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Greece vs the EU: The EU’s Democratic Deficit

One thing the Greek financial crisis has revealed is that democracy is in short supply. EU countries are blackmailing a fellow EU member state. EU institutions are bypassed, in favour of unelected elites and EU policy is ignored in favour of “moral” dogma. Members of the EU are trying to inflict regime change on a democratically elected government, while also driving that country to the brink of financial collapse. The EU motto is “United in diversity” but there is precious little unity or solidarity in how the EU is treating Greece.

The decision by Greek prime minister Alexis Tsipras to hold a referendum on whether the Greek people accept or not the latest round of austerity and loans proposed by the eurogroup, has led to outcries and denunciations from many in the EU family. But the EU is founded on democracy and consent and after two loans and five years of austerity, the people should be consulted.

It’s not the first time that the EU has faced issues with popular votes. As far back as 1992, the Danish people rejected the Maastricht Treaty and were required to vote again. The referendum in France barely scraped through on 51.05% in favour; and it was never submitted to a popular vote in the UK.

Then there was the EU Constitution which was going to solve everything from foreign policy to legal personality and smooth decision-making until the Dutch and French decided that they would rather not have an EU Constitution.

Ireland is luckier than other EU countries, in the case of popular consultation. We get to vote on every change to our Constitution. We, few EU citizens on the outskirts of Europe, can delay or halt EU treaties with our referendums. Delay we may have done but we have never caused the death of a treaty. Our Government puts the treaties before the people as many times as necessary to get the answer they require. Remember the Treaty of Nice and the Treaty of Lisbon? The people of Ireland voted on both twice. The questions regarding the democratic issues have never been answered by the Government.

Since the EU Constitution was put to the vote and defeated, other EU countries do not get to vote. The EU seems to have developed an aversion to the “ask the populace” option. This may be why former Greek PM Papandreou in 2011 faced such bitter external and internal opposition to his proposed referendum, including implied threats to cut funding.

Now another referendum is disturbing the peace. Tomorrow the Greeks will vote on continuing with EU-led austerity or insisting on another way. Economists from all over have condemned austerity and the arguments of moral hazard but EU finance ministers believe they know better – a group consisting of teachers, political advisers, lawyers and precious few economists.

Meanwhile, the Greek people are running out of medicine, food and money and the European Central Bank will not provide Emergency Liquidity Assistance. What is this if not political blackmail? The EU member states are in a currency union and the ECB is refusing to provide liquidity. It would seem that the only way Greece can access ECB assistance is by sacrificing their future to endless austerity.

So we have supposedly sovereign states allowing their money supply to be determined by an unelected supranational body that is above the law and accountable to nobody. And that body can freeze or withdraw money from member states’ banks at any time and for any reason. 

Greece is a sovereign state that is being strangled by an ECB that appears to be above the law. What is this but intimidation and blackmail of the Greek people and government?

To add to the misery, of all the €252 billion in loans between 2010 and 2015, only 10% is financing public deficit spending. So the “bailouts” are bailing out German and French creditors who have not lost by the recession, in fact by the end of 2011 Germany was estimated to have made more that €9 billion because of the crisis.

The IMF published a report in Washington on Thursday, despite strong European objections, that said that Greece’s public finances will not be sustainable without substantial debt relief. This may possibly include write-offs by European partners. And that Greece will need at least 50 billion euros in additional aid over the next three years to keep itself afloat.

If even the IMF, with its strict dogma of neoliberal fiscal policy, declares that austerity is not the answer, than why has Christine Lagarde been playing politics and declaring that there would be “no grace period or possibility of delay” to IMF repayments; and accusing the Greek finance minister Varoufakis of childish behaviour?

Why is the IMF getting involved in EU politicking if not to exert the pressure on Greece to cave to EU demands, even though they have published a report saying that Greece cannot repay? The IMF has no place in European politics but are being used by the EU as a hammer on the heads of the Greek people.

There is no aspect of the current crisis that the EU has not tried to spin. EU bigshots have been attempting to redefine the nature of the referendum. Jeroen Dijsselbloem, President of the Eurogroup, gave an impassioned speech last week begging the Greek people to vote yes, as a no vote would mean exiting the euro–a pity that he lied outright in his speech about pension cuts. The President of the European Commission, Jean-Claude Juncker has said that Sunday’s referendum is a vote on whether Greece will stay in the euro. However, they do not get to impose their narrative. The Greeks are not voting on euro or EU membership. They are voting on continuing the disastrous policy of austerity or finding another way.

Also, let’s put the notion of Greece being expelled from the euro to bed right now: there is no legal mechanism for expelling a country from the eurozone. Any exit from the single currency will have to be implemented by Greece. No matter how feckless the Germans think the Greeks are, they cannot just expel them. And that is just as well, considering that in such a situation financial speculators could pick off the weaker eurozone countries. We might see exits from Portugal, Italy, Spain and even Ireland. Even as we wait for the results of the Greek referendum borrowing costs for the eurozone’s weaker economies – such as Italy, Spain and Portugal – have all risen. Is this what the EU desires?

Martin Schulz, the president of the European Parliament declared that

New elections would be necessary if the Greek people vote for the reform programme and thus for remaining in the eurozone and Tsipras, as a logical consequence, resigns… be bridged with a technocratic government, so that we can continue to negotiate… If this transitional government reaches a reasonable agreement with the creditors, then Syriza’s time would be over. Then Greece has another chance.

The president of the European Parliament is making a concerted effort to destablise a democratically elected government on the eve of a referendum while shortages are plaguing a people that have suffered increasing austerity for the past years. It is not for the president of the European Parliament to interfere with the internal affairs of a sovereign state. He is abusing his position.

Technocratic governments throughout the financial crisis have been appointed without a vote or consultation with the people often because the EU powerhouses have required it. Schulz is advocating for regime change because essentially Syriza is not “their kind of people”. In democracies, people are supposed to elect their governments. By definition, a technocratic government does not run for office. Schulz is trying to undermine democracy as well as destabilise the current elected government. This is what the European project has come to.

What has austerity ever done for the Greeks? It has given them 62% youth unemployment; around 175% of GDP in debt; 25% increase in homelessness; 40% increase in the suicide rate; 40% of children living below the poverty line. What is their incentive to submit to more austerity to satisfy a European elite that has profited from the crisis?

And since when do we have a European elite? Why does Germany get to dictate terms to Greece? The EU is supposed to be about working together democratically to find solutions with a smidge of solidarity. Indeed, under EU policy, EU finances are subject to unanimity but there has not been much of that in its dealings with Greece. There are 19 states in the eurozone so what’s with the orders coming from Germany?

This is not a democracy. The so-called bailouts are loans to EU member states to pay the banks of other EU member states. Of the Troika, only one institution has an elected membership – the European Commission but even the Commission will only provide technical assistance if the Greeks vote for additional austerity. The EU is intimating Greece to vote against its interests.
The EU has lost its way.

It is easier to point out the failings, than provide solutions, especially given the extensive cultural, social and political differences among EU member states. To preserve the currency union, as is, Greece and possibly other countries will need a debt holiday and write-downs in exchange for substantial public sector reforms in the long term.

If Greece is permitted to exit, the euro is doomed as vulture capitalists and traders pick off the weaker states and only the Northern EU states are left. Their current state of growth would strengthen the euro to their exporting disadvantage and everybody loses. It is not necessary to shackle Greece to unsustainable debt through continued austerity.

It is necessary that the EU admit that the current policy is a failure. Wikileaks documents show that Angela Merkel knew the Greek debt was unsustainable in 2011. Every IMF report says likewise. Political dogma, rather than pragmatism, is at the helm of the ship. Reality will have to take control or each eurozone country will flounder. Perhaps tomorrow’s referendum will be a first step towards the realisation. The financial crisis is now five years old and confidence in the European Union is at an all time low. Bailouts and loans, along with poisonous rhetoric fanned by the media, has soured citizens on the Project. However, it is the lack of democracy that has inflicted the worst damage – technocratic governments appointed by outsiders; heads of member states dictating terms; the quashing of referendums; attacks on sovereignty; and the unwillingness to show solidarity with fellow nations.

The damage that has been inflicted may take years to heal or it may lead to a break up of member states. The European Project is valuable and worth saving if we can survive the political dogma.