Friday 28 October 2016

Beware claims Greeks have 'bested' the EU

Published 06/07/2015 | 02:30

People celebrate in front of the Greek parliament as early opinion polls predict a win for the Oxi, or No, campaign in the Greek austerity referendum. Photo: Christopher Furlong/Getty Images)
People celebrate in front of the Greek parliament as early opinion polls predict a win for the Oxi, or No, campaign in the Greek austerity referendum. Photo: Christopher Furlong/Getty Images)

Even when compared to some recent Irish conundrums, this was a very peculiar referendum.

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Amid the dithering and mixed messages from the Athens government, it was not always easy to make out what exactly yesterday's Greek vote was about.

But it in essence it looked rather like this:

A 'No' vote, as urged by Prime Minister Alexis Tsipras, would allow him claim a mandate for continued opposition to the eurozone leaders and the International Monetary Fund. A 'Yes' would have meant the fall of the Greek government, probably a general election with it, and ongoing political instability to compound the banking and economic chaos already foisted upon the Greek people.

Confusion and disarray were likely to ensue, whatever the verdict.

'No' carried the day. And the verdict increased the already growing likelihood that Greece may be about to leave the 19-nation eurozone. The European Central Bank already has Greece's banks on life-support, which it powered down last week and could terminate definitively at any stage.

Later today, we will hear many experts giving legal answers to political questions which have serious financial overtones. Yes, it is true that legally no country can be expelled from the eurozone. And, technically, if Greece exits the euro, there may be doubts about its continuing EU membership.

But let's please stick with the politics. This problem requires a big-picture political remedy which needs courage and vision from all the EU leaders. Whatever remedies are found must also fit the constraints on the ECB president Mario Draghi and his colleagues who are in charge in Frankfurt. Remedies posited in the coming days must be creatively framed within the EU treaties and laws in relation to the euro.

In reality, Greece requires considerable ongoing EU financial support - inside or outside the eurozone. But it does not have an open-ended right to avail of the taxes of the other eurozone citizens.

There must be more meaningful negotiations and both sides will need to take a calm and pragmatic view of where we all are, and the need to move swiftly out of that perilous place. Mr Tsipras and his colleagues must realise that the referendum result may have strengthened their domestic mandate - but their actions have seriously damaged trust with their European colleagues.

It is hard to see a remedy which includes Greece continuing as a longer-term member of the euro. The big shots in the world financial markets have been making all their plans on the basis of a eurozone without Greece for some time now.

That might lessen the ensuing instability which will certainly result from the Greek referendum result. But it could still be considerable and have serious implications for Ireland's hopes of regaining stable prosperity.

Modern Greece's history over the past two centuries would at very least give Ireland a run for its money in the level of deprivation and suffering endured by its people. It has arguably suffered more intensely in the past eight decades than Ireland.

The Nazi occupation (1941-44) brought also a famine in which an estimated 300,000 people perished. But liberation then brought a three-year civil war and further knock-on instability through the 1950s and 1960s.

The period 1967-74 was one of military dictatorship, with the infamous "Greek colonels" in charge.

Soon after the end of the military dictatorship, Greece applied to join what would become the European Union in 1975, and eventually managed to join, becoming the 10th member state in 1981. It was the first country to join after the 1973 intake of Ireland along with Britain and Denmark.

The democratic stability which followed Greece's accession encouraged all of the EU and became something of a model.

Spain and Portugal, which had each divested themselves of military dictatorships around the same time as Greece, also became EU members in 1986.

The decades of EU membership brought many changes to Ireland and Greece. But it is a simple fact - which can be stated without any allegations of ethnocentric smugness - that Ireland has made a better fist of the EU challenges than Greece has.

Greece urgently needs to reform its public sector and overhaul its tax-collection system and make other long-overdue changes.

None of this is to claim Ireland is perfect - it is very far from it. It is just not in the totally unenviable and parlous position in which Greece now languishes, regardless of the referendum decision.

The EU leaders' next moves from today onwards will affect everyone in Ireland. The intensified period of instability may have an impact on Ireland's ability to borrow.

But the reality is that Greece's increasingly imminent departure from the eurozone may well change the international perception of what is a primary world currency. It may be seen as a far less durable alliance than heretofore. That would have knock-on effects for all economies, including us as one of the weaker ones in the euro herd.

Greece may well be in a stronger position going into talks from today onwards. But it is unclear how much this will be of practical benefit to the Greek people in the medium to longer term.

Meanwhile, the language used by Finance Minister Michael Noonan in relation to Greece, and the overall attitude conveyed by Taoiseach Enda Kenny, may be infelicitous in both cases. But the overall reality is undeniable: Ireland kept faith with its EU and eurozone partners and benefited in the longer term. That said, everyone will hope the best possible arrangements will be given to Greece.

Irish Independent

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