European officials are finally acknowledging that democracy matters.
After their initial hostile reaction to the new Greek government’s pleas for a review of the country’s crushing debt, EU leaders finally seem willing to compromise—for now.
The hardball approach of Greece’s new finance minister, Yanis Varoufakis, may have unnerved them.
“Do we really want Europe to break apart?” he asked. “Anybody who is tempted to think it possible to amputate Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us? Portugal? What would happen to Italy when it discovers that it is impossible to stay within the austerity straitjacket?”
His tough talk is popular in Greece.
“Thousands of Greeks took to the streets of Athens on Wednesday to support their new anti-austerity government which was locked in tough negotiations with eurozone partners in Brussels,” Reuters reports. “A poll on Tuesday showed 75 percent support in Greece for the government’s stance.”
The ascension to power in Greece of Syriza, an avowedly progressive party, has greatly enhanced people power.
“Alexis Tsipras, the new prime minister, summed it up when he said, ‘Democracy will return to Greece,’ ” Mark Weisbrot, co-director of the Center for Economic and Policy Research, tells The Progressive. “Greece has had a six-year depression directly prolonged and deepened by very wrong decisions over which it had little or no control. The election is an attempt by the citizenry to regain some of that democratic input that they have lost to unaccountable European authorities.”
Nobel laureate Joseph Stiglitz backs up Weisbrot’s assertions.
“Seldom do democratic elections give as clear a message as that in Greece,” he writes in a syndicated column. “If Europe says no to Greek voters’ demand for a change, it is saying that democracy is of no importance, at least when it comes to economics. Why not just shut down democracy, as Newfoundland effectively did when it entered into receivership before World War II?”
Paul Krugman writes that much of this democratic enrichment is because the new Greek leaders, unlike their other European counterparts, are immune to the usual blandishments.
“Alexis Tsipras is not going to be on bank boards of directors, president of the Bank of International Settlements, or, probably, an EU commissioner,” he states. “Varoufakis doesn’t even like wearing ties—which, consciously or not, is a way of declaring visually that he is not going to play the usual game.”
Weisbrot tells me that the Greek elections mark an inflection in policy for the whole of Europe.
“Whatever happens, it is clearly a turning point: European authorities may compromise and allow Greece to recover faster; or (less likely) they may force Greece out of the euro,” he says. “In the latter case, although there would be an initial crisis, Greece would recover more quickly than other countries and more would want to leave the euro. So, either way, the current austerity/ neoliberal social engineering model will come to an end.”
It is important to understand the meaning of “austerity,” a term frequently used when it comes to discussions of economics in Europe.
“The precise nature of austerity varies from country to country, but the underlying principle is the same,” Sameer Dossani, global advocacy coordinator for ActionAid International, explained to The Progressive some months ago. “Advocates for austerity argue that the reason Europe’s economies are flagging is because they spend more than they should. So they argue for cuts in the budget, often threatening the social welfare state (but not the corporate welfare state or the military welfare state).”
But, as Stiglitz, points out, the same bad austerity prescriptions have been applied all over the continent—with equally bad results.
“Greece could be blamed for its troubles if it were the only country where the medicine failed miserably,” he writes. “But Spain had a surplus and a low debt ratio before the crisis, and it, too, is in depression. What is needed is not structural reform within Greece and Spain so much as structural reform of the eurozone’s design and a fundamental rethinking of the policy frameworks that have resulted in the monetary union’s spectacularly bad performance.”
Weisbrot says that even the Germans, famously intransigent, may be forced to change their stance.
“Most likely, the Germans will accept a compromise that allows a faster recovery in Greece, and then this will influence other countries as well, including Spain, which may elect the left party Podemos,” he says. “However, this is not guaranteed. There are some pretty extreme people in the negotiations, including German Finance Minister Wolfgang Schauble.”
The United States, as always, is going to play a crucial role.
“And then there is Washington, which has a lot of influence over Germany,” says Weisbrot. “So far, President Obama’s statements have been positive, urging the German government to compromise. But this could change if Washington thinks it has an opportunity to get rid of Syriza without forcing Greece out of the eurozone.”
Thus is much more than an academic policy debate. The result will have real impact on individuals.
“Doctors have reported shortages of basic hospital supplies, ranging from gloves to cotton wool,” wrote Dr. Adam Gaffney for Dissent magazine a couple of years ago, describing the effects of austerity on the Greek medical system. “Nurses have complained about huge increases in their patient loads. Waiting times increased, with one physician telling The New York Times that breast cancer patients were waiting three months to have their tumors excised. Despite large increases in the rates of depression, spending on mental health actually fell by 45 percent. Significant reports of drug shortages came in from across the country.”
For the Greek people—and commonfolk across the continent—the victory of the Syriza party in Greece should be a much-needed tonic.
Amitabh Pal is managing editor of The Progressive.