The horizon is not so far as we can see, but as far as we can imagine

Category: Greek Financial Crisis

The European Union


Both inside and outside Europe, the left is highly divided on the topic of the European Union, with a large current being firmly against it for reasons that are actually quite understandable, from multiple perspectives (not just economic). The recent history, especially the Syriza episode in Greece, does not help the reputation of the EU from a left-wing perspective, and there is a temptation to see anything that damages the EU as being good for the people of Europe.  Jeremy Corbyn’s somewhat incoherent position towards the EU can therefore be dismissed by some as the result of a circumstance impossible for him, whereby a good chunk of Labour voters were supportive of EU membership while a principled leftist like Corbyn would have to, in their inner selves at least, be against it.  The EU’s association with neoliberal economic policy has led some, including a large percentage of this blog’s own commentariat, to view Brexit as just another stick with which to beat the neoliberal dog, so to speak, and to take at best a neutral view of who and how the stick is wielded.

It is absolutely correct to say that EU institutions have developed in such a way as to embed neoliberal attitudes and policies deeply within them. The institutions of European integration were largely built at the very same time as the neoliberal consensus’ apparent accession to the Mandate of Heaven.  (Providence does not hand out these mandates on the basis of evident goodness or wisdom.)  Starting from the late 2000s, it became obvious that neoliberalism was losing the Mandate, and no clear claimant has as yet emerged, a worrying sign.

The dilemma for those who want a more just and sustainable human future is extent to which the active dismantlement of the EU is necessary or warranted.  There is a left-wing position that is a kind of short-term nihilism which celebrates the destruction of institutions as a necessary step in creating the opportunities for beneficial change.  This position should certainly be taken seriously and becomes increasingly relevant as neoliberal institutions continue to operate in “zombie” mode, deprived of the providential imprimatur.

The ideal case is that the dismantlement of the EU would lead to a condition that was more beneficial, i.e., replacement from the ground up with, if not with a single institution, then with a collection of polities that are better empowered to serve the needs of their citizens.  The prospects for this can only be understood in terms of the forces that created the European Union (and its predecessor organizations) in the first place.  Europe as viewed from a Martian height consists of extremely unstable, contentious nation-states with badly drawn borders (as it is impossible in Europe, the birthplace of the nation-state, to draw the borders well).  A handful of these nation-states took advantage of a specific set of historical circumstances to become great colonial-imperial powers, but partly due to their own internal contradictions and external developments eventually lost their own heavenly mandates.  Present-day Europe, ex-EU, is a checkerboard of small states and middling industrial powers which had to reinvent themselves in the latter half of the 20th century.

A cursory, common-sense examination of Europe’s present-day geographic situation indicates that the checkerboard (or chessboard) analogy is more than apt.  European countries sit on geographically strategic (if resource-poor, relatively speaking) real estate between the current hegemonic military powers and become easy prey for the very colonial tactics Europe itself perfected.  The post-WWII architects of European convergence, themselves functionaries of states skilled in colonial tactics, were absolutely correct to surmise that Europe required a super-state level of organization that was at least partly independent of other power blocs in order to prevent being further carved up like a Thanksgiving turkey. The Middle East’s current, long-standing troubles illustrate clearly what can happen in that case.

The adolescence of European institutions during the neoliberal moment presents the central dilemma, because it itself is now a major threat to a protective European unity.  The question is: what is the optimal and most feasible way to lever out zombie neoliberalism without putting European countries at risk of “integration” into the pathologies already evident in the current hegemons?  The question is not an abstract one: one of Brexit’s consequences is that the UK likely will adopt an even harsher internal economic stance with integration into the weaker, less consumer- and worker-friendly economic regulation of the USA.

My own position is that the only way to resolve the deadlock is by the boring, difficult work of building cross-border, cross-polity popular solidarity both inside and outside the current EU.  It is the only way to enshrine the benefits of European integration with the necessary reform of the EU’s economic management.  Anything else — and admittedly, “anything else” is the most likely prospect — risks that those who live in Europe jump from the frying pan into the fire, following a mirage of dead-end cultural-nationalist idylls and emotional appeals to a clean, safe world that never really existed.

Syriza Wins Re-election

Granted, there seems to have been a reduction in turnout and the Greek electoral system appears to vastly and disproportionately reward MPs to the largest party, I can only construe this result as Greeks saying that they are basically ok with how Syriza handled negotiations and with the current “reforms.”

Congratulations to Tsipras.

“Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

– H.L. Mencken

(Update: It appears 780K people who voted in the last election did not vote in this electionThat is more voters than all but the first two parties receivedOnly the Centrist Union and PASOK did not lose votes this election compared to last.)

ECB Is Trying to Break Greece: Buckle or Leave the Euro

So: The ECB has both decided not to extend any more money to Greek banks AND appears to have increased the haircut they give on Greek collateral (possibly to 75% from 50%).

I agree with Edward Harrison: This is an attempt by the ECB to force a decision—Greece can deal or leave. And pretty much now. The haircut is particularly brutal, reducing the amount of credit already available.

If the ECB wanted Greece and its creditors to have time to make a deal it could do so. All Tsipras asked for three billion. Pocket change.

This is an abrogation of the ECB’s responsibilities as lender of last resort, and appears to me to be a blatant political act. It will be noticed not just by Greece but by all other countries who use the Euro.

Greece’s one possible fudge is to start producing Euro denominated notes itself. They won’t be worth what the official ECB ones are, but this can buy them some more time to see if a deal with “institutions” is possible.

In other news, Varoufkis stepped down as finance minister at Tsipras’s request because he was hated so much by the negotiators on the other side. If negotiations fall thru, however, Tsipras might want to bring him back.

I may write a bit more on Varoufkis and what his experience tells us about politicians, bureaucrats, and the EU at a later point. In the meantime, understand that the pressure is on and that developments should keep moving fast thanks to the ECB cutting off Greece’s money supply.

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