Killing the European Project – The New York Times
Suppose you consider Tsipras an incompetent twerp. Suppose you dearly want to see Syriza out of power. Suppose, even, that you welcome the prospect of pushing those annoying Greeks out of the euro.
Even if all of that is true, this Eurogroup list of demands is madness. The trending hashtag ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.
Can anything pull Europe back from the brink? Word is that Mario Draghi is trying to reintroduce some sanity, that Hollande is finally showing a bit of the pushback against German morality-play economics that he so signally failed to supply in the past. But much of the damage has already been done. Who will ever trust Germany’s good intentions after this?
In a way, the economics have almost become secondary. But still, let’s be clear: what we’ve learned these past couple of weeks is that being a member of the eurozone means that the creditors can destroy your economy if you step out of line. This has no bearing at all on the underlying economics of austerity. It’s as true as ever that imposing harsh austerity without debt relief is a doomed policy no matter how willing the country is to accept suffering. And this in turn means that even a complete Greek capitulation would be a dead end.
Can Greece pull off a successful exit? Will Germany try to block a recovery? (Sorry, but that’s the kind of thing we must now ask.)
The European project — a project I have always praised and supported — has just been dealt a terrible, perhaps fatal blow. And whatever you think of Syriza, or Greece, it wasn’t the Greeks who did it.
Krugman is right. This has got nothing to do with Economics and is all about the various right wing and centre right governments in the other member states crushing their domestic left wing political opposition. It is the ultimate demonstration of the TINA doctrine – There Is No Alternative – and if you propose one, you will be crushed. I doubt the other Eurozone leaders even considered, in any detail, what the proposed measures would do to the Greek economy. That wasn’t the point. The point was to humiliate Syriza and the Greek people and to crush left wing oppositions at home.
Government parties in Ireland have lost no time in stitching it into Sinn Fein and left-wing independents at home. “You see, there was no alternative, we merely did what we had to do to get th country out of the bail-out programme”. Expect the next general election, due next year, to be brought forward to this Autumn, probably just after an October budget which will contain a few goodies for the electorate to heighten the contrast with Greece.
In Greek Crisis to Transform EU? I set out the four key points of what could constitute an agreement between Greece and the EU. It was a description of what I thought would happen, rather than necessarily what I thought should happen; a position I more clearly outlined in Greece: The next step; introducing the Euriou. So what does the proposed new agreement contain, and how does it differ from my prediction?
First of all, although it has been portrayed in the gullible media as an agreement, it is nothing of the sort. It is merely an agreement to begin negotiations on a third bail-out provided the Greek Parliament, almost without debate, pass a series of draconian measures designed to split and destroy the Syriza Government by Wednesday evening.
Greece deal: `Unanimous agreement’ reached on €86bn bailout
Mr Tsipras will now have to rush swathes of legislation through parliament this week to convince his 18 partners to release bridging funds to avert a state bankruptcy and just to begin negotiations on a three-year loan.
If the summit had failed, Greece would have be staring into an economic abyss with its shuttered banks on the brink of collapse and the prospect of having to print a parallel currency and in time exit the European monetary union.
Six sweeping measures including spending cuts, tax hikes and pension reforms must be enacted by Wednesday night and the entire package endorsed by parliament before talks can start, the leaders decided.
In almost the only concession after imposing a tough set of terms on Mr Tsipras, Germany dropped a proposal to make Greece take a “time-out” from the euro zone that many said resembled a forced ejection if it failed to meet the conditions.
The draft document for talks on a third bailout had made IMF participation a precondition.
Another sticking point had been a proposal to transfer €50 billion worth of assets to an external, independent fund to allow for future privatisations. It is understood Mr Tsipras suggested a maximum of €17 billion in assets could be identified. It is unclear how this issue has been resolved.
Other proposed measures included: a streamlined VAT-collection system and broader tax base; cuts to improve the pension system’s sustainability; a civil code overhaul to speed up trials and cut costs of legal action.
To prevent a repeat of previous stand-offs, a new programme would oblige Athens to submit draft legislation to its creditors before parliament.
In a final, provisional, line an earlier draft document said failure to reach agreement would see Greece offered “swift negotiations on a time-out from the euro area”.
However, it is understood other countries, including Ireland, were against this line being included in any final agreed document.
The whole purpose of this “agreement” is to force Greece to surrender all sovereignty to its creditors. Not only must they pass a serious of Draconian measures by Wednesday, but all subsequent draft legislation must be approved by its creditors first. The Hellenic Republic is being effectively liquidated, and Tsipras is being asked to commit Hara-kiri. To fully appreciate the extent of the capitulation required of Greece, it is necessary to read the full text of the “agreement” here (PDF).
The only “concession” to Greece, is that a German proposal to force a “time-out” from the Eurozone in the event of a lack of full implementation of the programme demanded by the Eurogroup has been dropped from the final draft. Given that a Greek default is an inevitable consequence of leaving the Eurozone, it is not clear what advantage such a “negotiated exit” would have for Greece in any case. Presumably it would have averted the threat of a trade embargo, if not an outright venture into gunboat diplomacy.
The tragedy of all this is that there are many elements of the programme that Tsipras might have wanted to implement in any case – measures to reduce corruption and legals costs and delays, for instance, and which would be far easier for him to implement, politically, if he could sell them as part of a larger rescue package. But to legislate for them now, in this context, would be seen as part of a plan for Greece to abdicate all claim to Sovereignty and due democratic and Parliamentary process.
There is no attempt in the “agreement” to include any sweeteners which might make the overall package more politically possible for Tsipras. Basically a gun is being held to Greece’s head, and the only benefit of the package is that the Executioners might, in due course, and subject to satisfactory negotiations, but the gun away and replace it with a whip. The “agreement” does not even include the “humanitarian measures” I suggested in Greek Crisis to Transform EU? although there is some mention of the investment programme I suggested there.
So where to, now, for Tsipras and Greece? The nearest historical analogy I can think of is the 1921//22 Treaty negotiations between what was to become the Irish Government and the British Government which split the island of Ireland into two states, one nominally independent and the other (N. Ireland) remaining as part of the UK. The Treaty negotiations were to lead to the death of the lead Irish negotiator, Michael Collins, and a civil war in Ireland which has echoes in our political system to this day.
Tsipras probably has two options: he can try to sell the proposals to the Greek Parliament, lose his own Governmental majority, and perhaps become an interim Prime Minister of a National Unity Government for a time. At some stage he will then be replaced by genuinely right wing Government led by quasi fascist or at least very right wing parties. Violence may or may not erupt, and a military coup is a possibility.
Alternatively he can go down the Euriou route with or without some tacit assistance from the ECB, a route made more plausible and possible by the fact it has been openly discussed in other capitals. I don’t want to minimize, for a moment, the difficulties, in the short term, that this could pose for Greece, particularly if Greece’s “partners” in the EU continue to play hard ball. But the alternative is a complete capitulation of Sovereignty by Greece. It will, effectively, become a colony of the EU.
Greece deal: `Unanimous agreement’ reached on €86bn bailout
Asked about criticism of the approach taken by the lenders over the last twenty-four hours, European Commission president Jean-Claude Juncker said there were “no winners and losers” in the deal.
“I said before the referendum that the situation would be worse after the referendum, this has proven to be true,” he said, noting that a compromise had been reached.
He was half right. There are no winners in this debacle, only losers.
