Thursday, March 12, 2015

The Euro-zone crisis can not be solved by national governments.

http://scusi.twoday.net/stories/1022390893/
For the past six years since the economic crisis has hit the euro-zone, Greece and its relationship with its partners have been always making news. 

Recently though, things have been turning constantly for the worse. Particularly Greece's relationship with its main creditor and Europe's economic powerhouse, Germany, has turned really sour. 

After being scolded, mocked and constantly criticized by its partners and especially by the German media, the Greek voters have elected a "radical" Leftist party in government; Syriza.

 The new Greek leadership has broken the lines of the country's former governments. The ministers of PASOK and the New Democracy were more compliant, diplomatic and keen to satisfy Greece's creditors' demands. By doing so, they agreed to implement very harsh and unpopular austerity measures, that  eventually led to their defeat in the last Greek general elections.

Naturally such outcome was expected. The Greek voters saw their politicians' surrender to the demands of the Troika as a national disgrace and surrender. After of six years of extremely painful policies that they had to endure, they had enough.

Yet the grave mistakes that the former Greek governments did, are not to be blamed on their European partners. It was not them who decided to cut the Greek salaries by 40%, destroying the internal market of the country. 

In Ireland the government also implemented austerity measures, but the salary cuts were never as severe as in Greece. After 2-3 years, the Irish market managed to bounce back, simply because the Irish consumers did not lose almost half of their income.

Nor it was Greece's partners who failed to proceed with reforms, mainly sorting out the country's taxation system, its red tape and tax evasion problem. It also failed to establish a land registry and even worse, go after the rich of the country, who are the worse offenders of tax evasion.

When Syriza came into power, understandably tried to gain some of Greece's dignity. To please its voter back home, it was very quick to challenge the Troika, the Eurogroup, the German leadership and all its European creditors and partners. 

Ideally that is not the way to gain support for your cause and pass a message to your partners about the need to reconsider Greece's situation. If only, you are only isolating yourself and you damage your country's image. 

Having said that, the way the European, notably the German media and governments have treated Greece is not fair either. They have slandered the former governments for "lying" to enter the euro. They have repeatedly treated Greece as the black ship of the family, underlining the faults in its system, more than they did for any other country.

http://www.newsingreece.com/protothema/yanis-varoufakis-meeting-with-wolfgang-schauble-underway/
They used Greece as a scapegoat, to cover all the mistakes that the European leadership made when creating the euro. 

Instead of pouring some light in the EU institutions' shortcomings and offer more transparency on their functions, they preferred to literally "feed" the Greeks to the outraged European public opinion.

The German leadership in particular, acted in a very arrogant way. They may have good intentions overall for the euro's recovery, or they just want to apply their tried and tested formula that they used during the unification of Germany.

But they forget one thing; in the German situation, its government was elected by a German majority of voters and naturally had its backing. In the effort to unify Europe, this panacea can not be applied as easily, simply because Europe is not one nation.

The Greek voters did not vote for the German government, or had any say on who is get elected. Thus when the German leaders are keen to tell the Greeks how to run their country, they are not helping much with the situation. They should leave the EU institutions to apply pressure on the Greek leadership and proceed with the necessary reforms.

In addition, by applying such harsh criticism on just one nation under EU/IMF bail-out program, they naturally increase the resistance of the Greeks against their demands. German government officials together with top EU officials, have been giving in the media's demand for a story, making inflammatory statements about the Greek situation.

That is not a wise way to appease the country's public, that has to suffer not just the harshest austerity measures in recent European history, but a decade long criticism and humiliation. Especially when no other EU nation has its social and financial shortcomings so openly discussed or analysed.

It is clear that the Euro-zone crisis can not be solved by national governments. The constant clash between the Greek and German governments, is high jacking the future of the euro, postponing its recovery and dividing the European public.

No side wants to back down and each one takes the fate of millions of people in the zone for granted, to satisfy the demands of voters back home. If we want to keep the euro, we got to face the facts: the only way to govern a single currency is a single government.

So no national EU government can meddle with the decisions to serve their own ego, ideology, national superiority or the idea of it. Syriza has a very different ideology than the rest of the European political elites. Naturally it opposes the way that the EU institutions have been run over the previous decades.

But until other nations decide to be as bold as the Greeks and vote for an outsider in government, Syriza is damaging Greece's interests by going against everybody in the EU. Ideally they should wait until other nations like Spain to also elect a leftist government, then launch a full on attach on the neo-liberal agenda of the EU institutions.

The Germans on the other hand must abandon their arrogance, thinking that because they "pay" for all others, they are entitled to dictate them or dominate the whole continent. Because the reality is quite different. It is the European banking system that it is being bailed out, not the countries and their citizens that receive the loans. 

The clash between Germany and Greece is constantly turning for the worse. Recently the Greek government decided to ask for the WW2 reparations from Germany, something that was received by the Germans and their supporters with even more content and ridicule. 

The situation leads nowhere and both sides have a fair share of blame. But as long as it is down to national governments to reach an agreement, the euro-zone will always remain in limbo. The national interests are getting in the way in finding a satisfactory solution for everybody.

Since we came this far to share a single currency, it is decision time. If we want to keep the euro, we need to create an ever closer political union, as well as a banking one. The euro was create as a symbol of European "unity" and upon its launch, the Greeks were promised that it would turn Greece as rich as the Northern European nations.

That no only did not happen, but actually quite the opposite took place. This is not just the fault of the Greek governments, but the way the euro was created and the opposition of the German leadership to allow the transfer of wealth towards the poorer, peripheral economies.

In other words, the only way the euro can fulfill its purpose is when the rich EU nations will allow this transfer of investments and funds. While the poorer nations should proceed with necessary reforms, to transform their countries into a model that is more compatible with that of their Northern European counterparts.

From what we observe, our governments fail to agree, save the euro and the European economy, or fulfill their obligations towards their citizens. We need a new type of government to deal with this mess, one that will force all governments to comply with what must be done, should Europe decides to keep the single currency.

That government must be created on a pan-European level, by pro-European politicians, committed and dedicated to Europe's cause, not to any pitiful, conservative, nationalist agenda. 

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