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Sunday, June 17, 2012

Eating your baklava and keeping it too.


Daniel Hannan

Daniel Hannan is a writer and journalist, and has been Conservative MEP for South East England since 1999. He speaks French and Spanish and loves Europe, but believes that the European Union is making its constituent nations poorer, less democratic and less free.

Greece wants the euro but doesn't want the austerity. How much longer can this go on?


Some higher authority will have to sort it out

Supporters of the euro, in Athens and in Brussels, have been quick to proclaim victory. Greek Euro-enthusiasts congratulated their countrymen on their level-headedness, while EU officials indicated that the country might be rewarded with a slight relaxation of the bailout terms. Yet there is something contrived, rehearsed even, about the triumphalism.
Look, after all, at the actual results. Greece has repeated itself, only more emphatically, declining to give any party a majority. In Europe's palaces and chancelleries, the hope is that the two old parties, PASOK (corporatist Left) and New Democracy (corporatist Right), might form the core of a pro-bailout coalition: between them, they have a bare majority. But PASOK is indicating that it doesn't want to join any coalition without SYRIZA (populist Left), which in turn says it won't join any government that accepts the EU's cuts package. If no coalition is formed, what next? A third election? A fourth?
The odd thing is that, in policy terms, the parties are closer together than you might think. Foreign media have defined the election as a contest between pro-austerity parties (PASOK and ND) and anti-austerity parties (almost everyone else). But a glance at the party manifestoes reveals that they are all, in varying degrees, anti-austerity. PASOK and ND say they want to renegotiate the bailout terms, slow the cuts, introduce more generous unemployment benefit and, in the case of ND, cut taxes.
Indeed, ND has the worst record of all: it ran up the deficit in the first place, lied about it, and then voted against every attempt by the Papandreou government to tackle the problem which it had created, while simultaneously insisting that Greece must remain in the euro at all costs. The chief difference between the three big parties is that ND proposes tax cuts which, while desirable in principle, are hardly a way to cut the deficit in the short term. All of which makes it hard to believe that an ND-led government, if one can be cobbled together, could deliver the necessary fiscal tightening. None of the fundamentals has been altered. As Allister Heath puts it, Greece has jumped out of the fire into the frying-pan.
The Greek electorate is in denial. It rejects austerity, but insists on keeping the euro. All the main parties duly parroted what voters wanted to hear, making for a fantasy election, a make-believe election, a fingers-in-my-ears-I-can't-hear-you election. The only list which was honest about the necessary cuts – a coalition of three liberal parties – failed to gain a single seat.
What will happen the next time Greece reneges on its promised spending reductions? Will the rest of the EU now lose patience? I doubt it. For thirty years, Greece has been subsidised, indulged and encouraged to look to Brussels for all its solutions. Now, faced with what they see as a problem of the EU's making, Greeks understandably shrug their shoulders and expect Brussels to sort things out for them. And you know what? Given the way the EU has behaved to date, they might just be right.

5 comments:

  1. Opa! We love the euro but prefer that someone else pays for it.

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  2. A key element of the reforms is a eurozone-wide deposit insurance program being developed by European Central Bank President Mario Draghi. It is meant to reassure investors and head off runs on banks in countries whose banking systems are under severe strain.

    Finance Minister Jim Flaherty has praised Draghi’s proposal, saying it’s the kind of dynamic action that has been missing as Europe struggles to subdue its debt crisis in the past several years.

    Prime Minister Stephen Harper and Flaherty have for months been urging European leaders to put aside national concerns and policy differences in order to develop a comprehensive, big-ticket economic strategy capable of overcoming the lingering financial market turmoil from the 2008-2009 global slump.

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  3. Most peaceful countries:

    Iceland
    Denmark
    New Zealand

    ReplyDelete
  4. Least peaceful countries:

    Somalia
    Afghanistan
    Sudan

    ReplyDelete
  5. Brief Relief

    10.05am: It's worth noting that the other weekend election result - France has elected a socialist dominated National Assembly, giving Fran├žois Hollande strong backing for his growth agenda - still needs to be digested.

    9.48am: With the Greek election out of the way, attention has turned to Spain again.The country's borrowing costs have hit a fresh peak of 7.14%, up 22 basis points on the day - the highest ever seen during the euro's lifetime. German Bunds, meanwhile, have fallen to a yield of 1.4%.

    A bond trader told Reuters:

    Markets are looking to fade the relief rally, and Spain is suddenly blowing out again. It looks like it is going to be under pressure until at least Thursday, but really it is hard to see what can stop [Spanish yields] rising even then.

    Spain holds an auction of short-term debt tomorrow followed by a five-year bond sale on Thursday.

    9.37am: Greece as victim? here is American economist and Nobel Prize winner Paul Krugman's latest column in the New York Times.

    Ever since Greece hit the skids, we've heard a lot about what's wrong with everything Greek. Some of the accusations are true, some are false — but all of them are beside the point. Yes, there are big failings in Greece's economy, its politics and no doubt its society. But those failings aren't what caused the crisis that is tearing Greece apart, and threatens to spread across Europe.

    No, the origins of this disaster lie farther north, in Brussels, Frankfurt and Berlin, where officials created a deeply — perhaps fatally — flawed monetary system, then compounded the problems of that system by substituting moralizing for analysis. And the solution to the crisis, if there is one, will have to come from the same places.
    - Guardian

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