Democracy – a system of government by the whole population or all eligible members of the state, typically through elected representatives. Oxford English Dictionary.
It is perhaps the greatest of ironies that in Greece, and more poignantly Athens, the modern country and ancient city state from which the origins of the term Democracy stems, is bearing witness to the least democratic happening in Western Europe since the end of the Second World War. To suggest that EU, fast becoming a quasi US of E, and its institutions operated predominantly by political appointees who past their prime have vacated their respective national stages, are operating democratically and for the greater good of its citizens would be fallacy.
The claim of Western capitalist democracy, that people’s votes matter and that we in the EU are living under a freedom, alien to people in other regions of the world is beginning to slip. The EU has thus far taken the position of supporting the losses of private investors over its own citizens. Public funds from across the Member States have been diverted from spending on health, education, welfare and even defence. This has been done in an attempt to reimburse the shareholders of failed capitalist monoliths, to the detriment of the economically and politically weakest across Europe.
What should be the underlying principle of Free Market Economics, that the markets should be left to dictate the success or otherwise of private enterprises has been found wanting. The neo-liberals who five years ago would have stoically rejected the notions of government intervention, now forcibly advocate the need for governments to invest public money to protect and support giant financial institutions. Through a distinct lack of corporate governance these globally connected institutions have abjectly failed to deliver a stable and coherent financial system, and have induced an inordinate redistribution of wealth in reverse.
The audacity of those clamouring to protect the interests of agents who sought gratuitous financial reward, whilst simultaneously failing to account for the risk of their endeavours have effectively reneged on their primary responsibility as legislators. These events have been the catalyst for the civil unrest witness in Athens, and are the prelude to potentially catastrophic damage to one of the worlds oldest countries.
Greece has been a stellar member of the European project since joining the EU’s predecessor in January 1981. It has like all Member States enjoyed benefits arising from this relationship with the EU, at least prior to the global financial crisis and the subsequent credit crunch. However it is also the case that the Greek economy was not fit to take its place inside the monetary union project when the Euro was introduced. It flagrantly disregarded the rules relating to the EMU, and for their part the EU and the ECB should have been firmer in its application of the convergence criteria (set in the Maastricht Treaty) prior to accepting Greek entry to the single currency. It was though not alone as both Germany and France have conveniently overlooked their own failings in this regard too. Nonetheless Greece was permitted to take its place and joined the Euro in 2002.
The Greek approach to public finances could be at best described as lackadaisical. The rational relationship between taxation, its accurate collection and the level of government spending has been skewed. A generous welfare approach, consisting of a relatively young retirement age and substantial pension provision by the state has not been supported by a sustainable attitude toward fiscal discipline. It is fair to insinuate that the governance of the country, at least in a fiscal sense is quite detached from that of a modern European state.
That said the problems facing Greece are not merely of the making of the Greek government nor the Greek people. They are routed in the fundamentally slack approaches taken by financial institutions across Europe and beyond, who systematically lent and speculated in what can be at best described as ‘a casual manner’ and at worst downright reckless. These private enterprises, though important to the supply of money within economies, and traditionally vital in supporting businesses, by providing finance for establishing and expanding firms, are intrinsically run for the benefit of shareholders.
The shift in banking that occurred in the latter half of the twentieth century has seen the ultimate goal of these international financial giants alter radically. The emphasis within these organisations changed from providing a reliable and effective service greasing the wheels of the economy, to organisations focused on returning exorbitant profits to shareholders and creating vast wealth for the few. Free market orientated politics has facilitated this since the late 1970’s.
The greater the potential rewards appeared the more risky the approach became. Speculative dealings and hazy transactions became the norm. As the realities of the losses became apparent those who had become accustomed to the fruits of international finance were startled into action to defend their assets and incomes. Due to the interrelation of the global banking system, the exposure of all leading financial institutions was not immediately calculable and so the credit crunch arrived.
Greece is perhaps the most severely affected country in the West, but it is by no means alone. The collapse of its domestic economy and its lack of sovereignty in relation to monetary policy, characterised by its inability to adjust interest rates, money supply or devalue its currency has plunged Greece into a desperate recession. The Greek government must take some responsibility, yet the medicine it is being asked to take for the good of private investors and to the detriment of its own citizens is plainly unjust.
The actions of the EU throughout the global financial crisis has provoked anger and bitterness. The simmering resentment exists not only in Greece but to lesser extent in other fringe countries such as the Republic of Ireland and Portugal. It could reasonably be suggested that the idea of European unity seems only to stand up when it benefits the larger central states. Angela Merkel appears to have taken on the role of the de facto President of the United States of Europe, with Nicolas Sarkozy as her able Vice President.
The influence that they are wielding in relation to Greece, a previously independent sovereign state, could not have been countenanced even a decade ago. The Troika consisting of the unelected European Commission, the ECB and the IMF have continuously pressurised Greece to accede to a further bailout. This has led to a democratically elected PM, George Papandreou, being forced from office. His crime being that he dared to suggest that the Greek people, be consulted in a referendum on an issue of profound national importance.
Surely a situation boasting potentially long term resonance of epic proportions warranted at least partial debate on a national level, incorporating all ‘eligible members of the state’? Such serious consequences as the realignment of a nations political and economic culture, incorporating the potential disengagement of a country from monetary union, and the possibility of defaulting, was such that the citizens of Greece were entitled to be heard?
Papandreou has subsequently been replaced by an unelected economist, Lucas Papademos, appointed at the behest of the EU. His appointment was made on the dogmatic insistence of the Troika, motivated by the sole aim of passing the Troika’s reform policies, thus enabling the draw down of flawed financial package. This latest bailout is ultimately designed to support the mainstream economies of the EU, rather than to prevent a comprehensive collapse of living standards within Greece.
The draconian terms of the latest ‘Rescue package’, stipulate that the minimum wage in Greece be reduced by 22%, to approximately €600 per month pre-tax, it also requires the Greek state cuts 15,000 public sector jobs, and the ‘liberalising employment laws’ (an IMF initiative no doubt). Reform is obviously a prerequisite of sustained recovery in Greece, the culture of bungs to officials is outdated and will never lead to a just and viable society. However the scale of the austerity measures being levied upon a nation and an economy already grievously injured, has meant that people have resorted to ever more dramatic acts of civil unrest.
The Greek economy and the very fabric of Greek society requires the assistance of its neighbours. Instead it is being subjected to a brutal tonic that is lacking in democratic integrity. From a purely compassionate perspective, the wealthiest continent on the planet should be protecting its fellow citizens; the ideals of European unity, forged in the aftermath of the Second World War surely demand a different approach. A social conscience dictates that the EU realise that Greece is bust. The Member States of the EU and those of the G20 et al must accept their responsibilities and concede that they must take their fair share of the blame. A genuinely socially orientated package of assistance would have greater long-term resonance, and imbue greater European unity than any number of austerity packages ever can. To be truly progressive, and to garner greater respect for its institutions, the EU should recoil from its current trajectory, desist from its pugilistic tactic of dictating unrealistic terms upon Greece, terms that other EU Member States themselves would baulk at.
It must also begin to place the welfare of its people ahead of the profit motive and cast aside the demands and whims of ‘the markets’ and begin to act in a manner befitting a so called civilised and developed wider society. The corralling of the Ratings Agencies and the Stock Markets must be ignored for the greater good. In essence the mechanisms of the Free Market have ground to a halt. The majority of the world’s financial institutions are no longer capable of functioning independently of government assistance. And yet these errant commercial organisations are still besieging governments and intergovernmental institutions professing that their way is the only way to prosperity and the fabled notion of continuous ‘economic growth’.
The terms being imposed upon Greece will not allow it to extricate itself from the perils it faces. It will simply prolong the decline of the country, whilst possibly ensuring that some private debt is repaid at the expense of the welfare at Greek citizens. Further civil unrest is predictable and the very remnants of social cohesion could be tested. Although perhaps distant, a more worrying question beckons. What comes after civil unrest? Would the UN need to enter with Blue Berets, or would the EU send its own troops in?
It is startling obvious to anyone with a rudimentary understanding of economics that the current plight of the Hellenic Republic will not be suitably addressed by the austerity measures.
A return to some semblance of democracy and the prioritisation of social justice is surely the only legitimate course to take. Society across the West has been damaged, but not yet irreconcilably so.
It is to the profound shame of the West that the country that projected such light onto the world and significantly contributed to the laying of foundations for western civilisation, should find itself in such a dark place. Democracy is to all intents and purposes dying in Greece. A system of government by the whole population or all eligible members of the state, typically through elected representatives, does not presently exist.