FORGET ALL YOU know and think about the European Union and the euro currency for a moment, and consider now with a fresh mind that Greece has just elected a far, far left party into government with the support of an ultra-nationalistic right wing party. Among their other coalition potential partners was a neo-Nazi party, complete with a large cohort of police members who mix politics and work, who placed third in the election overall. This is a bizarre situation for a member of the First World’s premier club league.
When you’re told with your fresh mind that this odd situation is related to a seven year old economic crisis in Greece and the response to it by the European Union and eurozone authorities, in combination with the IMF, you may be led to wonder what kind of crazy things have been going on over the past years that led to this.
We’ve been in the depths of an economic crisis now for nearly seven years. By ‘we’ I don’t mean the world at large. I mean the eurozone. The United States and United Kingdom, to name two of our largest trading partners, are roaring ahead with the crisis a dull memory. Growth is, in turn, helping fix many of the legacy problems of the crisis that hit in 2008. Not so in euroland, where growth is barely above red line and deflation has started to kick in. Legacy issues aren’t legacy at all, with banking debt, property busts and all the rest of it still hanging over our heads like the crisis started last week, if not yesterday.
It is abnormal to spend this length of time in crisis
This is not normal. It is indeed wholly abnormal to spend this length of time in perpetual crisis. We are sitting around in the eurozone talking about fears that we will become like Japan, a country caught in a perpetual cycle of deflation and stagnant economic growth since the 1990s. Not only is the crisis one of growth versus decline, it is a very existential one. At several points over the past years and now the spectre of a breakup of our economic club has been clearly in view. That is both abnormal and a result of inept economic mismanagement. It didn’t just happen to us by accident: we are in this situation by poor design.
Outside of the eurozone club, the wider European Union itself is facing some existential worries. If the Conservatives are returned to power in Britain this year, that country will hold a referendum on leaving the EU entirely. Even if Labour are elected to government they may not be able to bottle the genie back up, given that Brits are split roughly 50/50 on the notion and will pressure for a vote anyway.
What kind of partnership is this, really?
In the row over these potential break ups, of Greece from the eurozone and the UK from the EU entirely, it is easy to blame the other partner. Greece is an economic basket case; half them don’t pay their taxes, they cooked the books to get into the euro and now they have a government promising massive increases in spending when they can’t afford their current lot. The UK has always been a troublesome member of the EU, thinking itself bigger on the world stage than it really is and seeking opt outs from this and rebates from that policy that all other member states sign up to.
There is a severe reluctance within European circles, and within such ardently pro-EU echo chambers such as the Irish political arena tends to be, to contemplate that maybe it’s not just them. Maybe the eurozone and the EU at large really are, well, crap life partners?
Euroscepticism is a response to Eurofailures. From perpetual economic crisis to over-arching bureaucracy without seeming end, the euro and the EU are either failing or disappointing their constituents. The leaders of pro-EU parties and the institutions themselves scoff at any calls for reform, or, at best, pay-lip service to them; but the result of this is not that the issue is simply going away. The refusal to deal with the core problems of the Union in a pragmatic fashion are driving folks to fringe parties that take absolute positions against the EU.
The EU is good in theory – not so good in practice
The idea of the EU is an exceptionally good one. A free trade zone in one of the most economically prosperous parts of the world, with movement of people and commonality of basic laws and principles to make it all work. It is a guarantor of peace and, supposedly, prosperity.
What we’ve got nowadays however is this massive, bloated Brussels bureaucracy, which moves to Strasbourg every couple of weeks at great expense to keep the French happy. It is disconnected from citizens who mainly encounter l’grande institutions of the EU when they make a fool of themselves for trying to regulate banana curvature or dishing out grant money to brothels or, most regularly, getting told off each and every year without fail by their own auditors for having unaccountable accounting.
As for the eurozone, it’s a failure. I’m sorry to Europhiles, but it really is. When the bailiwick standing between you and oblivion is a Greek taxpayer who can barely afford to feed himself – and then surprises you by electing a populist socialist – you’re not doing it right. When the European Central Bank finally relents to Quantitative Easing about half a decade after countries like the US and UK, who have put the crisis largely behind them, it’s too late. When you’re looking at Japanese-type scenarios for economic stagnation, you’re failing.
While reform is possible for the EU, the eurozone is an irredeemable failure
The European Union can be reformed. We could junk a lot of bureaucracy and have it go through a renaissance of sorts, to return it to the values of free trade that really matter. The eurozone is an irredeemable failure, and the longer we try to fudge its continued existence the more ridiculous will become the compromise required to save face.
Had Ireland had the good old punt and our own Central Bank running it when crisis hit, we’d have devalued the currency and come through faster and easier than we did. There’s an argument that with appropriate interest rates in Ireland, the crisis may not have been as bad as it ended up being.
Instead we had to devalue by virtue of cutting incomes, and our Central Bank acted on behalf of a foreign institution to stab our government in the back when Ireland was bounced into a bailout – with the help of a radio interview that cut off any options our finance minister might have had.
We’ve had to forebear massive debts, truncated growth and one euro crisis to another. An election in a faraway country will dictate our economic future for the coming years, with the guiding hand of an influential Chancellor in Berlin and the positions of governments from Helsinki to Rome.
We need a slimmed-down EU and a junked euro
Most Europeans like the basics of the EU. Even the majority of Greeks would like to keep the euro. It’s a security blanket and a status symbol. Instinctively we all know that being in a club with our European neighbours is a good idea. But the nature of that club should be up for discussion.
European institutions with much to lose won’t discuss root and branch reform of the EU, and the euro seems sacrosanct after so much has been sacrificed to make it a reality and keep it going through crisis after crisis. This is pushing folks like the Brits to drastic in-or-out positions, and feeding the rise of extremist parties throughout Europe who hop on the Eurosceptic bandwagon.
Sensible parties and people need to have a sensible discussion about the future of Europe, and, to be viable, it needs to be a slimmed-down EU and a junked euro. It’s better we do it by design than in response to the next crisis: a Grexit, a Brexit, or maybe Spain or Italy electing Greek-like populists who will drag the whole edifice down.
Aaron McKenna is a businessman and a columnist for TheJournal.ie. He is also involved in activism in his local area. You can find out more at aaronmckenna.com or follow him on Twitter @aaronmckenna. To read more columns by Aaron click here.
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