Saturday, February 14, 2015

Greek rebellion greeted by left and right as 'kick in the ass' for Euro elites

Damien Kiberd Published 14/02/2015
A man takes part in a anti-austerity pro-government demo in front of the parliament in Athens. Reuters

A man takes part in a anti-austerity pro-government demo in front of the parliament in Athens. Reuters

Angela Merkel's insistence that austerity economics must be implemented to the letter across swathes of Europe is creating a most lethal form of risk - political risk. It threatens not just the political systems and office holders of those countries that earn her displeasure. It threatens the holders of investment capital as well.

In Ireland, the old 'two-and-a-half party' system has collapsed. Fine Gael, Fianna Fáil and Labour together rate just over 50pc in the polls. Just as overly rigid economic policies drove Europeans to the political extremes in the 1930s, here in Ireland voters are flirting with Sinn Féin and with putative political formations that have no real existence.

The word Syriza is an acronym meaning 'coalition of the radical left.' The party is an amalgam of 20 or more mainly far-left splinter groups. As a reaction to poverty, corruption and mismanagement, Syriza is no isolated case.

In Italy, the Ferrari-driving comedian Beppe Grillo's populist Five Star Movement was founded in 2010 and became Italy's biggest party in 2013. In Spain, Podemos ('We Can'), founded in 2014, is currently at 28pc in the polls, well ahead of the ruling Popular Party at 21pc. The convulsive change is not confined to the Left. In Greece, the neo-fascist Golden Dawn has 15pc support. In Austria, the Freedom Party has 20.5pc, broadly similar to Belgium's Flemish Block. In liberal Holland, Geert Wilders' Party for Freedom is the fourth largest. Add in the True Finns at 19pc, Hungary's Jobbik at 17pc and France's Front National and you have a dangerous political mixture.

In France, the FN's Marine Le Pen told 'Le Monde' she welcomed the ascent of Syriza: "I do not agree with their whole programme, but I welcome their victory." The Greek vote has been described as 'kick up the ass' for the Euro elite.

In Britain, UKIP leader Nigel Farage said that the Syriza vote was a desperate plea for help from the Greek people.

In Ireland, Taoiseach Enda Kenny is acutely aware radicalisation can follow in the wake of austerity. He's facing polls which show Sinn Féin consistently at 20pc, sometimes as high as 26pc, and the Independents on 25pc, or more.

He has taken a very hard line against making any concessions to the new Greek government. He echoed Europe's top table to the letter. Clearly the 'red line' issues for Berlin, Brussels and Frankfurt (as dictated to Kenny) were: no debt write-offs for Greece, no abandonment of the bailout programme, and no bridging finance for Athens. Michael Noonan went further, saying that even if Greece were to win concessions, Ireland would not seek to match them because Ireland was 'not on any programme'.

Why this hard line from Dublin, whose 'cute hoor' diplomats normally sit firmly on the fence when confronted by such dilemmas? Why not wait and see if the Greeks win concessions next Monday and then demand parity of treatment? After all, we have been paying a punitive €7bn a year in interest on our debt, and arguably carrying a bigger debt-servicing burden than the Greeks.

Clearly the Government wants to prevent any victory for Syriza that might be seized upon by Gerry Adams, the Anti-Austerity Alliance or People Before Profit. Sinn Féin claims that taking a hard line with Brussels can pay off. Adams is trying to create a coalition of the radical left led by Sinn Féin.

Adams could point out in the forthcoming election that Fine Gael and Labour have failed to deliver on the 'gamechanger' concessions allegedly made to Ireland by EU leaders at a summit in June 2012.

Kenny and Noonan may fear that an early exit of Greece from the Eurozone could be followed by a process whereby US and European hedge funds targeted the bond markets of smaller, heavily indebted Eurozone economies.

The meeting of finance ministers next Monday is likely to result in a fudge, with real issues postponed. But even temporary loans to Syriza, accompanied by a commitment to reflate parts of the Greek economy, could be dressed up as a victory for the Greek left.

The Germans are publicly sticking to a hard line. But Tsipras may claim next week in Athens that he is escaping from some previous austerity commitments and rolling back cutbacks previously dictated by the Troika.

There is another unexploded grenade lying at the heart of this crisis. If the Greeks do actually fail to reach agreement with Berlin by Monday and call the Eurozone's bluff, they may quit the euro and restore the drachma. If this happens, there is a real possibility that - after an initial period of turmoil - they could both restore Greece's competitiveness via a currency devaluation, and cut their debt burden by formally defaulting.

A successful exit of Greece from the Eurozone and EU, followed by a negotiated exit of the UK from the EU only could leave peripheral countries like Ireland badly exposed. In particular, a UK exit could fatally undermine both the Common Agriculture Policy and the operations of the IFSC.

Finally what is to become of Latvia, 40pc ethnic Russian and with many of its home owners holding Swiss franc mortgages? Now that Vladimir Putin has 'solved' the crisis in East Ukraine he may turn his attentions to this very issue.

Irish Independent

Greek rebellion greeted by left and right as 'kick in the ass' for Euro elites -