Today marks a year since a radical left government was elected in Greece; its dynamic young prime minster, Alexis Tsipras, promising a decisive blow against austerity. Yanis Varoufakis, his unconventional finance minister, arrived in London soon after and caused a media sensation. Here was a government that disregarded stuffy bourgeois conventions and was spoiling for a fight. Expectations were high.
A year on, the Syriza party is faithfully implementing the austerity policies that it once decried. It has been purged of its left wing and Tsipras has jettisoned his radicalism to stay in power at all costs. Greece is despondent.
Why did it end like this?… Seguir leyendo »
Has the eurozone crisis ended? Many politicians in Europe, including France's president François Hollande, seem to think so. Well, not so fast. Far from ending, the crisis is yet to reach its most difficult phase.
It is easy to see why politicians claim the crisis is over. Greece has just been promised another €50bn, provided it accepts still more austerity, deregulation and privatisation. Elsewhere in the periphery, Ireland is in its sixth year of recession, Portugal is heading for major economic contraction, and Spain is going from bad to worse – but their governments are imposing austerity, and people appear to be putting up with it.… Seguir leyendo »
The June summit of the eurozone was initially trumpeted as a decisive step towards resolving the crisis. Italy and Spain won agreement to allow European institutions to recapitalise banks and purchase sovereign debt directly.
But once financial markets had a closer look, it became clear that little of substance had been achieved, and the borrowing costs of Italy and Spain again approached forbidding heights. Meanwhile the Spanish government has imposed fresh austerity, breaking its promises to the electorate. And unemployment in the eurozone continues to rise, exceeding 11% on average.
It is now a fair guess that the European Monetary Union (or the eurozone) has crossed the Rubicon and is heading towards breakup or collapse.… Seguir leyendo »
The clear winner of the recent Greek elections is Syriza, a coalition of leftwing organisations active for several years. The fascist Golden Dawn party has also made stunning gains but its rise, disturbing as it might be, is neither the main outcome of the elections, nor yet a major threat to Greek society. Political momentum belongs to Syriza. If it gets its act together, it could help resolve the crisis and give a boost to the European anti-austerity movement.
The two staple parties of Greek government – Pasok and New Democracy – have been trounced for bringing the country to this pass over four decades, and for implementing the bailout agreements.… Seguir leyendo »
The referendum announced on Monday by the Greek prime minister, George Papandreou, is probably the final bell before Greece defaults and quits the euro. Assuming it is not withdrawn amid all the political turmoil afflicting the ruling party, the vote is planned for January, and the issue will presumably be the latest bailout. But the real question will be: "Euro or drachma?"
Greece's ruling elite understands the dilemma perfectly, hence the negative reaction of political parties and the press to Papandreou's initiative, with six senior officials of his own party calling on him to resign. If the vote goes against the euro, Greece's economic, political and diplomatic strategy of the last 30 years would be deeply shaken.… Seguir leyendo »
Greek default and exit has always been the most likely outcome of the eurozone crisis. The truth is that economic and monetary union has failed, not least because it has created an unsustainable gap between core and periphery. For peripheral countries, EMU membership is likely to be a source of stagnation and income inequality. For Greece it has already been a failure of historic proportions.
The problem faced by the country in 2009-10 had much in common with the rest of the periphery: vast public and private indebtedness, low competitiveness, huge current account deficits, and rapidly ballooning public deficits and debts.… Seguir leyendo »
Public debt is at the heart of the eurozone crisis. Greek public debt, already very high for years, has grown extraordinarily since 2009. Irish public debt has escalated once the debts of private banks were added to it. Portugal and Spain threaten to go the same way. Similar trends can be seen in other European countries, the UK not excluded.
Common patterns usually have common causes. The global crisis of 2007-9 resulted in huge costs, partly due to rescuing the financial system, partly due to falling output and rising unemployment. In the eurozone things were made worse because the common currency had weakened peripheral countries, giving rise to large current account deficits.… Seguir leyendo »