Andrew Spannaus: “Greece’s challenge to the Euro”

in Europe by

After Alexis Tsipras triumph in the Greek elections e and the birth of new government, a new political match is in operation between Athens, which would delete its economical debt, and Bruxelles, which demands the observance of austherity. European Affairs asked Andrew Spannaus, journalist and editor-in-chief of Transatlantico.info, his opinion about this new circumstance.

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“The victory of the Syriza party in the recent Greek elections has brought Europe to a crossroads: it is clear that the politics of austerity must be abandoned, but the institutions of the European Union cannot allow themselves to admit that their model is a failure. The result is a tension between appearances – which the EU aims to save at all costs – and the actual needs of the economy and the population.

During the election campaign, Alexis Tsipras laid out a clear position regarding the renegotiation of Greece’s debt, which essentially leaves only two alternatives: either he will hold the line and force Europe to accept a partial default, or he will give in to the pressure from the supranational institutions and be considered a failure by those who elected him.

The new Prime Minister worked hard to reassure everyone that he has no intention of abandoning the Euro, partially in response to fears around Europe of a market crash in reaction to his party’s victory. Yet the message sent by Greek voters is clear: no to the memorandum, no to the austerity policy that has caused so much suffering.

Tsipras’s debt proposal directly challenges the fundamentals of EU economics, calling for ignoring the restrictive budget parameters until the economy has returned to sustained growth. And some members of the new government have supported establishing a firewall between ordinary finance and speculation on the international markets, along the lines of the Glass-Steagall law in force in the United States until the 1990s.

This is diametrically opposed to the policy implemented over the past twenty-five years, from Maastricht, to the Stability Pact, to the Fiscal Compact.
Thus, the scenario before us calls into question the very existence of the Euro as we have known it.

It is clear that an attempt will be made to find a solution that salvages the image of the EU, by devising a compromise applicable only to the “special case” of Greece, and insisting that no broader changes are necessary.
The first requirement for such a solution would be that Greece accept something less than what it is asking. Europe will demand an act of submission, to make sure that other countries don’t seek to take advantage of the opening.

Indeed what the other countries do will be crucial. If the facade of the austerity policy dissolves, what will the Italians say? And the Spanish? And the Portuguese?

Will they continue to defend the impoverishment of the population because the recovery is “just around the corner,” or will they seize the chance to stand up and demand a more profound change?

Will they settle for throwing even more money at the financial markets through Quantitative Easing, and for the shell game of the Juncker Plan, or will they restore badly needed public investment?

Recent battles over European economic policy have led to only modest changes; some leaders promised to raise their voice, and others swore they would oppose the rules on deficit spending. But the basic framework has remained the same since the beginning of the 1990s, since the erosion of national sovereignty began, accompanied by policies increasingly favorable to international financial interests.

As we have all seen since 2008, such a policy cannot survive for long: it will have to change, either in an orderly way, or by the more messy route of social and political upheaval.

The Greek elections offer an opportunity to begin a process of rational change, but this will require courage on the part of numerous governments, a quality which does not seem to be in great abundance nowadays”.

Giacomo Pratali

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