Friday, February 13, 2015

Alexandros Orphanides — Why Syriza Hasn’t Threatened to Leave the European Union—Yet

So why isn’t Syriza currently threatening to leave the Eurozone?
Well, first there is the question of public opinion. Recent opinion polls indicate that as many as 70% of Greeks hope to remain within the currency union. The undertaking of any radical steps by Syriza will require building long-term political support on the home front by sticking to the democratic will. That means a Eurozone exit while the country overwhelmingly opposes such an exit must be off the table—at least for the time being.…
Consider the statements by the party’s other prominent economist, Costas Lapavitsas, in the Guardian: “First, the forces of austerity currently strangling Europe should not be allowed to crush the Syriza experiment, or turn it into a moth-eaten compromise; second, Syriza should make solid and meticulous preparations for all eventualities, a point that is well understood by many within it.”
Having expected harsh resistance and an onslaught of veiled threats from the financial community, it would be naive to imagine Syriza hasn’t prepared for this exact scenario. If Varoufakis’ proposals, which are viewed as reasonable by most Greeks, are rejected by E.U. officials, more Greeks will consider leaving the European Union a necessary evil.
At that point, if a Syriza government still exists, Greece can threaten to leave the union. (It should be noted that in his book Crisis in the Eurozone, Lapavitsas has supported a Greek exit from the Eurozone and has argued that austerity throughout Europe has been counterproductive.) That’s when the German government’s mettle will be tested. Can the European Union afford a “Grexit” and its potential implications for Spain and other austerity-ravaged countries?…
The future of Greece and that of other austerity-sacked countries in the E.U. is affixed to the democratic will of the people, the rationale of finance, and the geopolitical aims of U.S. hegemony. A way out—or a way to remain in—will rely on alternative solutions and commitment on the part of Syriza.

The US is already putting pressure publicly on the eurocrats to bend austerity. This is the strongest weapon in Syriza's arsenal. The poodles will yelp but follow their master's orders.

8 comments:

Dan Lynch said...

This reminds me of public opinion during the American revolution. Only 1/3 supported the revolution, 1/3 wanted to remain an English colony, and 1/3 didn't care.

"A genuine leader is not a searcher for consensus but a molder of consensus." ~ Martin Luther King.

Dan Lynch said...

Note that polls have consistently shown that the American public wants to reduce deficit spending.

Ralph Musgrave said...

What on Earth is the phrase “European Union” doing in the title of Alexandros Orphanides’s article? Greece’s problems stem from it being in the Eurozone, not the European Union. The UK is in the EU and has its own currency, and has thus avoided the problems suffered by EZ periphery countries.

As to why Greeks want to be in the EZ, the reason is that the EZ is a system which up to now has enabled Greeks to live beyond their means, and when their debts get too big, “restructure” their debts (i.e. cheat their creditors). Of course the creditors have been about as irresponsible as the debtors here, but the fact remains that if you can run up debts and then not pay your creditors in full, you’re onto a winner.

NeilW said...

"The UK is in the EU and has its own currency, and has thus avoided the problems suffered by EZ periphery countries."

Not totally. We're still crippled by the EU treaty restrictions that mean we can't employ the poor (because everybody in Europe would turn up) by running an overdraft at the central bank (because the treaty doesn't permit that technically).

" but the fact remains that if you can run up debts and then not pay your creditors in full, you’re onto a winner."

Just as Scotland has to 'repay its debts' to London?

Scotland's demand is one of the reason London is successful. Greece's demand is one of the reason Germany is successful - look where Germany sold their battleships.

The problem is that the Germans/Londoners have not repaid the favour by spending their money in Greece/Scotland to complete the circuit.

Therefore the circuit has to be short circuited - and in a fixed currency zone that means destruction of savings either via depression or write outs.

So the problem is with creditors hoarding assets. And there are only two ways of dealing with that - accommodation which is the MMT way, or confiscation which is the Left's way.

Kristjan said...

Plus like ECB is saying, It is legally problematic to leave euro and stay in EU.

http://en.wikipedia.org/wiki/Potential_Greek_withdrawal_from_the_eurozone#Legality

NeilW said...

That's just part of the threat mechanism.

What is legal at country level is just a matter of agreement - assuming nobody wishes to use tanks.

Attempting to start a trade war with Greece would be the ultimate demonstration that the purpose of the EU is to suppress dissent and democracy across the entire area.

Calgacus said...

On threatening to leave. Well, there's Varoufakis's 2014 statement "Well, you know what? In that case, the Eurozone is going to bid us farewell."

Frederic Lordon in Le Monde Diplomatique mentions here, translated at Verso that when he was just about to become Finance Minister a couple weeks ago, "In an interview that we probably didn’t pay enough attention to, Yanis Varoufakis dropped in a few choice words whose importance ought not be overlooked [used as title of the interview too] : ‘We are ready to lead an austere existence, which is something different from austerity’" Nous sommes prêtes à mener une vie austère. Hard to not read as opposing austerity even unto Grexit.

Lapavitsas & Heiner Flassbeck have a newer book advocating a Grexit: Against the Troika: Crisis and Austerity in the Eurozone. Chapter 7 freely available at AnalyzeGreece!. Lapavitsas & Flassbeck call the legality arguments nonsense - I would call them explicitly-admitted intellectual exercises.

Roger Erickson said...

"A genuine leader is not a searcher for consensus but a molder of consensus."
~ Martin Luther King

now that makes some sense ... but not quite enough


Wouldn't Lao Tzu etc agree that a genuine leader is one who can best help growing groups find new methods for adequately discerning transient consensus as the instantaneous moment of constantly emerging diversity?