Greece, the EU, and the Democratic Conundrum

In this post, Nicola Countouris, Reader at the UCL Faculty of Laws, analyses the reasons why the Greeks may have rejected the creditor institutions’ economic and reform proposals. Arguing that frustration is not the only explanation for Tsipras’  win at the ballot box, and recognising the daunting challenge that lie ahead of the 19 Eurozone democracies, he argues that Europe’s constitutional envelope can be spacious enough to accommodate different versions of democratic economic and human aspirations.

For the second time in six months the Greeks have voted for a political project (which many have and will continue to describe as a ‘political adventure’) that runs against the grain of the unanimous expectations and imperatives of the EU institutions, the IMF, and the bulk of both centre-right and centre-left European governments. Against the odds, against the economic and reform instructions imparted by the lending institutions, and – many will say – against their best interest, the Greeks have refused to conform, and have flatly rejected on two occasions now, the politics of austerity.

For the past five months, the Greek coalition government led by the radical-left party Syriza, has been accused of amateurism, arrogance, and of being prejudicially committed to exiting the Euro. In the last week, since the stalemate in the negotiations between the Greek Government and the lending institutions representatives resulted in a call for a referendum on the latest ‘reform package’ proposals (which sources close to the Government describe as worse than those rejected by Mr Samaras in late 2014), these accusations intensified, reaching a level of paroxysm that might have backfired in the ballot box. In an attempt to raise the stakes of an already complex, tense, and delicate democratic exercise, Greeks were told by various European leaders that they were actually voting on Euro, Eurozone, and even on EU membership. ‘Yes, or else’ was the message that registered with most Greeks (of both camps). In retrospect, many will recognize that these threats, compounded with the duress imposed on Greece’s most vulnerable by the sudden death of the country’s banking system, resulted in the majority of Greeks feeling further belittled, patronized, misunderstood, and frustrated with the way they were being treated.

But most will also recognise that frustration is not the main, and certainly not the only, explanation for Mr Tsipras’ seemingly Midas-like touch with the Greek electorate. There are two other important, and to many (though not to all, apparently) obvious reasons why Greeks have been saying No to austerity and anything even remotely related to it.

The first reason is humanitarian. Dramatic as they are, the macroeconomic consequences of the austerity policies imposed on Greece (record levels of unemployment, a collapsed GDP, etc. etc.) are nothing compared to the abyss of poverty that has struck a large share of Greek society since 2010.

The second reason is one that economists in both the ‘No’ and the ‘Yes’ camps—but not the ‘troika’ institutions—have consistently recognised and explained: the Greek debt is simply non-viable and must be restructured. Any reform proposals that do not address the debt issue are simply going to be perceived as useless and will meet resistance. Greeks have understood this very simple point, and it would seem that, finally, so has the IMF.

Make no mistake – Greece is also desperately in need of structural and deep reforms in most areas of public administration, public policy, tax, finance, and market regulation. Reforms that, for reasons that I won’t dwell upon here, the previous Greek Governments have not been able or willing to deliver. Greeks are aware of that. The Greek Government is aware of that. But they also want a reform deal that will not worsen or consolidate the existing humanitarian and economic crisis, and will at least address the debt problem. To achieve that in the medium to longer term, they are – it would seem — willing to pay a price in the shorter term.

But can they get such a deal? Can ‘Democracy really defeat fear and austerity’, as Mr Tsipras keeps saying?

So far, these calls have been met with little favour in European circles, and from an opposition that, to cut a long story short, claims to be premised on similar democratic legitimacy and moral high-grounds. As swiftly put by Martin Schulz, the President of the European Parliament, on the night of the ‘No’ victory in the Greek referendum, Mr Tsipras may have been brought in with a mandate to end austerity but he represents, at best, the democratic mandate of one Eurozone Member State, Greece, against the democratic mandates of 18 other Eurozone democracies. In other words, ‘you are not the only democracy and do the maths, Mr Tsipras’. So, in a bizarre twist of fate, Greece’s plight would be the result of too much, not too little, democracy in the Eurozone.

The problem, dare I say, is both less complicated and more complicated than this crude and false ‘battle of democracies’ debate suggests. It is less complicated because a very basic principle in all liberal systems of government is that some fundamental rights of human beings should not be subject to any majoritarian dynamics. The massive and systematic violation of fundamental human and social rights that has mainly resulted from five years of austerity policies in Greece cannot find a justification in any democratic argument, no matter how twisted. Human rights experts have not failed to pick up on the simple point that foreign debt cannot be used to justify human rights violations.

But it is also more complicated, in that the EU does suffer from an important ‘democratic deficit’ problem that, if left unaddressed, will continue to make life difficult for the Greek and European governments, and more importantly for the Greek and the European people, in the weeks and months to come. Since the 1992 Treaty of Maastricht, the EU has done something that no other modern European constitutional democracy has ever contemplated. With the adoption of the Maastricht criteria first, and their more recent firming up through the Fiscal Compact, it has progressively constitutionalised a particular and increasingly narrow variant of a specific economic system. It has conferred constitutional value to a neo-liberal and monetarist inspired market capitalist model, premised on very tight public spending, macroeconomic rigour, and a rigid economic governance structure that — it also turns out — is clearly not fit for purpose. Apparently, this model has been put on such a high legal and political pedestal, as to be no longer within the reach of democratic contestation. Historically, constitutions have dictated the rules of the game, not the outcome. It is increasingly hard to see how the EU, under its current constitutional and political arrangements, can accommodate other variants of market capitalism, for instance variants inspired to Keynesian principles or social democratic traditions, including its own Article 3 TEU ‘social market economy’. It is even harder to predict the extent to which it could be inclined to assist the Government of a small member state that is staunchly resisting the ‘pensée unique’ of Austerity (with a capital ‘A’).

The task that the 19 democracies of the Eurozone will be facing over the next few weeks is therefore daunting, but at the same time vitally important for the future of the European project. This task is to save Greece, by demonstrating that economic rationality and human solidarity can go hand in hand — but also to save the European project, by demonstrating that its constitutional envelope is spacious enough to accommodate (slightly) different versions of equally legitimate and democratic economic and human aspirations.


Nicola Countouris is Reader in Law and Co-Director of the Labour Rights Institute at the  UCL Faculty of Laws.


Note: The views expressed in this post are those of the author, and not of the UCL European Institute, nor of UCL.

2 thoughts on “Greece, the EU, and the Democratic Conundrum

  1. Gregory Pelecanos 6 July 2015 / 1:13 pm

    Dear Cousin Nicola,
    You are correct in that the issue is highly political.and that Greece needs deep reform. It has all the characteristics of a failed State as described in Acemoglou’s and Robinson’s “Why Nations Fail”. However the current crisis goes far beyond traditional politics or legal analysis, or even ethics. It is, in my opinion, a mistake to analyse the Greek issue in terms of liberal politics. It should be analysed in terms of left wing class-divisive politics. For what a Left wing party elected to office in a Western democracy would do look at R. Miliband’s, Marxism and Politics (final chapter). SYRIZA’a economic theory is that because of dynamics of capitalism, peripheral countries cannot develop and should not develop in the capitalist system (see S. Amin, Capitalism in the Age of Globalisation). If one reads their lead theorists – who are to a large measure in line with S.Amin, such as EMP Yiannis Milios (Theories of Global Capitalism, in Greek) the answer is rather that they should break away and achieve this by controlling the State and imposing a State economy.To do this with the support of the people, vital according to Miliband, they must discredit the current preference for Europe and often institute direct democracy through referenda.Despite Tsipras insisting that the Euro is not in doubt, the euro is not a fetish, as is repeatedly chanted by the likes of Prof. Lapavitsas (LSE) an MP. iIn light of the above, one can only wonder whether the so called “negotiation” was actually designed by the Greek government to drive the country out of the “clutches” of global capitalism.The “measure mix” is a political problem, not a technical one, and indicative of the tendencies. The Greek government is heavily left wing. It rejects reforming the State apparatus because its ideological leanings are towards the public not the private and would want to see a public command economy. In the same line of thought it rejects privatisations,. Both State reform and privatisation could bring billions to the fiscus. But the Governement does not want this. Thus their proposals are towards taxing the rich, which incidentally includes anybody earning over 30.000€, below the poverty line in most western countries. They are Left wing, not social democrats. They are not interested in reforms within the system but reforms that change the system. SYRIZA is deliberately moving towards establishing a left wing command economy and State. Independent Regulators are under attack because in the Government’s opinion there is no room for Independent Regulators: their functions should be undertaken by the State. Opinions have to conform with the Government line or else one is branded as non patriotic.The private media are branded as the Oligarchy and threatened with closure over licensing issues (which even if true, is scary in view that the Government reinstated the public TV-Radio ERT which is staunchly pro government). Telecom licences are also being re-assessed, leading probably to an attempt to re-gain control over OTE the Greek privatised telecom company. Energy is out of reach of privatisation.The Greek government could have implemented efficiency orientated changes in the tax system and could have clamped down on tax evasion and illegal forms of trade (oil/ cigarretes smuggling etc) which could have brought more revenue to the State. After all its been in power for 6 months. Rather it has abstained from doing so. Its domestic policy has been two-fold, first provide amnesties to tax doggers and the like in order to gather a war chest (incidentally reinforcing the very negative attitude of people towards taxes, compounding a problem they will have to confront) and cementing their power base by promoting the “humanitarian package)”.

    Why has Greece come to this?. The problem could have been resolved a long time ago, but for cultural (Greece missed the Enlightenment and has always been a mixture of East and West, see P.L.Fermer’s “Roumeli”) and historical reasons (Orthodoxy and mistrust towards the West, refer back as the repeated attempts by the Byzantine emperors to unite with the West, repeatedly scuttled by the Church and the oriental culture of the people). Western discipline has always been difficult for the Greeks. To demand debt relief and additional assitance without substantial reforms is against the EU/ Euro rules and the practice of the IMF and international institutions.Its a “quid pro quo” which is emedded as such in Western culture, but not accepted by the average Greek.

    Does this all seem as “conspiracy” theory? I do not forget that the Greek Communist Party engaged in civil war not 50 years ago and that the Left although defeated, possess the high moral ground in Greek national consciousness.

    A prediction for the future? Difficult, but I do not exclude a general election. Already Tsipras has engaged all the liberal parties in a dialogue, framed by the referendum, and which will, in my opinion fail to re-open substantive negotiations. In that manner he will not bear the exclusive blame for failure and economic collapse. The “foreigners” will be at fault once more and no political party will be able to say otherwise. At the same time he elevates his image and public support to his leadership. In the event of a general election he will then sweep the floor with his opponents and gain absolute majority in Parliament without need for allies. That’s when the real transformation will begin.

    I fear for freedom and democracy as we know it.

    Like

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