The EU and Greece

Political parties are beginning to gear up for the prospective referendum on the UK’s membership of the EU. Arguments for and against our continuing membership are beginning to take shape. At the moment it looks like Greece, its woes and its alleged mistreatment by the EU will be used as a reason for leaving the EU. The latest to do so was Patrick Harvie, the leader of the Scottish Greens.

In an otherwise balanced article on Europe: the next referendum, Patrick Harvie writes the following:”We’ve seen the disgraceful treatment of Greece by the ‘troika’ which is utterly committed to imposing a hard right economic agenda on Europe regardless of the way people vote.”

Much as I admire Patrick Harvie, this claim is just untrue. It has become a very widespread claim, but it is nevertheless a gross misrepresentation of what happened in Greece. A brief look at what did happen may help to clarify the matter.

The economic mess in Greece was caused by Greeks
The current economic crisis in Greece has been decades in the making. Successive Greek governments presided over mismanagement, corruption and cronyism on a grand scale. This is not the view of an outsider, but the central criticism of most Greeks, including Syriza, who preside over the current government in Athens.

Over decades Greek governments did little or nothing to modernise the country’s economy. Instead they indulged in as much cooking of the books as they could get away with. All this changed with the Euro. With membership of the eurozone, Greek governments could no longer get away with hiding their corrupt practices.

It is to the credit of George Papandreou, that he finally came clean in 2009 about the extent to which Greek governments had lied to its citizens and the rest of the EU. When the true state of the government’s borrowing and tax revenues came to light the government quickly found that it could not borrow any more. The global financial institutions took fright and would only lend to Greece with prohibitively high interest rates. Which effectively meant that Greece was insolvent.

Greece asks the EU for help
Faced with this situation there were very few options open to any Greek government and all of them were bad and nasty. One option was to simply default. Another was to leave the euro and re-introduce its own currency. Or both. However none of these options offered immediate relief to the Greek economy nor to the Greek people. What is more important is that the Greek people by overwhelming majorities have consistently rejected both these options. Opinion polls and election results confirm that a clear majority of Greeks want to stay in the euro and to avoid a unilateral default.

This left Greek governments with only one option. To ask the EU to step into the breach and provide emergency funding to enable the government to pay its way. This help was provided with the assistance of the IMF and the ECB – the infamous troika.
However there is no such thing as a free lunch. The troika, quite reasonably, set out some conditions for their funding. Now we can disagree with the specific conditions set by the troika. I certainly do, the troika’s prescriptions are widely regarded as economically illiterate and counter productive. However the troika is the only show in town.

Greece has accepted the troika’s terms because a majority of Greeks are convinced that the alternatives would be even worse. This is not the fault of the troika. It was the Greeks, all on their own, who got themselves into this mess. Blaming others, whether the troika or anyone else for Greece’s predicament, is not going to help the country move forward.

The EU is not an independent agent
I have one further quibble with Patricks Harvie’s comments. This is when he claims that the ’troika’ is utterly committed to imposing a hard right economic agenda on Europe regardless of the way people vote. Again this is not true. As the article is about the EU, we should just focus on what the EU can and cannot do. The key point about the EU is that it is not an independent body that can act separately from the member states.

The EU is essentially a club formed by the member states. The governments of the member states get together and when there is sufficient agreement, they will adopt a particular policy or regulation. But only where there is either unanimity or a very wide consensus.

This near unanimity, alas, applies in relation to economic policies. Just about all the member states, including our very own UK, have democratically elected parliaments and governments committed to a neo-liberal, austerity agenda. This agenda has not been forced on any country. It is the opposite. It is the member states which have forced the EU to adopt and agree to this austerity agenda.

This austerity agenda is not the result of the EU ignoring the way people vote. It is precisely because the overwhelming majority of voters in EU countries have democratically voted for austerity parties that this has become the dominant policy in the EU. That one country, Greece, has voted for an alternative policy, cannot alter that fact. I assume that Patrick Harvie is not suggesting that the rest of the EU be forced to adopt whatever policy the Greek people want.

If we want to change the current dominant neo-liberal agenda in the EU, then we need to work even harder to convince our fellow citizens in all the member states to vote for parties committed to an alternative economic and social future. Distorting how the EU works will not make that task any easier.

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