25 June 2015 — From Grexit to Brexit : The politics of retaliation
Today has seen another (yes another) Eurogroup meeting that failed to achieve a resolution to the Greek Odyssey. With no end in sight, and with the end of the month approaching fast, another meeting is possible on Saturday. Banal as it is to say it (again), this is the last chance (another one) for Greece and its creditors to reach a deal.
What will happen now? If a deal is reached on Saturday (unlikely as this may be after today’s events) the only way to avert a default to the IMF (Lagarde said that non payment will be considered a default – no grace periods this time) would be for the ECB to raise the T-Bill issuance limit for Greece and for Greek commercial banks to buy those T-Bills. Where will they get the money to buy them? But from ELA of course. So the ECB will give effectively Greece the money. This is why Jens Weidmann, boss of the Bundesbank, wants to restrict the power of the Greek central bank to provide Emergency Liquidity Assistance to the Greek banks as he does not want the Greek banks to use these reserves to purchase short-term government debt (at this moment total assistance is about 89 billion). He thinks this is a violation of the no-bailout clause in the Treaty. Yet, this is the only way Greece can avoid defaulting on the IMF as we have actually ONE DAY left to work this out. I guess an alternative would be to sell something to the Saudis, or to get a billion or so from the Russians, both of which alternatives being very unlikely.
So far so well known. What I wanted to raise in this post is something else, the building anti-European resentment, not just in Greece but in other parts of the continent, Britain included. What this sorry episode with Greece shows is that despite all the faults and stupid mistakes of Tsipras and Varoufakis, the idea of Europe as a force for good is dead. Dead as the dodo. The European project has been battling accusations of being undemocratic, bureaucratic, illegitimate, elite-serving, market-serving, neoliberal, aloof, you name it. The imposition of recession inducing austerity for so long, and so hard, on Greece also makes Europe appear vindictive, disinterested, cruel, lordly, immoral. Say what you want about the Greeks and the errors of their ways, but the math speaks for itself. Trying to get a heavily indebted country to repay its debt, while forcing contraction that causes a depression (this decreases GDP and increases the debt/GDP ratio) is odd to say the least.
Everyone looking at this sorry saga, Greeks and foreigners alike is sick of this situation. Of the never-ending negotiations, the threats of Armageddon, the austerity proposed by the Greeks to counter the austerity proposed by the creditors. Everyone is thinking “enough already”! This is becoming known as #Grexhaustion.
Sick as we all are of all this and building on long standing reservations and criticisms of the European project, don’t you think there is a risk that after the Grexit issue is out of the way, the people of Europe may seek other exits? Would the British not be tempted to vote for Brexit just to stick it to the evil suits in Brussels (even though that would mean giving the same powers to punish the working class to the suits at home)?
Please everyone find a decent solution for Greece. Do not cause Grexit Mme Lagarde and Mr Schäuble, because when it comes to Brexit, we may well just vote for it. Wanna try us?