The Troika threatens European democracy

29 June, 2015 at 17:00 | Posted in Economics | Leave a comment

On the 5th of July one of two things will end: either Greek democracy as regards economic policy or Greece’s Euro membership. Not a pleasant choice. Negotiations between the left-wing Greek government and the Troika had made little progress over the last months. When prime minister Alexis Tsipras announced a referendum on the Troika’s final offer, the reaction was swift. Democratic decision-making is not part of economic policy making in Europe. Fiscal policy has to follow the rules and debt has to be serviced.

greeceAccording to the European Commission the Greek government has unilaterally left the negotiating table. The German finance minister, Wolfgang Schäuble, and the head of the Eurogroup and Dutch finance minister Jeroen Dijsselbloem, thus concluded that the Greek rescue plan ends on Tuesday. The ECB is pulling the plug and has announced that it will not increase the size of the Emergency Liquidity Assistance (ELA). Less technically: no further short-term money for Greek banks. Greek banks are in intensive care. The ECB’s doctors haven’t switched off life support, but they have powered it down. Greece’s Euro membership has effectively been suspended. As a consequence Greek banks have been shut down and cash withdrawals have been rationed. The Greek people should experience, before the referendum, what life is like without the Euro.

This a disaster for Europe, both in terms of democracy and its economics. The message to the Greek people, and indeed to all Europeans, is that they have to accept the German finance ministry’s right to guide national policies and that austerity and deregulation is the only way to conceive of economics. This is a distinctly Germanic kind of neoliberalism and it is brutal. Syriza is a challenge to European elites and it has to be silenced. The ongoing depression in Greece and the desperation of the Greek population are just collateral damage in a Holy War of economic orthodoxy against a left-wing alternative. For the German government and European elites these negotiations have always been about regime change as much as they were about economics.

Engelbert Stockhammer

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