The
Guardian view on Greece and the euro: no money left
Editorial
Sunday 28 June 2015
20.07 BST /
http://www.theguardian.com/world/2015/jun/28/the-guardian-view-on-greece-and-the-euro-no-money-left
Deadlines have come
and gone before, but Tsipras’s referendum pledge has finally forced
a denouement. Creditors must rethink a failed austerity policy, and
the political risk of painting themselves as the enemies of the Greek
people
Something was bound
to snap in Greece, and now it has. Over six years, jobs have
vanished, hope has been smothered and a generation of progress in
living standards has been reversed. Suicides soared among stricken
individuals, and the collective sense of sovereignty shrivelled. The
nation has been crucified on the cross of a currency that it should
never have been allowed to join. It awakes to discover the extent of
restrictions on accessing its bank accounts.
Step back from the
immediate row over proposals and counter-proposals, under which
Alexis Tsipras drew a sharp line on Friday with his midnight pledge
for a referendum, and this is the real backdrop to Athens’s abrupt
decision to stop playing the European game. Fiery and inexperienced,
the Greek prime minister has breached all the rules of diplomacy,
failing to warn his counterparts about his plebiscite before going
public, and perhaps depriving himself of a last bit of leverage in
the haggling over bailout terms. His rhetoric contrasts his own
mandate with the presumptions of callous technocrats, ignoring the
mandates of creditor governments. That threatens the space in which a
European club of 28 members is fated to find compromise. And the
question he will put to the voters – whether they accept the
creditors’ terms for extending a bailout that is now set to finish
five days before Sunday’s vote – is arguably a nonsense.
No surprise, then,
that the initial response of the eurozone finance ministers meeting
in Brussels was to insist that the bailout would indeed end on
Tuesday. Greece’s Yanis Varoufakis, the sole dissenter, had to pack
his bags. A mood of “let Greece go” was taking hold. But by
Sunday evening, there were signs of second thoughts. After briefing
that it would not be able to provide the Greek authorities with the
extra euros required to keep cashpoints working, the European Central
Bank clarified that pre-existing assistance was not being cut off.
The European commission published the creditors’ previously
take-it-or-leave-it proposal, but now insisted that the plan had
always been to marry this stringent short-term scheme with debt
relief down the road. Soon Christine Lagarde of the IMF, too, put out
a statement advocating debt relief and further talks.
The creditors’
rethink could be a ruse to destabilise Mr Tsipras ahead of his
make-or-break vote. But let’s hope it is sincere. If the markets
have seen one corner of the eurozone break away, there will be
permanent and costly speculation about where the next crack will be.
The creditors need to have the humility to recognise that their
austerity programme has failed. None of the hardship has made Greek
debt more sustainable, yet still they demand more. The loss of about
5% of UK national income in 2008 could be answered by pumping in a
fiscal injection of 1% GDP. Greece, where 25% of the economy has
disappeared, is instead asked to offer up a fiscal blood donation,
whose direct effect is withdrawing 1% of demand.
Most fundamentally,
an EU whose democratic credentials are under populist assault from
Britain to Budapest needs to avoid reinforcing a damaging caricature.
It helped kill the Greek government of George Papandreou after he had
proposed a controversial referendum on bailout terms in 2011.
Strong-arming a second administration out of consulting a suffering
populace could look dangerously like haughty contempt. A club of
democracies cannot afford to set itself up against even one demos.
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