“I should say that, interestingly, the idea that finally broke the deadlock - which had to do with the use of the Fund - came from an idea that I myself put forward.”
The quotation is from Pedro Passos Coelho, the Portuguese Prime Minister speaking immediately after the EU reached an agreement with Greece regarding the possibility of a third bailout. They emphasize the importance of the Portuguese input in disentangling one of the most contentious aspects of the agreement, the establishment of a 50 billion Euros privatization fund. This fund, following the Portuguese proposal, is divided into two: half of it is destined for bank recapitalization and the other half for investment in the Greek economy. Passos Coelho’s sentence soon went viral and became a trending topic in Portugal, despite the fact that very few people spend any time at all analysing the implicit content of such assertions.
Portugal, as can be understood from the comments made by its PM, is proud to have contributed to an agreement that has dealt a blow to Greek sovereignty at the expense of the European dream. The European Union, once a symbol of freedom, human rights and justice, is now at risk. Politicians such as Passos Coelho believe that austerity, poverty and the erosion of sovereignty are necessary for Europe to survive, for the Euro to flourish and for the “barbaric” proposals of leftist parties like Syriza, or its half-cousin Podemos, to be side-lined. What these politicians fail to explain, however, is that joining the Euro meant yielding monetary sovereignty. Moreover, member countries that did so failed properly to inform their citizens that an inherent consequence was the loss of any ability to set an independent monetary policy, with all the consequences that such a renunciation entails. They also seem to be oblivious of the fact that the Eurogroup’s legal existence was only enshrined by the Lisbon Treaty, that it is regulated in two short articles in the Treaty, and that it lacks any framework of accountability, so that the public is not informed about what happens behind its closed doors. While politicians such as Mariano Rajoy in Spain or Passos Coelho in Portugal criticize Syriza for endangering the wellbeing of Greek citizens and the future of the European project, the Eurogroup decides, autonomously and unaccountably, the future of the European Union and its citizens.
Austerity policies do not work, at least not in the majority of cases, as shown by recent macroeconomic data. They certainly do not work as a long-run solution against the lack of competitiveness, unemployment, debt reduction and economic growth. Germany knows this, as do the majority of European countries. The agreement reached is not intended to reduce the debt or create employment, but rather to make an example of Greece. It is closer to a moral punishment than to an efficient solution to the faltering Greek economy. As far as concerns monetary policy, Germany rules Europe, with several weak states bandwagoning behind, incapable of making themselves heard even on an issue that must surely be considered one of injustice. Some, as is the case with Portugal, have even actively contributed to a misconceived policy.
Greece, like Portugal, has endured unbearable austerity measures to keep up with the unrealistic goals set by the “Troika”. The prescription, however, did not work and the sheer weight of the debt has ended up wrecking what remained of the Greek economy, limiting its capacity to pay its creditors and to give employment to its citizens. This situation forced Greece to ask the Eurogroup and the IMF for additional support, subject to increased austerity measures. This has resulted in a downward spiral the end of which is not in sight. Previous bailouts amount to 240 billion Euros, but only 10% has made its way into Greek coffers. 140 billion Euros were earmarked to pay debt and debt interest, 48.2 billion to rescue Greek banks, and 34 billion to cover the costs of the measures taken to renegotiate the debt. Only 24 billion went to the Greek people, which simply demonstrates that bailouts, at least in Europe, are aimed at bailing out creditors rather than debtors.
Portugal´s case is not that different from Greece. The country was “bailed out” through a 78 billion Euros assistance plan in 2011, which ended on 17 May 2014. Portugal had "done her duty". But the departure of the Troika from Portugal did not mean the end of austerity measures. The numbers speak for themselves. In 2014, Portugal ranked 41st (Greece is 29th) in the UN Human Development Index, which lists 187 countries. Despite some indicators of economic recovery (0,9% GDP growth in 2014), the UN report points out that the cutbacks in education and health represent far-reaching risks. This not only endangers the improvements made during recent decades, but implies that the burden of social expenditure is placed increasingly on the shoulders of citizens – which, under current circumstances, amounts to increasing inequality. Along this line, it is worth noting that a third of Portuguese citizens under twenty-five are unemployed and that half the university graduates under thirty-five earn less than 900 Euros a month. Emigration rates have sky-rocketed, to levels last seen in the 1960´s, and social and economic rights have suffered savage cutbacks. What is particularly worrisome is the fact that in 2014 the number of people at risk of poverty in Portugal was, according to a Eurostat report, 2.8 million (out of a population of 10.8 million).
While Passos Coelho celebrates, Hollande stresses that the agreement reached on Greece is far from being a humiliation and Rajoy warns against the ill-thought plans of Podemos in Spain, Angela Merkel and Wolfgang Schäuble are busy shattering the idea of justice and social cohesion upon which the European concept stood up. It is true that Greece made a huge mistake when, with the help of Mario Draghi’s Goldman Sachs, it decided to fake its accounts in order to enter the Euro. It is also true that Syriza’s ideology is not particularly integration friendly. But on a qualitative level, the different countries in Europe have decided to prostrate themselves before the international private banking system and have offered little, if any resistance. Athens' submission, the erosion of Greek sovereignty and the acquiescence of countries such as Portugal show that the European project has failed. People come before institutions, governments and banks, and European citizens, if such a concept ever existed under the gaze of neoliberalism, cannot become a means to an end: the Greek people cannot be used to show others the high cost of defying the prevailing ideology that guides the destiny of today's Europe.
Far from defending Syriza or Podemos, I argue that a nation's people have the right freely to decide their own destiny. Their decisions are bound to have good or bad outcomes and the international response to them may be more or less friendly. What happened in Greece, however, goes beyond this framework. In fact, it can certainly be regarded as a financial invasion which has used both the Greek banks and Greek institutions as its weapons of choice. Political decisions do have political costs and the status of the Greek financial system is certainly in dire need of reform. But such costs cannot be placed upon the shoulders of an impoverished and desperate population, which is not responsible for the indebtedness and, and certainly owes nothing to any French or German bank.
According to research conducted by Barclays in April 2015 and published in the Berlin Policy Journal, the Eurozone governments own 62% of the credits and bonds of the Greek government, the private sector owns 17%, the IMF owns 10% and the Central European Bank (ECB) owns 8% while the remaining 3% is owned by the Greek Central Bank. Within the Eurozone, the countries that lent money to Greece were Germany (92 billion), France (70.3 billion), Italy (61.5 billion), Spain (42.3 billion), the Netherlands (19.8 billion). At least 73% of the Greek debt is owed to European countries, which suggests that European citizens should be more demanding of their governments when negotiating payment conditions and should be willing and able to forgive, in due course, a share of the debt.
The right to have a decent, full life was born and codified in Europe. All Europeans, from the Portuguese to the Greeks, Germans and Spanish, would, independently of their ideology, subscribe to the idea that dignity is inherent in everyone and that the Greeks have the right, both as people and individually, to decide how they want to live and under what conditions. I am aware that discordant voices exist, accusing the Greeks of working fewer hours, demanding too much, paying very few taxes, and essentially living at the expense of other Europeans.
Passos Coelho seems to place himself in this second category, something he is obviously free to do as an individual. However, as Prime Minister of Portugal, representing the Portuguese people before both the Greeks and the Germans, he should be more careful with his remarks and refrain from applauding an agreement that many believe to be unsustainable, illegitimate and unjust. The European Union was, and to some extent remains, a concept, an idea - a dream. Most of us recognize that such a dream has made human rights, democracy and justice possible, while placing accountability and responsiveness to citizens as the pillars of a worthy and desirable project. However, today I confess I feel no joy at being European. I am ashamed of how both Passos Coelho and the EU representatives have treated the Greeks, how European citizens are being used as a means to make a point, and how ideology has trumped the basic ideals on which the European dream was founded.
A different Europe is possible. But its construction depends on its citizens and their capacity for solidarity with each other. It cannot be imposed either by bankers or individual states, but must be actively built by all the member states, and legitimized by European citizens who should be the real force behind an idea of Europe - that today seems more distant than ever. The idea has been corrupted. For it to survive, it must be put safely back upon the pillars of equality and democracy, justice and human rights, but primarily upon the concept of Union - which must necessarily include the idea of solidarity.
Solidarity, therefore, is what should guide Europe out of the neoliberal slumber that seems to have become a very real nightmare for many of its citizens.
Image rights: Flickr, 2015. Some rights reserved.