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« Margin Call: A Lesson For Us All | Main | Doug Casey's Lessons to Learn from the Facebook Fiasco »
Sunday
Jun172012

Greece: No One Wanted This Outcome


Monday morning kicks off with the results from the elections in Greece which we think has been aptly summed up by Daniel Hannan who is a writer and journalist, and has been Conservative MEP for South East England since 1999.

He speaks French and Spanish and loves Europe, but believes that the European Union is making its constituent nations poorer, less democratic and less free. 

No one wanted this outcome. Greece has repeated itself, only more emphatically, declining to give any party a majority. There had been some hope in Europe's palaces and chancelleries that the two old parties, PASOK (corporatist Left) and New Democracy (corporatist Right), might form a pro-bailout coalition, but PASOK now says it won't join any coalition without SYRIZA (populist Left), which in turn says it won't join any government that accepts the EU's cuts package. If no coalition is possible, what next? A third election? A fourth?

The odd thing is that, in policy terms, the parties are closer together than you might think. Foreign media have defined the election as a contest between pro-austerity parties (PASOK and ND) and anti-austerity parties (everyone else). But a glance at the party manifestoes reveals that they are all, in varying degrees, anti-austerity. PASOK and ND say they want to renegotiate the bailout terms, slow the cuts, introduce more generous unemployment benefit and, in the case of ND, cut taxes.

Indeed, ND has the worst record of all: it ran up the deficit in the first place, lied about it, and then voted against every attempt by the Papandreou government to tackle the problem which it had created, while simultaneously insisting that Greece must remain in the euro at all costs. The chief difference between the three big parties is that ND proposes tax cuts which, while desirable in principle, are hardly a way to cut the deficit in the short term. All of which makes it hard to believe that an ND-led government, even if one could be cobbled together, would deliver the cuts programme which Brussels demands.

Greece is in denial. It rejects austerity, but insists on keeping the euro. All the main parties duly parroted what the voters wanted to hear, making for a fantasy election, a make-believe election, a fingers-in-my-ears-I-can't-hear-you election. The only list which was honest about the necessary cuts – a coalition of three liberal parties – failed to gain a single seat.

Will the rest of the EU now lose patience? Will its governments risk the unmanaged default they have so struggled to avoid these past three years? I doubt it. After all, they have only themselves to blame. For thirty years, Greece has been subsidised, indulged and encouraged to look to Brussels for all its solutions. Now, faced with what they see as a problem of the EU's making, Greeks understandably shrug their shoulders and expect Brussels to sort things out for them. And you know what? Given the way the EU has behaved to date, they might just be right.

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