Next week and the days to come, we are going to see enormous changes on the European soil. To quote an opening cliché of students’ paperwork, European Union is indeed the most successful multilateral project in forming a supranational body: common foreign and security policy, regional parliament, common monetary policy, and most importantly single currency, the Euro. The ideal leading example of integration among nations. Yet EU countries are not without problems.
The changes I’ve mentioned above is undoubtedly related to Greece. This Sunday (5 July 2015) Greek Referendum will decide the fate of Greece and Europe, both economically and politically. At the final days of June, The Greece’s Prime Minister Alexis Tsipras, who’s been in his tenure for (only) 6 months since January, abruptly left the negotiation table regarding a renewal of an existing bailout worth € 7.2 billion and, surprisingly, call for a referendum in which Greeks will have to choose whether or not they accept this bailout program, which means another austerity measure. In my opinion, as a sovereign country, this clearly reflects the Greece’s dependence on international aids, as it has received around € 240 billion in total of bailout fund since 2010. What makes everything different is that Tsipras comes from Syriza Party, which is, I would say, a Leftist party with a socialist tendency (pretty much different from his predecessors) whereas the rest of Eurozone members are liberals. Ideally and psychologically by Tsipras, being ruled by other nation-states is a kind of humiliation to the Greek nationalism (similar to Indonesia’s Soekarno jargon “Go to Hell with Your Aid”). Moreover, he called this austerity measure an extortion to the Greeks.
Receiving a bailout program with austerity measure, logically, is very simple: here’s more money you can borrow, cut your spending, pay more to the creditors. Yet in reality this has been problematic for Greece. The problem is nobody wants austerity. If we take a look at Greece’s economy policy, pensions and minimum wages are the main priority spending for Greeks. Greeks receive so much from the government, yet they tend to evade paying taxes. This shows the culture of Greeks, that is contradictory to that of the Germans. Having learned from the monetary crisis and inflation in the World Wars period, Germans tend to work hard, pay their taxes, and be discipline. This is why austerity measures formulated by Germany, meaning cutting pensions and minimum wages, caused unrest in Greece.
Going back to Tsipras leaving the negotiation table in the last minutes when, said Eurocrats, decision was almost reached, and that Greece has failed to pay the € 1.6 billion payment to IMF, a referendum is going to be held this Sunday, whether Greeks want another austerity measure in order to get this € 7.2 bn funds. If the winning vote is a Yes, there should be chance of continuing negotiation process for the betterment of Greece and its relation with Eurozone countries. Surprisingly, Tsipras urges the people to vote a No. But what is actually at stake is Greece has failed to fulfill the payment to IMF due on 30th June, and European leaders, especially “Mutti” Merkel has asserted that no negotiation held before the referendum. What’s more crucial is creditors (the Troika especially) have stated that the offer is no more on the table! So if the question to be voted on is about accepting the bailout and austerity, is it still legal? But politics are relentless. Referendum is still going to be held with this implication: a Yes would mean Greece staying in the Eurozone and ready for other negotiation along with the resignation of Alexis Tsipras and Yanis Varoufakis (Greece finance minister); a No would mean Greece out of the Eurozone or even the European Union and a potential strengthening ties of Greece and Russia. A No would mean so, as Eurocrats likes such as Jean-Claude Juncker and Francois Hollande have warned. As long as I have been concerned there is no clear rule that deals with EU exit in the treaties. So it would be up to a country, whether the people still want to be part of EU or not anymore. By the way, Alexis Tsipras is said to have sent a letter (after the failed negotiation) to the creditors, asking for (more) debt relief, but deemed too late.
On the side of the EU (or more precisely the Eurozone states), Greece’s exit would be manageable; the European leaders are relatively calm. This is reasonable as Greece’s economy accounts for only 2% of the European economy. This is also a preemptive step taken to assure the market and keep the confidence that the economy would not be hampered. But still, when debts are not paid, the lending parties would be weaker economically.
Politically, Grexit would have implication on other member-states, relating to the EU/Eurozone ties. Greece is not the only one to suffer crisis, Portugal, Spain, Italy, and Ireland suffered such crisis, too, although almost nothing has been put on the news regarding this four member-states. A Greece exit could be psychologically contagious, and it is not impossible that unprecedentedly other member-states would follow Greece steps towards the exit door. In my opinion, this scenario would be more likely with the existence of far-right parties or movement in the member-states. Not only are they against Muslim migration, they could be anti-EU (Eurosceptical), too, as they have the view that integration weakens nation-states. this is logical that regionalism means giving up parts of the sovereignty. Some of this Eurosceptical parties are France’s National Front, UK’s UKIP, Hungary’s Jobbik, and so on. So do left-leaning parties, in which Syriza is to be included.
Talking about Russia, it is not clear if Russia would be happy to welcome Greece with open arms as its ally or it would rather have Greece stay in the EU. The ties between two countries have been crystal clear since Tsipras took office, as they agree the creation of pipeline as a path of Russia’s gas supply to Europe in the Turkish Stream Project, for the pipeline would cross the Turkish territory to end in Greece. Europe normally have its gas supply from Ukraine, but as Gazprom has stated that it is stopping the supply to Ukraine, this would be a problem for Europe. However, with the money about to come from the Turkish Stream Project, it would mean also that Russia has an ally in the EU and, as a result, will give more probability for the EU sanctions to be relieved or even lifted. So there is actually reasons of having Greece stay in the EU with the Yes vote, as it means a resignation of Tsipras and Varoufakis, and a bigger chance to “cut ties” between Greece and Russia.
So, is Greece worth keeping in the EU or not? Politics is about rational choice. What would be more important is preventing such crisis to happen again. But how? As already mentioned, the EU has common monetary policy among the member-states, proved by the existence of European Central Bank to set regulation concerning the Euro, how much money is circulating in these country, the interest rate, and so on. But every member-state has its own fiscal policy (how much they get from taxes and how much they spend). The absence of this fiscal-regulating body is, expert says, the cause of imbalance and crises in Europe. Thus, there is the need to have such body that have the authority to cut spending, tax collection mechanism, and other measure related to the fiscal policy. But this would also mean giving up even more sovereignty to the European Union, whereas sovereignty is a key and most substantial feature for a state to have. Are there ever any intention of building United States of Europe? That’s unlikely to me.
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