February 23, 2015 by Paul Goldsmith
Well that didn’t take long, did it? As Alex Salmond and Scotland would have found out had they achieved independence then tried to negotiate a currency union with the UK, if you make promises to your electorate that cannot be delivered without outside agreement, you are massively misleading them. So it is with the almost brazen capitulation of the new Greek government led by the far-left Syriza party to the conditions of the bailout from the other members of the Eurozone. Sovereignty, is, after all, sovereignty, and Greece has little of it over too much of what is actually important to their people.
As I have written before, there are plenty of strong economic arguments for releasing the pressure on the Greek people. The idea that a country can pay off debts whilst conditions are forced upon them that reduces their income by 25% doesn’t really make sense. The insistence, then, of Yanis Varoufakis, the Greek Finance minister who may end up more famous for his leather jacket and lack of punctuality than his ability to achieve his economic aims, that Greece’s future debt payments should be linked to economic growth, does actually make sense. Varoufakis also wants some of the major humanitarian consequences of the squeeze on living standards caused by the Troika’s (IMF, ECB, EU Finance ministers) bailout conditions to be lifted too.
Varoufakis, and the Prime Minister Alexis Tsipras, have thus begun a package of reversing some of the policies used by previous Greek government’s in agreement with their lenders. So, the state payroll is being added to, the privatisations of inefficient industries are being reversed, the state retirement age is being lowered again, and the minimum wage is being raised. The long term reforms demanded by the Troika, of the bloated public sector, the inflexible employment laws, and the corrupt taxation system, would have been a way to help Greece not be in the situation again. But Syriza didn’t get elected by promising those. They got elected by making what a German economist called on Newsnight last year “loony election promises.”
Those promises seemed to pretend that no other country existed, and, in particular, that their people don’t have needs too. Dominic Lawson in the Sunday Times tells of figures produced by the German Federal Statistical Office, which found that, despite the country’s overall healthy economic situation, more than half a million workers in the country were eating a full meal only once every two days so that they might save money. Now, Lawson says, the Germans are being expected to relax loan terms and abandon economic reforms for a county that had fiddled the figures for so long whilst benefitting from being part of the Eurozone.
But the bailout isn’t just about Germany. It is funded by all other EuroOne countries. The Prime Minister of Slovakia, Robert Fico, who is a former Communist, asks how he is supposed to explain to his citizens, many of them who are poor, that they will have to pay through their taxes to compensate Greece. Lawson points out that whist 36% of Greek citizens voted for Syriza, those who fund the bailouts are the taxpayers of the Eurozone, which is a ‘vastly more significant electoral force’.
Syriza actually wants Greece to remain within the Eurozone. That is why it has to accept the agreement on Friday that the bailout will be monitored by the Troika, and that should Greece not continue the economic reforms demanded, the money will be frozen. This is the exact deal that Syriza got elected swearing it would never accept. What has happened is a reminder that the sovereignty of governments inside a currency union is extremely restricted. Or in other words, reality has bitten.