Tsipras, a Political Master

ggt2

Europe and the world should be taking a moment and reflect on the political mastery of Alexis Tsipras of Greece. In less than a year, Mr. Tsipras won two general elections, won a referendum and implemented contradictory policies, all this by changing his political standing and under terrible domestic and economic conditions. Aside from political ideology, Alexis Tsipras is undeniably one of the most talented European politicians. However has his mastery of politics translated into sound governing skills?

Early 2015, most Europeans, including a some Greek citizens, had never heard of Alexis Tsipras. The 41 year old tieless politician finds his political ideology in extreme left affiliated at first to the Communist Party. His political house is centered in the extreme left side of the political spectrum. After years of internal evolution in the Greek lefts, he then became the leader of the exteme-left wing party, Syriza (which means Coalition of the Radical Left) and was elected at the helm of Greece in February 2015. This was the beginning of his true political exposition.

Chapter 1: His election in February 2015 marked the end of the decade long transfer of power between the two leading parties. Tsipras was elected based on a program of anti-austerity policies, fight for Greek interests before the Troika (ECB, IMF, and Commission), increase of minimum wages, restauration of state employees and increase of pensions. If European media were deeply skeptical about his rise and thought that he would not last a year, they have appeared to be wrong. Ensuing his election, Tspiras disappeared from European minds until the looming of the deadlines for debt repayments of the IMF and ECB.

Chapter 2: The second chapter of his reign started several weeks prior the eventual default 478861728of Greece for the repayment of a  €1.5 billion to the IMF on June 30th, and a second one to the ECB mid-2015. These negotiations at EU finance ministers level and EU leaders level were extremely tense as neither Tsipras nor his finance minister, Yanis Varoufakis, wanted to accept the deal put on the table by the Troika and Germany. At the last minute, PM Tsipras called for a referendum on July 5th asking Greeks to decide on their fate: voting yes to the deal implied more austerity measures; a no vote was a rejection of the deal and could lead to a Greek default and leaving the Eurozone, known as a Grexit. Not only did Tsipras organized the referendum without noticing his European partners, but he campaigned for the no vote.

Chapter 3: The no camp, or Oxi, won the referendum with 61.3% and Europe was expecting a progressive departure of Greece from the Eurozone. Even President Juncker of the European Commission asked for a report on how to accompany Greece outside the Euro area. Instead of using his domestic mandate, Tsipras fired his finance minister (officially he resigned desipte winning) and went back to the negotiation table

ATHENS, GREECE - 2015/06/29: The word 'OXI' (NO) written on a banner in front of the Greek parliament. Greeks demonstrate in Syntagma square in support to a 'NO' vote in the referendum that will take place on the 5th of July, whether to accept the new agreement between Greece and it creditors. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
ATHENS, GREECE – 2015/06/29: The word ‘OXI’ (NO) written on a banner in front of the Greek parliament. Greeks demonstrate in Syntagma square in support to a ‘NO’ vote in the referendum that will take place on the 5th of July, whether to accept the new agreement between Greece and it creditors. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)

requesting the initial deal. Germany refused and France played an important role of holding together the parties and the negotiations alive. Ultimately, Greece agreed on a worst deal than previously offered and Tsipras implemented additional austerity measures and required reforms. The deal entailed the following aspects: raising the age for retirement; a VAT hike at 23% across sectors; privatization of key sectors of Greek economy; and removal of tax breaks for some Greek islands. These reforms would permit to unlock a third loan package of €86 billion until 2018.

Chapter 4: Tsipras agreed on the second deal, agreed at EU level on July 13th, which was worst than the initial offer, and brought it back home for a vote. The Greek Parliament voted and agreed on July 15th, on the bailout deal, which was approved with a 229-64 majority. However, Tsipras’ party, Syriza, seems to have lost some unity with 32 Syriza MPs defying their leader’s pleas and rejected the deal. Throughout July and August, Tsipras was facing serious political criticism and opposition by the members of his own party. Syriza was divided between a radical branch, led by Mr. Lafazanis, and a more centrist one counting Tsipras. The radical branch of Syriza had not accepted the political move by Tsipras to go against the popular vote of the referendum. “Mr Lafazanis’s supporters speak of an ‘ideological betrayal’ and ‘treachery’ by Mr Tsipras’s faction.”

Chapter 5: On August 20th, PM Tsipras announced his resignation and his candidacy for the next general election that would take place mid-September. His rationale was to get reelected without the radical branch of Syriza. His political gamble worked as he was reelected with 35.5% of the vote and was able to drop the hard-liners from his party. Syriza won 145 seats out of the 300 seats of the parliament, only four fewer than after the January elections. In order to assure a majority, Tsipras agreed on a coalition with right-wing party Independent Greeks (ANEL) with its leader Panos Kammenos. ANEL is an ultra-nationalist anti-immigrant party, often compared to UKIP in the United Kingdom. With this alliance, the Syriza-ANEL coalition offer the majority with 155 seats in the Parliament to Tsipras. Even President of the European Parliament, Martin Schulz, expressed his concerns directly to PM Tsipras about this political alliance.

Political Talent over Governing Skills?

In less than a year, PM Tsipras has demonstrated his political talent in remaining alive and electable despite party, domestic and European pressures all this under dire economic conditions and an unemployment level around 25%. If Tsipras proved to the world that he cannot lose an election, he needs to now tackle the true problems of Greece: crony capitalism, clientelism, systemic corruption, and implementing structural reforms of the economy and state. The country has been on life line for over 5 years, its intellectuals are fleeing away, higher education is barely financed and Greece cannot even protect its borders. Winning elections is one thing, implementing reforms and governing are another.

(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).
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Once upon a time, the EU was a Nobel Peace Prize Laureate

 

europee-crisis_0

Three years ago I wrote a piece beginning by: “It all started in the aftermath of World War II and in the emotional and material rumbles of Europe. The visionary great men of Europe — Jean Monnet, Robert Schuman and Konrad Adenauer —understood that peace in Europe would only be possible through deep economic integration, strengthening an irreversible degree of cooperation between Western European powers.” This was in mid-October of 2012, when the Norwegian Nobel Committee gave the Nobel Peace Prize to the European Union (EU). The rationale behind the prize was that the EU was a process permitting to make war unthinkable and allow for economic growth. This was a proud moment for Europeans, even though most of them did not pay much attention, and for Europeanists.

Radicalization of Domestic Politics

Today it is with real sadness to realize that in less than three years the survival of the EU appears in direct jeopardy and on the brink of implosion. Domestically, nationalism is ramping through either the rise of extreme-right wing parties, like the Front National in France, UKIP in Britain, Golden Dawn in Greece, or more recently through the

Image: AFP/Getty Image
Image: AFP/Getty Image

reemergence of extreme leftist parties like Podemos in Spain, Syriza in Greece, and the newly elected Jeremy Corbyn in Britain. In addition, the narratives and actions demonstrated by the Obrán government in Hungary talking of a Christian Europe is affecting the overall normative message of EU (read a previous analysis here). These movements demonstrate a radicalization of the political debate directly informed by a highly emotional and confused electorate witnessing a continuous and unstoppable decline of their socio-economic condition.

Directly related to the rise of European nationalism is the financial crisis, which has spilled over to the Eurozone. The euro crisis has left the 17 Eurozone economies, at the exception of Germany, into a state of economic lethargy. In the case of Greece, the country has been on the brink of default for years and its future does not look promising based on the reports produced by the International Monetary Fund, a member of the Troika. In the case of France, still an economic pillar of the Eurozone, the succession from right to left has demonstrated the inabilities of traditional political parties to build confidence, implement meaningful structural reform, and lower inequalities. Part of the problem is the divide between a common currency and national fiscal policies.

Regional Inefficiencies

Regionally, the lingering war in Ukraine is a direct illustration that war on the European continent continues to live on. A last minute cancelation by Ukrainian President Viktor Yanukovych of a bilateral agreement between Ukraine and the EU in November 2013 sent off Ukraine into one of its darkest periods. Two years later, Ukraine lost a piece of its territory, Crimea, which was annexed by Russia in spring 2014 after a quickly organized referendum (read here an analysis on Russian influence over Europe). Since the annexation of Crimea, not only as Ukraine lost the peninsula, which is never mentioned by

Photo: Kremlin.ru [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons
Photo: Kremlin.ru [CC BY 3.0 (http://creativecommons.org/licenses/by/3.0)%5D, via Wikimedia Commons

the 28 EU Member States, but the war in the Eastern border of Ukraine has severely affected the political, economic and stability of Ukraine. The only instrument implemented by the EU, which has been very successful, is a series of sanctions against Russia. But unity among the 28 on keeping and deepening the sanctions is slowly disappearing in favor of national gains.

The second serious regional crisis is the current migration crisis. After the 2007 Arab Spring, many in the West and the Middle East and North Africa (MENA) were hopeful for a democratic transition of many countries under long-term dictatorships like in Egypt, Syria, Tunisia and Libya. The time of euphoria quickly turned sour for Arabs and Westerners, witnessing either the reemergence of authoritarian regimes (Egypt), their survival (Syria) or simply collapse of the state (Libya). Since then, the EU, which has not done enough with its American counterparts in assisting in the transition of these states, is seeing an unprecedented number of refugees fleeing their homes, which have become war zones like in Syria, Afghanistan, Eritrea, Somalia and so forth. The mass of refugees seeking for asylum in the richest EU countries is not new, but the current mass of refugees is unprecedented and is underlining the weaknesses of the EU (institutional) and dismantling European solidarity.

A Crisis for Ages – The Migration Nightmare

If the Eurozone crisis, or at least a Greek default, were framed as the event that could kill the Euro and ultimately the Union as whole, these were the good old days. The migration crisis is directly threatening the future of the Union. If Germany and Sweden have been the good Samaritans in welcoming refugees (in 2015, it is estimated that Germany could welcome between 800,000 and 1,000,000 asylum seekers), Chancellor Merkel with her Minister of Interior, Thomas de Maizière, have reinstalled border control at the frontier with Austria. This move by Germany has started a snowball effects with other EU Member States implementing similar measures. The closing of borders to control the movement of people is a direct violation of the Treaties. The border-free Schengen agreement is one of the most successful and visible symbols of the European Union. It is too some extent a sacrosanct dimension of the EU.

European Integration in Danger?

The European integration process is a complex story of crises and adequate responses through policy changes and bargaining power. The period of the empty chair, the end of european_crisisthe Cold War and the reunification of Germany, the war in Kosovo, the divide between old and new Europe around the Iraq crisis, the no to the 2007 Constitutional Treaty and the Eurozone crisis have all been serious crises, but yet manageable for the European leaders. It appeared that European actors understood the need to solidify the Union and put aside differences in order to solve a crisis. The migration crisis is showing the worst of Europeans and their leaders, and European solidarity remains to be seen. Jean-Claude Juncker, President of the Commission, called for courage in remaining altogether and implementing meaningful measures like quotas. With a weakening Euro, as the Eurozone crisis has yet to be solved, the Schengen agreement under attack, a possible Brexit in 2016/17, the EU appears to move towards an ‘ever-lesser Europe.’ Yes, once upon a time, the EU was a Nobel Peace Prize laureate.

(Copyright 2014 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).

 

Will Tsipras 2.0 be better than Tsipras 1.0?

Photo: AFP
Photo: AFP

Alexis Tsipras resigns after seven months in power, but is seeking for reelection in elections in late September. His time at the helm of Greece was marked by a impossible conundrum: defend Greek interests against powerful European and international forces, ending the austerity while finding growth, and dealing with an ideological split within his party.

Prime Minister Tsipras is calling for a new round of elections, most likely scheduled for September 20th, and he will lead the Syriza party. “I believe we haven’t yet seen our best days” announced the Prime Minister on television “and I’m going to ask for the people’s vote to govern this country – with more experience, with my feet more firmly on the ground.” With a disastrous economic and fiscal situation, Greece is now facing even deeper political uncertainties. With his resignation the country will be governed by an interim-government until the next snap elections in September 20th. Tsipras is leaving office for a better comeback and freeing himself from the rebels of his party. He is looking to “return to power with a more manageable coalition.”

Reflection on Tsipras’ First Tenure

Several points need to be reflected upon his time in office. First, PM Tsipras came into power based on an anti-establishment campaign. His extreme-left party, Syriza, took the power based on many promises: defending Greek interests by ending the international and european austerity measures; and an anti-establishment campaign.

Second, his time in office was quite smooth until the looming of the deadlines for repayment of the IMF and ECB loans. Even though he remains one of the most popular politicians in Greece, the summer has created serious political tensions within his party Syriza. The fight between Greece and the Troika (ECB, Commission, and IMF) over an agreement after missing the initial deadline forced the Tsipras’ government to close Greek banks for almost three weeks. Tsipras was obliged to agree to the terms requiring tax hikes and further spending cuts under the threat of complete collapse of the Greek banking system (read here a past analysis). The deal with European creditors infuriated members his party Syriza, but Tsipras managed to get it approve through the Parliament with the help of the opposition.

Third, the resignation of Alexis Tsipras, which should be seen as a two-step process – first the referendum, and second the agreement to the terms of the bailout – marks in some ways a complex existence and survival of socialism in Europe. To many, Alexis Tsipras was the last embodiment of socialism in Europe. Now the question is: was the international market seeking to make a point in going after Tsipras? With Tsipras’ departures, it seems that austerity measures have become the European landmark in solving deep structural economic crisis. But if reelected, Tsipras would be a much more centrist politician than seven month ago. Tsipras had to move towards the middle creating a split with the radical core of his party.

Referendum, Bailout and Political Tension

When did it go all wrong for Tsipras? And, did it go wrong for Tsipras? For many Europeans, PM Tsipras lost the battle after calling for a referendum and advocating for the no vote (remember the oxi?). In retrospective, the results of the referendum actually did not matter, aside for many Greeks feeling that Tsipras tried to defend them. The referendum was perceived by European partners, especially the Germans, as an act of treason. Greece was already on the thin line with his Eurozone partners since the collapse of its economy and the first bailout five years ago. Greece had mis-behaved and lied to its partners (read here a previous interview on the topic). The referendum was another act of treason for European partners. Once Greeks had voted in favor of the no

ATHENS, GREECE - 2014/10/13: MP with the SYRIZA political party, Mr Panagiotis Lafazanis, talks with a megaphone to the demonstrators expressing SYRIZA support. Kurdish people that live in Athens organised a demonstration in support of the Kurdish fighters that defend the Kobani town in Iraq from ISIS insurgents. (Photo by George Panagakis/Pacific Press/LightRocket via Getty Images)
Photo: George Panagakis/Pacific Press/LightRocket via Getty Images

vote, and a week later PM Tsipras agreed to the new terms of a third bailout, his time was counted. His vocal lieutenant, finance minister Yanis Varoufakis, announced his resignation days after the victory of the no vote. Once Varoufakis was gone, and Tsipras agreed with the terms (criticized by the IMF) and started his transition towards the center. But in some ways, Tsipras’ fate was sealed, or not? In addition, it created a real ideological split within Syriza. Tsipras is undeniable moving towards the center, while the old guard of Syriza, led by the former Energy and Environment Minister, Mr. Lafazanis, have not changed their position. On the referendum, The Financial Times reported that “Mr Lafazanis’s supporters speak of an ‘ideological betrayal’ and ‘treachery’ by Mr Tsipras’s faction.” The paradox between calling for the referendum opposing the bailout and then accepting the terms of the bailout created an unsustainable political condition for Tsipras.

Some experts and media are comparing Greece to a European protectorate (at least in the leftist literature) after the agreement on the third bailout’s terms. But aside from asking for the approval of his policies, does Greece need another election in such dire times? Tsipras is gambling on a new election in order to get rid of rebels, or what The Economist calls the ‘wild ones,’ build on its domestic legitimacy, and try to govern and reform Greece with a fresh flow of money. Let see if Tsipras can win another election, and how different will Tsipras 2.0 be from the Tsipras 1.0? Can Tsipras 2.0 bring Greece to reform and become a growing and sustainable country under the current conditions? This remains to be seen.

(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).

It is Politics, Stupid!

CREDIT: ANADOLU AGENCY
CREDIT: ANADOLU AGENCY

“I really cannot remember, in all my time in European politics, whether I have come across a situation like this. This is really all about the European Union. If the EU is going to have any credible force, it is going to have to demonstrate it is capable of solving its own problems.” – President Martin Schulz on July 12th, 2015 during the Euro Summit Meeting

Forget about economics, finance, banking regulations, social welfare policies, debt forgiveness; the future of Greece solely depends on politics. “The answer [of endless negotiations on solving the Greek crisis these last five years] cannot be found in economics,” writes Yanis Varoufakis, the former Greek finance minister, “because it resides deep in Europe’s labyrinthine politics.” Greece’s destiny is a simple political question based on several concept: trust and confidence.

The Deal

After a week long of back and forth between Greece and the European capitals, Brussels is once again the siege of a Greek marathon. A meeting of the Eurogroup finance ministers started on Saturday, July 11th and ended the next day around 3pm. Ensuing it a general EU summit, with the 28 leaders, was supposed to take place, but was instead cancelled and transformed into a crisis summit of the 19 EU leaders of the Eurozone. The future of Greece as a member of the Eurozone was clearly on the line with a very reticent German team (Chancellor Merkel and her Finance Minister Wolfgang Schäuble proposing an eventual ‘temporary Grexit’).

As reported by the Financial Times, the finance minister negotiations, which were fruitless and tense, let the way to the EU leaders, whom could not do better considering Germany’s position. Until François Hollande, President of France, whom had been extremely active in advising, helping and defending Greece in the last mile, called for a meeting in Tusk’s office. Preisdent Tusk was reported saying “Sorry, but there is no way you are leaving this room” until a deal is reached.

Credit: Aris Messinis/Agence France-Presse — Getty Images
Credit: Aris Messinis/Agence France-Presse — Getty Images

Interestingly enough, Tsipras’ proposal prior the July 11th meeting included: raising the age for retirement; a VAT hike at 23% across sectors; privatization of key sectors of Greek economy; and removal of tax breaks for some Greek islands. These reforms would permit to unlock a third loan package of $59.6bn until 2018. Tsipras’ proposal was highly similar to the one offered by the international creditors. Even Jean-Claude Juncker during the meeting recognized the proposal brought by Tsipras as almost identical to the one put on the table by the creditors weeks earlier. And the President of European Parliament, Martin Schulz, called for avoiding a Grexit and find a solution.

Based on the deal reached on July 13th, the Greek Parliament voted and agreed on July 15th, on the bailout deal, which was approved with a 229-64 majority. However, Tsipras’ party, Syriza, seems to have lost some unity with 32 Syriza MPs defying their leader’s pleas and rejected the deal. Clearly the terms of the bailout are in direct contradiction with Syriza’s policies, beliefs, and promises, as well as sidelining the results of the referendum. These contradictions could push even further the political crisis in Greece and lead to yet another election during the summer.

Chancellor Merkel, the Finish government and others are not convinced about the proposal and especially Greece’s commitment. The Greek drama is taking more than a simple economic/financial turn, it is purely political. It appears that some EU Member States, like Germany, Finland, Slovakia and others, are more inclined to go after Greece and its leftwing government led by Alexis Tsipras, than finding a real deal that would help in the long term the country.

One core reason is trust, or at least ‘lack of trust.’ Some experts have argued that Tsipras was now on Merkel’s black list after his political coup, the referendum. Merkel and others EU leaders do not trust any longer Tsipras and his government. Or even has argued by Yanis Varoufakis, “based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.”

Death of the European Project?

The Greek file should be considered as an overall failure for the European ethos. Many economists, like Joseph Stiglitz, have been very critical of the negotiation process and the agreed deal. One of the most virulent denunciation of the deal was Paul Krugman, writing that “it’s [the deal] a grotesque betrayal of everything the European project was supposed to stand for.” Even the International Monetary Fund, a global advocate for austerity measures and straightjacket policies, has been critical of the dealbroken_euro_fit calling instead for a huge debt relief for Greece.

Last but not least, Nicolas Gros-Verheyde of Bruxelles2 wonders about a core question: “Is Europe becoming the sum of its egos?” The Greek file embodies more than solving an economic problem, it has become a vicious fight between powerful EU Member States. These egos are affecting their global visions and understandings of the core principles and values of the European endeavor. But right now, the EU is failing at this important crossroad. The EU cannot find a real solution on any major crisis from counterterrorism in Mali, to migration crisis in the Mediterranean, to Ukraine/Crimea, to the domestic rise of nationalism, and naturally Greece. Are politics killing the EU? It certainly looks like it.

(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).

Grexit, Zombies and Back to the Future

grexit

With the looming Greek deadline, it is interesting to revisit an interview conduced back in 2011 about the future of Greece as a member of the Eurozone. Not surprisingly, not much as changed since then aside from the perpetual rotation of Prime Ministers unable to balance the debt, european and international pressures, and domestic forces.

In almost five years, the EU, the Eurozone and Greece are in the same situation that they initially were. Today Greece is on the verge of defaulting on its debt of €1.5 billion to the IMF on June 30th. Since the election of Prime Minister Alexis Tsipras, the fight between Greece and the Troika+Germany has been tense with no real solution (read a previous analysis on Syriza here). The bargaining process has brought the EU and Greece in front of a wall. The only difference between 2011 and 2015 is the acceptance of the concept of Grexit. In 2011, Grexit was only a word to express the unthinkable. In 2015, Grexit is an option.

Here is the interview of Dr. Lorca-Susino taken place in Miami in 2011:

“What makes a currency unique? The symbols, monuments, leaders figuring on the paper money, are exemplifications of the collective identity and shared culture. In the case of the Euro, as underlined by Gideon Rachman, the symbols on Euro’s coins and bills are fictitious.

Last week [September 15th, 2011], I ask one of my close friends, Dr. Maria Lorca-Susino, and also co-worker at the EU Center of Excellence at the University of Miami to grant me a little of her time for an interview on the future of the Euro and its impacts on the EU as whole. The fraternity among Europeans living abroad is such that she could not refuse. Dr. Lorca-Susino has emerged as one of the top thinkers on the Euro and recently published an outstanding book, The Euro in the 21st century, from the ashes of her dissertation. I had in mind to do the interview à la Financial Times, unfortunately neither lunch nor coffee were part of it.

Zombies have become a very trendy concept to use in International Relations and mass culture [it was the case in 2011 with all the movies, tv-shows and Drezner’s book Theories of International Politics and Zombies], and I could not resist on using it for this piece. Is Greece a zombie? Can a bite from Greece lead to contagion to the other members of the Eurozone? and ultimately to the European Union as a whole? Could it lead to the comeback of national currencies? Would a default of Greece be like a heat shot to a zombie? These were my general questions throughout our discussion.

I started straight with a large, contentious and complex question, “How do you see the future of the Euro?” As a true academic, she replied by “it depends,” and then claimed that it will be “without Greece.” Greece has been at the heart of a massive political storm in Europe for several reasons: first, Greece is seen by the Troika – EU, IMF, ECB – as not doing enough; second, Greece could be considered as a failed-state. The problem with Greece is that the Greek government is unable to raise money [this changed in 2014 in Greece], as opposed to be unwilling to. Furthermore, from an economic standpoint, the case of Greece is a problem of solvency – no more assets – as opposed to have a problem of liquidity, which is the case of the Italy.

Dr. Lorca-Susino underlined that the Eurozone without Greece is not a “big problem” as the Treaties have been already breached many times. The no bailout rule has been breached, so why would it be a problem to remove Greece for the Eurozone? At that time, I should have raised the fact that one of the problems is perhaps not political, but instead unethical. But even the notion of ethics on the Greek fiasco lost its value a long time ago, when the Greek government cooked the books. The fact is that Greece lied and did not report the “real” data concerning its deficit and debt. The expulsion of Greece from the Eurozone is not a question of economic weakness, as argued by Dr. Lorca-Susino, but instead a consequence of its dishonesty to the other Member States. The cover-up by the Greek government did put the entire system in jeopardy, as she recalled, but also limited the time for action or reaction of the other Member States in dealing with such crisis.

I, then, wondered about the need to restructure, redesign the architecture of the Eurozone. She replied very simply that, “the Eurozone has all the requirements. But the only problem is that they have not been respected.” Originally and “in good faith” – as underlined several times throughout our discussion – Member States were allowed to maintain their fiscal autonomy. She went on and argued that the “unwritten rule for this fiscal independence” was because of a shared belief that Member States were part of a so-called “gentlemen club.” In other words, Member States’ words were the only guarantee needed for a stable and safe economic climax within the Eurozone. Short-term breaching was permitted, as it was the case with France and Germany, as long as Member States readjusted their deficits.

What about a common EU fiscal system? “Fiscal unity is complicated,” argued Dr. Lorca-Susino, “because it would send the entire European political class to unemployment.” Her vision of the role of politicians is reduced to their abilities to make the budget in accordance with the country’s needs. Fiscal unity is not a fiscal question, but instead a political one. However, another problem would be to design a common European taxation system with all its complexity around the question of redistribution in accordance with national taxation and European needs. Fiscal unity would ultimately lead toward a federal state along the lines of the United States.

But, what is the role of the European public in all that? Have European citizens been removed from the equation? Since the beginning of the crisis in 2008, the European public, all across the Union, has been extremely critical and vocal of all the austerity measures undertaken, especially the ones implemented in Greece, Spain, Italy, Britain, and to some extent France. A large segment of Europeans see the European Union as the supra-entity forcing national governments to cut their budgets and ultimately weakening the power of the welfare state. Her answer, once more, was sharp and clear, “the Euro is like Bush! Everybody blames it!” Her argument is that European citizens truly believe that life post-Euro was better. To some extent, the economic rationale is valid, monetary autonomy. Furthermore, national governments have used the Euro as a shield in order to push unpopular national economic policies without affecting the electability of its political class.

On the international stage, the Euro has been used as an instrument from diversion especially in the US. On the money market, the Euro is not seen anymore as a strong, stable currency leading investors in buying massive amount of Swiss Franc with all the consequences it entails for the Swiss authorities.

To conclude this piece, I would emphasize two points: first, the Euro is far from being perfect, however, it has become an European scapegoat. At least, Member States can agree on something; second, as argued by Dr. Lorca-Susino, “Greece is not buyable as a country, as an economy.” Greece looks like a zombie. One of the problems with zombies is the difficulty to find a vaccine. “

0,,18530052_303,00Putting this interview in perspective and as a concluding remark, one should mention the call by Prime Minister Tsipras to put the decision in the hands of the Greeks by holding a referendum on July 5th. This fascinating political move by Tsipras put the Greeks in the driver seat. Tsipras and his finance minister, Yanis Varoufakis, are opposed to the terms of the new bailout. For instance, in his public address on June 26th, PM Tsipras said “After five months of tough negotiations, our partners ended up with a proposal in the form of an ultimatum,” with “new, unbearable measures,” which would force for additional cuts to pensions, salaries and tax increases. He added that “the goal of some of Greece’s partners is the humiliation of an entire nation.” It is the first time since the beginning of the eurozone crisis that a government is asking directly its citizenry to make a choice on their future.

In order to do so Tsipras had asked to his creditors and the Eurogroup to give a 5 days extension. The next day, June 27th, the finance ministers of the Eurogroup rejected Tsipras’ demand. Jeroen Dijsselbloem, the leader of the Eurogroup of eurozone finance ministers, told a news conference that “The Greek government has broken off the process. However regrettable, the program will expire on Tuesday night.” Ultimately, Greece seems on the verge to leave the Euro. A Grexit is now a reality.

This piece was initially published on Foreign Policy Association’s Blog on September 23rd, 2011 under the title of “Euro, Zombies, and Greece: A Discussion with Dr. Lorca-Susino”
(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).

Putin, Master of Europe?

Credit: Alexei Druzhinin / RIA Novosti / Associated Press
Credit: Alexei Druzhinin / RIA Novosti / Associated Press

Is Russia winning its war against Europe? It surely looks like it. Since 2008, Putin’s Russia has been over active in dividing and conquering the members of the European Union and the Euro-Atlantic community (the North Atlantic Treaty Organization). Vladimir Putin, President of Russia, has been successful by implementing a strategy on two fronts: regional/international and domestic. Despite his track record of not bidding himself to any agreement, Putin has transformed Russia into the ‘indispensable nation’ in Europe.

Geopolitics – Maintaining Regional/International Chaos

Putin understands one thing: safeguarding Russia’s neighborhood and empowering its sphere of influence at any cost. In order to fulfill both goals, Putin has been using military force in order to limit the horizontal expansion of NATO and the EU. On the European continent, Russia is the only state willing to use military force to advance its interest. It has done so in Georgia in 2008 and in Ukraine since 2013 (this does not include the lengthy war in Chechnya). In 2008, Putin saw the need to attack Georgia as the Bush administration was foreseeing the incorporation of Georgia within NATO. By attacking Georgia, Putin forced Euro-Atlantic leaders to rethink about the consequence and strategic soundness of including a small state like Georgia within the Alliance. The Article 5 was a powerful deterrent during the Cold War, but could be in the current multipolar order a threat to the security of the Euro-Atlantic community.

In 2013, Ukraine was on its way to sign a trade agreement with the EU. Putin saw it as a threat and pushed its influence over the corrupted and pro-Russian leadership, Viktor Yanukovych. Ukrainian President abruptly ended the talks causing pro-Western manifestations in Kiev. In a matter of months, Yanukovych had fled Ukraine, Russia had annexed Crimea and continues supporting pro-Russian militiamen in Eastern Ukraine. Though the annexation of Crimea was not enough to unite the 28 EU Member States against Russia, the evidences gathered by NATO demonstrating the clear military involvement of Russia in

Picture: Reuters
Picture: Reuters

Eastern Ukraine permitted the 28 EU leaders to implement sanctions against Russian individuals and corporations.

Putin was again the heart of the February negotiations with Angela Merkel of Germany and François Hollande of France in order to agree on the baseline for a ceasefire in Eastern Ukraine. The Minsk provisions have not lived to the promises hoped by Europeans.

Aside from the use of military power, Putin has been working on the creation of a Eurasian Union. This Union initiated by Vladimir Putin is a way to balance out the European Union and the North Atlantic Treaty Organization. The Eurasian Union has allowed Putin to attract regional countries from the EU to his Union. As per Nico Popescu of the EU-ISS, it exists two Eurasian Union: one real, an economic union; and, one imagined with geopolitical aspirations. The first one, the Eurasian Economic Union, is led by the Eurasian Economic Commission, which has a staff of 1,000 employees, which was established by the Eurasian Union treaty in May 2014. While the second union, with geopolitical role, is the center point of Putin’s third term seeking to become an organization, like the EU, NAFTA among other, and reintegrating former states of the Soviet Union under one entity.

The Eurasian Economic Union (EEU) is currently under construction. The Treaty came into force on January 1st, 2015 with three core members, Belarus, Kazakhstan and Russia, and Armenia (entering on January 2nd) and Kyrgyzstan joining in May 2015. As presented by Ian Bremmer of the Eurasia Group the EEU in perspective is quite considerable: “The size of the EEU is not the primary cause for concern; rather, it’s what it reveals about Vladimir Putin and his commitment to maintaining regional dominance. It’s why he will go to such extremes to keep Ukraine from joining Western institutions like the EU or NATO. He’s not willing to cede this sphere of influence, and Ukraine is the crown jewel; there is no viable, robust Eurasian Union without Ukraine.”

Vladimir Putin has masterfully locked in the control of geopolitics in Europe, the Caucasus and Central Asia. Additionally, Putin has increased his influence in the conflicts in the Middle East. Bashar al-Assad, President of Syria, owes his power to Putin as he reached at the last minute to his American counterpart, President Obama, in order to agree on an international deal to destroy Syrian chemical weapons.

Playing with European Domestic Malaise

Within the European Union, Russia has been highly successful in creating disunity among the 28 Member States. Putin has used two aspects to Russia’s advantages: Europe’s energy dependence and the sluggish European economic context.

On the question of energy, the EU-28 are highly dependent on Russian hydrocarbons (gas and oil). Germany, France, Italy, Greece and Eastern EU Member States need a constant influx of Russian energy in order to maintain their economic and industrial engines going. Europeans have dealt, poorly, with the security of supply of energy as illustrated below.

Chart: European Dependence on Russian hydrocarbons (2002-2012)

3. Chart 1- EU dependence on Russian energy-B&W
Source: Eurostat. 2014. “Energy Dependency Rate, EU-28, 2002-2012 (percent of net imports in gross inland consumptions and bunkers, based on tons of oil equivalent) YB14

The graph above demonstrates the high degree of dependence on Russian hydrocarbons. The trend has certainly be declining, but the overall average remains too high in order to guarantee a security of supply. In recent years, the Europeans have been working on lowering their dependency on Russia through renewable energy and, for a long time, on nuclear energy.

Figure: Production of Primary Energy in Europe

5. Fig 2-Production of Primary Energy in Europe-B&W
Source: Eurostat. 2014. “Production of Primary Energy, EU-28, 2012 (percent of total, based on tonnes of oil equivalent) YB14.”

Renewable energy – composed of biomass, hydropower, wind, solar and geothermal energies – are increasing and offering an alternative to Europeans. However, renewables cannot be the only source of energy as they need to be backed up by either hydrocarbons or nuclear power. If Europeans are working on moving towards greener economies, they still require hydrocarbons. Germany has been the prime example with the Nord Stream pipeline bringing Russian hydrocarbons directly at home without depending on transit countries. With the crash of oil prices, hydrocarbons remain an important share of European consumptions.

The second door for Russian intrusion and/or attraction is money. Despite a dire domestic economic and financial situation, Vladimir Putin has been able to attract the most desperate EU Member States such as Italy and Greece as well as building strong ties with some national political parties. Since its financial collapse, Greece has proven to be the weakest EU and Eurozone member. Greece’s default was avoided by a series of multilateral bailouts by the troika – ECB, European Commission and IMF -, keeping the country within the Eurozone. However, these bailouts have come at great costs requiring  large spending cuts in social and welfare programs. Unemployment levels are through the roof, young Greeks are fleeing to Germany to get a higher education, and dying in Greece

Photograph: Sasha Mordovets/Getty Images
Photograph: Sasha Mordovets/Getty Images

is once again a reality (read here a previous analysis).

In addition of this dire domestic context and the succession of powerless former government, Syriza, the extreme-left party led by Alexis Tsipras, was elected in January 2015 (read here a previous analysis on Syriza). Tsipras’ platform was based on renegotiations of the terms of the bailouts and rebuilding Greek national psych. From electoral promises to governing realities, Tspiras was unable to do so and is now seeking for outside funding in order to “come up with money to pay off maturing debts, revive its devastated economy and renegotiate its loan agreements with other countries in the eurozone.” Prime Minister Tsipras was in Moscow last week. Both countries are claiming that Tsipras did not ask for money. Considering Putin’s behavior and Tsipras’ desperation, it is difficult to believe that Tsipras and Putin only talked of the new gas pipeline through Greece and discounts on gas prices. Additionally, Tsipras has been advocating for a removal of the European sanctions against Russia. Such comment is a departure from European unity in order to maintain economic sanctions on Russia.

From state to party-sponsoring, Putin has found a way to change the perceptions within Europe about Russia. In France, recent allegations and press coverage have demonstrated that a Russian bank has been financing the extreme right wing political party, the Front National. Reports show that the Russian bank, First Czech Russian Bank (FCRB), had lent EURO9 million to the party. The party claims that no French banks were willing to lend them money, forcing them to find foreign funding. However, the Front National has been very vocal in defending Vladimir Putin’s domestic and foreign policies and portrayed him as a great leader. The French government is reflecting on launching an investigation to look into the campaign financing of the FN.

The relationship between Putin and the European far-rights has grown thanks to the dire socio-economic context and the rise of euroskepticism all around Europe. “The far right is attracted by Putin’s Russia,” argued Pierre Lellouche, a member of a mainstream conservative party, the Union for a Popular Movement, “because it embodies the traditional social values they feel Europe has abandoned.”

europe-russia

Divide and Conquer

Putin is the key to regional stability and instability. Since his arrival to power in 2000, Vladimir Putin has worked on rebuilding the grandeur of Russia and perceives the collapse of the Soviet Union as the greatest catastrophe of the 20th century. Vladimir Putin is using all aspects of Russian power to increase Russia’s regional and international influence. He has been very successful at it. Bashar al-Assad of Syria is still in power of a destroyed country, Crimea is now part of Russia, Eastern Ukraine seems englobed in a long and nasty war and could end up as the next piece of Russia, and Russia is regularly interfering with national sovereignty of EU and NATO members.

In response, the members of the Euro-Atlantic community have only condemned Russia’s actions, agreed on mild sanctions and are hoping to stop conflicts and tensions through diplomatic agreements. Are Putin’ strategies sustainable? and, what are the endgame? Putin certainly emerges as being very successful in creating discord, affecting the unity of EU Member States, and underscoring the power-aversion of the EU and to some degree the US. Putin has made Russia the indispensable European state.

(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).

Syriza – The Greek Silver Bullet?

Photographer: Yorgos Karahalis /Bloomberg
Photographer: Yorgos Karahalis /Bloomberg

Syriza won the 2015 Greek elections with over 12.5 percentage points on New Democracy. Syriza elections at the head of the Greek government should not be seen as a surprise. It was in fact a continuity of its rise. For instance, in May 2014, the party had already won the majority in Greece, with 26.6%, for the European elections. Ensuing the results, Syriza did not have enough votes in order to fully control the new Greek government. The question was answered when Panos Kammenos, the leader of the coalition partner, Independent Greeks, a right-wing party, decided to join forces with Alexis Tsipras. The Independent Greeks, whom received 13 seats at the Parliament, formed a coalition with Syriza, holding 149 seats (two shy of the majority). Independent Greeks and Syriza share one element in common: desire to renegotiate the terms of the bailouts and ending the austerity measures (See below the distribution of power inside the new Greek Parliament).

Source: BBC News
Source: BBC News

In any case, Alexis Tsipras, will become the next greek prime minister. His mandate is based on ending the austerity measures, while maintaining the flow of European assistance to Greece. M. Tsipras, as Chancellor Merkel, President Hollande, know very well that a Grexit – exit of the Greece from the Eurozone – would be a terrible moment for the Euro and the EU. But one of the core questions is: how much are European partners – Germany, France and the European and international institutions – prepared to compromise with him?

Seeking for Dignity and Political Sovereignty

The current legislative elections in Greece have become more than just an election. By bringing Syriza to power Greek citizens want to change the political direction of their country. For now six years, the greek economy is in recession and the succeeding governments – socialists and conservatives – have all continued the same policy based on austerity measures in order to clean-up Greek finances. However, these measures, attached to the succeeding bailouts, have had terrible consequences on the quality of life in Greece.

For the first time in recent years in Europe, it is not a extreme-right wing party threatening to overtake power, but an extreme-left. These elections raise important question: the future of Greece in the Eurozone; the future of austerity measures implemented by the Troika (Commission, European Central Bank, and International Monetary Fund); and the return of democracy in Greece. After voting, Alexis Tsipras made two pledges: first, “Democracy will return to Greece.” Second, “the choice is clearer than ever. Either the troika comes back and continues its work and its catastrophic politic of austerity, or we are moving towards a difficult and tense renegotiations with our partners in order to re-conquer our dignity.” Tsipras was able to base its campaign on the themes of dignity and national sovereignty. In a report on France Inter, a French journalist was describing the emotions of Greek citizens as they feel proud of having reconquered their political sovereignty, which is not anymore under the helm of the Troika -at least for now-.

However, Wolfango Piccoli, managing director at Teneo Intelligence in London, told Bloomberg Businessweek that “Tsipras will be the celebrated winner, but delivering on voters’ larger-than-life expectations has not become easier after the landslide victory.” The next day will be tough for Greeks and Tsipras. Many questions are now being asked in Greece: who will compose the new government? how will Tsipras be able to renegotiate the terms of the bailout? how will Syriza be able to govern?

The Real Impacts of the Austerity Measures

The case of Greece within the Eurozone diverge from other Eurozone members like Italy, Spain, Portugal or even Ireland. When Greece was on the verge of defaulting in 2008, the main reason was that the political class had cooked the numbers for quite some time. Greece had been for decades under a corrupted political class. Syriza rise to power put an end to the perpetual control of Greek politics by either the Papandreou or the Karamanlis family and their connection to powerful oligarchs. If one recall, it took a long time for the other Eurozone members to decide on saving Greece and then how to implement a plan in order to save Greece and keep it inside the Eurozone. In some way, the members wanted to give a lesson to Greece. It has been now more than five years since the first bailout package was delivered to Greece. The first package included “€110 billion ($150 billion) and was first agreed upon by the euro-zone member states and the IMF in 2010.”

In counterpart to receiving bailout money from the Troika, Greece has had to implement serious structural reform in order to reform the labor market and in liberalizing areas of the product markets. Aside from the reforms, the Greek government had to cut pensions, lay out large amount of public servants, and so forth. Certainly Greece lied and did not follow the guidelines established in the Eurozone once it adopted the Euro in 2001. But the costs of the austerity measures on Greece and the greek society have been terrible. How do the austerity measures translate into daily life? For most of Western citizens, these are two words reflecting government spending cuts in most social policies. Well, for Greece and Greek citizens, austerity measures look like this:

  • on public health
    • left over a million without healthcare (for a country counting 11 million citizens, so 1/10);
    • country’s health budget was slashed by almost 40%;
    • rising infant mortality rates by 43% from 2008 to 2010;
    • soaring levels of HIV infection among drug users;
    • the return of malaria;
    • and a spike in the suicide count;
    • decline of birth rate by 15% (a drop from 118,302 in 2008 to 100,980 in 2012);
  • on the economic life
    • decline of GDP per capita from roughly $30,000 in 2008 to $21,000 in 2014;
    • 1/5 of the country lives under poverty lines;
    • rising unemployment levels at 25.8% in Greece compared to 23.7% in Spain, 13.4% in Italy, 13.1% in Portugal and 10.4% in France;
    • highest youth unemployment rate in Europe with 61.5% in 2013 (see chart below);

chartoftheday_1524_Youth_Unemployment_Still_Unrelenting_in_Europe_b

  • on social life
    • cuts on public education and especially higher education;
    • over 200,000 Greek citizens have left the country since 2009, and a majority of them are going to either Germany or the United Kingdom;
    • a ‘brain drain’ is occurring, which will affect the transition of the country in the decades to come.

In some part of the country, Médecins du monde, an international non-governmental organization, is now providing healthcare. On its website Médecins du monde writes that “the measures destined to save the financial system do not take into consideration the human consequences.” In some ways, considering the numbers above, it is not difficult to understand why Greek citizens picked the Syriza route over the traditional center right/left.

Syriza: A European Experiment?

Will the elections of a radical left party save Greece? Not really. Syriza is far from being a silver bullet. However, it could offer some serious leverage in order to loosen the weight of the austerity measures, re-negotiate the terms of the bailout, and find a long-term plan for Greece. Additionally, Syriza has become for many a political experiment in a Europe in search of a new political and economic life. Syriza does not appear to be a red revolution, but rather a road for more human transition.

Dying in Greece because of poverty is a reality, and is unacceptable on one of the richest continents. Greece is a core EU Member State, it is a Member of the Eurozone. The European Union is a political and social endeavor between a group of states committed to such goal. The force of the austerity measures and the requirements on Greece in order to save the Union back in 2008 may have been a necessity at first considering the degree of interconnection between all world banks. However, the continuity of their effects on Greece should have long been renegotiated. The EU has become a multi-speed Union, composed of a Northern Group and Southern Group (rich and poor) on many important issues: in defense with the CSDP; in democratic and judiciary terms – see at Romania, Bulgaria and Czech Republic -; in economic policies – look at Greece, Portugal, Spain and Italy -.

The ECB announced last week the beginning of a massive Quantitative Easing (QE), a program open-ended by nature – at least until the inflation rate of 2% is attained – of a value of €60 billion a month. However, the European QE won’t be enough until the European economic engines are not reformed and become more competitive. In parallel, the European Commission has announced the launch in 2015 of its Juncker Plan, a €315bn investment fund program intended to kick-start the European economy/ies. Both plans, QE and the Juncker Plan, will be necessary, but Member States ought to address their economic, industrial and financial models at home and harmonize them with European regulations and commitments that they agreed to.

Syriza won’t solve Greece’s problems, but it will once and for all bring important issues on the European table. The 2008 financial crisis has had devastating effects on most European citizens. The European welfare states are under-attack; unemployment levels among European youth is too high for any viable future of the EU-28 and the Union; and the rise of political extremes – right and left – endangered democratic foundations. Syriza’s message embodies all these elements. Money won’t solve it all, but politics will. As underscored by Christian Odendahl and Simon Tilford of the Center for European Reform, the three areas of negotiations will be required in Greece: debt relief, austerity, and structural reform. Both side, Greece, and the international institutions and EU Member States, will be bargaining for their side during tense period of negotiations. Both have some nuclear options, as highlighted by Odendahl and Tilford, “the withdrawal of liquidity for Greek banks, which the ECB has said it is considering; and the unilateral default on official loans by Greece.” The bottom is line is keeping Greece in, while loosening government maneuvers.

These elections are for the first time since the 2008 financial crisis illustrating a real popular call for ending austerity measures through neo-keynesian policies (read here a good analysis on the issue), and not anti-globalization and mercantilist policies advocated by extreme-right parties. As Tsipras told Greek citizens a week ago, “Our victory is also a victory of all the people of Europe struggling against austerity, which is destroying our common European future.” Europe will be watching carefully the way Tsipras implements its reforms, while keeping Greece in the Eurozone, keeping the flow of foreign aids, getting private investments, and rebuilding the public sectors to acceptable standards. “Populist parties across Europe” writes Judy Dempsey “are cock-a-hoop over Tsipras’s victory, seeing it as an inspiration for their own political ambitions.” But a failure by Tsipras will be the nail in the coffin for radical lefts and socialist parties around Europe; while a mild- or full- success could change the economic, social, fiscal and monetary debates in the decades to come. Greece is hoping; Europe is monitoring; the World is watching.

(Copyright 2015 by Politipond. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed without permission).