So what’s happening in Europe? Voters in France and Greece delivered huge swings to Socialists at the weekend, with François Hollande replacing Nicolas Sarkozy as the French President, and an alliance of left-wing parties taking second place in the Parliamentary elections in Greece, and breaking the long-established hold on power of New Democracy and Pasok.
In the UK too, although voters stayed at home in droves during last Thursday’s council elections, there was a huge swing to Labour at the expense of the Tories and the Lib Dems, even though the Labour Party would be hard-pressed to describe itself as Socialist after its destruction of left-wing politics over the last two decades.
The swing is causing a huge stir in the EU, and with good reason, as the most savage manifestation of austerity is taking place in Greece, as a direct result of the banking world’s self-inflicted financial crash in 2008, which almost destroyed the world economy, and led to the unprecedented crisis we are now facing, as a result of massive bailouts, increased unemployment and reduced revenues. Literally a country that is being squeezed to death, Greece has been made to make such savage cuts that its economy is in terminal decline — and, of course, the suffering of Greece, is, to some extent, being echoed throughout southern Europe, with Spain as the most notable example of a country crippled with unemployment and unable to cope with the death spiral of savage austerity.
In response, some politicians at least appear to be waking up to the problems, which, in Greece’s case, are so severe that they are creating a humanitarian crisis. On Tuesday, the Guardian reported that the European executive “responded to the electoral earthquakes in France and Greece by calling for a shift towards growth across the EU,” as, in Greece, Alexis Tsipras, the 38-year old leader of Syriza, the coalition of radical left groups that took 16.8% of Sunday’s vote, “tore into the terms agreed by Athens for a €130bn bailout, threatening to nationalise the Greek banks and warning that Greece would walk away from its rescue deal with the eurozone.”
For fans of austerity, like Britain’s coalition government, who fail to see that it is stifling growth and entrenching misery, this is suicidal talk, but those who prefer to be involved in Europe, rather than merely carping about it, are listening. In Brussels, as the Guardian reported, Herman Van Rompuy, the President of the European Council, “called a special summit to be held in a fortnight” at which François Hollande, who has persuaded the European Commission to support his “demands for pan-European investment to generate growth and create jobs,” will “be able to unveil his proposals for tackling the Euro crisis.”
Olli Rehn, the Commissioner tasked with dealing with the Euro crisis, said, “We are seizing the moment to advance our proposals in the new political climate,” and, as the Guardian put it, “accepted that the weekend’s elections in France and Greece had changed the face of European politics.” Both he and José Manuel Barroso, the European Commission’s President, said it was “likely that EU leaders would agree next month to increase the capital of the European Investment Bank by €10bn, which could be used as collateral to inaugurate large infrastructure ‘pilot projects’ on a pan-European scale this year,” echoing similar calls made by Hollande on the French election trail.
The Guardian also noted that the European Commission has stated that “there is €82bn in unused structural funds from the EU’s medium-term budget which could be tapped to promote growth and jobs.” That is the equivalent of a quarter of the EU budget, and could therefore be a huge stimulus for growth, although, as the Guardian also noted, “Its use in this way is likely to run into stiff opposition from national governments.”
Despite this, Olli Rehn “signalled there could be a relaxation of tight fiscal conditions for countries struggling to meet binding budget targets,” which have largely been favoured as a response to the crash of 2008 for the last two and half years.
This plan, however, does not even extend in theory to Greece, where the bailout — and its attendant austerity — is subject to the punitive and inflexible terms set by the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF).
For Greece, of course, this remains a huge and almost certainly insurmountable problem, as I have been noting since last year, in my articles Crisis in Greece: Experts Call for Return of the Drachma, As Prime Minister Cancels Bailout Referendum, We Are All Greece: Expert Explains How the Greek Crisis is Being Manipulated by Banks and Governments to Enslave Us All, New Perspectives on the Euro Crisis, and the Need for Greece to Default, Can’t Pay, Won’t Pay: Greeks Rise Up Against Austerity and Greek Despair: Will the EU and the Bankers Finally Accept That Austerity is Killing Greece?.
Primarily, the problem created by the terms of the bailout fails to address the need for a return to the drachma, and the writing off of debts that no amount of austerity can combat, and that — if all players were to be honest — involved European banks and institutions recklessly lending Greece money that it couldn’t afford. As I see it, the injustice of making loans to countries that were never able to afford them, and then killing those countries in return, through economic strangulation, is neither just nor appropriate, and the Euro project has been such a failure that the only way out is for Greece to be able to devalue and reset its currency to be competitive once more.
While François Hollande has a ready audience in Brussels, Alexis Tsipras seems to be widely viewed as a dangerous outlier. Responding to the election result, he said, “The popular verdict clearly renders the bailout deal invalid,” aware that the radical left coalition he leads was just the largest of the parties opposed to the bailout, who, between them, took two-thirds of the votes on Sunday. Of the long-standing parties who have dominated Greek politics since the fall of the military regime, New Republic narrowly took the most votes (18.9%), but the mainstream centre-left Pasok was pushed into third place by Syriza.
Tsipras, whose “radical coalition was the moral victor of the Greek election,” in the Guardian‘s words, and who was “asked to try to form a government after an attempt by Antonis Samaras, the centre-right leader, collapsed within hours,” immediately “called for a moratorium on Greek debt repayments, an investigation of the Greek banks, and the lifting of immunity of Greek MPs to facilitate their prosecution if deemed appropriate.”
As the Guardian explained, he insisted that “the signing of the loan had not been ‘a salvation but a tragedy,’” stating that New Democracy and Pasok should “withdraw their support” for it. “The pro-bailout parties no longer have a majority in parliament to vote in destructive measures for the Greek people,” he said, adding, “This is a very important victory for our society,” and stating that “[t]earing up the letters of guarantee they had given creditors would be evidence that “they truly regret what they have done to the Greek people.”
At the time of writing, it looks unlikely that Tsipras will be able to put together a parliamentary majority, meaning that another election is on the cards, but I can see no reason why Syriza wll not continue to gain support. When supposed political prudence means the strangulation of an entire country, the time is ripe for different ideologies to resurface. Far left ideals, and the passion of those like Tsipras, with what the Guardian described as his “fierce denunciations of the inequities of austerity,” bring hope and engagement back into politics.
In France, François Hollande similarly tapped into discontent, and as the centre begins to no longer hold, another alarming truth is that, if the left does not invigorate voters, the fascists may succeed instead. In France, its was deeply disturbing that Marine Le Pen and her despicable Front National secured 6,421,426 votes (17.9% of the total). In Greece too, the fascists are on the rise, and with military dictatorship such a recent memory, that is troubling indeed. The Golden Dawn, thoroughly old-school fascists, also benefitted considerably from the backlash against centrist or centre-right politics on Sunday, gaining 7% of the vote (see here and here for disturbing accounts of these Neo-Nazi thugs).
Despite the fact that the left’s anti-austerity message is powerfully resonant with populations who, understandably, are unprepared to be destroyed for something that was not their responsibility, Jörg Asmussen, Germany’s representative on the board of the European Central Bank board, warned that Greece “could be kicked out of the Euro if it reneged on the bailout conditions,” as the Guardian put it. In an interview, he said, “It must be clear to Greece that there is no alternative to the agreed restructuring programme if it wants to remain a Eurozone member.”
The markets reacted badly to the latest worries abort Greece, but, to be honest, that is both entirely predictable and morally irrelevant. Since last year, Greece’s suffering has been like a very modern war, in which the EU has declared hostilities against Greece, but is doing so through austerity rather than physical invasion by armed forces. The result, however, is the modern equivalent of an aggressive invasion, as disturbing reportage from the front lines has demonstrated. Jörg Asmussen’s gauntlet may not have the desired result if a radicalised Greece responds by stating that its alternative is to leave the Eurozone and start again.
Tsipras himself, as the Guardian noted, “says he wants to stay in the Euro, but with a radically different bailout deal and an easing of public spending cuts and structural reforms,” but a political impasse “could lead to a negotiated exit” and the return of the drachma if the EU concludes that “Greek politics is so fragmented and polarised that no conclusion is likely,” and enough Greek politicians eventually agree.