What about democracy?

This week many commentators criticized Greek’s new Finance Minister Yanis Varoufakis for his decision to travel to Paris and London before travelling to Berlin to meet his German counterpart Wolfgang Schäuble. The message is clear – all states within the EU are not equal.

The unelected European Central Bank, the European Commission and Germany are seeking to bully the newly elected Greek Government in negotiations over Greek’s unsustainable debt.

The reality faced by the Greek Government is the extent to which nation states have lost sovereignty – the extent to which they have lost the ability to act in the best interest of citizens.

They are also confronted with the reality of a democratic deficit at the heart of the EU and its institutions.

Some have suggested that the demise of the nation state is imminent, that it is an outdated concept in an increasingly globalized world.

Without doubt, those seeking to create an EU state or a federal Europe see the attachment of citizens to the nation state as standing in the way of political union and have worked successfully to take power from those states which are members of the EU. They have endeavored largely in vain to promote an EU identity.

Most people feel distant from the EU, distant from its decision making, unrepresented, irrelevant and peripheral.

The direct influence of individual citizens is minimal – Irelands 14 MEPs are a mere 1.8% of the MEPs of an EU parliament that has limited powers to hold the Commission to account.

On the other hand, there is real concern that Brussels is becoming overrun with lobbyists.

According to a recent report by the Corporate Europe Observatory, there are at least 30,000 lobbyists in Brussels with some estimates suggesting they influence 75% of legislation.

Despite decades of European integration and institution building the idea of EU citizenship is abstract and remote for the vast majority while others simply do not want it.

The attempts to push towards a ‘United States of Europe’ has been rejected by citizens when they got a chance to have their say. In 2004 the EU constitution was defeated by French and Dutch citizens in referenda. Citizens in Ireland rejected both the Nice Treaty and the Lisbon Treaty only to be forced to vote again in both cases.

The actions and decisions of the EU and its institutions confirm criticisms and concerns about the lack of democracy in how it functions.

Where was the democracy when the then head of the ECB Jean Claude Trichet effectively bullied the Irish government in 2008 into implementing a bank guarantee that was detrimental to the interests of the Irish people?

Philippe Legrain, the former advisor to the then EU Commission President Barroso summed up this situation saying, “It was outrageous of Germany, the European Commission and above all the ECB to threaten to force Ireland out of the euro if it did not follow through with that foolish guarantee, lumbering Irish people, who have already suffered enough from collapsing house prices and a sinking economy, with a €64bn bill to bail out bust banks, €14,000 for every man, woman and child.

Where is the democracy in the secret EU negotiations with the US in relation to the Transatlantic Trade and Investment Partnership (TTIP) which seeks to drive forward an increasingly discredited neo liberal agenda that is contrary to the best interest of citizens?

A European Citizens’ Initiatives petition in opposition to TTIP has now been signed by almost 1.4 million people across the EU.

The EU, once seen as advancing and protecting the rights of workers, citizens and consumers, is now actively participating in a race to the bottom.

States need defend their right to the policy space in which to manage their economies and protect their social contracts – the space and the ability to act in the best interests of their citizens.

This is the battle that is now being fought in the birthplace of democracy – Athens, as Alexis Tsipras, Yanis Varoufakis and their colleagues fight for a fair deal for their citizens.

History has taught us that people will not in the long term tolerate the denial of their sovereignty and democratic rights.

For those who want to see a future for the European Union this is a lesson of history that should not be lost on them.

If the EU project is about forcing the Greek people to live in extreme poverty and deprivation it is something that many people across Europe will reject.

As child poverty in Greece rose to 40.5%, as its youth unemployment rate reached 52%, as pensioners and families scavenge for food in dustbins, as suicide rates hit an all-time high we need to defend to right of the Greek government to stand up for their people.

The nation state still provides the most effective way of ensuring democratic participation and this, as we have seen, cannot easily be transferred to law-making authorities at an international level.

Today, we need to stand with the Greek government and with the right of nation states to act in the best interest of their citizens who have elected them in democratic elections.

  • If you don’t want to lose sovereignty, don’t join the EURO. You have? Well, no-one is stopping you leaving again…. if you really want to. You don’t? Then you have to stick to the rules.

  • terence patrick hewett

    The EU has the fundamental flaws of all unsuccessful federations: the hegemony of one or two states and the lack of fiscal union. When Ireland is asked to join a fiscal union then what little sovereignty it has left will be lost.

  • puffen

    Like a shot out of the blue, someone has realised that Dublin is not the same as Berlin,at least with London we have some skin in the game.

  • willie drennan

    This is an excellent piece. It will be fascinating to see what effect the evolving debate on the EU, within the UK, will have on the citizens of ROI.

  • streetlegal

    Revolution followed by a military coup. The Colonels are waiting in the wings.

  • mickfealty

    It’s the old political trilemma (http://goo.gl/sDUypN) Caoilfhionn…

    Deep down, the crisis is yet another manifestation of what I call “the political trilemma of the world economy”: economic globalization, political democracy, and the nation-state are mutually irreconcilable. We can have at most two at one time. Democracy is compatible with national sovereignty only if we restrict globalization. If we push for globalization while retaining the nation-state, we must jettison democracy. And if we want democracy along with globalization, we must shove the nation-state aside and strive for greater international governance.

    Two out of three ain’t bad. Greece, it seems to me, is once again teetering on the edge of having to make just such a decision.

  • D99

    Not sure that’s how Syriza or the people of Greece would ‘frame’ the choice facing them.

    In any case, even if we assume that this analysis is correct, is it just Greece that’s ‘teetering on the edge’ of having to choose two from three of the above (democracy, nation-state and globalisation)? Are not the other European countries – Germany, Italy, France, Spain, Portugal, Ireland, etc. – faced with the same choice? Or can some or all of them get to have all 3 because they haven’t quite reached the edge of the cliff just yet?

    Maybe it’s democracy and contemporary capitalism that have become mutually exclusive. Maybe this is the real choice on offer.

  • D99

    Is that what you have to do when you join the Euro – give up sovereignty?

    And who exactly are these masters that make the rules and decide how to apply them? The ECB? The Europen Commission? The IMF? Don’t remember elections for any of these bodies.

  • Reader

    Giving up sovereignty isn’t something you have to do when you join the Euro. It is something you have already done – decisions are taken out of your hands.
    Your elected government, or your referendum, put you into the hands of the ECB, the EC and the IMF. Each of these decisions might have looked like the least worst option at the time. You do still have the opportunity to leave the Euro and the EU, and borrow off the Chinese or Russians instead. Read the fine print this time.

  • Cue Bono

    Without the EU where would these countries be now? I would suggest they would be in a very bad place indeed. It provided a safety net for them when their banks were in danger of total collapse. I say again that all those people out there who fantasise about ‘standing up’ to the EU, and refusing to pay back what has been loaned to them, keep a very good eye on Greece. You will get a very good indicator of how that would turn out if they go ahead with what they said they would do. If you want your children to grow up in the sort of lifestyle that Borat would identify with then by all means vote for the people who say they are going to do the same.

  • D99

    Where is this ‘fine print’ you mention? I don’t think the voters in any of the countries that signed up to the currency union had sight of it. So was it mis-sold? A bit like PPI, endowment mortgages and the countless other financial products recently exposed as crap? I wonder who rigged things so Greece and other South European countries could join up; and I wonder who convinced their past political elite that it would be a good idea in the first place.

    But you make a good analogy – if people do get to read the fine print, the sham will be exposed, not only as undemocratic but as corrupt and systemically flawed?

    If Greece are forced out of the Union, Spain or Portugal will become the new weakest link.

    Maybe Spain will reject the austerity programme too – especially if they see that Greece can do better outside the Union, either on their own, or (as you say) with alternative support.

  • chrisjones2

    Is that what you have to do when you join the Euro – give up sovereignty?

    Yes…thats what a currency union involves

  • chrisjones2

    I don’t think the voters in any of the countries that signed up to the currency union had sight of it

    Well it was well discussed and trailed so if you missed it , tough. You signed up., You have accepted the rules

  • chrisjones2

    Great. still doesn’t change the economics

  • chrisjones2

    If the EU falls apart…and I hope it does…

    You should be a KIPPER not a STOOP

  • chrisjones2

    ..surely its better to not have skin in this game!!!

  • chrisjones2

    Without the EU where would these countries be now?

    Free??

  • chrisjones2

    Fantasy land again. The reality is that in or out they owe all the money

  • D99

    The reality is that in or out, they are never going to be able to repay the money under current conditions

  • D99

    I neither signed up, nor voted for anyone who signed up

  • Reader

    D99: I neither signed up, nor voted for anyone who signed up
    Then your country did. If you can’t persuade the rest of the country to see things your way you could always declare independence. You’ll need a stick of chalk (for the border) and a flag.

  • D99

    Syriza HAVE just persuaded the people of Greece to see things their way and HAVE just ‘declared’ or recovered their ‘independence’ from the Troika. That’s the point.

  • D99

    I think we’re about to discover that we all have skin in this game

  • mickfealty

    Well Syriza has a very weak hand on this. Even leaving is a hard station since they would have to drag their debt with them. Or burn the bondholders and stay in surplus for the foreseeable.

  • D99

    They’re already in a ‘very bad place’. And it’s not about ‘refusing’ to pay back the loans, it’s about being unable to pay them back under the current arrangement. The ECB has created a situation that’s a bit like asking someone who has just lost their job to pay off a current mortgage loan by borrowing more money on their credit card.
    Syriza have refused to do this. And unless the bank (ECB) change the arrangement, Greece will be bankrupt (their banks will fail) and they will default on the loans. As a result, they will probably be forced out of the European monetary union and this will have wider implications for other countries including Ireland and the UK.

  • D99

    Yes, but ‘sometimes nothing is a pretty cool hand’. And, to sustain the poker analogy, I have a feeling that Syriza are committed to going ‘all in’.

    Then it’s a matter of whether the ECB calls their bluff.

    If they do, there are only a couple of outcomes:

    Syriza backs down – too late, they’re already all in and will either default or resign
    Or Greece defaults and is forced to exit the Euro. But then everybody loses – including the Germans – as the Euro project starts to crumble.

  • D99

    The Greece Finance Minister, Yanis Varoufakis, is an economics professor who specialised in economic game theory.

    In this particular game, the ‘correct’ outcome – the one least damaging to all players – is a compromise involving some significant write-down of Greek debt. This would have to be done using the kind of constructive ambiguity (so familiar here) that would allow both sides to save face. (Maybe extending repayments over a long period in a way that amounts to a de facto cancellation/write-off).

    Of course, this game is for real; and it’s complicated by ideological considerations and a challenge to power. So achieving the correct outcome is far from certain.

  • Cue Bono

    Well if they go ahead with their plans (which I doubt) we will soon see if the experiment of letting the banks fail is the wise way to go.

  • Cue Bono

    Just like the chappy who spends his nights sleeping on a park bench. As free as a bird but brass lint.

  • Cue Bono

    It’s also complicated by the fact that if Greece get away with it the other skint countries will expect the same treatment. That is precisely why it won’t be allowed to happen.

  • D99

    Yes, I think you’re right. That’s the real problem – if austerity is loosened up in Greece, then Spain and others will want less austerity too. It’s not really about the money/debt, as the EBC is now printing the equivalent of the Greek debt every month through their quantitative easing policy. It’s about ideology and power.
    However, it’s highly unlikely that Syriza will back down, so either the ECB will compromise (in a way that allows both sides to save face), or Greece will exit the Union leaving all the debt with foreign banks.

  • Reader

    Yes, it is an option. Any of the PIIGS can take that option, and pay the price. I was commenting on your ‘nothing to do with me’ stance – that really wasn’t necessary. Countries don’t have principles, they have interests. Size up the situation, do the sums (well or badly), make their move, pay the price.
    Even if Syriza gets things spot on, and move in line with your preferred options, things could still get very, very bad. Same with the rest of the PIIGS. Sometimes there really is no cosy solution.

  • puffen

    Well we are where we are,it is better to be a big beast in the jungle,volatility will be the name of the game going forward, and small Nation State’s do not count for much arm twisting and bullying will be the order of the day, Having said that something left field in Ukraine, could change everything, and Greece may have a stronger hand if the cosy up to Putin.

  • D99

    I agree, no cosy solutions, even if there is a deal. And, yes, there’s a strong possibility that Germany may call Syriza’s bluff and force a Greek exit.

    But I think the German banks have most exposure to Greek debt. And they might be worried that Greece might do better outside than inside the Union – without all that debt to weigh them down.

    There’s talk of Merkel and others intervening to help bail out a struggling Ukraine. Maybe Putin will respond by offering to help bail out Greece if they leave the Euro. Wouldn’t that be ironic.

    (I’m only half joking here, because the way world is today, allies and enemies seem interchangeable from one week to the next)

  • Zeno

    “If the EU falls apart…and I hope it does…then it is ironic that the catalyst will be Greece.”

    The Greeks did invent democracy. So there would be an ironic twist.

  • Reader

    I think Germany is not particularly worried about Greece itself, which is only a small country. They are interested only in the message that is given from G to the rest of the PIIGS, as a queue will soon form if Greece is offered any substantial concessions.

  • Meltyhead

    Looks to me like Greece is putting people above money – maybe all should give it a go.

  • SeaanUiNeill

    The substitution of mopeds for private cars for politicians use interested me. That and the new government being able to remove the protection boards from political buildings’ windows.

    I know Machiavelli said “a Prince should prefer to be feared rather than loved by his people”, but the amount of protection democratic representatives seem to need about them nowadays…….

  • D99

    Yes. First Greece, then Spain, with a few others to follow. Germany may not have the best hand after all, because even if they win the battle with Greece over the next few weeks and force an exit, their Euro Project is seriously undermined. Under the free market system there will always be a weakest link, so once Greece leaves the focus will switch to on of the other South European countries. Even Obama knows this and is lobbying for a compromise.

  • chrisjones2

    PErhaps a good analalogy but at least greece would own the bench and have a chance to make it a better poelace to sleep

  • chrisjones2

    “it’s about being unable to pay them back ”

    Where is the evidence. They were managing to pay back but at huge social cost. Did that cost have to be as bad? NO, because they have so much corruption and internal tax evasion that they do nothing about and that just amde it worse

  • chrisjones2

    Never is a long time. In that case better that teh EU ejects them and prepares fro the flood of Greek refugees

  • chrisjones2

    Then let them get out …. after the pay their share of the bar bill

  • chrisjones2

    without all that debt to weigh them down.

    YOu still dont get it. If they leave they still owe the money and its priced iN Euros while they will be earning in drachma. All all foreign assets they may have will be up for grabs at knock down prices

  • chrisjones2

    the problem is that there aren’t just 2 players

    Write down for 1 = write down for all and the German Taxpayer pays …and they aren’t prepared to

  • D99

    If they leave and default on the debt, they would NOT pay it back. (Like Iceland; or like if you declared bankruptcy.) This would of course make it very difficult to get credit in future, but the gamble is on the basis that things can’t get much worse than they are now. (Again, that may or may not be the case, depending how they perform outside the Euro. And things would get much worse before they got better, with the added risk of right wing insurgency.)

    Many economists think they would be better outside; and there’s even suggestion that they would be running a 3% surplus without the debt repayments. (I have to admit, I find this last claim hard to believe, but we may find out sooner than expected.)

  • D99

    Yes Chis, I agree that’s the key problem for Merkel. But it’s less about money/debt, than about ideology and power. (The ECB is printing the equivalent of Greece’s debt every couple of months through their quantitative easing programme.)

    The real problem is that if Greece gets less austerity, others will want less too. And that would mean a defeat for the ideology that demands austerity and a loss of power for its advocates.

    There’s a democratic deficit as well as an economic one. And, in the end, someone’s going to have to pay for that too.

  • SDLP supporter

    I understand that theGreek public debt is circa €315 billion compared to €215 billion for theRepublic, although apparently the Greeks pay less interest than do the Irish,
    due to previous reliefs and deals, some of which the Irish didn’t get . I don’t
    know how much of the Greek debt is due to bank bailouts, that is comparable to
    the €65 billion debt the Irish people had to take due to the criminal
    activities of Anglo-Irish etc. and the crazy, stupid decision taken by Cowen,
    Lenihan and others in September 2008.

    However, it seems to me that the Greek debt should be
    divided into two parts: one the bank bailout money (inadequate
    Regulator/Central Bank supervision etc, same as the Irish) the other being the
    accumulated deficit run up by previous
    Greek governments. I think that the first part needs and deserves
    relief, the second part the Greek people incurred that debt themselves by
    electing and re-elected reckless governments which went on a democratically
    validated spending spree. On the second part, I think the Greeks have no case
    other to accept responsibility for it.

    Greece appears to me a failed state, even worse than both
    jurisdictions in our own beloved Island of Saints and Scholars (murya) with
    world class levels of corruption, tax evasion and degraded civic spirit. Only
    the Greeks can fix that.

    Last week in the Dail, Finance Minister Michael Noonan
    pointed out that between 2008 and 2014 the Irish government borrowed €100
    billion just to run the country, pay public sector salaries, welfare, keep the
    health service going. That was nuts, it’s the Irish people’s debt and they
    should accept responsibility for it, since they voted Ahern in three times
    running.

    Focal scoir, unlike fellow SDLP supporter, John
    Mooney/Fitzjames Horse, I’m unequivocally pro-EU, as is the SDLP. I’m also
    inherently sceptical of the saying ‘Vox populi vox dei’/’The voice of the
    people is the voice of God’ or, more colloquially, the people always get it
    right in who they vote for. That’s not to say I don’t respect the decision.

  • Cue Bono

    I probably should make it clear that I am no big fan of the EU, but I reognise that for small countries like Greece and the ROI it has been an absolute Godsend. The very people who used to boast of how they didn’t need the British state for financial stability because they could rely on the much larger EU are now suggesting that they should, yet again, bite the hand that feeds them. If they want to see how that will work out then the Greeks have very kindly volunteered to be the experimental Guinea Piigs.

    There are limits to what you can do to make a park bench a comfortable place to live and especially in the winter time.

  • Cue Bono

    I think that Syriza probably will back down, but if they don’t then the third option is that Greece implodes and the Colonels take over again.

  • D99

    They will not back down. If there’s no compromise, they will default on loans and Greece will be forced to leave the Union; or Syriza will resign and there will be new elections in Greece which Syriza will win with a bigger mandate and probably a pledge to return to the Dracma.

    But, if I had to bet my future on it, as the Greeks are doing, I’d bet on a carefully worded compromise from ECB involving an extension of the repayment period of Greek debt, which in real terms would be the equivalent of a significant write-off. (A bit like you or me being allowed to pay our mortgage off over a period of 100 years at 0.5% interest.)

    We’ll see what happens by the end of the month.

  • Cue Bono

    As you say we will see soon and there are indeed many things that could happen depending on the calcultions made by the people that matter. There is however one scenario that you haven’t explored. Greek default on the loans followed by ejection from the Euro, the collapse of the Greek banks, the implosion of their economy, the riots, the coup, the exile or lynching of the leading members of Syriza followed by the election of a government with the sense to rebuild the bridges burned by the present government. Leading them back to somewhere close to where they where before they elected Syriza.

  • D99

    James Mackintosh, Investment Editor at the Financial Times, noted that:
    “only €15bn of €410bn total ‘aid’ to Greece” actually went into the country’s economy, the rest having been handed over to its creditors” – German and French banks

  • D99

    If you mean a scenario like the one in Germany in the 1930s that saw the rise of Nazism, you’re right to say that I haven’t mention it, but the Greece Finance Minister acknowledges it as a possibility. Check out this link:

    http://www.bbc.co.uk/news/world-europe-31170591

    In desperate times, people can turn right as well as left.

  • Cue Bono

    A pretty good argument for not making things even more desperate than they already are.

  • Kevin Breslin

    Isn’t life great for all those European nations outside the EU?

    Switzerland can’t break free of the Eurozone crisis and it was never in the EU to begin with, Norway has been fecked over by the oil prices, Leichenstine is just as bad as the Swiss but relied heavier on banking which is going through the mill, Iceland is bankrupt, Serbia, Albania, Macedonia and Bosnia-Herzegovina want to join the EU, Bosnia-Herzegovina and Kosovo’s in the Eurozone already, as are Andorra, Monaco and the Vatican City State, Russia’s sanctioned off and it’s sanctioning the EU in revenge. Ukraine’s under a civil war as is Georgia, as is Moldova, Azerbaijan and Armenia are fighting Nagorno-Karabakh while Turkey are fighting ISIS.

    That still leaves Belarus, pretty much caught up between all of this and nowhere to go with it.

  • SDLP supporter

    Yes, D99, but how much of the balance of the €395 billion
    was run up by the Greeks (and funded by its creditors) in their accumulated current account deficit over the years when they were clearly living beyondtheir means as a nation? It’s fairly widely acknowledged that the Greeks, withthe aid of Goldman Sachs, finagled their way into the Eurozone.

  • Kevin Breslin

    Borrowing off the Russians and Chinese is not a long term solution, borrowing off the Chinese is the approach taken by many African nation that have got themselves in massive debt , the Russian rubble is going through a crisis that their interest rate has skyrocketed.

    International usury is so out of hands these days It would not surprise me if your best bet is probably ISIS. They’ll just cut your hands off if you don’t pay them back. You don’t know what organs would be harvested by the other big shots.

  • D99

    Hard to calculate. But I agree that Goldman Sachs and other banks bailed out in 2008 have a lot to answer for; and that the previous Government in Greece went along with them. But then again, the prevalent narrative tells us that we were (and still are) all living beyond our means in UK, Spain, Ireland, Italy, etc., and now must be ‘punished’ through austerity for doing so.

  • John Collins

    Cue
    Not wishing to be sarcastic but the USA did exactly that with Fanny Mae and I have no doubt we should have done the same with Anglo Irish Bank