POPULISM REACHES ITS LIMITS

Alexis Tsipras

Because of its Classical past as the founder of democracy, Greece was treated more tolerantly, than other countries would have been, when, during the nineteenth century, it defaulted several times on its commercial creditors.

That history created bad habits of mind. Now its creditors are the taxpayers of other countries, who are less tolerant, and less conscious of their intellectual debt to Plato and Socrates.

The present Greek debacle is the result of a clash of political cultures.

On the one hand is the culture of the European Union, where every decision has to be mediated through complex institutions representing 28 different countries, each with its own political culture, and then often has to win the assent of the European Parliament and of an independent European Central Bank. 

Theatrical gestures and moments of brilliant eloquence count for little in this world. Building a good track record, with good civil service staff work to back it up, is what counts in the EU political culture.

EU bailout decisions also have to be approved by the IMF, a global body, most of whose members and clients are far poorer than the Greeks. This creates an additional layer of interests which Greece must try to satisfy, as well as its EU partners.

In this setting, credibility and patience are vital to success. The new Greek government did not have patience, and soon it lost credibility as well.

In stark contrast with what was needed, it seems to me that the Greek Government is made up of people who come from a revolutionary tradition, where it believed that progress will come from a harsh rupture with the past, and whose proponents envisage a nationalist or socialist utopia, once that rupture is complete.

The Greek government are also people who have little or no previous experience of government, and who have thrived politically by agitating against the existing order, without the necessity of explaining how things would work after they had obtained power, and they had to survive and govern in the complex interconnected reality, that is the global economy of today.

That the Greek electorate would elect such people to office is explained by the desperation in to which they had been led by the irresponsible policies pursued by successive Greek governments since the 1980’s, who tried to win the votes of Greeks by promising them a standard of living that was not matched by their productive capacity, and by the mistaken decision to take Greece into the euro before the results of these bad policies had been properly rectified.

The problem is that the activities of the new government made things much worse than they were when they took office.

By creating doubt about whether they would honour the debts incurred by their predecessors, the new government created a crisis of confidence, and this loss of confidence led to a suspension of normal commercial activity. By looking for debt relief, before reforms were implemented they put the cart before the horse.

The underlying problem of Greece is a lack of productivity and export potential, but the Greek government, and to a great extent the EU authorities too, continue to ignore this. Greece’s productivity problem will take years to solve, not least because Greece is an elderly society. The structural reforms urged by the EU will help, because they will clear the clogged arteries of the Greek economy and allow talent to be reallocated to where it can do something productive. But the ageing of Greek society will remain an intractable problem.

As a result of the drama generated by their new Government, Greeks, instead of focussing on ways to invest to make more money, became in recent months obsessed instead with protecting what they already had. Whereas the economy was on a path towards modest growth, when the old government left office, it quickly plunged back into recession as money was withdrawn from the Greek banks, thereby further weakening Greece’s ability to meet its ongoing expenses, and to pay its debts as they fell due.

The timing of the Referendum, AFTER Greece has already run out of money, and on a proposal that has already been withdrawn, could not be worse. It compounds the panic and uncertainty. It is probably in breach of the Greek constitution. Apparently the Greek constitution does not allow referenda on fiscal issues, and the bailout offer contains many elements that are fiscal.

If ever there was a case study that shows how important it is to have political leaders who understand and face up to their responsibilities, and who deal with the world as it is rather than as they might wish it to be, it is to be found in Greece today. The lessons for Ireland are too obvious to require to be spelt out.

I wonder how Paul Krugman and others, who were so free with their advice to the Greeks in the early months of the crisis, are advising the Greeks to vote in the referendum on the 5 July.

A BIOGRAPHY OF A ROMANTIC EXPONENT OF VIOLENT NATIONALISM

Ernest Hemingway, a contemporary of Gabriele D’Annunzio, described the Italian Nationalist agitator of the early 20th century as a “jerk”,  because of D’Annunzio’s glorification of war.

D’Annunzio believed at the time that a recently united  Italy needed to shed blood, and  to conquer extra territory, so as to build a  shared sense of nationality among its diverse peoples.

Lucy Hughes Hallet has produced a major biography of D’Annunzio, entitled “The Pike, Gabriele D’Annunzio, Poet , Seducer and Preacher of War”. The book won the Samuel Johnson prize for biography in 2013.

As Ireland prepares to commemorate, between 2016 and 2022, the centenary of events set in train by a similar exercise in nation building through violence and death, it is well to reflect on the effect of a similar ideology in another country.

Like many of Ireland’s 1916 rebels, D’Annunzio was a poet, and a dramatist.

In 1915, he used his huge reputation in these fields, and his gift of speechmaking, to agitate for Italian entry to the First World War. As Hughes Hallet puts it     

“ He looked forward to the ensuing carnage without compunction for his part in involving his country in it. He referred blasphemously to his days of non stop oratory (in favour of war) as his “Passion Week””.

His speeches were incantatory, designed to work, not on their hearers intellects, but on their emotions.

That a dramatist would have such influence may be surprising, but it seems that in 1870, it is estimated that, while only 25% of Italians could read, 90% went to the theatre.

His theatrical approach to politics, was adopted with some success by Mussolini, and later by Hitler.

Although, in the war, Italy suffered enormous casualties in its battles against the Austrians, was militarily humiliated, and achieved little, D’Annunzio remained hugely popular after it ended, and was able, with impunity, to defy his own government, and to successfully  incite Italian troops to mutiny in pursuit of territorial claims against Yugoslavia.

He was the precursor of Fascism, and interesting in this respect, but one wonders if  he really deserves a biography of 644 pages!

LETTER TO EU HEADS OF GOVERNMENT

Along with other members of the “Friends of Europe” group, I have signed to following letter to the EU Heads of Government.  They need, I believe, to look beyond the immediate problems of the Union....The Greek crisis, Ukraine, Transatlantic investment  and the UK Referendum....and present a vision of the future of the Union. Only in that context can these immediate problems be solved.

Sir,

Discord between the European Union's member governments has been reaching a crescendo, with taunts exchanged not only between Athens and Berlin but almost routinely between some other EU leaders. 

A culture of recrimination and rebuke is growing to eclipse the commitment to intergovernmental solidarity and joint purpose that so successfully nurtured European integration over many decades.

Europe’s leaders would do well to turn to the spirit of the Schuman Declaration sixty-five years ago, for solidarity paved the way for the European Union.

In today’s terms, that means both North South and East West solidarity between member states, and between large countries and small.

Finger-pointing by national governments that are beset with their own particular political and

economic difficulties is understandable. But it is profoundly unhelpful. We Europeans face daunting longterm problems that can only be confronted and then overcome by a reaffirmation of unity, a fresh sense of common purpose and bold action.

The EU's structural challenges are well-known, but not given sufficient emphasis. In most countries of the Union demographic shrinkage is set to reduce active labour force; pension reform has made progress in a number of European countries, but much remains to be done, if we want both financial and social sustainability. Increased immigration could possibly be part of the the answer, but brings with it heightened social and political tensions that carry their own serious risks which the Union must formally and publicly confront.

Enhancing the quality of our human capital is another and crucial part of the answer, but currently we see an alarming disinvestment in education in a number of countries.

Many European governments now hope they see signs of economic recovery, yet the underlying trends are less encouraging. Our slowness in embracing new technologies is handicapping our productivity improvements - twenty years ago Europe's productivity improved at almost twice the rate as in America, and now it's about half that of the U.S. The implications for our international competitiveness in what is being labelled the 'Asian century' are not encouraging.

On the EU's home front, it is surely time that everyone with a hand in shaping Europe's future awoke to the implications of the continuing eurozone crisis. Disagreements between creditors and debtors are cloaking the more important issues of inadequate design and of the North-South gap within Europe.

The latter is widening fast, and unless checked could yet tear the European Union apart.

We believe that a sense of shared purpose between EU governments must be restored. To that end, we urge the European Council to take the opportunity of its next scheduled summit meeting on June 25 to publicly commit to a 'Doctrine of Unity'. This would see our national leaders pledging themselves to far more cooperation and mutual support because that's explicit in EU membership though decreasingly observed. This in no way implies “blank check” financial support for any particular member state, but it does seek to reinforce the links that are so essential to Europe.

What is needed is for the Union's heads of state and government to spell out the underlying weaknesses that cloud Europe's future. These should be the strategic threats we Europeans must all face up to, as distinct from short-term difficulties. It should put into their proper perspective the damaging public spats between some governments that have been doing so much harm to the EU and to the credibility of the single currency and the common foreign and security policy.

Such a declaration by the European Council would ring loud alarm bells within the EU, and would send an important signal around the world that Europe may be down but is far from out.

Yours,

WILL EUROPE ALLOW A BANKRUPT UKRAINE TO FALL BACK UNDER RUSSIAN DOMINATION?

Ukraine is on the brink of financial collapse.

It is not able to meet interest payments it is due to make this week. Its GDP fell by 6.8% last year and is liable to fall by an even greater extent this year. Meanwhile it is having to defend itself against a neighbour which guaranteed its frontiers as recently as 1994.

Instead of stepping forward to help Ukraine financially, the EU and the United States are both leaving the job to the IMF. The IMF is offering Ukraine $40 billion whereas the EU says it can only manage $2 billion.

The European Union has already extended forty times as much credit to Greece, as it has given to Ukraine, whose population is four times that of Greece. If this ratio reflects the EU’s real priority, it is unbalanced. 

GDP per head in Greece is, after all, about three times that of Ukraine. Like Greece, Ukraine has a lot to do to create a functioning and efficient legal and administrative system, stamp out corruption, and collect taxes fully and fairly .But Ukraine is having to do this while  recovering  from the effects of a Communist system which was imposed on it from outside since 1919, whereas Greece has been the democratic shaper of its own policies for many years.

Greece is , of course, in the EU and the euro, and Ukraine is not, but both are in Europe, and both aspire to a democratic European future.

Furthermore Ukraine had it borders guaranteed in the Budapest declaration of 1994 by EU countries, including Britain and France, and by Russia and the US,  in return for Ukraine giving up nuclear weapons. 

Despite this, Ukraine was invaded, and portion of its territory annexed, last year by one of its guarantors, Russia, because Ukraine wanted to make a modest cooperation agreement with the EU.

Notwithstanding that, the EU is now being stingy in helping Ukraine in its financial crisis, and is fixated instead on the drama in Athens.

Ukrainians believe they have a European destiny, and are prepared to die for it.

The Russian leadership, on the other hand, believes that Ukraine, with its Russian speaking minority, is in their sphere of influence, and sees a link up of Ukraine with the EU as a form of foreign interference in their backyard. One would have to respond that this view is not in accord with Russia’s guarantee to Ukraine of 1994, nor with international law.

The entire post World War Two European security order rests on acceptance of international law.

Similarly, any prospect of voluntary nuclear disarmament in future must depend on solemn obligations, like the Budapest commitment given to Ukraine in 1994, being seen to be honoured.

In Ukraine’s case, all the EU is expected to do is provide financial help.

But if Ukraine falls, the Russian threat may move on to other countries, with Russian speaking minorities, like Latvia and Estonia, which are NATO members  and  to whom most EU countries (not Ireland) have a solemn Treaty based obligation to provide military help if their  territory is threatened.

Meanwhile the Greek government, while looking for new loans and debt write offs from the EU, is ostentatiously aligning itself to the very country that has invaded Ukraine,  Russia. It is looking for more credit from the EU, without implementing reforms that would generate the long term growth, which would enable those loans to be repaid.

In contrast, the new Ukrainian government is implementing painful reforms to increase the growth potential of its economy, for example by eliminating inefficient consumption subsidies, which have quadrupled gas prices paid by Ukrainian households. Parts of its reform programme are being delayed in its parliament by opposition figures, like Julia Timoshenko, once the darling of the western media and still part of the EPP family to which Fine Gael and the German CDU belong.

Ukraine’s financial situation is now so critical that President Putin believes that all he has to do is sit and wait, and Ukraine will collapse back into Russian control simply because, in the absence of large western credits, it will run out of money. 

If this happens, and if the EU has continues to do little or nothing to stop it beyond talk, that will a huge blow to confidence in the EU’s ability to defend its values and help its friends.  Other countries on Russia’s perimeter will feel they too will have to make a deal with Putin, rather than rely on the EU. 

In Ukraine’s case, European countries do not have a Treaty obligation to give military help . But, in their own interests, they should give generous financial help now, to ensure that a success in Ukraine does not embolden Russia to undermine countries like Latvia and Estonia, which also have Russian speaking minorities, but where most European countries do have a Treaty based military obligations to help.

When questioned in a recent Pew poll, as to whether they would be willing to use force to defend another neighbouring NATO country, that found itself in conflict with Russia, 51% of Italians, 53% of French people and 58% of Germans answered that they would not.

If that frightful dilemma is to be avoided, it would be wise for Europeans to draw the line in Ukraine now, by providing that country with enough financial help to build a properly functioning state, that can pay its way and look after itself, and be capable on its own of resisting intimidation by its big neighbour.

ANGELA MERKEL

“Angela Merkel” by Alan Crawford and Tony Czuczka is not a conventional biography of the leading political figure in Europe. Rather it is an exploration of her approach to politics around different themes.....her approach to the United States, her response to the Greek crisis, to the nuclear question, and the future of the European Union.

Her style is different from her predecessors Helmut Kohl, and Gerhard Schroeder.

She would never have taken Schroeder’s strong stand against the Iraq War because of her emotional pro Americanism, something that flows from having dreamed of America while growing up in Communist East Germany.

She does not have Kohl’s emotional commitment to European political Union. Kohl, whose life was seared by the effects of family losses in the two World Wars, wants to merge Germany into a united Europe to prevent future wars. It is something about which he is deeply emotional. 

Merkel’s approach is more practical, and more in tune with the feelings of ordinary debt averse Germans. She will pay a price to keep Europe together, but not any price. She is not as committed to common European Institutions, like the sole right of legislative initiative of the European Commission, as Kohl was, and is more likely to make deal with a small number of other heads of government of bigger states, bypassing the Commission. This is risky for smaller EU nations. But small nations, by insisting on one Commissioner per member state , have contributed to a weakening of the Commission.

Her approach to all political questions is shaped by her training as a scientist. She looks for lots of evidence before making a decision. She avoids visionary statements, but works through the evidence until she finds a basis for a decision. The weakness of this approach is that, in the absence of a grand vision into which decisions can fit, German public opinion may not be adequately prepared for the decision when it is finally taken.

She makes no effort at all to paint a picture of the future of Europe that would inspire the continent’s 500 million people to make sacrifices to build a joint future. But if the German Chancellor does not paint such a picture, who else has the stature to do so? 

Her pragmatic, cautious, and scientific approach also presumes a degree of rationality and shared interest on the part of her antagonists. Although she is a fluent Russian speaker, she does not seem to have achieved any common ground with Putin. She may be having a similar experience with Alexis Tsipras of Greece.

This is good book but I finished it, feeling that I had acquired a good knowledge of Angela Merkel’s tactical approach to politics, but no greater understanding of her deeper motivations.