Geoffrey Hosking, Emeritus Professor of Russian History at UCL’s School of Slavonic and East European Studies, gives his view of what went wrong before and during the Greek crisis, and of the challenges that now lie ahead. To him the problem is centrally one of a lack of trust.
The Greek crisis goes back a long way, and at several stages demonstrated the dangers of a loss of trust.
The epic began with the creation of the euro, which was set up without several of the trust-generating stabilisers of national currencies: a common fiscal policy, a central ministry of finance and a central bank empowered to act as a lender of last resort. Without these essentials, the euro lacked the full and credible commitment of all its members, an essential prerequisite of mutual trust. A member nation could no longer cope with serious crises by devaluing its currency, yet no provision was made for a solidarity fund (the euro equivalent of the IMF) to deal with crises collectively.
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.
Ashoka Mody, Visiting Professor at Princeton University and former Deputy Director in the IMF’s Research and European Departments, critiques the IMF report published on 2 July, on the eve of Greece’s referendum. This report found that Greek debt was not sustainable and deep debt relief along with substantial new financing was needed to stabilize Greece. This report, according to Mody, reveals that the creditors negotiated with Greece in bad faith. He suggests that the Greek debt burden is much greater than portrayed by the report, and that the policy measures proposed to reduce that burden, including more austerity, will make matters worse. This article was first published on bruegel.
On 2 July, the IMF released its analysis of whether Greek debt was sustainable or not. The report said that Greek debt was not sustainable and deep debt relief along with substantial new financing were needed to stabilize Greece. In reaching this new assessment, the IMF stated it had learned many lessons. Among them: Greeks would not take adequate structural reforms to spur growth, they would not sell enough of their assets to repay their debt, and they were unable to undertake sufficient fiscal austerity. That left no choice but to grant Greece greater debt relief and to provide new financing to tide Greece over till it could stand on its own feet. The relief, the IMF, says must be provided by European creditors while the IMF is repaid in whole.
In this post, Kalypso Nicolaïdis, Professor of International Relations at Oxford, and Othon Anastasakis, Director of the European Studies Centre, St Antony’s College Oxford, explain how a ‘yes’ vote in tomorrow’s Greek referendum is a choice for dignity rather than fear, as canvassed by the No campaign.
The SYRIZA government claims that a No vote in the referendum is about dignity. A Greece that can say no, no matter the consequences. A Greece that can at last resist creditors’ demands, just as its national heroes of yesterdays resisted the Italian and Nazi invasions. For many Greeks, – supporters of SYRIZA-ANEL-Golden Dawn – today’s no echoes the OXI in 1940 spelled out with trees on the hillside of Epirus for the advancing enemies to behold. Seventy five years later, they think that will show the world that they can still take the heroic stance. Against such a no, according to them, the YESes are the cowards, those who accept to be bullied and blackmailed, the German collaborators. In this simple world view, YES means fear. No means pride.
What is wrong with this picture? What is wrong with the “dignified” No? Continue reading
Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, was Chairman of President Bill Clinton’s Council of Economic Advisers and served as Senior Vice President and Chief Economist of the World Bank. In this commentary, he describes the true nature of the ongoing debt dispute as being about power and democracy much more than money and economics—and takes a stance on how he would vote in the Greek referendum. This post was first published by Project Syndicate.
The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.