A daily blog on the thrills, spills, and frequent absurdities of the world's one and only 'non-imperial empire' - as Barroso himself called it - the European Union.




Anything to say? Contact me at europeandisunion@yahoo.co.uk


Tuesday, 8 November 2011

Meet the New Boss...

The EU is taking of Greece's political and economic structures.


'Solidarity goes two ways,' says European Commissioner for Economic and Monetary Affairs Olli Rehn, the EU's highest economic official. As the European Union purports to have stood by Greece, so Greece must stand by European union. To that end, both the outgoing Prime Minister, George Papandreou, and his immediate successor, as yet unnamed (my money's on Lucas Papademos, a former vice-president of the ECB), have been asked to sign a declaration stating that the bailout terms agreed on October 26th - at a meeting summarised here - will be fully implemented. They will do so alongside the leader of New Democracy, the chief opposition party, Antonis Samaras, and the head of the country's central bank.

It's a fine way for the EU to tie up all loose ends ahead of elections on February 19th. If both PASOK and New Democracy sign up to the deal, there is no way that a change of government can result in a change of policy. There can be no further democratic recourse from a people still smarting from the scrapping of the referendum. The heavily indebted nation will accept more loans whether it likes it or not!

That's the plan, at least. The leader of New Democracy, a conservative neoliberal party, has refused to sign the paper. He accepts the inevitability of the bailout nonetheless: he thinks for this very reason that a written declaration would be pointless. But, to an EU desperate for reasurrance that a second bailout - for a country that they said would not receive one, let alone need two - will go ahead, that counts as outright opposition. And outright opposition cannot be tolerated.

Wolfgang Schauble, the German Finance Minister, said that if the government and the opposition could not both agree that they could fulfil their 'commitments,' the sixth tranche of EU loans - worth eight billion euros - will not be paid. That is a threat that has been flaunted before. It was deployed twice against Papandreou, oh-so-long-ago, to make him back down on his referendum plans. But, successful at getting politicians to do what you want though it may be, it, too, is fraught with danger. Simply put, if the next tranche of loans is refused due to a government refusing to play ball, there won't be a government to play ball with.

The government would have no funds to pay public sector workers: the worst case scenario is more than half the country's workforce going unpaid, and almost half of its total economic output lost.  The result would be simply catastrophic. It would almost certainly lead to mass-unemployment and a colossal reducation in living standards, just at the point where the country's debt crisis comes to a head. Anyone who thinks that traditionally fragile democracy could be preserved in those conditions is deluding themselves.

2 comments:

  1. I have read this post. This post is a nice one that we are loans in chennai , personal loans in chennai , home loans in chennai . That I will inform about your post to my friends and all the best for your future post..

    ReplyDelete
  2. This is a very great blog. The financial planning is very important in everybody life
    debt advice

    ReplyDelete