It is possible that elections in Greece this weekend could have a more positive bearing on the economic future of Ireland than the so-called 'Democratic Revolution' of 2011 which saw Fine Gael and Labour enter government here on the back of a swath of broken promises.
The potential victory of left wing party Syriza in Sunday's Greek elections is of the utmost importance to all those who desire a change of direction in European Economic Policy. Syriza, which looks set to achieve at least 30% of the vote and possibly lead a new government, has the promise of seeking a deal on Greek debt as one of its key policy platforms.
Having worked closely with Syriza MEP's since my own election to the European Parliament last year I have been stuck by the practical, albeit radical, nature of the proposals they wish to implement if successfully elected to government. Contrary to many reports, Syriza are not threatening unilateral default but want Greece’s debt burden to be considered within a broader restructuring of sovereign debt within the Euro Zone.
If Syriza wins the elections it is anticipated that it will immediately use the mandate to call for a European Debt Resolution Conference, with the aim of achieving a write down of all euro zone public debt over 50% of GDP. In this context, Syriza’s proposals will not involve the write down of sovereign debts and will not mean that German Taxpayers will be expected to “bail out” the Greeks or the Irish, for example.
If implemented, Syriza’s proposals would see the write off of €228 billion of Greece’s €319 billion euro debt and repayments stretched over 58 years. A similar deal for Ireland would cut Ireland’s €203 billion debt to €82 billion and repayments would be made over 40 years. Such a deal would dramatically reduce our annual debt servicing bill, allowing flexibility to introduce economic stimulus measures, invest in underfunded public services or to reduce the tax burden on hard pressed families.
There is precedent for such a debt conference – in 1953 the London Conference wrote off half of post-war Germany’s debt and extended the repayment period for the remainder of the debt over a number of decades. This measure, along with the Marshall Plan were essential cornerstones of the development of Germany’s thriving economy. For many, the proposals put forward by Syriza are sensible, credible and reflect the view of many mainstream economists that much of Europe’s public debt is unsustainable.
The European Union was meant to be as much about solidarity as about cooperation. But when countries like Ireland entered into an economic crisis, partially caused by European policies, solidarity was sorely lacking. Likewise with Greece - when the Greek people were at their lowest ebb our own Finance Minister, Michael Noonan, made jokes about feta cheese.
Instead of support, the European institutions foisted an austerity agenda on Greece and Ireland (with, unfortunately, the support of domestic governments).
This weekend's Greek elections are seen as a referendum on the Austerity policies implemented across Europe since the crisis began. Deep public spending cuts and tax hikes have had their toll on the lives of citizens of the bailout states in particular and many are questioning the wisdom of continuing with the austerity regime as only limited signs of economic recovery have been seen across Europe over six years into the economic crisis. It is widely anticipated that support for left parties across Europe will increase in upcoming elections this year as political battle lines are drawn on the approach to economic issues.
The rising popularity of Syriza has sent reverberations through the powerful and elite of Europe. Political leaders, by and large, have unleashed the “fear factor”, hinting at a possible Greek exit from the eurozone and market contagion in an effort to nudge Syriza supporters back into line. These are tactics, which unfortunately are becoming all too familiar in Ireland, and it remains to be seen if they will be sufficient to dampen the growing desire for change among the electorates of member states.
One thing is for certain, should Syriza come to power in Greece, the future course of European Economic Policy could be changed forever and not before time.