission: Germany can make Eurozone grow again just by helping itself

Chinese Premier Li Keqiang’s speech from World Economic Forum’s Annual Meeting of New Champions

Press coverage of migration crisis in Europe: a call for collaborative action

Parliament demands ban on neo-fascist and neo-Nazi groups in the EU

Climate change recognized as ‘threat multiplier’, UN Security Council debates its impact on peace

2 trillion drinks containers are made every year – so where do they go?

Water supply a human right but Greeks to lose their functioning utilities

Darfur: Inter-communal tensions still high despite improved security, Mission head tells Security Council

Brexit: when the hubris of one man can set the UK, the EU and the entire world on fire

Marking Sir Brian Urquhart’s 100th birthday, UN honours life-long servant of ‘we the peoples’

Mandela, ‘true symbol of human greatness’, celebrated on centenary of his birth

ECB’s first flight in Eurozone’s banking universe will be just a reconnaissance

Syria: ‘Violence, displacement’ and cold kill 11 infants ‘in the past two days’

Tuesday’s Daily Brief: Bicycles for the environment, new leader for the UN General Assembly, UN values, Ebola, Syria and Libya

EU-China Light Bridge in Brussels signals the bright coming of the Year of The Dog

‘Never give up’: UN chief urges all who serve, marking UN Day

Venezuela: UN human rights office calls for ‘maximum restraint’ by authorities in face of new demonstrations

The EU Commission does nothing about the food retailing oligopoly

MEPs want to ensure sufficient funding for Connecting Europe’s future

We need to talk about failure in the social sector

Long live Eurozone’s bank supervisor down with the EU budget supremo

Why Obama asks approval from Congress to bomb Syria?

UK voters sent strong message to May and Corbyn for soft Brexit

COP21 Breaking News_05 December: Ban Ki-Moon Closing Address at COP21 Action Day Innovation, Imagination, Faster Climate Action

The 28 EU leaders show contempt for the European Elections results

WEF Davos 2016 LIVE: “No other problem has jeopardised the EU as much as the refugee question” Joachim Gauck, President of the Federal Republic of Germany, cries out from Davos

Love unlimited

Medical students of today, technological doctors of tomorrow

Why Eurozone urgently needs the ECB to print and distribute at least €500 billion

European Youth Forum welcomes the European Commission’s proposed revision of the Union Code on Visas, however it does not go far enough

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s