From
As the stalemate between Greece and
its creditors continues after Eurogroup negotiations collapsed Monday night,
all eyes are on Europe, wondering who will blink first. But as Varoufakis
stated in the press conference following the meeting, there is no plan B.
Greece is not playing games, and its new government is serious about
challenging the conditions attached to Greece΄s bailout agreement, affirming
that they will not commit to completing a programme that they have been elected
to challenge. So is Europe just being stubborn?
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Greece's new government was elected
on an anti-austerity platform, promising to renegotiate the Greek debt burden.
Despite what verged on blackmail from EU leaders urging Greeks to 'vote
responsibly', as well as what amounted to a scare campaign from domestic Greek
media, the majority of the population voted for SYRIZA anyway. This in itself
reflects the severity of the economic reality for most Greeks, in that Greece
is generally a conservative society, who despite endless corruption scandals
continued to vote for the same 2 parties that led the country into its current
dire straits until as recently as the 2012 elections. Greek society didn't
change overnight, subscribing to a 'radical left' party which ten years ago
were receiving only 4% of the vote. Rather, having lost faith in the governing
political class, and having very little left to lose - the latter point being
especially salient for the Greek youth, for whom unemployment stands at around
50%, they are ready to gamble and let the chips fall where they may.
Since the elections there have been many expressions of sympathy for SYRIZA's position, which regarding the debt burden and any further bailouts is essentially that the current programme is not working, and that austerity will not save Greece. However, EU countries are sticking to the line that Greece has signed an agreement and must abide by it. Which would be perfectly logical were it not tantamount to economic suicide, condemning Greece to be Europe’s debt colony for the foreseeable future.
Whilst new Greek finance minister Yanis Varoufakis has been eloquently explaining the havoc that austerity policies have wreaked on his country, and why the government he is part of will not continue to implement a programme based on austerity, there seems to have been little real engagement with the issue at hand from European politicians. Indeed a convenient collective amnesia seems to have overtaken popular discourse, with very little mention or recognition of the private banking crisis and huge public bailout that followed which kicked off Europe's sovereign debt crisis in the first place. As Mark Blyth argues , Europe’s debts are in large part due to bailing out and recapitalising a broken banking system rather than “an orgy of government spending”. (It is at this point important to acknowledge that the Greek state is in many ways deeply dysfunctional and desperately in need of reform, which SYRIZA have said they are deeply committed to, but the question here is what kind of reform.)
Fiscal austerity, or cutting state spending, is the economic medicine prescribed to overcome the economic problem of fiscal profligacy, or a state spending too much. But as others have argued , this is a misdiagnosis of Greece's problem.
What's more, it is a policy that has been criticised and discredited extensively over the years. Many have challenged the basic logic of applying an austerity regime to an indebted depressed economy, including Nobel prize winning economists Paul Krugman and Joseph Stiglitz, and yet it continues to be forced on indebted countries. The past experiences of developing countries, who were required to implement austerity as a condition of international loans, suggests that the policy has rarely proved to bear the results that its proponents promised. As Stiglitz has argued , "Austerity had failed repeatedly, from its early use under US president Herbert Hoover, which turned the stock-market crash into the Great Depression, to the IMF “programs” imposed on east Asia and Latin America in recent decades."
In fact, it has more often been the case that the medicine turned out to be worse than the disease itself. A recent book, The Body Economic: Why Austerity Kills , has looked at 8 experiments of economic recovery, and come to the conclusion that it is austerity rather than economic depression in itself that is disastrous for public health. The continued implementation of such fierce austerity given reams of evidence that it has not worked before, and it is not working now, starts to look like less like misguided policy and more like an ideological project.
The European dream was meant to be an equal union of peoples, respecting and celebrating difference. The EU we live in today though, seems to be acting in the interests of Europe's elites and banks rather than its citizens. For this is not just a story about Greece. Other EU countries that have suffered through austerity such as Ireland, Portugal, Cyprus and Spain have their own reasons not to support Greece’s cause. Having not attempted to negotiate on their own behalves, giving in to Greece now looks to their electorates like their government failed to stand up for them. The need for austerity has been the myth peddled since neoliberal economic theories rose to prominence. State cutbacks on the pretence that Europe's economic woes are principally the result of excessive state spending are affecting the poorest all over the continent, with the UK for example even being warned by the IMF that they were implementing too much austerity. But the age of austerity was never intended to be temporary, as UK prime minister David Cameron admitted publicly . Rather it is a thinly veiled attack upon the welfare state itself. That's why the EU won't back down, because it would mean acknowledging the failure of austerity, and this, despite claims to the contrary, is not about logic but about ideology.
Since the elections there have been many expressions of sympathy for SYRIZA's position, which regarding the debt burden and any further bailouts is essentially that the current programme is not working, and that austerity will not save Greece. However, EU countries are sticking to the line that Greece has signed an agreement and must abide by it. Which would be perfectly logical were it not tantamount to economic suicide, condemning Greece to be Europe’s debt colony for the foreseeable future.
Whilst new Greek finance minister Yanis Varoufakis has been eloquently explaining the havoc that austerity policies have wreaked on his country, and why the government he is part of will not continue to implement a programme based on austerity, there seems to have been little real engagement with the issue at hand from European politicians. Indeed a convenient collective amnesia seems to have overtaken popular discourse, with very little mention or recognition of the private banking crisis and huge public bailout that followed which kicked off Europe's sovereign debt crisis in the first place. As Mark Blyth argues , Europe’s debts are in large part due to bailing out and recapitalising a broken banking system rather than “an orgy of government spending”. (It is at this point important to acknowledge that the Greek state is in many ways deeply dysfunctional and desperately in need of reform, which SYRIZA have said they are deeply committed to, but the question here is what kind of reform.)
Fiscal austerity, or cutting state spending, is the economic medicine prescribed to overcome the economic problem of fiscal profligacy, or a state spending too much. But as others have argued , this is a misdiagnosis of Greece's problem.
What's more, it is a policy that has been criticised and discredited extensively over the years. Many have challenged the basic logic of applying an austerity regime to an indebted depressed economy, including Nobel prize winning economists Paul Krugman and Joseph Stiglitz, and yet it continues to be forced on indebted countries. The past experiences of developing countries, who were required to implement austerity as a condition of international loans, suggests that the policy has rarely proved to bear the results that its proponents promised. As Stiglitz has argued , "Austerity had failed repeatedly, from its early use under US president Herbert Hoover, which turned the stock-market crash into the Great Depression, to the IMF “programs” imposed on east Asia and Latin America in recent decades."
In fact, it has more often been the case that the medicine turned out to be worse than the disease itself. A recent book, The Body Economic: Why Austerity Kills , has looked at 8 experiments of economic recovery, and come to the conclusion that it is austerity rather than economic depression in itself that is disastrous for public health. The continued implementation of such fierce austerity given reams of evidence that it has not worked before, and it is not working now, starts to look like less like misguided policy and more like an ideological project.
The European dream was meant to be an equal union of peoples, respecting and celebrating difference. The EU we live in today though, seems to be acting in the interests of Europe's elites and banks rather than its citizens. For this is not just a story about Greece. Other EU countries that have suffered through austerity such as Ireland, Portugal, Cyprus and Spain have their own reasons not to support Greece’s cause. Having not attempted to negotiate on their own behalves, giving in to Greece now looks to their electorates like their government failed to stand up for them. The need for austerity has been the myth peddled since neoliberal economic theories rose to prominence. State cutbacks on the pretence that Europe's economic woes are principally the result of excessive state spending are affecting the poorest all over the continent, with the UK for example even being warned by the IMF that they were implementing too much austerity. But the age of austerity was never intended to be temporary, as UK prime minister David Cameron admitted publicly . Rather it is a thinly veiled attack upon the welfare state itself. That's why the EU won't back down, because it would mean acknowledging the failure of austerity, and this, despite claims to the contrary, is not about logic but about ideology.
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