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.
