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

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

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

3 reasons why data is not the new oil – and why this matters to India

COP21 Breaking News_05 December: Children Will Bear the Brunt of Climate Change: UNICEF

Climate change: Will COP23 be able to accelerate the implementation of the Paris agreement?

Intensified Al Qaeda and ISIL activity in Yemen ‘deeply worrying’, says UN Human Rights Office

A dangerously hot climate, simmering political tensions: ‘This is not the summer of our youth,’ UN chief warns

US life expectancy is falling – here’s why

Gig economy: Employment Committee MEPs want to boost workers’ rights

12 ideas on how the private sector can help ensure universal healthcare access by 2030

Which countries have the highest unemployment rates?

How the tech sector can power the shift to a sustainable economy

UN recognises role of sport in achieving sustainable development

UN rushes to deliver aid as key Yemeni port city is ‘shelled and bombarded’

How oysters are cleaning New York’s polluted harbor

A day that Berlin and Brussels would remember for a long time

Cameroon: Clear ‘window of opportunity’ to solve crises rooted in violence – Bachelet

“Only through energy policy we can trigger competitiveness”. The Sting live from #EBS2015: Energy Union – When will it happen?

Manipulating privacy and reaping the benefits of technology

Emergency meeting called as Ebola spreads to Congolese city – UN health agency

EU should promote immigration as a humanitarian issue in order to provide a more permanent solution

Global immunization is having its annual check-up. What can we learn?

Turning Europe into a giant wind farm could power the entire world

Human rights ‘core to sustainable development’: deputy UN chief

Spread of polio still an international public health concern

Ukraine takes EU money and runs to sign with Russia

6 ways to ensure AI and new tech works for – not against – humanity

The smartest cyber investment is collective action. Here’s why

Systems leadership can change the world – but what exactly is it?

World is closer than ever to seeing polio disappear for good

Nearly 180,000 displaced by northeast Syria fighting as needs multiply: UN refugee agency

Migration crisis update: The “Habsburg Empire” comes back to life while EU loses control

High-technology manufacturing saves the EU industry

The banks first to benefit from the new euro trillion ECB plans to print

5 ways to go green in your own kitchen

‘Free state aid’ for imprudent banks

EU rewards organisations that make eco-innovation pay

Lessons from the Global Entrepreneurship Index

The metamorphosis of the categorical imperative in medical students

Lifting the lid on the value of a company’s human capital

Snowden is the “EU nomination” for this year’s Oscars

This is what the gender pay gap looks like in eight countries

Britain and Germany change attitude towards the European Union

One billion people have preventable eye conditions, increasingly linked to lifestyle choices: UN health agency

UN committed ‘to support the Libyan people’ as Guterres departs ‘with deep concern and a heavy heart’

Cyclone Fani hits India, UN moves to protect vulnerable refugees in Bangladesh

Starbucks and FIAT again under Commission’s microscope: is Europe ready to kick multinationals out of the house?

How the powerful science of behaviour change can make us healthier

Making the most of the Sustainable Development Goal 3: its overlooked role in medical education

Asia’s plastic problem is choking the world’s oceans. Here’s how to fix it

Electronic Cigarettes: Are they really as safe as we think?

DR Congo: Insecurity and attacks mean Ebola will keep spreading, warns world health agency

Australia needs to intensify efforts to meet its 2030 emissions goal

1 in 13 young British people have PTSD. Here’s why

FROM THE FIELD: India’s plastic waste revolution

EU Parliament: Deposit guarantee and trading platform transparency sought

Mali peace process in a ‘critical phase’, says head of UN Mission

The great challenge of the 21st century is learning to consume less. This is how we can do it

This is why AI has a gender problem

Accountability for atrocities in Myanmar ‘cannot be expected’ within its borders – UN investigator

EU investment budget for 2020: A boost for the climate

Australia wants to build a giant underground ‘battery’ to help power the nation

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