Greek crisis foreshadows new European order

Far-Left Syriza's victory in Greece could herald the beginning of an even more bureaucratic, state-dominated and anti-democratic European Union than we already have

Preparing for a new order
Tom Gallagher
On 5 February 2015 07:37

Ever since he  quickly took charge of government last week, the self-confidence of  Alexis Tsipras and his far-left  Syriza movement has unnerved the European status quo.

He quickly struck up an alliance with the nationalist Independent Greek party which is contemptuous of German domination of EU affairs.

Privatisations were cancelled, the minimum wage promptly raised, the EU-led troika overseeing austerity policy was threatened with a boycott, and there were warnings that if goaded, Greece might easily default on its debt.

Alas, there was no threat by Greece’s self-styled anti-capitalist rulers to quit the Eurozone. In its present form, it binds together countries with often totally contrasting economic needs. Its rules require members that have fallen into debt to pursue draconian austerity policies that only increase their debt while devastating the independent business sector, and creating a generation of jobless youth.

Instead, Tsipras’s goal is a new pan-European settlement which would be stabilised by policies of redistribution from richer to poorer areas. Europe-wide common budgetary and taxation policies finally give the single currency the power of a full-fledged state.

This new progressive European order would have the legitimacy to intervene wherever economic setbacks and crises occur. Under this benign order, the post-2010 Greek financial crisis would have been treated in the way that Washington responded to the hurricane that levelled New Orleans, with a massive transfer of aid from the centre.

The United States is by now an ancient democratic state with a powerful group identity and strong (though waning) trust in its federal institutions. Many people far beyond Greece hope that a post-crisis Europe will emerge in which US-style powers of oversight and intervention will be one of the key elements of a new post-capitalist settlement.

There is intense opposition among German voters to a transfer union. In other states which pursued the austerity model -  Spain, Ireland, Portugal – there is apprehension at government level that Greece will enjoy debt forgiveness, making their own sacrifices appear pointless.

It is not  fanciful to imagine Syriza obtaining consent from rattled EU elites for large parts of its neo-Marxist cure. People who share much of the worldview of Tsipras proliferate in the centres of information and opinion in Western capitals where the Greek crisis is weighed up and judged.

The firebrand Alexis Tsipras has had access to the op.ed pages of numerous leading Western newspapers. The recent drama has revealed the startling number of Greek social scientists and economists who are employed in British universities, nearly all of whom it seems, have piled in with pro-Syriza articles in highbrow online publications like Open Democracy and the Conversation.

Yanis Varoufakis, the new Greek finance minister, has been thrown up as a new crisis-busting hope of the international left. This Greek-Australian academic has an original and sharp financial mind and will be more than a match for many of the apparatchiks from the European Central Bank and European Commission if negotiations commence on a new approach to the Greek crisis.

He is holding out for a new loans deal which means Greece is only required to pay according to its economic performance with repayment stretching into the far distance.

This ebullient travelling salesman has been on a tour of major European capitals to promote Syriza’s crisis-ending formula. He was well-received by the French finance minister and it is easy to see why. French industrial production has been sliding for years as it becomes an increasingly fragile and  indebted consumer-orientated economy.

Sooner than many imagine, it could well find itself exactly in Greece’s tight economic spot. Many on the left of the French establishment have no liking for a pro-capitalist EU that is bound to be tilted towards the priorities of its most successful country, Germany.

France has long been shaped round state capitalism. A bureaucratic, centralised and welfarist Europe would be a solution that would involve far less readjustment in France than in many other countries.

As Syriza began to try to shape the debate over Europe’s future on the terms of the political left, President Obama intervened, seemingly taking the side of the new Greek government. He told CNN: ‘You cannot keep on squeezing countries that are in the midst of depression’. He is bound to be mindful of the veiled threat made by Syriza to look to Russia for an economic lifeline.

One of Tsipras’s first EU moves was to show his reluctance to endorse further sanctions against Russia as it steps up its military actions in Ukraine, and as long as it remains in the EU Greece can veto any action on the foreign policy front. But perhaps Obama sees a post-2016 role for himself as a global champion of Syriza-style policies.

Britain’s financial chief George Osborne received Varoufakis on Monday and described their talks as constructive. He echoed Obama’s pro-growth sentiment and warned about the dire effect globally of a damaging stand-off between Greece and EU power holders. He would have been far more constructive if he had used the opportunity to call for a re-organization of Europe’s chaotic currency regime through negotiations.

This would enable countries caught in the same bind as Greece to reflate and recover using currency and interest rate adjustments which membership of the Euro bars them from doing.

Instead, the photo opportunities with Varoufakis inside Osborne’s official residence, No 11 Downing Street, were of unusual duration. Britain’s Chancellor evidently wants to bask in the reflected glory of the Greek economic wunderkind, knowing the extent of his popularity in British academia and media-land.

If the tweets of several UKIP MEPs are anything to go by, even UKIP is hailing the rise of the Greek insurgency. Sadly, few in this country are pointing out that  Europe will only recover if it acquires an economy that reflects human scale and the interest of tax-payers and producers.

Instead, there are mounting signs that the rigged market economy of the EU, controlled by big corporations allied to major political parties and state bureaucracies, will give way to something  worse. Replacing it could easily be a super-state shaped around massive social and economic planning.

It will be paradise for bossy intellectuals far less engaging in style than Mr Varoufakis. An ideological European order driven from the left is likely also to be even more contemptuous of individual and property rights than the bumbling oligarchs of today’s EU.

Greece’s winter revolt could easily leads to the triumph of a new European doctrine based on left-wing social engineering. The support Syriza enjoys in key parts of public life in Britain suggests that those who would legitimise such an order already wield extensive power.

On 4 February, fearing the loss of its authority, the European Central Bank barred the Greek government  from using bonds (now practically worthless)  as collateral for cash. Athens will now have to find far more onerous and expensive ways for financing its spending.

Varoufakis reacted with insouciance. He urged Germany to act as a ‘hegemon’ but one prepared to unite Europe around a left-wing programme of enhanced spending.

A close analysis of the Greek dimension of the Eurozone crisis can be found in Tom Gallagher’s Europe’s Path to Crisis, published in paperback by Manchester University Press last October

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