Greek threat to break ranks frightens EU elite

The Greeks, credited with creating western civilisation, may have saved it in a near cataclysmic moment for Europe, more profound than the aftermath of 9/11.

As Churchill is to have said about the price of democracy being eternal vigilance, the survival of Europe as one of the world’s five powers in the coming decades will be about a series of steps already in train, being carefully implemented.

Having scared the living daylights out of themselves and the Greeks, there is a sense that the main EU actors have returned home to lick their wounds, contemplate on the sight of the abyss and resolve not to come so close again.

And there is the understanding that in this world, everyone has everyone else over a barrel. As President Donald Tusk warned all are “losing credibility”.

When the taboos were lifted, a lot of plain talking was done. So not just Grexit, but any country leaving the euro, will now be an option for any future bailout programme. Since any country could find themselves in such a position and not just because of profligacy but being at the wrong end of the economic cycle, this will put pressure on adapting the Economic and Monetary Union.

The relatively tame Five Presidents report set 2025 as the date for the final stages of this deeper EMU and for once in this decades-long project, that date could be realistic.

While finance ministers, often with little deep knowledge of economics but hard won political nous, were lectured by the academically and socialist sound Yanis Varoufakis, they choose to blame him for the fact that Greece strayed from the path of growth that stopped abruptly with the election of Syriza to government.

But the fact was that despite the programme being in the hands of the centre-right New Democracy up to January, it had failed abjectly. Some figures may have looked encouraging but the fact that taxes had increased on the poorest portion the tax paying public by 337% and by just 9% on the rich few screamed that this was not sustainable.

The debt went from a dangerous 130% before the programme to 170%. Less than half the troika reviews had been successfully completed and reforms of tax collection, pensions, judiciary and closed professions had not worked - but this week all have been passed in the parliament.

Apart from implementing the new rules, the sticking point now is New Democracy’s refusal to support the raising of farmers’ tax to that of the rest of the population — a strict demand for the negotiations on the new €86bn bailout that got under way yesterday.

Just what were the troika doing over the previous years? They had come up against a state that was unlike others in the EU— one without a proper land registry for instance which is now under way with just 20% of land registered at the moment; with a tax collection system that allowed the inspectors to split the proceeds three way with the payer and the state.

Northerners abhor what they see as ‘emotionalism’ — Alexis Tsipras was praised for being calm and unemotional during the 17 hours of knife-edge negotiations 10 days ago while Italy’s Matteo Renzi was reprimanded for making emotional statements.

And so the Greeks suffered for their emotional outbursts on the streets of Athens to protest austerity. But there was nothing emotional about the quiet way they removed their billions of euro in savings from their banks, acknowledging their distrust of their political system.

Syriza came into government buying the big voting block — the public and civil servants and their families. The somewhat primitive administration has held the whip hand for years, demanding brown envelopes for services and forming a powerful block to politicians interests.

While the troika may be forgiven for not understanding how this less than half-formed democracy works, they must be questioned about allowing so many public servants first to be fired, then put back on the payroll as their constitutional rights were realised and then offered the option of retirement —putting massive pressure on the already broke pension system.

While the Germans swing behind their single-dimensional hard-as-nails finance minister Wolfgang Schauble, the fact that one of his strongest supporters was the Finnish government, the largest part of which has vowed to bring down the euro and the EU, does not sit comfortably.

The EU’s 11 centre-right governments including that of Germany and Ireland, that belong to the European Peoples Party and essentially see any other political colour as ‘extremist’ may have to revise that notion as their arrogant attitude is blamed for the rise of the far-right, xenophobic and Europhobic groups such as France’s National Front.

The exercise of democracy is one that the EU is long grappling with and appears to make the issue worse with every well intentioned effort such as the aborted Constitution, the returning of powers to national governments, giving the European Parliament elections say over the Commission president.

The abreaction of even the Irish leaders to the Greek decision to hold a referendum brought to the fore the conundrum of a single country’s exercise of democracy against the democratic rights of the member states as a whole. The Irish solution of retaking referenda until the ‘right’ answer is produced is not one that wins approval elsewhere.

The suggestion too that human rights can only be expected by those who can afford it has caused many to blanch and, together with the battle of democracies, there are calls from well-respected figures that hopefully will cause policymakers to think more broadly in future, and perhaps come up with a better structure — such as better defined EU and national areas, in other words a form of federalism be it German or US that will acknowledge one size does not fit all, but that sovereignty sharing is required for sharing risk.

While the “Balkans” has negative connotations for most peace-loving Europeans, suddenly the recognition that Greece is part of the region has caused many to readjust their reading of her geopolitical importance. Foreign minister Nikos Kotzias this week declared “Greece is returning to the Balkans,” and promised to help Serbia et al on their road to EU membership.

But as well as completing the half-baked euro project, balancing tight fiscal demands with worthwhile incentives, devising clear structures to allow democracies co-exist, the consequences of globalisation and corporatisation will also need to be balanced with a social policy as being acknowledged by French president Francoise Hollande.

If all this does not happen then the abyss is in sight and the EU and the euro will flicker out gradually and almost imperceptibly.