Yanis Varoufakis has an article in today’s Irish Times in which he laments the failure of the Eurogroup (of European Finance Ministers) to listen to his proposals even whilst they themselves have been kept in the dark about what “the Institutions” (IMF, ECB, Commission) are proposing. Apparently no substantive discussions took place on what either “the Institutions” or Greece were suggesting as the way forward. A majority of the Eurogroup Ministers appear to have decided, in advance, that Varoufakis is not someone they can “do business with.”
But perhaps the finance Ministers couldn’t address, never mind resolve, the Greek crisis because at root it isn’t a financial crisis, it is a political crisis which effects the whole European project. If this all goes horribly wrong, we will have Greece spinning, out of control, into the Russian orbit run by a military Junta and with politicians such as Varoufakis in exile, jail, or worse.
The EU, meanwhile, will start to fall apart with nationalists governments, led by the UK, doing their best to break it apart. We may not have a major European war any time soon, but the slippery slope will have begun. Meanwhile we will have people starving in the streets and dying en masse for lack of proper medical care.
There is no doubt that Greece needs an internal social, economic and political revolution. For too long it has been run by a corrupt elite who pay very little by way of taxes and do not re-invest their profits to modernize the economy. It has a massive and inefficient military and civil service which absorb huge resources and stifle all economic enterprise and growth. The underlying Greek economy is painfully underdeveloped whilst social inequalities grow.
It is unclear whether Syriza, or any Greek government, have the means to lead such a revolution. Perhaps a massive rupture is unavoidable. A default followed by ejection from the EZ could well result in hyper-inflation of any new currency, mass impoverishment, and violence in the streets. Sounds familiar?
The EU was founded to prevent such a re-occurrence. and if it fails to prevent it, it will have failed in its most basic and sacred duty. It will have destroyed its own most basic raison d’être and claim to legitimacy. All of Europe will be the loser.
We need to decide whether the EU truly aspires to be a Union or not. If so, the suffering of the Greek people is indivisible from suffering in our own home states. It is as much our responsibility as is the hardship experienced by our neighbours down the road. There is no solution to the Greek Crisis which does not involve at least a mini-revolution in the EU institutions as well. Monetary Union cannot be pursued in isolation from fiscal Union, and the health, social welfare, education and economic development of the Greek people must be assured at an EU institutional as well as at a national level.
We cannot allow the suffering of the Greek people to become a bargaining chip in the power politics of competing national elites. It is time for Community wide solutions to Community problems. It is time for the European Union to get real.
Did you catch the speech by Tsipras at the International Investment Forum in St. Petersburg … yes in Russia?
Mr Tsipras described Russia as one of “Greece’s most important partners” while lamenting the EU sanctions imposed on his host last year. And in words likely to be interpreted as a stark warning to the country’s creditors that Greece may make an alliance with Russia if the country exits the eurozone, Mr Tsipras suggested his country had other financial options outside Europe.
“We are at the centre of a storm, of a whirlpool. But you know we live near the sea – we are not afraid of storms, we are not scared of open seas, of going into new seas. We are ready to go into new seas to reach new safe ports,” he said. Russia has been seeking to cultivate Greece and other smaller European states in order to divide the EU, which has so far shown a united response to Russia’s aggression in Ukraine. There have been fears in some European capitals that Greece could veto future rounds of sanctions on Moscow if it falls out of the single currency yet remains in the EU.
I watched the speech live. The European Union has a serious problem for some time now and politicians in Brussels are at the root of it. The US wants Europe in its capitalistic orbit without the benefits of socialism … see the TTIP negotiations. Led by the SG and US Commander Breedlove, NATO runs wild across the European continent with an aggressive anti-Russian stance. The military investments needs to be upped by partner nations and a great illustration is one more plan for stationing new nuclear missiles (abandoned under the Reagan administration in 1986). At the time in The Netherlands, massive demonstrations nearly brought down the coalition government of PM Ruud Lubbers as 400,000 marched against positioning 48 Tomahawk cruise missiles in Woensdrecht.
See my recent diary – Obama Russian Reset: Pre-emptive Nuclear Strike Capability.
I would expect that even now the CIA is planning a military coup in Greece to head off any move into Russia’s orbit. The EU can them blame the Greeks themselves for being undemocratic and suspend their voting rights within the EU – a per-cursor to expelling the altogether if the creditors don’t get their money by fair means or foul.
The question that I have is why any country which is not named Germany or France still wants on the Euro. We are going to Croatia on Thurs. We were in Montenegro in Nov, and prices for everything were much higher than in Croatia. Moving to the Euro increases prices. It also decreases your flexibility. Why do Croatia, Romania, and other countries want on the Euro? I think it’s nuts.
I am old enough to remember wild fluctuations in the value of the Irish pound seemly unrelated to underlying economic performance as the “financial markets” speculated in the Irish pound and the interest rate on my Mortgage was 14%.
The advantages of the Euro for a small open economy like Ireland are:
The disadvantages are:
Can you imagine a USA where each state had its own currency? Would that improve the economic performance of the USA as a whole? Who would be the winners and losers? I suggest the main winners would be the banks and currency speculators. Nevertheless, if the Euro is to succeed and work for everyone, I would argue that the ECB has to take on more of the powers and responsibilities of the Fed, and the EU central budget has to look more like the US one – i.e. effectively a fiscal Union. Over 50% youth unemployment in Mediterranean countries on an ongoing basis and recurring regional financial crises undermine the legitimacy and efficacy of the whole project.
An edited version of this blog has been published as its lead letter by the Irish Independent – the largest circulation daily in Ireland.