Issue link: https://maltatoday.uberflip.com/i/455578
12 CONSIDERING that 'democracy' is ultimately a Greek invention, it may make sense that it had to be Greece to remind the rest of Europe what the word actually implies. Last weekend's election did more than just emphatically propel Syriza – a previously all-but unelectable left-wing party – to power. It has also been interpreted as an explicit rejection by the Greek people of an austerity programme many felt to have been imposed upon an unwill- ing country by the power brokers of Brussels. Incoming prime minister Alexis Tsipras intends to challenge the EU's economic policy direction for Greece. It remains to be seen wheth- er (or to what extent) he can, in fact, force a policy rethink onto the so- called 'Troika' – the European Com- mission, European Central Bank and the International Monetary Fund – but the Greek prime minister is also echoing the view of many independ- ent economists, who argue that 'aus- terity measures' are not the answer to the crisis engulfing the Eurozone. Multiple questions inevitably arise. Greece's current predicament, six years after the beginning of the re- cession, seems to confirm that the conditions imposed by the troika for multiple bail-outs have not reversed the current stagnation. And as the election result indicated, there seem to be clear divergences between the policy-makers in Brussels, and the European voters who are affected by those policies. This tension directly challenges the principle of democracy upon which the EU is supposedly founded. Can the EU keep insisting on a policy that has been rejected by the electorate, and continue to describe itself as 'democratic'? Nor is this the only conundrum. Greece might have voted against aus- terity, but it remains a fact that the county still owes a debt of over 200 billion euros. Can the democratic principle nullify such a debt? If not: is it fair that the burden of repay- ment should fall on a population that is not – in itself – directly responsi- ble for the financial mismanagement that led Greece to this pass in the first place? One person who has been follow- ing developments very closely is Prof. Roderick Pace, of the Univer- sity of Malta's Institute for European Studies. I meet him in his office with a view to finding out if what we are looking at is the start of an unravel- ling of the European Union. But first off: is it correct to interpret this result as a rejection of austerity? And if so, how likely is it that this will force a rethink of such policies on the part of the Troika? "Yes, there is no doubt that the Greek election result is a clear re- jection of austerity," he begins. "But more than enforce a radical rethink in Brussels, I think it is likelier to result in further adjustment of poli- cies: which let's be frank has already started…" Pace reminds me that, following the MEP election last year (which likewise indicated widespread disen- chantment among Europeans) and the appointment of the new Com- mission, there has been a €350 bil- lion stimulus package. "Just a few days ago the European Central Bank started the Quantita- tive Easing process, which is meant to put more euros in circulation..." Quantitative easing involves the ECB electronically generating mon- ey specifically to kick-start sluggish economies. It is considered an unor- thodox tool, and generally indicates that the Eurozone, on its own steam, cannot overcome current problems without outside 'help'. "Both measures have been criti- cised," Pace goes on. "The first for being too little and somewhat late; the second for being too late." Nonetheless, he adds that they have had a noticeable impact. "The situation in the Eurozone is now more stable and this has renewed a measure of confidence, although we are not yet out of the danger zone. There are signs of recovery even in Greece, and now – with the benefit of hindsight – there is a better appre- ciation of where the excesses of the troika may have been. Hence, there is hope for some improvements…" But how fair are these measures on the Greek people? One argu- ment that characterised the election campaign concerned the perception that the Greeks were being made to pay for the 'mistakes' made by oth- ers: including a wealthy and largely untaxed minority of oligarchs, but also the EU in accepting Greece as a member of the eurozone without the necessary checks and balances. How justified is this anger? "I agree with both interpretations. Greece was not ready for member- ship of the eurozone… nor were France and Italy, for that matter. In the case of Greece we now know that the statistics on which the decision to admit her was based had been cooked…" This, he argues, points towards an underlying problem in the initial approach to establishing the euro- zone. "A fundamental mistake was made to treat the European Mon- etary Union (EMU) as primarily a political project, with lesser empha- sis on the fact that it is an economic project…." Ordinary Greeks therefore have a right to be angry with austerity. "Their country was ruined, not by a single policy failure, but by decades of economic mismanagement. There are countries in Europe, and Greece is their prime example, which pick and choose what to implement from the market economic model. In gen- eral, in the southern European states, good governance plays second fiddle to politics, and debilitating practices such as tax evasion, corruption and protectionism in several economic sectors are given less attention…" Pace argues that while austerity measures have been rejected, Greece cannot expect to turn its economy around by going back to old habits either. "Let's be clear: it was the Greek government which approached Eu- ropean institutions for a bail-out when the problem first came to light. The EU agreed to a package of aid, but there were conditions attached. And given the extent of the problem, these conditions seemed reasonable at the time…" But this creates a Catch-22 situa- tion. Even if the problem was caused in part by overspending, it cannot be addressed merely by cutting ex- penditure. "Productivity, education, innovation, research & development and public sector reform are all nec- essary for economic growth. Crony capitalism does not benefit growth. Nor do inefficiencies and waste." By the same token, cutting back on investment in those crucial spheres will also hold a country back. "Ulti- mately, social stability is necessary for economic growth. But this is what was missing from the picture. In Greece and Italy, youth unem- ployment is around 50%. It is 55% in Spain. We speak of a lost generation. This is both a result of economic col- lapse and austerity…" Ultimately, much of the problem might have been avoided had the necessary structural reforms been effected sooner. "One lesson that must surely be learned from this recession is that the longer countries postpone re- forms the greater the danger they run. The problem is that the EU has few powers to force recalcitrant gov- ernments to act before it is too late. It is their citizens who have to do that. People get the government they deserve …or elect." But like many observers, Roderick Pace finds it hard not to sympathise with the plight of the ordinary Greek citizen caught up in this desperate situation. "When economies encounter problems, authorities turn the screw on ordinary citizens with increased taxation, deep cuts in pensions and spending on education and health. The ordinary man in the street who depends on these services will be the hardest hit. Some workers and their families lose not only incomes, but their homes because they cannot af- ford to pay their rents anymore. Even bank savings can be poached, as hap- pened in Cyprus. These victims do not have anything to fall back on, no millions stacked overseas to turn to. I expected stronger measures in their favour than was the case. Can we blame the suffering people who turn to radical parties like Syriza?" At the same time, there are consid- erable doubts as to whether Syriza will actually make a difference in the long run. Many of its electoral prom- ises have already been dismissed as 'impossible' to deliver, and there is a chance that by further straining rela- tions with the rest of Europe, Greece might be forced into an antagonis- tic position within the Union. How does Pace predict the situation will unfold? "It all depends on how the Greek government plays its cards. The gov- ernments of the EU member states which stood by Greece in its darkest hour are not likely to compromise their voters' trust and taxpayers' money. If Syriza has a legitimate ob- ligation to its electorate, so have the governments of the other member states..." Naturally that includes Malta, which contributed to the Greek bail-out fund, and expects its loan one day to be repaid. This is now ex- tremely doubtful… and so is Greece's continued membership, if not of the EU, at least of the eurozone. Already we are seeing sabre-rattling between the two sides, with Greece singing from a different hymn book when it comes to the EU's shared policy towards (for instance) Russia. Does this suggest the differences may be too deep to be amicably resolved? "I do not think that Tsipras wants to lead Greece out of the euro or the EU. I am not exceptionally alarmed that Greece has broken ranks with the rest of the member states vis-à- vis Russia over the Ukraine. Greece and Russia share cultural affinities that have frequently drawn them together in the past. Greece's stand may be used as another bargaining chip in the negotiations which will take place on its debt…" Much now depends on how far Tsipras will be willing to up the an- te. "If what we are seeing really is a radical policy shift, then Greece may cause a major crisis which will heav- ily rebound on it. But I think after the initial victory euphoria, Tsipras will be smart enough to begin act- ing like a government leader. The political rhetoric will not abate. But the confrontation may not happen either. Only time will tell us how ac- curate my assessment is…" Coming back to the rejection of austerity: could it also be that not enough time was allowed for the policy to have its desired effect? As Pace has already observed, there were already indications of a turna- round in the Greek economy, which registered growth in 2013. Does this indicate that the 'tough love' ap- proach might work in the long term, Interview By Raphael Vassallo maltatoday, SUNDAY, 1 FEBRUARY 2015 Is the 'European Dream' INJUSTICE These victims do not have anything to fall back on, no millions stacked overseas to turn to... Can we blame the suffering people who turn to radical parties like Syriza? PEOPLE POWER The problem is that the EU has few powers to force recalcitrant governments to act before it is too late. It is their citizens who have to do that