Category Archives: European Union

Democratise Europe! 
- More Sloganizing from the Left?

This Thursday, 9th February in Berlin, sees the launch of yet another reforming movement for the EU. DiEM25 hopes to build a broad based movement which will lead to a left wing reform of the EU. DiEM stands for Democracy in Europe Movement and their key message is that the EU will either be democratised or it will disintegrate! 
 Their snappy slogan is Democratise Europe! The main impulse for this new movement is our old friend Yanis Veroufakis, the former Syriza minister. We wish DiEM well, but fear that at this stage it is little more than a slogan.

You can find the DiEM website here, where you can download their manifesto. This is a bit long on assertions, especially about how bad and undemocratic the EU is. Their actual proposals for moving forward seem mostly a bit vague.  Anthony Barnett on Open Democracy has helpfully put together a shorter version, which you can read here.  The really short version seems to boil down to two immediate demands:

(A) full transparency in decision-making (e.g. live-streaming of European Council, Ecofin and Eurogroup meetings, full disclosure of trade negotiation documents, publication of ECB minutes etc.) and

(B) the urgent redeployment of existing EU institutions in the pursuit of innovative policies that genuinely address the crises of debt, banking, inadequate investment, rising poverty and migration.

Now A is long overdue and would be most welcome. Not clear though just why the various EU institutions would agree to do this right now. These are after all immediate priorities for DiEM. Somehow I do not think that the 28 governments of the members states are quivering in their boots at the prospect of DiEM meeting in Berlin. For any change to the way the EU works requires at the very least a large majority of the governments of the member states to agree. It may, possibly, require unanimity. A fact of the EU that DiEM seems to just ignore.

As regards B, these have little or nothing to do with democracy per se. This is a wish list of issues that DiEM would like to see tackled in a left wing, progressive way. However, these issues could be addressed in a left, progressive way just now. The only reason that this is not happening just now is the rather inconvenient fact that the overwhelming majority of democratically elected governments in the EU are pretty right wing in their approach to everything.

DiEM also has a medium-term goal. This is nothing less that the establishment by 2025 of a full-fledged European democracy. This goal will be achieved via a constitutional assembly. It seems that the key feature of this European democracy will be a sovereign Parliament that respects national self- determination and sharing power with national Parliaments, regional assemblies and municipal councils. 
(my emphasis)

This goal seems to be even more out of touch with reality that the two immediate goals. What decisions will this sovereign parliament take? Is it meant to replace the council of ministers? If this parliament is to be sovereign, what is meant by sharing power? Either you can take a decision, which is what sovereign usually means, or you cannot. If you need the approval of other parliaments, then you are not sovereign.

My main worry for DiEM is that its analysis of the EU is very weak and full of misconceptions. Another recent article in Open Democracy, by Lorenzo Marsili, offers an alternative view of the EU. As he puts it:

We need to stop portraying the EU as an all-powerful behemoth impeding any real change at national level. This rhetoric is false and only benefits supporters of the status quo. Failure to achieve progressive national policies is not due to the EU. It is due to the incapacity of the progressive field to win popular consent.

This cannot be said often enough, especially on the left. Much can be done to reform the working of the EU, but this will only happen in a progressive way, when and if, the left can once again win popular consent. It will not do so by diverting time and effort into grand sloganizing and attempting to bypass the current EU institutions. The Council of Ministers is where real power in the EU lies. To reform the EU means that the left needs to enter government in a clear majority of the member states.

I agree very much with Lorenzo Marsili when he writes that the attacks on the EU by the left have more to do with justifying their political failure nationally than opening up a new field of action for their countries. Grandstanding on the European stage is no doubt satisfying and good for the ego, but it misses the target. This remains as ever, the need for the left to win power in the various national parliaments. DiEM would do better to focus on this challenge rather than issue a grandiose manifesto.


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Brexit – what next?

So far in the debate, or shouting match should that be, over the EU, there has been little or no examination about what might happen if there were to be an out vote.  Lots of claims and counter-claims, but not much light. There is no doubt that the UK would survive and could indeed prosper outwith the EU. The real question rather is what kind of country and economy would the UK have to become?

Various academic studies have looked at the options that might be available to the UK after a Brexit vote. Some overlap a bit, so I reckon that there are in reality only four options for life after a no vote. I have excluded the Swiss model, which involves a series of bilateral agreements with the EU. This model has proved somewhat unsatisfactory for both parties and the EU has made it clear that it would not repeat this kind of arrangement. The four remaining options are therefore as follows:

  1. The Norwegian model – joining the EEA (European Economic Area). This involves full membership of the Single Market with all that implies, including the free movement of people. The UK would have no say in the rules governing the Single Market and would still have to contribute to the EU budget. On the other hand the UK would no longer be part of the common agricultural or fisheries policies.
  2. The Turkish model – joining the EU’s custom union. This gives continued access to the Single Market, but only for goods, not for services. The UK would also be subject to all the EU rules governing that part of the Single Market.
  3. The WTO model – effectively no special arrangement with the EU. Trade would be bound by WTO(World Trade Organisation) rules on tariffs. Again would only cover goods and not services.
  4. A special UK agreement with the EU. This is the option that most Brexit supporters want, at least on the right. The UK would get continued access to the Single Market on its own terms and would be able to opt out of the bits it didn’t like – free movement of labour etc.

As regards the Norwegian model, this would seem to be the most easily achieved, yet the worst outcome for the UK, especially those who want out of the EU. Getting out of the common agricultural and fisheries policies would be a very high price to pay for giving up all influence and votes in the key decision making bodies. This model would also mean that the UK would remain subject to all the rules that the Eurosceptics most dislike about the EU.

The fourth option, a special UK deal with the EU is difficult to envisage. It relies on the rest of the EU regarding the UK as so important that they would do almost anything to keep the UK in. Not sure if there is any evidence this is how the rest of the EU sees the UK. Sure, they would like us to stay, but not at any price. This option effectively abolishes the Single Market and would seem more of a pipe dream that a realistic possibility.

This leaves the second and third options as the ones most realistically available. There is probably not a great deal of difference between the two models. Both models would however require quite significant changes within the UK. As a paper from OpenEurope puts it: “Britain will only prosper outside the EU if it is prepared to use its new found freedom to undertake active steps towards trade liberalisation and deregulation.”  It is not difficult to see why the right wing in Britain is so keen on leaving the EU!

In practical terms this trade liberalisation and deregulation would mean some rather unwelcome developments. Much of what remains of health and safety regulations and protections for workers would be open to further attack from our nasty Tory government. In addition, UK firms and workers would find themselves exposed to whole new levels of competition from low-cost countries. Finally, OpenEurope conclude that in order to be competitive outside the EU, Britain would need to keep a liberal policy for labour migration. As the paper notes with some understatement, these developments would be politically very sensitive.

So far most of the campaigning for an out vote has been by those on the right. It is relatively easy to see why. They by and large favour a deregulated economy with as much trade liberalisation as possible. This is not a view shared by all on the right of course. UKIP’s opposition seems to be more a combination of political – sovereignty, and opposition to immigration. As the above shows, it may not be possible to achieve all that those opposed to the EU want.

On the other hand there is a growing number of people on the left who also support leaving the EU. I do find this a bit perplexing. Leaving the EU and in particular leaving the Single Market is not going to do anything for the (already) precarious rights of workers. Claims that the EU is an undemocratic, neoliberal club are also a bit far fetched in my view. Furthermore it is not at all clear how the UK leaving is going to make any positive difference to this state of affairs. As I pointed out in my previous post, to the extent that the EU is neoliberal and pro-austerity, that is because the voters in almost all EU states have voted for neoliberal and pro-austerity parties. Just how the UK leaving is going to persuade voters in Germany, Finland, Slovakia etc to become more left wing is a bit of a mystery to me.

In short it seems to me that none of the likely post Brexit options offer the UK much, at  least from a left, progressive perspective. I can understand why some on the right would welcome leaving the EU. And for this reason we need to examine much more closely the implications of a No vote and what that might mean for the economy and society.

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The EU – a failure of the Left

The EU has come in for a lot of battering over the last year or so. With the prospect of an in/out referendum on the horizon, this battering is likely to reach apocalyptic proportions. While most of the attacks on the EU have come from the right in the Tory party and UKIP, ably assisted by their friends in the media, some on the left have willingly joined in. For those on the right the EU is too interventionist and too protective of the rights of workers. While those on the left accuse the EU of being a capitalist club. Both hold the EU to be undemocratic and run by unelected bureaucrats in Brussels.

Both sides are wrong in their description of how the EU works. It is not run by bureaucrats, elected or unelected, nor is it undemocratic. I was pleased to come across an interesting article on Bella, by Alistair Davidson, outlining why the left should support the EU. The article also contains a very brief and succinct description of how the EU works and where the real power lies within the EU. “There is a tendency in Britain to blame “the EU” as though it is a government apart, but in fact EU policy is largely driven by national governments in the Council of the European Union. The so-called European Parliament is actually a second chamber like the House of Lords. It is the national governments who appoint the Commission and the national governments who control the equivalent of the Commons. We have a right-wing EU because we have right-wing European governments.” (my emphasis)

This is why I have titled this post as a failure of the Left. The left in its broadest sense has conspicuously failed across the EU. In member state after member state, a majority of voters have elected and often re-elected parties and governments of the right. Often a very nasty right. They have not done so on orders from Brussels or from Berlin. Yet the left, as Alistair Davidson notes above, much prefers to blame the EU, instead of reflecting on why the left has been so often rejected.

That the EU is not some monolithic superstate can be seen in the way the EU has responded to two very different and difficult challenges in the last year or so. I refer to Greece and the ongoing refugee crisis. In the case of Greece there was a very clear and consistent approach by the EU. On the other hand there has been the exact opposite when dealing with the arrival of hundreds of thousands of refugees. There has been and continues to be, no clear and consistent approach to the refugee crisis. Yet it is the same EU in both cases.

Why was the EU able to respond in such a clear and consistent and united way to the crisis in Greece? This was because, as noted above, we have right-wing governments across the EU. All of them in favour of austerity as the only way out of the financial crisis. Wrong headed we would all agree, yet this was the position of nearly all the democratically elected governments within the EU. As they were all imposing austerity measure on their own populations, it was hard to see why they would not insist on the same measure for Greece. Remember too that it was not the EU that created the financial mess in Greece. A democratic vote in Greece does not trump a democratic vote elsewhere.

The Commissioners who led the negotiations with Greece were able to do so confidently because the had the unified support of all the other 27 member states. Not sure how this can be described as undemocratic. While the Commissioners led the negotiations, it was perfectly clear that the key decisions were all taken by the elected government ministers of the member states. It seems rather perverse to suggest that the likes of Wolfgang Schäuble or Angela Merkel or François Hollande are faceless bureaucrats. We may all agree that the choices these politicians made was wrong, but we cannot deny their right to make the decisions. Again the key question should be why has the left failed so miserably in getting left-wing governments elected across the EU? Blaming Merkel or the EU achieves nothing.

When it comes to the ongoing refugee crisis which started last spring, we see the EU working in the complete opposite direction. Or perhaps not working at all, might be a better way of putting it. For in this case the member states have been and remain unable to agree on a common response to the refugees. Each country has acted on its own behalf, with little or no attempt to find common ground with others. The EU Commission has made all kinds of pronouncements and suggestions, but to no avail. This illustrates perfectly the powerlessness of the EU Commission. Though full of ex-politicians, the Commission is essentially a civil service. And like all civil services it does what its masters tell it to do. The masters here is the Council of Ministers, where the representatives of all the 28 member states meet to decide on policy and action. Or not, as in the case of the refugee crisis.

For better or worse the EU does not have a government. The Council of Ministers or the European Council are the supreme decision making bodies in the EU. The Parliament has a role to play, but not of initiative, and the key decisions remain in the hands of the governments of the member states. Alas, when they cannot agree on a common response, we get inaction or muddling through. As we can see with the refugee crisis. Again, though deplorable, I find it hard to see how this is undemocratic.

In both cases the left has had little constructive to say. I am still not aware of any consistent programme of action from the left on how the EU should respond to the refugee crisis. No doubt there are suggestions from various groups on the left, but there does not appear to be a clear and consistent approach by the left.

In the case of Greece, even the left of centre governments of France and Italy supported the hard line taken by their colleagues. While some on the left have opposed austerity from the beginning, the broad left has not. This failure to oppose and challenge the need for austerity is to my mind the single most important reason for the failure of the left across the EU. Simon Wren-Lewis in his blog has written much about this failure. His most recent post contains this criticism of the left: “Austerity is a trap for the left as long as they refuse to challenge it. You cannot say that you will spend more doing worthwhile things, and when (inevitably) asked how you will pay for it try and change the subject. Voters may not be experts on economics, but they can sense weakness and vulnerability. If instead you restrict yourself to changes at the margin, you appear to be ‘just the same’.”

I agree wholeheartedly with Simon Wren-Lewis on this score. It is not enough for some radical parties to challenge the dominant ideology of the right. They will never win power on their own. The broad left needs to somehow find a way of coming together in coalitions to win power. Not to simply endorse an austerity lite programme, as the socialists in France and Spain have done, but to challenge the whole mythology about austerity.

However this will require some hard reflections on all sections of the left as to why they have so conspicuously failed to make this challenge. So far it seems many on the left prefer the easy route of just blaming the EU.



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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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Corbyn and the EU

It is only to be expected that the new leadership of the Labour party will need a bit of time to flesh out their policies on the main issues facing the country. However the sloppiness of thinking on the issue of the prospective EU referendum is deeply worrying. Corbyn and his inner team will not commit to campaigning for the UK to stay in the EU and this line seems to be based on rather flimsy reasoning.

Corbin himself has stated that he cannot say how he will vote until the Tory government finalises the details of its reformed package. To do otherwise would be to give Cameron a “blank cheque”. A further reason for voting to come out of the EU has been put forward by others in the party, namely that Cameron may succeed in eroding workers rights as part of his deal with the other EU countries.

Both of these approaches seem to be to be not just flimsy, but counter productive. The argument that a possible erosion of workers rights should cause people to leave the EU is simply farcical. In this putative case leaving the EU does nothing, absolutely nothing, to stop this erosion of workers rights. Worse, by leaving the EU completely, it allows our nasty Tory government the space in which to legislate for even greater erosions of workers rights. Leaving the EU will not in itself make a  blind bit of difference to the actions of our current Tory government, which let us remember will remain in power till May 2020.

The “blank cheque” argument is superficially more reasoned, but only superficially. Campaigning to leave the EU is a major, major decision and leaving the EU will be a complex process with considerable consequences for the UK and its citizens. To contemplate doing so, simply on the basis of a disagreement over elements of a renegotiation package is just irresponsible. It must be emphasised that whatever Cameron manages to achieve, if anything, only lasts as long as the Tories remain in power. A future Labour government in 2020 could easily and quickly reverse these changes, assuming they have even been brought into force by then.

Given the parliamentary arithmetic, it may not be possible to vote down any package that Cameron succeeds in reaching with the other EU states. So, it may not be possible to stop these changes, including any erosion of workers rights. But they can be overturned after the 2020 election. They can only be overturned after that election. Leaving the EU in the meantime does nothing to alter that and if the only reason for leaving the EU was opposition to these specific changes in workers rights, does that mean that Corbyn and Labour will be campaigning in 2020 to rejoin the EU? It simply does not make sense.

Of course it may be that Corbyn and those publicly contemplating a No vote, actually want to leave the EU. Which is fine, but they should have the courage of their convictions, and come out openly and say why they want the UK to leave the EU and how this move would benefit British workers. The heart of Corbyn’s appeal was that he was not like the other contenders and would not hide behind meaningless spin. So it is time for Corbyn to come clean and stop hiding behind “blank cheques” and come clean and share with all of us what he really thinks about our membership of the EU.

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Can Syriza reform Greece?

It is interesting to note that media coverage of Greece has almost disappeared. For a couple of weeks in July, Greece and its troubled negotiations with the Troika was front page news, with rolling minute by minute reporting from Brussels and Athens. What most motivated this frenzied coverage seemed to be the prospect of a massive failure, with all the political bloodletting that would result. Great for selling newspapers and filling TV programmes. The main question was could Greece stay in the Eurozone or even in the EU or was the much talked about Grexit about to happen? When a last minute deal was somehow agreed the media quickly lost interest in the whole thing. The complex negotiations over a new long term deal for Greece is way beyond the interests or competence of our media. This tells us a lot about the media and its love of simplifying and bidding up any story. The latest media frenzy – the migrants at Calais, confirms yet again the failures of our media.

However this post is about Greece and the prospects for real change.  By whatever circuitous route it has been achieved it looks like Syriza is on the verge of securing a long term financial deal that will provide the country with support and stability over the coming few years. That this is a poor deal and not good for Greece is at one level, besides the point. For what Greece needs above all else is radical change, and only Syriza is in a position to ensure that this radical change is of a progressive and transformative nature. But in order to do this Syriza needs time and this is why a new financial package is so important. Syriza needs the time and space to turn away from negotiating deals with the Troika and get fully engaged in the serious business of transforming Greece.

This is in large part the key message from a longish article by Stathis Gourgouris on Open Democracy, entitled The Syriza problem: radical democracy and left governmentality in Greece. It is well worth reading in full as Gourgouris outlines in some detail the complexities both of Syriza as a coalition and of the challenges facing the government. The success of Syriza is vital for the people of Greece, but not only for Greece, but for the prospects of successful radical change elsewhere in Europe.

While most of the media attention is on the euro, the real challenge facing Syriza lies in Greece itself. As Gourgouris puts it: “Syriza needs time so as to set in motion the governance of its essential task, which is not so much the settling of accounts with the EU but, above all, the radical reorganization of Greece’s long term corrupt social and political institutions.”

It is in this context that reaching a deal that will bring stability to the country’s finances is of such importance. In the long run transforming Greek society away from the clientelist institutions and practices that have gone on unchecked for decades will do more for the people of Greece than anything else. It is also worth noting that even in times of great austerity, radical change can take place. Perhaps the immensity of the austerity that will be forced on Greece may even help win political and popular support for implementing the kind of radical change Greece so desperately needs.

The prospects for this are quite encouraging. As Jan-Werner Müller reminds us in an article for the London Review of Books, Syriza was elected on a platform not just to end austerity, but to tackle and change the root causes of the underperforming Greek economy. Austerity has not ended but much can still be done in reforming Greece. And as Müller points out, “Given his overwhelming support among citizens and the collapse of the conservative New Democracy and Pasok, Tsipras has a chance to become a great reformer.”

If Syriza is to achieve this then it needs all the support it can get. Tsipras and Syriza remain popular in Greece, but continuing support from the rest of Europe would no doubt be welcome. This support should include the left. We need to go beyond bewailing the nasty Troika and support whatever practical measures Syriza can enact to begin the radical transformation of Greece.

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Calais and Aspiration

The attempts by migrants and asylum seekers to enter the UK is not particularly newsworthy in itself. Getting into the UK illegally is not an easy feat and the Channel ports and the tunnel would seem to be the most obvious place to make an attempt. The recent and ongoing crisis in and around Calais must seem small beer to some of the other countries in Europe that continue to bear the brunt of welcoming migrants. Despite the best attempts of our media, most would be migrants do not want to come to the UK. Only relatively small numbers out of the large and growing numbers of migrants end up by Calais.

Unfortunately this is enough to create a mini panic within the British establishment. How to keep the buggers out seems to be the dominant line. Never mind the humanitarian suffering behind all these movements or what is causing hundreds of thousands of people to undertake the dangerous journey of travelling half way round the world. Much simpler to just unremittingly focus on portraying them all as untrustworthy scroungers who must be kept out at all costs.

What I find particularly fascinating about the media and political response is how it relates to the celebration of aspiration as a positive virtue to be encouraged. Now if the thousands of people who are camped in and around Calais are demonstrating one thing, surely that is aspiration. They want to improve their lives and are prepared to undergo all kinds of unimaginable suffering and dangers in order to achieve this. Allied to a large dose of aspiration, these would be migrants have also demonstrated endeavour and determination in spades.  All the kind of things that our media and UK political parties constantly praise as key British values. We should therefore be welcoming with open arms the prospect of more young people full of aspiration, endeavour and determination. Exactly what the UK needs to meet the challenges of competition from China and the rest of the world.

But it seems that aspiration is only a good thing if it is British citizens who are doing the aspiring. Others are most clearly not welcome at all. Underlying the nasty language of the opposition to these would be migrants is a barely disguised racism and narrow nationalism. Of the British variety of course. What is especially sad about this, but all too predictable, is the alacrity with which the Labour party has joined in this attack on migrants. What the response from the British establishment in both the media and political parties shows, is that nationalism of the worst possible kind is alive and kicking in the UK. It is telling that it is the SNP, along with the Greens, who have made a more positive response, accepting that the UK should be willing to accept its fair share of the migrants arriving in Europe. Yet it is the SNP that continues to get accused of narrow nationalism. The nasty nationalistic response of the British establishment is but further proof of how unreformable the UK has become.

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Syriza – And Now?

As a former UK Prime Minister once said, a week is a long time in politics. Mind  you, it did not take a whole week for the political situation in Greece to gyrate almost 180 degrees. The big No vote against the EU imposed austerity measures barely lasted a day. Greece has now put forward new proposals which look remarkably like the one they rejected a week ago. These new proposals have even been enthusiastically approved by the Greek parliament. What is going on?

As I and others have consistently pointed out there is a yawning chasm at the heart of Syriza’s platform. This was to end austerity and to stay in the Euro. It was never made clear how they would be able to achieve both. The first, ending austerity, was not and still is not, something that Greece can do on its own. It needs the agreement of the infamous Troika, which is not really just three players, but anything up to 21. To get an agreement on changing the bailout conditions and thus ending austerity, Greece needed the approval of all 18 of the other eurozone members. Some of whom need to get Parliamentary approval to do so. Some are smaller and poorer than Greece, and they find it difficult to understand why Greece needs so much additional support.

The other big problem for Syriza is that while an overwhelming majority of Greeks want both an end to austerity and to stay in the Euro, Syriza never explained what might happen if both were not achievable. In large part this may be because the majority in Syriza regards euro membership as essential for the long term future of Greece. In this they are supported by an overwhelming majority of the Greek population. Polls consistently show anything between 70% and 80% in favour of staying in the eurozone.

However Syriza never really engaged with the people of Greece in terms of what alternatives there might be to not getting an agreement with the EU. Which makes last weekend’s referendum all the more puzzling. It is all very well to say you want to strengthen your hand in the negotiations, but for that you need to be able to threaten the others with something. That something could only be a default and with it a possible Grexit. But this is precisely what Syriza refused to do. It made it crystal clear that a No vote was not a vote for either default or Grexit. So what precisely was the point of the referendum?

Some informed commentators, with good contacts with leading Syriza members, have stated that the Syriza leadership expected to lose the referendum. They had reached the end of the road and wanted someone else to take on the burden of agreeing a new deal, with the extra austerity this would entail. This reading certainly makes some sense and is further borne out by the fact that after the resounding No vote, Syriza had no new proposals in place. It took until late on Thursday evening for their new plan to reach Brussels.

Whatever he expected from the referendum, given the massive No vote, Tsipras had no choice but to continue as Prime Minister. However he moved quickly to shore up his position by getting formal support from the main opposition parties in the Parliament. Hence the big vote in Parliament for the new EU proposals. Everyone now awaits the various meetings which will take place in Brussels tomorrow, Sunday. Most commentators expect the EU to agree on a new package for Greece, though it is by no means guaranteed.

What next for Syriza? If the deal goes ahead then the current financial crisis should end, and the banks reopen. The reforms will need to be legislated for and then implemented. Something that has not really happened up to now. Though the new austerity measures will be hard for many Greeks and completely unnecessary in economic terms, there is still much that a radical left government could do. Not everything depends on money. Once the negotiations are over, perhaps Syriza can spend more time on actually governing and implementing some of the small, but essential changes that will in time improve things for the majority of Greeks. Reducing the rather large military spending for example.

Other radical left forces in the EU need to reflect long and hard on the recent developments in Greece. In particular do not promise to achieve two objectives that are likely to be incompatible. In the case of Greece this was promising to end austerity and stay in the Euro. It is not that these two objectives could not be achieved, but rather that, given the current configuration of power within the EU, it was most unlikely. Power in the EU rests with the governments of the member states. And to the misfortune of Greece, almost all of these governments are right wing governments, some of them very right wing. All are committed to austerity and neoliberalism. All have been legitimately and democratically elected, so this is not a conflict between democracy and unelected institutions.

This should not have been news to Syriza. Which makes it all the more incomprehensible that they pointlessly stuck to their original plan. Which seems to have amounted to nothing more than hoping that the other 18 eurozone governments would be swayed by the eloquence of Varoufakis. In this situation it matters not a jot that Varoufakis may be right. What matters is that the others have the power and Greece did not and does not.

The only alternative to accepting a bad deal was to go for no deal and default and probably leave the eurozone. But the people of Greece, including the Syriza government, have consistently made clear that that choice would likely be even worse. Many commentators have urged Syriza to go for a Grexit, on the grounds that a devaluation would speed up an economic recovery and that anyway, things are so bad that they cannot get any worse.

I think they are wrong on both counts. Those arguing for a return of the Drachma and a massive devaluation point to the likes of Argentina and Canada as examples of where this has worked. This seems to me to ignore both that Greece and its economy is nothing like either Argentina or Canada, and just as importantly the global economy is pretty much stagnant at best right now. In the previous examples, both Argentina and Canada benefitted from rising global demand. Not to mention that Greece imports more than it exports.

As regards the argument that things are so bad, why not just go for it, this seems to me to be irresponsible in the extreme. Just to remind some people, things can actually get worse. In fact things can get a lot worse. The people of Greece need all the support they can get, but false promises of a new dawn are the last thing they need just now. Syriza in government can still make a difference to the lives of the majority of Greeks. Not as much of a difference as they would have liked, but still a difference. Let us wish them well and offer any support we can.

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Greece – what is Syriza’s plan?

The rather sudden and unexpected decision by the Greek government to hold a snap referendum on the latest proposals from the Troika has caught everyone by surprise. Something does need to be done to bring this long running and seemingly never-ending merry-go-round to an end, one way or another. Whether this particular referendum will help resolve the crisis is open to question.

The basics are pretty well known. Greece is effectively insolvent. Its debt burden is too great for it to have any prospect of ever repaying this debt. The unprecedented additional austerity measures proposed by the Troika, in the view of most people, will only make things worse. Most of the additional loans go immediately back to the lenders in the form of repayments on previous loans. Hence the merry-go-round analogy. Very little of the loans go to helping the Greek population. While the greater the austerity the greater the long term damage to the Greek economy.

Yet the Troika seem even more determined than ever to force further austerity on Greece. As Paul Krugman puts it, it has been an act of monstrous folly on the part of the creditor governments and institutions to push it to this point.

How should Greece respond? The Syriza led government has responded by proposing to hold a referendum for next Sunday. The Greek parliament has voted in favour of holding this referendum. But will the referendum provide a clear cut result for a way forward?

Various international observers seem to think so. Paul Krugman for example supports the referendum for the following reason: “… until now Syriza has been in an awkward place politically, with voters both furious at ever-greater demands for austerity and unwilling to leave the euro. It has always been hard to see how these desires could be reconciled; it’s even harder now. The referendum will, in effect, ask voters to choose their priority, and give Tsipras a mandate to do what he must if the troika pushes it all the way.”

This is in line with the view of those who believe that leaving the Euro offers the best option for Greece, at least in the long run. Unfortunately the actual question being put to the Greek people does not support this interpretation. According to Reuters, Greeks will be asked the following question: “Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank and the International Monetary Fund, at the Eurogroup meeting held on June 25.”

Alexis Tsipras, the Greek Prime Minister has stated that an emphatic “no” vote would strengthen Greece’s negotiation position. The obvious question here is negotiating what? An improved bailout agreement or an exit from the euro? The referendum question says nothing about the euro and only refers to the bailout agreement. There is a further doubt about the validity of the referendum and that is that the draft document referred to, in effect no longer exists. So the Greek people are being asked to accept or reject a proposal that is no longer available. What’s the point of this?

A further problem with the referendum is that in order to secure any kind of strengthening of Greece’s negotiating position, Greece needs to still be in euro by the time the referendum is held. Will it? The Greek government has asked the EU to extend the current agreement for another two or more weeks to allow the referendum to take place, but this has been rejected. Unless something is agreed today, Sunday, then on Wednesday, 1st July Greece will have defaulted on its repayment to the IMF. Before then, absent an agreement with the EU/ECB, there will most likely be a run on Greek banks. To prevent this the Greek government will have to declare an extended bank holiday and probably institute capital controls to prevent euros draining out of Greece.

This is where it all gets very messy indeed. Greece almost certainly needs to default on most, if not all of its debts. The real issue is whether this is done in an orderly and agreed manner, or is done abruptly without agreement. This could happen if Greece is either forced out of the euro, or voluntarily decides to leave the euro.

The big problem for Syriza is that all the indications are that a large majority of Greeks want both an end to austerity and to stay in the euro. Which is why the referendum question does not mention the euro. However if by the time the referendum is held, next Sunday, it is clear to all that a rejection of the bailout agreement means leaving the euro, how will the Greek people vote then?

For underlying all this is the uncomfortable reality that there is no good option for Greece in the short to medium term. And the long term may be a very long time coming. Leaving the euro will not bring about an end to austerity. It may change who suffers most from continuing austerity, but things are likely to get even worse for many Greeks with a euro exit. There is no short term, painless fix for the Greek economy.

A further complication is that many legal and economic commentators have opined that even with a default there is no need for Greece to leave the euro. In fact it seems there is no legal, treaty based way for any eurozone country to be expelled from the euro. So, at least in theory, Greece could default on some of its debt, and try and remain in the euro. What this might mean in practice is unknown and at the moment unknowable. Much would depend on how willing the ECB and Greece’s partner countries would react. The prospects do not look good.

A final point on the portrayal of the referendum as a battle between democracy and the nasty world of finance. This is just nonsense and not at all helpful. Democracy is not just for Greeks. A commentator on another site puts it nicely and succinctly. “It is normal that a vote in Greece is not binding for Germany, France, Ireland, and the poorer than Greece countries of Eastern Europe. The Greek vote is valid only for Greece’s government. The democratically elected governments of the remaining Euro Group are negotiating according to their own voters opinions. The outcome may please some and not others.”

I agree with Paul Krugman that the governments of the eurozone countries have been acting with monstrous folly in relation to Greece. Alas democracy has never guaranteed the election of sane and reasonable governments. In the eurozone all governments have the same democratic validity. It does no good to anyone to pretend that the wishes of the Greek people are more worthy than the wishes of others.


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Greece – between a rock and a hard place?

The recently elected Greek government has won itself some breathing space as a result of last Friday’s agreement with the other members of the Eurozone. Not much of a breathing space, just four months, and in the meantime there are strict conditions attached to the extension of the current finance agreement. However an immediate collapse has been averted and the ball is now firmly in the hands of Syriza. As I have previously written, Syriza has a strong case, at least in economic terms. Alas, the key decisions will be taken by politicians and not by economists. The Greek government has to persuade a majority of the other governments of the Eurozone. The omens are not looking too good.

It is worth emphasising here that it is not helpful to describe this as the rest of the Eurozone ignoring or thwarting the wishes of the democratically elected government of Greece.  All the governments in the Eurozone are democratically elected. You and I might not like who has been elected, but we must respect their rights as much as the rights of the Greeks. And for Syriza to achieve its twin objectives – an end to austerity and to remain in the Euro – it needs the agreement of the other Eurozone governments.

An end to austerity and stay in the Eurozone?

The difficulty for Syriza is the twin nature of these objectives.  Most Greeks almost certainly agree with these two objectives, to end the austerity measures in place in Greece, and to stay in the Euro.  However it will be very hard for Greece to get a majority of Eurozone governments to agree to this, other than some cosmetic changes. The reason is that some countries, such as Germany, Austria, Finland and others, are wedded to the virtues of austerity. Austerity is seen as much as a moral issue and has been good for them. So they see no reason why Greece should be let off the hook, as they would probably put it. Other governments, such as Ireland, Spain and Portugal, which have willingly agreed to their own austerity programme, have no interest in supporting an abandonment of austerity for Greece.  They would have a damming political price to pay if austerity was seen to have not been necessary after all.

Syriza has been elected on the promise to end austerity and stay in the Euro.  What if that proves to be impossible? This is the great unknown at the moment. If an agreement, acceptable to Syriza is unforthcoming, then the people of Greece will have to choose between maintaining austerity or leaving the Euro. While many non Greeks, on both the right and the left, would love Greece to exit the Euro, it is not at all clear that most Greeks agree. So far opinion polls have consistently shown a majority in favour of remaining in the Eurozone. Though some members of Syriza are for a Euro exit, the majority are not and Syriza’s election platform was to stay in the Euro. So if push comes to shove, and the people of Greece have to choose, it is quite possible that they will choose to stay in the Euro and just put up with the austerity. In this respect it is worth reminding ourselves that Syriza only won 36% of the votes in the recent election.

Can austerity be ended anyway?

The other difficulty for Syriza and for all Greeks is that ending austerity may not be achievable anyway. At least not in the short and medium term. If there is no agreement with its partners, and Greece does decide to leave the Euro, or is somehow forced out, the options are none too good. Leaving the Euro would almost certainly mean a default, at least in practice. While this would at a stroke remove the debt overhang, the country would for some time have no access to borrowing. The government does run a budget surplus, so would be able to pay its way in Greece. However the big downside would be the creation of a replacement for the Euro. Whatever this is, New Drachma?, it would be worth very little. While this would help Greek exporters, it would punish all those who rely on imports. And here is the rub for Greece – its imports are probably more important than its exports. Greece has not much of a manufacturing base and just about all of its energy needs are imported. All of which have to be paid for in Euros or dollars. Which would become terribly expensive for most Greeks. Even the much vaunted tourism depends to some extent on imports – energy, transport etc.

This can of course change. As some imported goods become too expensive for most people, local substitutes will be found. Alas this will take some time. In the short and medium term, leaving the Euro and the massive devaluation that this implies, offers little, if any, gain for most Greeks.

The outcomes facing Greece are not good. The best outcome would be for the other Eurozone countries to admit the error of their ways and change tack on austerity, not just for Greece for all of the Eurozone. All the other outcomes just prolong the agony and suffering of lots and lots of Greeks. As someone once said, a week is a long time in politics, so let us hope that four months is long enough for something good to turn up.

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