Greece: European Solidarity and the IMF
Greece now seems to be hurtling towards a Eurozone exit. The IMF have been unwilling to compromise and SYRIZA lack a mandate from the Greek people to accept the Troika’s demands. This probably comes a little late but a few comments on Reddit spurred me to put into writing some of my thoughts on where exactly the problem lies. I’m going to post from some of my comments in that thread and expand a little on some of the points I offered there.
One user on /r/Europe, an American, pointed out that it’s difficult to imagine how a continent of over 20 different languages, histories, and cultures could ever form a cohesive identity around which solidarity might be built.
And for me this really is the crux of the issue: solidarity.
The entire issue of Greece’s economic crisis has been framed as “Greece vs the rest of us.” Greece has been hung out to dry because nobody in Europe actually cares about helping Greece if it’s at their own expense. This idea of so-called ‘European solidarity’ does not exist in reality, and neither does the ‘European identity.’ There has been so much talk over the last few years about solidarity and European unity, about the moves we might make towards a federal Europe; yet the moment one member country goes through serious economic hardship, the response ranges from “they stole our money!” to“fuck ‘em.” Said solidarity is now nowhere to be seen.
How on earth can a federal EU hope survive in the face of such a general lack of solidarity? This issue goes beyond just Greece because it speaks to the very real problem pro-federalist thinkers must confront: for a political community to be sustained there must be cohesion and solidarity. There needs to be a sense that everyone looks after each other in the good times and the bad times. In Britain we don’t just cut adrift the areas that are stricken by poverty, though we don’t do quite enough for areas like Cornwall. But the same goes for pretty much every other country, from Italy to Belgium: Italians know that the south is much poorer than the north, but the question is not whether the south should be cut adrift but of how best to help them develop.
For a political community to be sustained there has to be a sense that their fates are intertwined; that it is in the interests of those who live in New York that those in Austin succeed as well. In England, we do not mind that massive amounts of wealth created in the south-east are redistributed to help other areas of the country, because we want to help each other; because we care, and because we know it is in our own interests that they succeed. Redistribution and political/economic unions can only be sustained as long as this continues.
This very real national solidarity does not extend to the European Union. Germans and other Europeans feel no responsibility for the economic and physical well-being of Greeks, and indeed very little inclination to help them at all, seeing them as an economic drain to be cut adrift before they pull the rest of the EU down with them. But that is a huge problem for anyone who wants to see a federal Europe: if you want such a Europe, then you cannot only support unity during the good times, states need to be there to support each other in the bad times too.
The response over the past few months has been particularly callous given that it is the actions of the leaders of European institutions and the Troika that have made this crisis far worse than it ever had to be. The crisis was only ever able to reach this point because of the IMF’s biblical-scale incompetence, yet they refuse to back down on their blindly ideological “reforms.” Greece is now in a position where it either accepts the Troika’s slow death sentence inside a union of people that loathe them for demanding some respect, or it leaves and tries to make its own way in the world, a journey likely to be incredibly difficult on the Greek people.
And I need to make that clear: the IMF are clueless. They have no idea what they are doing. No country in history has ever developed the way the IMF want Greece and others to, and every prediction they make about Greece’s recovery ends up being disastrously wrong (see above). And that’s even after the OECD concluded that Greece has been the single most responsive Eurozone country to reforms (see below), even more responsive than Portugal or Spain. It’s an absurd situation where the IMF are demonstrably wrong but refuse to admit it, and the price of that refusal will be the lives of innocent Greek people. SYRIZA are being told to throw the elderly under the bus first followed by the poor.
And it must also be made clear that of all the countries in the Eurozone, Greece has been the single most responsive to reforms, even more than Spain, Portugal, or Ireland. And what did that get them? Their GDP fell by 25%, their overall unemployment is currently is over 25% (and about 50% for youths), and poverty and homelessness rise every day. The proposed austerity measures would go much further. CNN report on June 23, 2015:
He is not alone — IMF data show that private consumption has dropped around 30% since 2010, with food consumption down 28%. As Greeks tightened their belts, companies suffered. Around a fifth of the country’s private businesses have folded since 2010, and unemployment skyrocketed from 10% in 2010 to 27% in 2014.
The unemployed and pensioners are hit hardest. Pensions have been slashed by as much as 60% to average 830 euros a month ($930). Greece experienced one of the largest falls in real wages across OECD countries (more than 5% per year on average since the first quarter of 2009).
At the same time, prices have been rising. Renting a small apartment in Athens costs around 300 euros a month ($336) and a monthly metro ticket is 30 euros ($34).
With high unemployment, pensions are the main source of income for many families.
Yet the IMF keep expecting the Greek people to believe that eventually it will pay off, that their consecutively incorrect predictions over the last five years will finally be correct this year. “Honestly, please believe us, we know we were hopelessly wrong, but this time it will be different, we swear! If we just turn the screw a few more times the economy will pick up this time!” And then they have the gall to lecture Greece about economic credibility and how the Greeks should run their economy?
Greece must now either accept a slow death under the IMF’s proposed “reforms” or the dangerous path to independence and the return of the drachma. This is an unenviable choice, particularly when it seems like the referendum will be largely meaningless anyway given that the EU claims it will cut off support on Tuesday. All I can really do is wish them well and hope for the best.
