It would be true to say, as John Redwood has pointed out, that the entry of Greece into the Euro a decade and a half ago was sheer hubris and folly. That hubris has been shown up for what it was since 2010. During this time, Greece has been subjected to so-called ‘austerity’ measures that have brought the country to its knees and have, five years later, not produced any improvement and indeed very much the opposite. In some areas, unemployment has risen to 60% and Greece’s banks are now closed.
In the last few weeks and months, we have seen a troika of New Imperialists – Christine Lagarde of the IMF, Jean-Claude Juncker, President of the European Commission and Angela Merkel, Germany’s Chancellor, openly bully and strong-arm the democratically elected Prime Minister of a sovereign nation, Alexis Tsipras. It has been an absolute disgrace and an affront to democratic principles. We saw heavy-handed and insensitive ‘diplomacy’, that was clearly intended to undermine Tsipras and to coerce him into capitulating to yet more horror and misery. The result was that Tsipras did the one thing the New Imperialists hate the most — he decided to ask his own people what he should do. He actually dared ask for a democratic mandate. What impudence!
That is the one thing the New Imperialists insist must never happen. The European Project, the euro zone and the world’s financial system operate through deals being done that are not given a mandate by popular vote, which then can never be undone — or so they would like to think. The very concept of a referendum is anathema to them: political solutions are for the senior members of the diplomatic cabal to impose on the people.
They can never come out and openly say that they regard democracy as an inconvenience to be subverted and steamrollered whenever it suits them. But we are all supposed to play along with the blatant pretence that they think democracy has value. The lies, deceit, and sheer contempt, of the New Imperialists, are manifest in their tactics with Tsipras: they intended to browbeat him into ignoring the will of the people who had elected him. Instead he threw it back in their faces and turned the matter over to that people.
And in so doing, Alexis Tsipras has shown himself to be that rarest of the rare: an honest politician who respects his mandate. He has shown exactly what his opponents, the bullies who would compromise him, do not have: integrity.
The vote, a referendum on the terms under which their misery will be prolonged, how much more shame and suffering Greeks must endure, will be held on Sunday. How will they vote?
Had Greece had an independent currency, it would have devalued in 2010. This would have stimulated inward investment and exports. Greece is not a major exporting nation but it is still a significant part of the economy. However, Greece relies heavily on tourism, which always benefits from a low currency.
At the same time, its central bank would have minimised interest rates to stimulate growth and reduce the cost of debt servicing. It would have had to accept a reduction in its national credit rating, but the corollary would have been that it would simply have written off a significant amount of the debt that it ‘owes’. The government, risking a small amount of inflation, would have printed more money — exactly as the UK did. It may even have issued new bonds — in drachmas, not euros.
There is no reason why Greece should not have been successful if it had been able to do this. Instead, it has been nailed to the cross of a failed neo-liberal economic model. The ’emergency bail-out’ money, paid since 2010, did not go to Greece, but to foreign banks demanding their viggerish. In other words, yet again, taxpayers’ money in other European nations is being spent to keep their own profligate and dysfunctional banks operating, while calling it a ‘bail-out’ to a Greek economy that is only in the mess it is because of those very lenders’ slavish adherence to a discredited ideology.
There is no doubt which way Greeks should vote on Sunday; they should vote ‘No’ to the ridiculous demands for further ‘austerity’.
This will give Greece a unique opportunity that it must grasp: to free itself from the straitjacket of the euro and once again manage an economy in its own interests, not those of Europe’s paymaster, Germany.
Greece should reintroduce the drachma as soon as it can get the presses rolling. It should establish a favourable exchange rate against the Euro; this will mean that savers will not lose out in the exchange but at the same time, that the economy will be attractive to investors.
It should default, as Iceland did, on all debt. If it agrees to honour any at all, this should be on condition of a five year renewable repayment holiday, during which time, no interest will accrue. Further it should insist that any such debt will be repaid, ultimately, in drachmas, not euros. If creditors refuse to accept these terms, Greece should consider itself under no obligation to repay them.
It should immediately make overtures to China, which has immense reserves of capital ready to invest and will do so. Russia has no money, so no matter how politically attractive that avenue might be to Tsipras, it is doomed to failure. But opening upGreek investment markets fully to China is a real possibility. After all, the British, themselves not burdened with the euro, are doing exactly that.
Yet underlying all this is a simple fact: Greece accounts for 2% of the euro zone economy. Europe could easily — so easily that no-one would even notice — just write off the Greek debt and return it to a zero balance.
It won’t for political reasons. The power players in the euro zone do not care about Greece in itself; they worry about the message they might send to Italy, Spain, Portugal and to a lesser extent Ireland, should they appear ‘soft’ on Greece. A Greek exit from the euro would be a gnat-bite; were Italy, Spain and Portugal to follow suit, it would provoke an existential crisis for the euro and perhaps an end to the European Project as it is now understood.
At the same time Euopean leaders are viscerally opposed to the idea of countries outside the euro zone being able to trade freely with it while setting their own interest rates and fiscal policy — which is exactly what Greece, and should they also decide to grow a backbone, Italy, Spain and Portugal would become. It’s a Domino Theory that has teeth.
This is also an ideological conflict. Alexis Tsipras, the Greek Prime Minister, is a radical Leftist and the established authorities on Europe have drifted so far to the right, to satisfy Germany, as to be totally hostile to everything he stands for — like equality, justice, social inclusion and fairness. They want to see him humiliated, and they want, through that, to humiliate the Greek people, so that they will toe the neo-liberal economic line; even though that line has been a failure across Europe.
Forcing Greece to suffer unnecessary ‘austerity’, to a level that would get Merkel booted out of office were she to try it at home, is as nothing to the New Imperialists. Above all else, on their agenda, is that the other peoples of Europe do not discover ‘austerity’ for the sham that it is, a means of taking money directly from the poorest and weakest and giving it to the richest and strongest.
At every turn the essential, governing principle of democracy has been, is being and will be corroded and debased by the neo-liberal economic system until it is destroyed. That principle is simple: it is that ‘sovereignty resides with the people’. This is the foundation of modern democracy, and it is under threat from every side; from unelected supra-national organisations like the European Commission, the International Monetary Fund and even the United Nations; from a network of quangos and appointees at both supra-national and sub-national level, and by trade agreements that allow corporations to sue populations for making decisions that affect only the territories they are sovereign over.
We have gone so far in allowing the democracy that is perhaps our most precious asset to be stripped from us that it will now take catharsis to turn the tide, to begin to reclaim some of that which is rightfully ours.
Greece stands on the cusp, the tipping point of the balance. Which way will the people vote? We don’t know. The Greeks have steadfastly endured a horror of ‘austerity’ that has come close to destroying their country and has ruined the lives of millions. Perhaps they will, like a drowning man, clutch in shame at the straw offered by the New Imperialists — submit to yet more horror and abuse and we will let some scraps from our table fall your way, if we think you’ve been good enough.
But perhaps they will not. Perhaps they will remember that it is to them that we owe democracy itself and will vote down the troika’s vicious proposition, which can only lead to more suffering and, in fact, only a delay of a year or so in Greece’s inevitable departure from the euro. Perhaps the spark of defiance that they have showed so often before will kindle again.
Perhaps they will show that democracy is a precious thing, not to be sold for a pittance. That sovereignty is all we have and if we let it go, then we condemn ourselves to perpetual slavery, to the dominion of the New Imperialists.
The voters in the Greek referendum should consider very carefully on Sunday. They have the choice to re-establish the rule of democracy in their own country instead of being dictated to by people who are either unelected or whom they did not elect. Yes it will be difficult for a while should they leave the euro, but they will survive and their country will be stronger for it.
More than that, they will not only be voting for themselves, but for the rule of democracy, and to relight the candle of hope for the rest of the world. If they do so, they will be owed a huge debt of gratitude by everyone else on the planet.