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The fate of Greece raises serious questions for all

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On Monday last, Greek Prime Minister, George Papandreou, appears to have suffered a rush of blood to the head, of the kind that used to afflict Taoiseach Brian Cowen in the final days of the latter’s ill-fated regime, and now looks likely to hasten his own political demise.

Noon today and the Greek government appeared on the point of collapse, some forty eight hours after Prime Minister Papandreou made his ‘shock’ announcement to call a referendum to give the Greek people a say in whether or not to accept the bail-out package painstakingly carved out by the EU a few days earlier and on which the ink was barely dry.

Reminiscent too of the fractious Cowen- Lenihan relationship, Papandreou had not informed his Finance Minister, and former leadership rival, Evangelos Venizelos, of his referendum gambit. Nor had he told anyone in the EU. Not the architects of the EU deal, Angela Merkel and Nicolas Sarkozy, not the EU Commission, nor anyone else either. Worse, he had apparently added insult to European injury by writing a letter to the EU demanding a renegotiation of the bailout terms.

“We have faith in our citizens, we believe in their judgment and therefore in their decision,” Mr. Papandreou was reported as saying as the political clamour from the Greek opposition for an immediate general election intensified in the wake of his referendum call.  In the market turmoil that followed, as trillions were wiped off European stocks – much more than might have been required to fix the Greek problem in the first place – Mr. Papandreou received a summons to appear at the G20 Summit in Cannes to account for himself and his actions to the French and German leaders. He was given an ultimatum: Hold a referendum on membership of the euro within the next two weeks. Otherwise, the transfer of the 8bn euro tranche of bailout funding from the IMF and EU that Greece needs to draw down this month, in order to avoid sovereign default, will not occur.

On the flight home from Cannes, Mr. Papandreou is believed to have turned a deaf ear to his Finance Minister who, immediately on arrival in Greece, issued a statement stating his opinion that the Greek people should not be asked to make a decision on membership of the euro in any referendum. As support for Mr. Papandreou, within his Cabinet and his PASOK party, disintegrates, it seems unlikely the Prime Minister can survive a parliamentary vote of confidence on Friday if he even lasts that long. At this point, a government of national unity comprising the two main parties, PASOK and New Democracy, may be a preferred option to a general election that might fail to deliver any decisive result or possibility of political stability.

Mr. Papandreou’s foray into direct democracy on the EU bailout plan raises profound issues. By any standards, if the Greek Prime Minister was motivated in his call for a referendum by issues of personal political self-preservation, then his behavior must be deemed both reckless and irresponsible. But all that’s secondary to questions about what austerity politics and inadequate European responses to the debt crisis are doing to the lives of people not just in Greece, but here in Ireland, in Portugal, in Spain, Italy, even in the non-eurozone debt-burdened UK. Add to that  the agonizing doubt that the price being asked in employment and public services, and the suffering inflicted across whole swathes of society, by this policy can deliver any positive redemption in the long run. It also raises questions about where the EU is going; in particular the shift in power towards France and Germany away from the ‘Community Method’ and the EU Commission, and whether the concept of a European Union itself is politically sustainable, even in the medium term, under such a model of governance.

In terms of our own national politics, serious scrutiny of the current strategy of our own government is also warranted. It’s difficult though, since government strategy is frustratingly obscure and confounded by habitual resort to stupid PR speak and spin by the Taoiseach and his ministerial colleagues, as recently exemplified in the case of the Anglo bond payout. Is it the case that the leadership of our government are incapable of making any impression on the EU in respect of Ireland’s interests? Or are they pursuing the wisest course in the present circumstances by playing a version of the three wise monkeys on the EU stage in the hope that whatever crumbs fall from the EU table, as the debt crisis resolution process works itself out, will inevitably accrue to our benefit?

If Greece implodes politically and economically, we’re likely to find out the hard way.

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11 Responses to “The fate of Greece raises serious questions for all”

  1. # Comment by Donal O\'Brolchain Nov 4th, 2011 12:11

    @Veronica
    “In terms of our own national politics, serious scrutiny of the current strategy of our own government is also warranted. It’s difficult though, since government strategy is frustratingly obscure and confounded by habitual resort to stupid PR speak and spin by the Taoiseach and his ministerial colleagues, as recently exemplified in the case of the Anglo bond payout. ”

    “Providence never intended to make the management of public affairs a mystery to be comprehended by a few persons of sublime genius. ” J. Swift

    Yes, the current situation is another example of just how serious of our way of governing ourselves is. The governing elite still seem to believe in the mushroom style of doing things – keep them in the dark and throw a-four-letter-scatalogical entity (used by George Hook) at them.

    This government tried just that management tactic/strategy (which IMO is the default position of the governing class) with the Oireachtas Enquiries referendum over the past few weeks.
    The result of that failed effort suggests the truth of Pericles of Athens observation “Although only a few may originate a policy, we are all able to judge it.”

  2. # Comment by Veronica Nov 4th, 2011 13:11

    @Donal,

    Apt and impressive quotations! You obviously have a store-full of them?

    A few points arising from the current debacle on which you may have an insight: (1)Small peripheral countries beware (i.e. Greece, Ireland etc.) – you can, and will, if you threaten its stability in any way (e.g. Papandreou’s referendum caper), get kicked out of the EU, irrespective of whether or not any formal ‘legal mechanism’ exists for that purpose;(2)Same does not apply to larger ‘core’ EU member states, who will be granted much more latitude because of their strategic importance or economic position, irrespective of how much they bend/disregard the rules; (3) The centre of gravity has shifted within the EU to the powers that be within the EU Council and the other institutions, the EP and the Commission, are increasingly exposed as weak and irrelevant; (4)It’s arguable that the EU Humpty Dumpty can ever be put together again.

    As for national political reform, I think the result of the Dublin West by-election might have commanded more attention were it not for the rest of the stuff that overshadowed it. The candidate who won, Patrick Nulty, and the candidate who came second, David Mc Guinness, are both in their twenties. Ruth Coppinger also showed herself an able and intelligent candidate.

    Their respective party labels are one thing, but their respective passion for change and reform, and their personal integrity, made a favourable impression on anyone who came across any of them during the election campaign. Nulty’s core message, obviously sincere, was that he was putting himself forward as a ‘representative of the people’. You’d almost have to feel sorry for him, since in the next breath he was obliged to concede that in Leinster House he will, in all circumstances, be obedient to the party whip. His representative capacity has been been emasculated by the party system, and the arcane procedures of our national parliament, before he even gets a chance to open his mouth, and he is reduced to being just another footsoldier in the government lobby. Whatever little reform is achieved, it’s going to have to come from vociferous lobbying from the outside. We’re all ‘the opposition’ now.

  3. # Comment by Donal O'Brolchain Nov 4th, 2011 14:11

    @Veronica
    re. EU
    The golden rule applies – they have the gold make the rules.
    re. Patrick Nulty and the other canadidates as “representative of the people”
    Plus ca change, plus c’est la meme chose!

    At some stage, I am sure that the penny will drop that the only way to improve the power of
    1) the directly elected representative to be just that
    and
    2) the government to govern competently, sustainably and honestly
    is to separate the two functions from one another.
    At present, the constitutionally mandated tie between both the roles means that any increase in the power of one is at the expense of the other. At present, our way of governing ourselves is close to a zero-sum game.
    Without cutting the tie between them, neither function can really be improved.
    By cutting the tie, improvements to both can focus on government by law, rather than whimsical and arbitrary action – of the sort that could have all too easily emerged from this Government’s proposal for Oireachtas Enquiries.

  4. # Comment by A Humble Chestnut Roaster Nov 6th, 2011 12:11

    ‘Reform’, like ‘problems’, is a key word of the not-very-thinking, leftish, PR guff lexicon.

    It sounds good, like motherhood and apple pie – but does it actually mean anything?

  5. # Comment by Donal O'Brolchain Nov 6th, 2011 21:11

    @AHCR

    “Reform” can actually mean to re form or re assemble or put together again or change to reflect new values/better udnerstanding of old values so that some existing ways of doing things are dropped, other modified/improved and new one introduced

    The issue here in this Republic is that some of the new things we have brought in have been rolled back eg. the 1997 Freedom of Information Act was spancelled by the 2003 Act – brought in at the behest of senior civil servants after the 2002 General Election, when it was not an issue see here

    http://www.thepost.ie/archives/2003/0316/a-basic-right-for-citizens-182315047.html

    and here

    http://politicalreform.ie/2011/09/30/seanad-public-consultation-committee/comment-page-1/#comment-6037

  6. # Comment by EddieL Nov 8th, 2011 18:11

    It looks like we are headed for a collapse of the €uro project. So instead of reducing the wages of the poor and middle-class under the €uro while increasing the wealth of powerful elite we will see a return to the Punt under which there will be an immediate devaluation. This is what we should have done long ago. If anyone wants to know why this course is now inevitable clink on the link:
    http://maxkeiser.com/2011/11/08/kr207-keiser-report-the-fed-the-treasury-the-holy-troika/
    The Germans will then dump Western Europe including France because they see their future having more in common with Russia than Western Europe, a bankrupt and war-making servant of the US.

  7. # Comment by Donal O\'Brolchain Nov 8th, 2011 18:11

    @EddieL
    Interesting idea – that Russia and Germany tie their interests to one another.

    The last time that was tried, it ended in an awful lot of tears – to put extremely mildly – as both found that their particular forms of war-making was absolutely merciless.

    To what extent is “devaluation” a silver bullet which means that existing ways of doing things – in the non-traded sectors in particular – can continue as before?

  8. # Comment by A Humble Chestnut Roaster Nov 8th, 2011 19:11

    What Europe and the Euro need is for member countries to start meaning what they signed up to in the Treaties regarding limiting the size of budget deficits and public debt, and committing to the imperative of low inflation. Instead we align ourselves too readily with the money illusion so popular in the UK during the Labour years. We need to hold the line against emerging inflation which destroys competitiveness, living standards, assets, savings and motivation. We can’t go on living like overlords off the work of people in developing countries.

  9. # Comment by EddieL Nov 8th, 2011 23:11

    Donal: I see your point but when you consider the absolute necessity for a balance of power you see that with America seeking world domination along with the economic rise of China and India the balance of power is no longer confined to European empires. With the war on Libya where France, Britain and Italy danced to the American tune along with the IMF hand in the chaos of the banking sector Germany has become the odd-one-out in Europe(not the first time)so it has to look elsewhere for friends and a marriage of German technology and Russian resources as the most sensible solution if both are to survive when the going gets tough as now looks very likely (note the recent pipeline directly to Germany from Russia).
    As regards leaving the €uro and devaluation the idea of a monocultural world is now dead so we have to go back to a time when we had total control of our own affairs. This means that we have no option but to ditch all the ideas that a tiny open economy will be allowed to survive in a world where countries with the power to do so will literally use all means at their disposal to destroy any country they put their evil eye on. Even large countries like Italy are now discovering this.

  10. # Comment by Donal O\\\'Brolchain Nov 9th, 2011 00:11

    @EddieL
    I suggest that the era of US world dominance has passed – just as the Wall Street crash following WW1 signalled the end of Britain/France/Germany as world powers being replaced by the US – still heavily influenced by Europe, when it looked outside itself

    As you rightly point out, the major locus of economic acticity is now the East – a place to which the US has shifted its major attention years ago.
    Trouble is that the US has been involved in many resource-sapping wars since WW2

    Of course, the major European countries will not cease to be influential nor will the US.

    IMO, since the foundation of the state, we have never had total control of our own affairs. For years, we were in a currency union with Britain (which ran its policy to suit itself) which meant all kinds of balnace of payments constraints.
    Similarly, our agricultural prosperity depended on access to British markets dominated by a cheap-food policy.

    Over years, Irish people have shown that we seek a higher material standard of living. During the 1950s, so many voted with their feet that there were editorials asking the last person to leave to switch off the lights.
    There was similar emigration during the 1980s.

    I suggest that a higher material standard of living means that we have to trade (eg. the lights would really go out unless we imported the fuels needed to generate electricity, together with the capital equipment needed for generation, transmission and distribution).

    Other “tiny open economies” seem to be able to provide good sustainable standards of common prosperity for those who wish to live and work in places like Finland, Denmark, Austria.

    I do believe that our current difficulties arise primarily from our own bad government over years compounded by disastrous decisions on the banks in 2008.
    What is worse, we made similar mistakes during the 1980s with AIB/ICI and PMPA.

  11. # Comment by EddieL Nov 9th, 2011 10:11

    Donal: America is weak but that makes it more dangerous. If we want a higher standard of living we have to earn it. Most of the world is now borrowing to buy poor quality Chinese goods which become obsolete at an alarming rate.
    Obviously we can never be insulated from the outside world but that does not mean we have to abandon total control over our own affairs. The fifties were tough times but we were not in as much debt as we are now.
    Our current difficulties arise from adopting an American model of economics – house-building for non-existent occupiers, no regulation of a corrupt financial services sector, importing manufactured goods etc.
    So to sum up, instead of pretending we can compete with China, Germany etc we should rely on what we have – mainly food production, education, health service provision, transport provision etc, all the things we did well in the fifties instead of importing them.

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