The Corner

The Return of Politics

Perhaps one the most dangerous of the black swans now hovering over the Eurozone is what the return of politics—national politics, electoral politics—could mean to the bloc’s ability to work its way out of its problems in its current form. It’s impossible to know. And the zone’s leadership knows that it’s impossible to know, and almost uncertainly unpleasant to find out. That’s why (ideally) it would prefer suitably compliant governments of ‘national unity’ at the helm of both angry creditor-nations (and that’s what it has–sort of–in Finland) of the North and of the enraged and increasingly desperate debtor countries of the periphery. Such governments are governments that almost by definition stop some very awkward questions from being confronted.

That’s what makes this Guardian piece on Antonis Samaras, the leader of Greece’s center-right New Democracy (a party, incidentally, that bears much of the responsibility for the country’s current predicament) worth reading. Samaras has no interest in a government of national unity. Here’s an extract:

Born into pedigree and privilege – just as George Papandreou, the socialist prime minister with whom he shared student digs in the US – the conservative leader has found himself sparring not only with his one-time close friend. Opposition to the “growth through austerity” formula that Greeks have been subjected to has also put Samaras at odds with other leaders in the centre-right European People’s party, of which New Democracy is a member. Since the crisis erupted 18 months ago, Angela Merkel, the German chancellor, José Manuel Barroso, the European commission president, and Silvio Berlusconi, the Italian prime minister, have all tried and failed to change his views. But Samaras remains steadfast – and unrepentant. The deficit-cutting measures pursued after Athens’s €110 bailout last year, have, he insists, not only failed to solve Greece’s spiralling debt but plunged it into the “biggest recession since the second world war”.

Last month’s sweeping plan to contain the crisis – hailed as a “historic decision” by Papandreou – was a mixed blessing, Samaras says, and more “mixed” than “blessing” at that. While offering the country much–needed breathing space by improving the terms of its debt repayment – lowering interest rates and extending the maturities of loans – the €109bn programme had done nothing to rekindle recovery.

“As long as the Greek economy keeps sinking in depression, it will not be able to service its debt, even under better repayment terms,” he says. “Three months ago, Greece was provided another improvement of its debt repayment terms. It was ‘good news’ then, but not good enough because as the crisis has since worsened.”

Despite appeals from both in and outside Greece New Democracy voted against a €28bn package of further spending cuts and tax increases last month, claiming it would push the country “one step” closer to default.

“The only rational thing is to change the policy mix,” he says. “As Einstein himself said, the definition of absurdity is to follow the same solution and expect different answers. The official projection was that in the first semester of 2011 the deficit would drop by 4% compared to the first semester of 2010. Instead, it went up by 27.5 %,” he says, throwing his hands up in despair. For the German media Samaras is the fly in the ointment, the gadfly who has put personal ambition before national interest. But he is the gadfly whose reaction matters. EU leaders are acutely aware that political consensus is also crucial to Greece being “saved”.” Without national unity many fear the changes needed to overhaul the country’s profoundly uncompetitive economy will never be enforced. Samaras retorts that, unlike Papandreou in opposition, he has never encouraged people to take to the streets. Indeed, he says, his party is “all for” cutting public waste and has also agreed to a raft of structural reforms including a privatisation drive that is projected to raise €50bn by 2015. But he remains opposed to further belt-tightening. The threat of violent demonstrations– following riots in central Athens earlier this summer – looms, as the city braces for a protest-filled autumn when the latest policies, starting with mass layoffs in the public sector, begin to be felt.

Samaras may be right, may be wrong (that’s a different debate), but the fact that he feels free to take the position that he has is just one example of the malign consequences of imposing a currency union prematurely and from on high, rather than letting it evolve (if it is to evolve) organically and with widespread and genuine popular consent. The euro’s implications, its obligations and its costs were never properly explained to the electorates of the Eurozone. That meant that the single currency never had the popular buy-in it was to going to need if times turned rough.

Well, times have turned not just rough, but toxic. There is not enough buy-in. The chickens have come home to roost.

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