Flash Summary: September Greek election outcome in 100 words

Greeks voted for parliament for the second time this tumultuous year. In 100 words, here are the key results:

Syriza lost just 4 seats relative to January but replaced 22 of the 26 defector MPs who quit the party this summer over the bailout capitulation. The junior coalition partner Independent Greeks lost 3 seats. That leaves the existing coalition down just 7 seats versus January but up 19 supporting MPs versus recent weeks.

Syriza’s main ideological competition (Potami) lost a fair number of seats, and older-school socialist and communist parties rose back up from the ashes. Neo-Nazi party Golden Dawn picked up 1 seat and almost a percentage point to finish 3rd at 7%, but their absolute supporter turnout figure dropped, along with the whole electorate’s turnout.

Flag_of_Greece

Greece’s default, day one

National democracy at its Athenian birthplace crashes head-long into the distant technocracy of the wider European project.

On Tuesday night, Greece became the first developed economy to default on an IMF loan (though not its other obligations). The IMF loan was itself a bailout to repay other loans, including those the EU failed to stop years ago:

In a sense, like so many American homeowners before the end of 2007, Greece was given subprime loans it couldn’t possibly repay. Regulators and monetary authorities failed to perform due diligence ahead of the accession of Greece to the eurozone and then ignored the escalating danger as long as the rest of the global and European economy was doing fine. They only stepped in after the house of cards collapsed and then demanded round after round of budget cuts and other measures that hurt average Greeks who had nothing to do with the bad debt decisions that the rest of the Eurozone should have stepped in to prevent years earlier.

 
Greece now heads into a referendum (full story➚) on the bailout conditions offered by European leaders.

Here are a couple reactions since the referendum was announced and default became very likely.

Flag_of_Greece

“Joseph Stiglitz: how I would vote in the Greek referendum”:

I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

It is startling that the troika has refused to accept responsibility for any of this or admit how bad its forecasts and models have been. But what is even more surprising is that Europe’s leaders have not even learned. The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.
[…]
In January, Greece’s citizens voted for a government committed to ending austerity. If the government were simply fulfilling its campaign promises, it would already have rejected the proposal. But it wanted to give Greeks a chance to weigh in on this issue, so critical for their country’s future wellbeing.

That concern for popular legitimacy is incompatible with the politics of the eurozone, which was never a very democratic project. Most of its members’ governments did not seek their people’s approval to turn over their monetary sovereignty to the ECB.

 
Paul Krugman, arguing no to additional austerity; no to the euro:

First, we now know that ever-harsher austerity is a dead end: after five years Greece is in worse shape than ever. Second, much and perhaps most of the feared chaos from Grexit has already happened. With banks closed and capital controls imposed, there’s not that much more damage to be done.

Finally, acceding to the troika’s ultimatum would represent the final abandonment of any pretense of Greek independence. Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.

So it’s time to put an end to this unthinkability. Otherwise Greece will face endless austerity, and a depression with no hint of an end.

 
On the other side of the debate there has been some sighs of exasperation, tongue-clucking, and then particularly disturbing responses that are clearly the wrong takeaway from the situation… Read more

Greece heads back to the polls on a big question

In less than one week, the people of Greece are scheduled to vote on a referendum on whether or not to accept the terms from the European Central Bank and European Commission leaders and the IMF to receive more help on meeting its debt obligations.

The terms are not particularly favorable (read: pretty terrible), and the government of Greece is urging a no vote. But Greece is also about to run out of money and go into default and probably be forced out of the eurozone, because the European leaders and IMF aren’t planning to change the terms or provide emergency funds even with a no vote.

So, there are likely to be brutal consequences coming either way the referendum goes. The average people in Greece will continue to suffer the most.

They were the victims of a lot of really irresponsible people — creditors and European leaders as well as Greece’s own past leaders — putting abstract finance and personal enrichment over human lives.

But within all the blame going around, I still remain most frustrated by the present-day handling of the situation from the European Union leaders. The lines below captured a lot of my feelings.

“The moral crusade against Greece must be opposed” by Zoe Williams for The Guardian:

The vision that Syriza swept to power on was that if you spoke truth to the troika plainly and in broad daylight, they would have to acknowledge that austerity was suffocating Greece. They have acknowledged no such thing. Whatever else one could say about the handling of the crisis, and whatever becomes of the euro, Sunday will be the moment that unstoppable democracy meets immovable supra-democracy. The Eurogroup has already won: the Greek people can vote any way they like – but what they want, they cannot have.
[…]
The euro was founded on the idea that the control of currency was apolitical. It has destroyed that myth, and taken democracy down with it.

These talks did not fail by accident. The Greeks have to be humiliated, because the alternative – of treating them as equal parties or “adults”, as Lagarde wished them to be – would lead to a debate about the Eurogroup: what its foundations are, what accountability would look like, and what its democratic levers are – if indeed it has any. Solidarity with Greece means everyone, in and outside the single currency, forcing this conversation: the country is being sacrificed to maintain a set of delusions that enfeebles us all.

 

Is EU member democracy compatible with fiscal union?

After four months of mounting tension between pro-austerity European Union officials and Greece’s anti-austerity Prime Minister Alexis Tsipras, a breaking point appears to have arrived. The Prime Minister published an op-ed (see below) questioning whether the increasingly centralized fiscal / currency decision-making authority in the Union is compatible with continued democratic self-determination by each member country’s populations.

Asking that question so publicly (and in a hostile tone) is likely to solidify his growing pariah status within the European Union, but it is not altogether unreasonable. In fact, more than a few political theorists and economists have been raising the point since the start of the currency crisis in 2010. Maybe it’s simply not possible to have a strong monetary / fiscal / currency union without an equally strong political union. Such an arrangement either allows individual member countries’ voters and legislators to veto necessary standardization of union-wide policies, or it forces member countries to accept rules and decisions set by unelected and unrepresentative officials without popular consent.

In Greece’s case, the voters plainly rejected the policies that the Union and the IMF demanded the government deliver. Whether or not the policies are merited, if the people exercise their sovereign self-determination to reject the policies, the ostensibly pro-democracy European Union either needs to rethink its demands or rethink its overall sustainability as an economic union without political unity.

Here are excerpts from the Tsipras op-ed, as reported by the UK’s Express newspaper:

He envisioned a future where a “super” finance minister of the eurozone wielded unlimited power and the ability to reject budgets of sovereign states that are not aligned with its “extreme” ideals.
[…]
Writing in an article for a French newspaper this weekend, Mr Tsipras blasted creditors.

He said: “The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance.

“It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.”

He added: “An initial thought would be that this insistence is due to the desire of some to not admit their mistakes and instead, to reaffirm their choices by ignoring their failures.

“I simply cannot believe that the future of Europe depends on the stubbornness or the insistence of some individuals.

“My conclusion, therefore, is that the issue of Greece does not only concern Greece; rather, it is the very epicentre of conflict between two diametrically opposing strategies concerning the future of European unification.”

Mr Tsipras said that the strategy of EU creditors who insist on austerity means “the complete abolition of democracy in Europe, the end of every pretext of democracy, and the beginning of disintegration and of an unacceptable division of United Europe.”

He added: “This means the beginning of the creation of a technocratic monstrosity that will lead to a Europe entirely alien to its founding principles.


“It appears that this new European power is being constructed, with Greece being the first victim. To some, this represents a golden opportunity to make an example out of Greece for other countries that might be thinking of not following this new line of discipline.”

He finished the article by adding: “If some, however, think or want to believe that this decision concerns only Greece, they are making a grave mistake.”

 
For more analysis on this tension between the European Union’s supranational democratic deficit and member-national self-determination see my March 2015 essay, “Drawbacks of Technocracy, Part 1: Europe’s Political Crisis”.

greek-euro-10-acropolis

Greece’s defense ministry ratchets up rhetoric

Panos-Kammenos-greeceAs part of the anti-austerity coalition deal between the leftist, pro-european reformers of Syriza and the right-wing, euroskeptic Independent Greeks, the latter were given the country’s National Defense portfolio in the government. Unlike Syriza, which at least officially favors cooperation with Europe, the Independent Greeks party under Defense Minister Panos Kammenos (pictured) is openly antagonizing other European Union governments and being far less diplomatic — either as a rogue effort or as the role of “bad cop” outside the negotiations.

The latest ramp-up in “bad cop” talk was Minister Kammenos’s suggestion that the eurozone would disintegrate in the aftermath of a Greek economic implosion or exit, with Italy, Spain, and possibly even Germany being forced to go back on to their own currencies too. (The latter seems pretty unlikely.)

He also recently threatened to release all Middle Eastern refugees in holding in Greece into the rest of the Union with papers to enter Germany — in the midst of a political crisis there over refugees — if Germany fails to ease up on its demands upon Greece, and he reiterated counter-demands that Germany repay Nazi war debts that Greece forgave under Allied pressure in 1953 along with damages from the brutal Nazi occupation and counterinsurgency of Greece during the war. (Justice Minister Nikos Paraskevopoulos, a former academic who is not a member of either party in the governing coalition, also suggested that failure to repay the debts and damages could open German companies in Greece to asset seizure.)

But the most specific and perhaps unexpected demand to emanate from the defense ministry was actually related to defense! The ministry — along, actually, with some German journalists — alleges that its predecessors wasted billions in public funds on buying weapons systems and arms it didn’t need from EU firms that bribed Greek officials to make the purchases, and they want compensation. Reuters reports: Read more

The West German debt writeoff

France24 — “Lessons from 1953: The debt write-off behind Germany’s ‘economic miracle'”:

West Germany’s debt at the time was well below the levels seen in Greece today. But German negotiators successfully argued that it would hinder efforts to rebuild the country’s economy – much as Greek governments have in recent years, in vain. Under a crucial term of the London Agreement, repayments of the remaining debt were made conditional on West Germany running a trade surplus. In other words, the German government would only pay back its creditors when it could afford to – and not by borrowing even more money. Reimbursements were also limited to 3% of export earnings. This gave Germany’s creditors an incentive to import German goods so they would later get their money back, thereby laying the foundations of the country’s powerful export sector and fostering its so-called “economic miracle”.
[…]
Back in 1953, the money Greece gave up included a loan extorted during the gruesome Nazi occupation of the country, when thousands of resistance fighters and civilians were murdered and hundreds of thousands starved to death. Even before Syriza’s electoral triumph, Greek newspapers were awash with calls for Germany to repay the loan, the exact amount of which is a matter of historical dispute. Estimates range from $24 billion to five times the amount. While few Greeks expect Berlin to pay up, many believe that Germany was let off the hook after the war and should now be more generous in Greece’s hour of need.

 
See also: A Brief History of the Greek Debt Coverup – Arsenal For Democracy
And: Greece’s Syriza, Germany, and the Gordian Knot – Arsenal For Democracy

January 28, 2015 – Arsenal For Democracy 115

AFD-logo-470

Topics: Big Ideas – Zero-Tuition Public College; Greek elections. People: Bill, Nate. Produced: January 26th, 2015.

Discussion Points:

– Big Ideas for Reforming American Governance: Should the federal government offer a zero-tuition 4-year public college system? Is this feasible?
– How will Syriza’s win in the Greek elections affect Greece and the EU?

Episode 115 (46 min)
AFD 115

Related links
Segment 1

ThinkProgress: How Obama Could Make College Free For Everyone Without Spending A Dime
EdWeek: Some Higher Education Advocates Wary of President’s Free Community College Plan
The Atlantic: Is There a Better Way to Deal With Student-Loan Debt?

Segment 2

AFD: The Questions Posed by World’s 2015 Elections
AFD: Syriza-Independent Greeks coalition takes office

Subscribe

RSS Feed: Arsenal for Democracy Feedburner
iTunes Store Link: “Arsenal for Democracy by Bill Humphrey”

And don’t forget to check out The Digitized Ramblings of an 8-Bit Animal, the video blog of our announcer, Justin.