What the Greek Challenge to Austerity Means for Ireland.

Robert Grant

THE NEW GREEK government can afford to breathe again on the back of last week’s bailout extension – yet, this four month extension serves only to delay an inevitable confrontation, the result of which is loaded with political meaning for Ireland. The stakes remain high and unchanged.

This confrontation, which we in Ireland can watch from the sidelines, is happening because, for the first time, austerity is being challenged, not by protestors and ordinary citizens, but by a democratically-elected government. Anti-austerity sentiment has been high, and growing, in Ireland and across Europe, but Syriza are the first government since the crash to take this challenge directly to the corridors of power.

Accepting the terms of austerity is not inevitable

For many in Ireland frustrated by our political class’ too-eager submission to the programme, Syrzia’s election and subsequent actions have breathed life back into our political imagination. It allows us to see that accepting the terms of austerity is not inevitable. It brings with it significant risks, however, that culminate in the possibility of Greece going bankrupt or leaving the euro.

There are two ways out. Either the Greek government goes back on its election mandate and agrees to enforce the same policies the previous Greek government enforced; or else the EU, and Germany, accept some compromise on austerity conditions to allow Greece to deal with the humanitarian crisis they are currently undergoing, and to formulate an economic plan to reignite growth so they can begin repaying part of their debt.

Revealing the true dynamics 

Regardless of what happens, the challenge of the Syriza government will mark a turning point for European citizens – especially us Irish – by revealing certain aspects of how the European project works.

When confrontations are forced to a head in this way, the true dynamics of power – dynamics that often operate underneath official commentary – are brought to the surface.

Greece has forced Germany, architects of the austerity, to reveal that this is more than an economic policy aimed at avoidance of future catastrophe. It is an ideology, untouchable by reasoned argument or humane appeal, on which they are unwilling to budge.

The impact of austerity 

In terms of economic growth, the effects of austerity have been negligible. Seven years into severe budgets cuts and tax increases across Europe, things are barely improving. Unemployment remains in double digits and growth is minimal. The recent announcement of a 1.1 billion quantitative easing programme is further proof that Europe is in desperate need of something to stimulate growth.

Socially, it has been a disaster. Suicide rates have sky-rocketed, and youth unemployment is at record heights. An additional 15 to 25 million people across Europe could face the prospect of living in poverty by 2025 if austerity measures continue, according to Oxfam.

Yet Germany and the Troika appear totally indifferent to the wellbeing of the people of Europe and the role of democratic decision-making. The will of the people of Greece counts for nothing. The fact they actually voted for change is irrelevant.

It reminds me of when we voted on the Lisbon Treaty here in Ireland; we were told to vote again, the right way. When confrontation comes to a head, the truth about power is revealed, and democracy becomes an empty gesture.

Living within our means

The rationale employed by those who disagree with Syriza is framed by two points. The first is that one must pay one’s debts. The second, related, point is that we must live within our means: national budgets must be balanced.

The first moral dictum is an oversimplification of the historical nature of dealing with national debt. As Fintan O’Toole recently pointed out in the Irish Time, there are multiple cases of debt cancellation and restructuring throughout history without disaster following. In fact, it often leads to growth as the country is a better investment opportunity since it no longer has a debt over-hang.

Forcing broke people to repay debts is useful for neither the creditor or debtor. Sometimes, it makes more sense for all parties to allow some room for countries to get on their feet and find a way to repay what they can. Remember too: “Every irresponsible borrower is enabled by an irresponsible lender“.

As for living within our means, no one is in disagreement. Greece’s finance minister has made it abundantly clear that they wish to balance their budget, tackle corruption, and clamp down on tax avoidance. They are merely looking for space so they can do this, while not inflicting devastating damage on their people.

It is wiser to stimulate recovery

No one disagrees that both borrowing and lending got out of hand in the last decade. What is being questioned is the need to impose such severe austerity measures so quickly. Greece, and many economists, argue that it is wiser to stimulate recovery first, and attempt to tackle unemployment and poverty. Then, once things look better and people can live decent lives, deal with budget deficits.

We need to question the point at which harm done to people’s lives now outweighs the moral commitment to repaying debt. At the very least, the effort of the Greek government to bring these issues to a head has allowed us in Ireland to expand our political imagination and see that alternative ways of dealing with Europe are possible.

They may fail, they may retreat, or they may leave the euro. But at least, unlike the past two Irish governments, they will have forced the ECB, the IMF and the EU, led by Germany, out into the open. They will have forced these organisations to openly disregard the welfare of the citizens of Europe so they can uphold an irrational ideology.

This article originally appeared on thejournal.ie on Feb 23rd 2015, 11:05 PM            28,240 Views  http://www.thejournal.ie/readme/greece-austerity-challenge-ireland-1955406-Feb2015/