Tag Archive: Euro

What has the EU ever done for us anyway?

Britons will be voting on the EU referendum tomorrow. The vote will determine Brexit whether Brexit will happen or not. This is actually Britain´s second great Brexit debate, the first being the referendum of 1975, which the Remain side won comfortably. There is a different scenario now and the vote could go either way on the 23 June 2016. In this divisive and intemperate debate about whether to Remain or Leave, the emphasis has been on the negative. Fear is the name of the game: if we stay/leave, the UK will retain/lose x, therefore, vote to leave/remain. It is rare to read a positive set of reasons which connects up with people are interested in the things that affect our day-to-day lives.

This is the focus of this article. This one is written from the perspective of a citizen who happens to be British, has a German partner and has friends and family scattered all over Europe. It is the view of someone who has created a business in another EU country and who is active in EU nations as well as EU Candidate Countries and other nations.

The thing I love most of all is the freedom of movement of people. It is the greatest gift to be able to travel, work, live, study, au pair, retire, etc. wherever we like, whenever we like, as often as we like in any of 28 countries. This is the epitome of freedom and we lucky enough to have it.

If the climate in one country does not suit you, go to another. If the costs of living, such as housing, are too high, go somewhere else. If you cannot find a job in one place, try somewhere else. Britain is booming today but it might not tomorrow; this is when Britons will begin to appreciate it. Remember Norman Tebbit´s “on your bike Speech? If you can move freely within one country, to be able to do so in 28 / 508 million people is absolutely amazing.

And the beauty of it all, is that no one has the right to question or hinder you. You can study or work abroad, alone or taking your family, without applying for visas or other waiting at the borders for hours, paying any fees or being dependent on any bureaucrat´s whims. Once the freedom of movement of people is lost, life will never be the same again.

Not only that, the EU directives mean that I cannot be discriminated in any of the EU 28 countries on the basis of nationality, language, gender, religion, ethnicity, etc. This is priceless within the 28 countries, as well as between them all. This makes us the most advanced region in the planet – by far.

Despite the fears being put about by the Leave Campaign, only 5% of the 508 million EU citizens take-up the freedom of movement of people. Most people are quite happy to live where they are, but use the other benefits of the EU. What are those?

I love the fact that I can go on holiday whenever I like, wherever I like. I take for granted the fact that I can book a journey and set-off without delays due to visa requirements, border controls and other factors which transfer power from me, as a citizen, to others. The bureaucrats in 28 countries all have to apply the same rules to everyone from the EU. This increases transparency and freedom.

It also makes for cheaper, faster, more efficient travel. And since there is a group of 28 countries involved, it is much harder for telecom operators, travel agencies, airlines, commercial banks, etc. to divide and conquer customers, ripping us off by imposing the highest prices they can for no reason.

I now pay low mobile roaming charges and in 2017, I shall pay none because of the EU´s competition policy. I have an EU wide airline policy to ensure that I am compensated if my plane in unreasonably delayed, something that I have made use of. I can buy anything I like in other EU nations or via the internet and still have my consumer rights protected, regardless of where I live or which country I purchased something in – and I do not need to return to that country in order to make a claim. This is a great, even though I do not even think about it.

I particularly like the fact that if I fall ill in any of the EU countries, I shall be treated without having first bought a private insurance policy, thus saving me money, time and hassle. That is great when I am on business. When I am on holiday, especially with my family, this is wonderful. I don’t think about it anymore, but it is a saving and it is very welcome. Britons cannot benefit from this yet begrudge others of the same rights in Britain. Ask the British pensions living in Spain and France.

I am only too aware that the Eurozone, comprising 19 countries, is unfinished business, as the situation in Greece and other countries continues to show. On the other hand, even more countries are joining over time, which shows that others do not share the British newspapers´ Euroscepticism. They keep pronouncing the Euro dead: read the archives of any of the top journalists of the Mail, Sun and Telegraph and you will see how many times the Euro has been written off since 2007. Yet it is still here and is the world´s second reserve currency, not Sterling. Those journalists should occasionally re-read their previous articles and learn to a bit of humility.

I love the fact that I do not have to pay a provision to exchange money every time I go to another country and to pay again to change it back if I do not want have tons of useless coins and notes in a box somewhere. I transfer money between Germany and other countries freely or for a pittance, yet still pay through my nose to transfer money to and from Britain.

I can, if I wished to, buy a holiday / retirement home in any place I like, etc. If I fall ill and my health system forces me to wait years for an operation, I can just go to another EU country that can do it faster; it is up to the health systems to sort out the payment amongst themselves. I get treated faster and my quality of life improves immeasurably. I am empowered by the EU´s capacity to make this happen for 508 million citizens. Bureaucracies such as restrictive health systems lose. I gain.

I know my children can study anywhere they choose to at primary, secondary and university level. Mobility is increasing and Europe will be their oyster in terms of studying, living and working. Should they, like me, wish get married to someone from another European country, I know their spouse will not be disadvantaged and they can live and work where ever they desire. Families will not be split.

The EU regulations are often vilified. But the rights that they assign over 28 countries mean that my children will not be discriminated. Their health and safety will be protected. They will also have at least 1 day off a week, 20 minutes break if they work more than 6 hours, 11 hours´ rest from work each day, not work more than 48 hours per week if they don’t want to, get at least 4 weeks´ paid holiday a year, etc. They will get the minimum package across all 28 countries: this means that employers across 28 nations have the same basis deal and they cannot screw the employees in a race to the bottom. Why would anyone, other than unscrupulous employers or politicians, turn down a package that upholds human dignity and protects health and well-being?

There are other things that I love but which are harder to pin down.

I know the mankind is flirting with disaster unless we do something about climate change. 28 countries doing nothing or perhaps something about climate change is not the same as all EU doing it together: working in concert is the only way to tackled the “tragedy of the commons” across the whole of Europe. This applies to the water I drink, the rivers and beaches I enjoy, the air I breathe and the birds, animals and habitats that I interact with and depend upon. I know that Britain did not take these things all that seriously until it joined in 1973 but that the EU rules apply to all: this is the reason why fish stocks are being preserved and renewed and is the reason why British beaches have become clean. I am glad the EU steps-in because I know for sure that some countries would otherwise just ignore environmental issues. Not all government care equally about what we leave behind for future generations and one that does today may change its mind tomorrow.

But it also applies to other abstract issues. I remain stricken by Europe and NATO´s inability to deal with the collapse of the former Yugoslav Republic. The war may be over, but there are still issues festering in parts of the Balkans and now, the situation in Ukraine/Russia threatens to spill into the rest of Europe.

I have lived through a civil war and I am only too aware of its consequences, even if my fellow Britons may not be. So I say this: Britain may be an island but it is not immune to what happens beyond its coastline. Two World Wars should make that abundantly clear. Even when Britain won, Britain lost big time in people, trade, wealth, empire and much more. I would rather live with the EU´s flaws and cost (as a German tax payer I contribute more than any other nation) than with the unquantifiable cost of possible future conflicts in Europe.

Criminal and terrorist activities are nothing new to Britain (I remember plenty about the IRA´s previous campaigns), Germany and the rest of Europe, though the nature and origin have changed over time. A terrorist is a terrorist is a terrorist regardless of nationality, race, religion or gender. My safety is enhanced when 28 nations share information, coordinate activities and act in unison. Going it alone is not my view of how to deal with a globalising world that brings new threats to every nation and every doorstep. If asylum seekers can find their way into Britain, so can a determined criminal or a terrorist, even if Britain does not have open borders as the Leave campaign wrongly claims.

Working in concert, working with 27 other EU nations, carries a lot more weight in terms of health, environment, defence, counter terrorism, international relations, trade, crime prevention, fraud prevention, consumer protection, research and development, education, etc. etc. etc.

This is a small sub-set of the benefits of being in the EU, as I see them.

So, what has the EU ever done for Britons? Plenty since 1973, I would say.

Is it worth paying less than 1% of GDP into the EU budget for and pooling parts of our sovereignty with the EU? Yup! Every single time.

Is the EU, perfect? Hardly. But neither it the UK now, let alone when it is on its own.

Would I want to give up the above on the 23 June 2016? The answer is obvious.

So the question to my fellow Britons who are undecided is: why would you want to?

© Ricardo Pinto, 2016, AngloDeutsch™ Blog, www.AngloDeutsch.EU


#ThisIsaCoup´s Germany Bashing is “Over the Top”

Quite a few people have taken to twitter under hashtag #ThisIsACoup to air their view that Greece has been bullied and coerced into an unjust and undemocratic agreement by the other Eurozone members, with the finger being pointing directly at Germany.

#ThisIsNOTaCoup

At least part of the reason for the popularity of hashtag #ThisIsACoup is that prominent commentators such as Paul Krugman, the Nobel-winning economist, have helped to legitimise it and propel the hashtag #ThisIsACoup to the global audience. Krugman wrote in his New York Times blog“The trending hashtag #ThisIsACoup is exactly right.” This was part of his campaign to encourage Greece to exit the Euro.

 I have shown that hashtag #ThisIsACoup is exactly wrong and on two counts. Firstly, “this is a coup” literally implies a great compliment to the Eurozone countries (a coup), which Krugman and the rest presumably did not mean. What they actually meant is hashtag #ThisIsACoupD’état. But here too they have got it completely wrong because the bailout agreement on offer has none of the defining characteristics of a coup d’état either.

I am not arguing that the Euro summit agreement is all fine and well. It most certainly is not and makes unrealistic demands of Greece given the almost non-existing willingness or capacity to reform. I am simply saying that referring to it as a coup d’état (or indeed comparing the agreement terms to the Versailles Treaty, which some commentators have taken to doing) is emotional claptrap directed at one country rather than the 19 that signed the agreement, Greece included.

 #ButItCertainlyISGermanyBashing

In this post I would like address the content being posted on hashtag #ThisIsACoup. This particular bandwagon is not only ill-informed but it is deteriorating into a full-on Germany bashing movement.

Have a look at a selection of photos on offer to get the general gist of what is going on.

Germany Bashing 1

This is a sub-set of the kinds of images being posted. Some of them are funny but the vast majority are simply misleading or spiteful. The tweets are laced with references to Nazism, Fourth Reich and other stuffpointing towards Germany´s true intentions, namely of subjugating Europe through the back door.

Which planet have these people been living on since 1945?

Germans are entitled to feel offended by what is going on. Make no mistake: this is not restricted to the Twittersphere. A reading of comments posted in many national newspaper articles relating to the Eurozone crisis reveals a rising level of enmity towards Germany and its supposedly true intentions towards Europe via the mechanism of the Euro.

As a Briton living and working in Germany, with a German family, friends, family and colleagues, I find this sort of thing, often under the guise of “humour”, unacceptable.

This is unfair. It is wrong. This is  Germany bashing.

If it has not yet been understood those in question, please reflect on the unequivocal fact that that vast majority of Germans would never have opted for the Euro if they had been given a choice and would gladly return to their beloved Deutschmark tomorrow if they could. The Greek tragicomedy is only adding fuel to this particular fire. But I guess whatever I say will never not cut much ice with some people.

Debt relief has already happened and will continue to happen

Now, having got that off my chest, I would like to turn to the rest of Paul Krugman´s quotation, since it appears to legitimise much of what is going on in hashtag #ThisIsACoup namely: “This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief.”

I would like to start with the end bit: no hope of relief. It must be noted that Krugman wrote this before the finalisation of the bailout negotiations, so he was not aware of the fact that, for the first time publicly, “hope of relief” has been finessed into the agreement (“… including financing needs, debt sustainability and possible bridge financing.”). We all know there is no such thing as money for nothing; and so do the Greeks. Incidentally, Krugman also fails to acknowledge that there has already been very significant debt reduction in the first two bailouts for Greece. There will almost certainly be further debt reductions in the third bailout.

As for the final part of the quotation, “This goes beyond harsh into pure vindictiveness,” I suggest that the Nobel laureate actually looks are the terms of the bailout to justify his view. I do not see it, thought I do agree that many of the things in the Euro summit agreement will never be realised, just as they were barely realised in the first two bailouts and/or were reversed once Syriza assumed power.

Germany Bashing 2National sovereignty is a 19-way street

The “complete destruction of national sovereignty” part is a red herring. In a representative democracy, the Greeks elect their government and their government makes decisions in relation to spending, taxation, etc. Parliament does not have to agree to anything it does not wish to do. In the meantime, the Greek Parliament has voted to accept the draft agreement. Two general elections and multiple Parliamentary votes later, the Greek government continues to ratify bailout conditionality. The debate about national sovereignty cannot be about Greece and Greece only. In the Eurozone there are another 18 nations whose taxes are increased and/or expenditure is potentially curtailed as a result of bailout after bailout to help Greece get its own house in order. There is a duty and responsibility towards the sovereignty of 19 nations, not only one.

If a country runs out of money through its own actions and inactions and needs to get it from another 18 countries with no end in sight, then then that country can expect reforms. But remember, these are the things which everyone agrees (including the Greeks themselves) it has systematically avoided doing for decades. Ask other states that have gone broke (but do not have the benefit of a Eurozone sugar daddy) whether they have had to implement painful reforms or not and for how long they have had to do it for in order to get back to normalcy.

Greece is under tremendous pressure to accept the bailout and some of the conditionality is questionable, such as connected with the privatisation fund. This reflects the lack of progress made in the other two bailouts as well as the breakdown in trust as a result of the negotiation tactics deployed in the last six months, rather than pure vindictiveness. At the end of the day, Tsipras and the Greek government must decide what, on balance makes most sense for their country. If the conditionality is vindictive and humiliating, there is an obvious option for them. If the future is truly brighter outside the Euro then it is the duty and responsibility of the Greek Parliament to go in the direction advocated by Krugman and others. But this is something which they have steadfastly refused to do so far to many economists´ dismay and disbelief.

As an aside, Paul Krugman is reported to have said that in pushing for a Greek exit he may have “overestimated the competence of the Greek government” and that it didn’t even occur to him that Greece would make a stand against the rest of the Eurozone countries without having made a plan for an exit from the euro if things went wrong. Perhaps he will also come to agree that the latest bailout agreement may be better than the alternative after all.

He who pays the piper calls the tune

At the end of the day, the country which makes by far the biggest contribution to the bailouts and thus potentially incurs by far the greatest loss associated with the Greek bailouts is entitled to not just a vote but to a significant say in the matter. Failure to do so would be irresponsible in relation to its own tax payers and a failure in democracy vis-a-vis its own electorate.

Every country must look after its own national interests. Consider Britain steadfastly refusing to contribute a penny to the Euro bailouts but offering to show solidarity towards Greece in the form of “humanitarian and medical aid,” should the country choose to exit the Euro and default. Britain is doing what it considers acceptable to its own electorate, as are all 19 Eurozone countries. What about Greece? Its approach is the epitome of following its own national interests. Why not Germany?

Get real: Greece´s sovereignty is not the only one in question; 19 countries are affected by the crisis. As the biggest contributor, Germany is entitled to a significant voice in the decision making-process (just as Italy, France, etc. and the Troika/Institutions are – but Britain is not). Some may not like it, but that is the reality.

Grow up: WWII ended 70 years ago; there comes a point when it is just plain silly to keep rolling out the tired old war clichés.

Stop the “over the top” (pun intended) Germany bashing.

 


If #ThisIsACoup then #MoneyGrowsOnTrees

© Ricardo Pinto, 2015, AngloDeutsch™ Blog, www.AngloDeutsch.EU

It seems as if a great number of people, and not just in the Eurozone and the European Union (EU); have taken to Twitter to express their view that Greece has been bullied and coerced into an unjust and undemocratic agreement by the other Eurozone members and by Germany in particular.

Prominent bloggers and commentators such as Paul Krugman, the Nobel-winning economist, have helped to legitimate and propel the hashtag #ThisIsACoup to the global audience. He wrote in his New York Times blog that:

“The trending hashtag #ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief.”

Partly as a result, the hashtag #ThisIsACoup, was trending in Greece, France, Germany, Britain and indeed globally as Twitters claimed that Greece was being stripped of its sovereignty as illustrated below.

#ThisIsACoupGLobalTrend

 

 

 

 

 

 

 

 

 

 

 

So it is worth examining what the hashtag #ThisIsACoup really means.

There are two meanings of the word “coup” according to Dictionary.com, with a third connected with the word:

  1. a highly successful, unexpected stroke, act, or move; a clever action or accomplishment.
  2. (among the Plains Indians of North America) a brave or reckless deed performed in battle by a single warrior, as touching or striking an enemy warrior without sustaining injury oneself.
  3. coup d’état.

Strictly speaking, it would appear as if the hashtag #ThisIsACoup is actually praising the bailout agreement that Greece and the Eurozone have come up with as “a highly successful, unexpected stroke, act, or move; a clever action or accomplishment.” However, if you read the thread, it is clear that the vast majority of people on have actually understood the Twitter hashtag #ThisIsACoup as the exact opposite. And took the opportunity to engage in a bit of Germany bashing while they were about it.

As an aside, what is not being reported is that there is also a hashtag #ThisIsNOTaCoup where quite a few people are arguing the opposite. Although I do agree with this particular hashtag, they are also missing the point.

This takes us to the third meaning, namely of a “coup d’état” which is, of course, what the hashtag #ThisIsACoup does not say but presumably actually meant to say.

So let us examine this option. The same source (Dictionary.com) defines a coup d’état as: “a sudden and decisive action in politics, especially one resulting in a change of government illegally or by force.” Furthermore, it identifies various synonyms for coup d’état, including “overthrow, rebellion, revolution, uprising.”

It seems as if the vast majority of people actually were talking about the hashtag #ThisIsACoupD’état rather than #ThisIsACoup. But let us examine if this makes any sense, despite its obvious popularity:

  1. A sudden and decisive action in politics: really? I could have sworn that what has happened is the very opposite of this. The Greek crisis has been at least five long years in the making, there have been two bail outs already and an excruciatingly drawn out process of six months since Syriza came to power. Sorry, but the Twitters seem to be backing the wrong horse again, Nobel Laureate included.
  2. Resulting in a change of government illegally or by force: Really? Again, I could have sworn that the process has been the opposite of this. It seems to me as if the people of Greece have not only elected the political party (Syriza) which the “Eurocrats” did not want but also reinforced the point by offering up the referendum result that the Eurozone was hoping to avoid. Has there been a change in Government in Greece since the January general election? Has anything been done illegally or by force? I don´t think so. In fact, if anything is being done illegally it is that many of the other 18 members of the Eurozone, Germany included, are actually doing somersaults to keep Greece in the Euro despite the sentiment of their own electorates. There are 19 countries and democracies to take into consideration in the Eurozone, not just Greece. And this is before even mentioning the fact that transfer union is illegal, as are debt write offs and permanent bailouts in the Eurozone. Yet effectively all three are being done in one way or another in order to assist Greece.
  3. As for the synonyms “overthrow, rebellion, revolution, uprising,” do these really apply? I am not convinced. There has not been an overthrow or revolution of any kind and the Greek parliament will have its chance to reject the whole potential bailout package if they so wish. If there has been a rebellion/uprising, it is on the part of Syriza in relation to its approach to austerity, its debts and the conditionality which previous Greek governments have signed up to  and unorthodox manner by which it has carried out the negotiations with the rest of the Eurozone countries. This is not something that has been done to the Greeks, except for the Eurozone´s insistence that they deliver on their reform commitments (this time around) before getting their hands on the bailout cash. After all, money does not grow on trees. As I have previously argued, the Greeks have had two general elections and one referendum to leave the Euro and/or the EU. They have resolutely stuck to the current path of remaining in the Euro and the EU. If anyone is advocating a coup d’état, it is the commentators that are shrilly insisting that the Greek government rejects its electorate´s views in two general elections and leave the Euro as soon as possible. If the same wish to argue that the Greek Referendum was a vote to leave the Euro, let them try to make that case but they will get nowhere since the question was so convoluted as to be meaningless. It could not possibly be construed as a desire to leave the Euro and no one is claiming that.

So please, you Twitters out there, do get your facts right instead of blindly following the herd instinct.

If you meant that “this is a coup”, then you have actually been lavishing praise on the Eurozone members and the agreement that was reached at the eleventh hour.

I think it is a flawed agreement but better than none.

And it you actually meant that “this is a coup d’état” (which is clearly not what the hashtag actually says), you have also  got it completely wrong.

Either way the hashtag #ThisIsACoup that has been globally trending is misleading to put it mildly.


To Grexit, or not to Grexit, that is the question

© Ricardo Pinto, 2015, AngloDeutsch™ Blog, www.AngloDeutsch.EU

And so, amazingly and beyond most Europeans’ wildest imagination, it has come to the single most important Referendum since the beginning of the Eurozone, indeed since the very beginning of the European Union (EU) “project”. The Greek nation is voting in a historic referendum that will shape its future, as well as that of the 18 other nations of the Eurozone and the 28 nations on the EU.

As a Briton, I belong to one of the 9 countries that are not part to the Eurozone, but I live and am based in Germany, so I am contributing to the various bailouts. My views of the historic vote the Greeks are casting are shaped by both sets of experiences, which is valuable, since Greece may soon be one of the 9, following a probable default, probable exit from the Euro and possible exist from the EU, the so-called Grexit.

Let me start by saying that I fully understand the Greek’s anger and frustration with the current situation. Unemployment of around 25%, youth unemployment of 60%, wage reductions, pension reductions, poverty reaching unprecedented levels, pensioners desperate to get some money and all the rest of it. Whatever you may think about Germany and the Germans, you will surely be aware of the suffering of the German civilian population after two world wars, hyperinflation, devaluation, two periods of devastation in the last century. The Britons have also gone through traumas. So have the Irish, Portuguese, Spaniards and Cypriots to varying degrees at the same time as the Greeks. No one wants to see this whole sorry situation drag on endlessly.

I am tired of and increasingly frustrated with all the accusations, bickering, tantrums and all the rest that all our politicians have been guilty of since January 2015, reaching a crescendo in the last two weeks. At a historical turning point in European history, it is sad and worrying to see just how divided Europe is. This does not bode well for Greece, the other 18 countries in the Euro or the 28 nations of the EU, not mention the large number of countries that aspire to join the EU in the future. Only one country will be quietly satisfied observing that is going on: Russia.

There have been all sorts of claims and arguments from politicians and economists, many of them totally contradictory. I am just an interested observer who is contributing through my taxes to the bailouts, who may be affected by a possible Euro collapse and who will be affected by the future shape of Europe resulting from today’s referendum. I would like to highlight some issues that Greeks may or may not be considering in casting their vote, but which are probably impossible to pay adequate attention to. given the chaotic and febrile situation, as well as the compressed timescale for this critical referendum:

  1. Europe is not to blame for Greece’s woes. This is first and foremost Greece’s own responsibility.
  2. The EU is not to blame for the Greeks’ troubles. Greek governments have consistently promised more than they could deliver and its citizens have knowingly voted them in one after the other, including the current Syriza. If what politicians are offering sounds too good to be true, it probably is and in other countries, the electorate generally acts accordingly.
  3. The Euro is not the reason why Greece needs bailouts. Greek government, Greek businesses and Greeks individually have lived beyond their means for decades and then used the historically low interest rates generated by (fraudulently) joining the Eurozone to over-borrow even more than previously. But we know full well that what is borrowed must eventually be repaid – and so do they.
  4. Greece has systematically lost competitiveness through its own actions and inactions. Generation upon generation of politician has borrowed too much, created too many public sector jobs, feathered the nests of their supporters through unaffordable perks such as early retirement, failed to collect the taxes due from certain segments of society, refused to implement needed reforms and again and again paid itself too much. In the 10 years until the crisis, the Greeks awarded themselves a 100% increase in wages, not to mention anything about early retirement or other perks. The loss of Greek competitiveness is not due to the EU, the Euro, the banks, the capitalists, the oligarchs, the politicians etc. They have collectively failed to maintain or improve their own competitiveness. The last 5 years have reinforced an entrenched the pattern and austerity has made the pre-existing situtation a lot worse, which is the main criticism which is justifiable. But the last five years were not the cause.
  5. The German, French and other banks are not to blame for the Greeks´ ills. These and other banks saw the opportunity to expand their business in this and other similar countries (as have Greek banks in the whole of the Balkans region) and lent according to the regulatory principles of the Greek Central Bank, according to the contracts that the Greek government, businesses and individuals signed. All three took the money that was lent and did not concern themselves unduly about its origin, though this has become an issue when it comes to payback. The banks naturally want to be repaid the huge sums involved otherwise they go bust, meaning losses for all the individuals that save with them, businesses that bank with them, shareholders that invest in them and others. They are no different from the Greek banks operating in Greece, the Balkans and elsewhere. If the banks (including Greek ones) had not been rescued or propped up, the consequences for the Greeks and for us in the Eurozone and non-Eurozone countries would have been disastrous. The Eurozone has acted correctly in avoiding this scenario. All the talk of paying French and German banks but failing to mention all the others, including Greek banks is hypocrisy. This has happened in all countries where it had to happen, including Britain, Ireland and the United States. If push comes to shove and governments have to make a similar choice again, the same pattern will be repeated because the alternative is worse.
  6. Greece has been the whipping boy for the Eurozone, but not the only one. The fact is that the Eurozone could easily have suffered “contagion” if Greece had defaulted at the time of the first and second bailouts. Furthermore the vast majority (around 90%) of the bailout has gone to the banks rather than the people of Greece. However, this was neither premeditated nor designed to impoverish, punish or humiliate the Greek people. I have already discussed the likely consequences of allowing a Lehman-style ”letting go” of the commercial banking sector. The failsafe mechanisms were simply not in place at the time (who knows if they really are this time around). The Eurozone was doing whatever was necessary to stop a doomsday scenario in Greece and potentially the other weak countries, as well as the whole of the Eurozone area. They succeeded, but at an even greater cost to Greece. But Greece chose to remain in the EU and the Euro. It did not have to.
  7. The Eurozone is not responsible for past, present or future Greek prosperity. There is no transfer union in the EU and it is not possible to have permanent bail outs of one nation by any other nation. Therefore Greece does not have an automatic right to be bailed out by anyone and certainly not on an on-going basis. Solidarity stretches only so far and cuts both ways. The Greeks should reflect on the fact that many of the nations bailing them out are notably poorer than them. If Greece is being bailing out, it is not to create a long-term dependency culture, but to help it to help itself and to be economically sustainable as soon as possible. Greece is entirely responsible for its present and future prosperity, not others.
  8. Greece has chosen so far to remain in the EU and Euro and must live with the consequences. Greece has held two national elections at which its electorate has categorically insisted upon remaining in the EU and the Eurozone. There is a price to be paid for this decision on their part and that price is called “internal devaluation”. The way that the Greek nation can regain competitiveness and eventually stand on its own two feet, is to reduce wages and other costs to levels which are compatible with their economic performance. The other option is to leave the Euro, but this is exactly what Greeks have insisted upon avoiding so far. The decision today enables the country to choose its own path for the third time. If they choose the same path as the rest of the Eurozone countries, then they have to abide by the implications. Please, let us not have any more accusation of blackmail, terrorism, humiliation of the Greek nation and all the rest of it.
  9. No one is taking sovereignty away from the Greeks. The Eurozone does not owe Greece anything and certainly not on a permanent basis (which is actually illegal in the EU and rightly so). So far Greece has chosen to remain in the Euro and swallow the bitter pill of internal devaluation that goes with the bailouts. The bailouts involve clear conditionality and the other Eurozone governments will only provide further tranches of funds if they accept the conditions/reforms connected with the bailouts. No one can or should get money for nothing. The conditionality is designed to enable Greece to get back on its own two feet as soon as possible, including priority reforms which previous Greek governments have systematically failed to implement over decades. Most people are totally unwilling to pay for a free Greek (Irish, Spanish, Portuguese, Maltese) lunch and certainly not for ever. And the same applies to these countries in reverse. Greece has a duty and responsibility, to itself as well as the Eurozone countries, to reform and regain its competitiveness as soon as possible. The conditionality is not for the benefit of the other countries, except in the sense that they and their electorates / taxpayers wish fervently not have to have to continue to bail out other countries.
  10. No one has twisted Greece’s arm and forced it to take the bailouts and accept the associated conditionality. Greece asked for the bailouts arising directly from its own actions over decades. Its politicians signed-up to the money and the conditionality. If it takes the cash but fails to deliver on the conditionality, shit happens. But as the popular saying goes: “Fool me once, shame on you; fool me twice, shame on me.” EU voters in other countries will not allow further bailouts that fail to deliver the promises of reform for ever. Our politicians know this and they are not suicidal. They have a responsibility towards the Greek citizen by virtue of Greece being part of the Eurozone. However, they have a much greater responsibility towards their own electorates and to fulfil their own mandates. This will always trump Greece in a democratic environment comprising 28 nation states, and rightly so.
  11. The last general election resulted in a Syriza majority despite the electorate knowing full well that its programme was both contradictory and unaffordable without continuing bailouts from the Eurozone countries, debt relief and a cancellation of numerous conditions attached with the present bailout agreement. The nightmarish last five months have been the direct consequence of the mandate that the Greek people have given Syriza to end austerity. This is pie in the sky. This will not happen for a decade, regardless of whether Syriza is able to extract all the concessions it wants and certainly regardless of whether Greece remains part of Euro/EU or not. The mandate to end austerity in Greece is pure political opportunism on the part of Syriza: it amounts to a populist policy that cannot be delivered. Messrs Tsipras and Varoufakis know this full well and so does the Greek electorate.
  12. Mr Tsipras and Mr Varoufakis cannot deliver the mandate they have asked for. They have assumed that the risk arising from Greek default is so high that the Eurozone countries would agree to whatever they demanded and have acted accordingly. They have deliberately and consistently gambled over the last five months with the future of Greece, as well as that of the rest of the Eurozone (and beyond – Britain, take note). I resent this stratagem on the part of the Greek government and I feel indignant about it both on the part of the ordinary Greeks and other Eurozone citizens. Game theory is all very well when it comes to econometric modelling, but not when the future wellbeing of 19 countries is at stake. Newsflash for Mr Varoufakis: we are not a mathematical model comprising 10 million Greek voters and a further 325 million rest-of-Eurozone variables to be number crunched until your previously desired statistical outcome is eventually delivered. The sad reality is that all that the Fine Your Radicals have manage to achieve so far, other than plunging Greece into unneeded and unwanted chaos, it to manage to rename the hated “Troika” to the equally detested “Institutions.” Game theory at its best? We are real people, not some gigantic theoretical experiment. The Greeks are facing enormous stress which goes well beyond any spurious mandate that Syriza believes it has managed to extract from a deeply traumatised nation.
  13. Greece has broken the EU way of doing things and the current state of the country is the result. The only way that it is possible for 19 counties to make decisions on such issues as the future of Greece and the Euro (and possibly the EU) is through compromise. Neither Mr Varoufakis nor Mr Tsipras have proved to be willing or able to play the game according to the established rules. The game theory assumption is that when push comes to shove, the Eurozone countries will back down and agree to more or less whatever Greece wishes. Newsflash for Mr Varoufakis: this hardball strategy, which plays fast and loose with the lives of 350 million people, not just that of the Greeks, has failed. The resulting fall-out is a complete and utter lack of trust on a scale never previously witnessed in Europe (not even during Margaret Thatcher’s period as British Prime Minister) since the end of the Cold War period. It does not serve Greece’s interests. It does not serve Eurozone interests. It does not serve EU interests. And it does not serve global interests.
  14. The current chaos in Greece only serves Russian interests. The geographers out there would agree that Greece is undoubted located at a pivotal geo-political position in Europe. The USA, EU and Greece know this, and so does Russia. Mr Tsipras´ attentive and persistent courting of Russia has been deliberate and has not failed to grab our attention. Europe is at a turning point and Russia, despite the ongoing economic weaknesses due primarily to low petrochemical prices, is resurgent. This is game theory with serious global implications which go potentially beyond mere economics and finance. The obvious and explicit threat is that Greece will turn its back on Europe and fall straight into the arms of mother Russian. Good luck with that. Greece is part of the European Union and Greeks feel European. There is nothing in the mandate that the Greek that citizens have given to Syriza to justify this approach and it can only entrench feelings against Syriza in the first instance and the Greek nation thereafter.
  15. Austerity cannot and will not be stopped tomorrow or any time soon. What the Greek or any other politicians imply, say or promise count for nothing as far as austerity is concerned. Not much will change, regardless of whether Greece votes Oxi (yes) or Nai (no). The choice is between “shock therapy” by defaulting and leaving the Euro or “muddling through” with EU bailouts. Neither option is quick nor palatable, though the shock therapy route does offer the promise of regaining competitiveness faster than the “muddle through” option, since Greece would then be totally in charge of its own currency and its own monetary policy, instead of the Euro straitjacket. However, there is no guarantee that its politicians will be able to agree, implement or maintain the long-term reforms necessary to achieve greater and faster economic dynamism than the current path. Presumably this lack of confidence in their own politicians is the reason why the Greeks are bending over backwards to remain in the Euro and the EU, rather than to entrust their own leaders with their future. The chaotic last 6 months are not a good omen: who can blame them?
  16. A flip-flopping government has run out of credibility, friends and trust. The negotiating position of Greece fluctuated over time but unilaterally pulling out of negotiations at a critical time, calling a snap referendum, the decision by Messrs Tsipras and Varoufakis to solicit a “no” vote, not to mention the increasingly bellicose language used, means that there is no longer any trust in the current Greek government. How Messrs Tsipras and Varoufakis can imagine that Greece’s negotiating position will be strengthened by a “no” vote is beyond me but this must obviously be the conclusion that their game theorising has led them to. The main counterparts in the whole process, not least IMF, EC and the principal contributor to the bailouts, Germany, have stated that they will not be able to work with Mr Varoufakis while remaining a vague about whether the same applies to Syriza.
  17. The EU cannot achieve regime change, only the Greek people can. The Institutions/Troika can say whatever they like (and they are, presumably because of their exasperation) but only the Greek people can decide on their own future and which party will lead them. The rest of Europe will have to like or lump it: that is the nature of democracy. But what exactly are the Greeks deciding on in this referendum? Do the people understand the convoluted question? Do they have enough time to consider the options properly? Even if the answer is “yes” twice over, is there an EU bailout on offer to vote on? The answer is “no”. The only thing that the voters are deciding on is whether they want to be part of the Euro or not. Already, with funds running low, there are chaotic and heart-rending scenes that are nothing to be proud of, either in Greece, the Eurozone or the rest of the EU. If this goes on, whatever the announcements by the Syriza government that they have stock-piled food and medicines (when did they do this and why did they do so, unless they did not expect their negotiations to succeed?), we shall all be diminished and the Greek people will indeed be desperate. Who knows what kind of chaos will break out? Has this really been factored in by Syriza? I very much doubt it. I suspect that they are just winging it.
  18. Neither option will be palatable to Greek people: it is a case of damned if you do and damned if you don’t. A yes vote could mean easier negotiations with Syriza since they will then have another mandate (but they already have the mandate of remaining in the Eurozone) to negotiate the terms of the bailouts. This will be awkward but not impossible to roll up the sleeves and find a workable compromise this time around. We expect no less from our politicians. But a resignation by Syriza is the more likely outcome based on their intransigent approach in the last five months. There would be another general election, with the possibility of an even more radical government coming to power and the crisis being drawn-out even longer. Or it could mean a “traditional” government that will agree debt relief, combined with an acceptable bailout programme and conditionality. Either way, the Greeks cannot expect higher minimum wages, pensions, etc. than exist in the various countries that are contributing to keeping their economy afloat but do not enjoy the same level of benefits. This is not feasible and will not be agreed to. Living within their means has to be the way forward, even with the significant debt relief combined with serious investment for growth and development that I sincerely hope will be hammered out next time round.
  19. The present is bleak, but the future could be worse. No European, indeed no human being, can look upon the scenes in Greece with aloofness. My parents are pensioners and I would not wish this sort of thing upon them or any other person. However, should the Greeks choose the “no” path, followed by default and introduction of a new Drachma, they will have delivered themselves into an unpredictable roller-coaster ride which will test the nation well beyond the limits of anything they have endured so far. There is plenty of not-so-distant experience of “shock therapy” in most of Central and Eastern Europe, including Russia. Whatever the alluring promises on the part of duplicitous politicians or contradictory prize-winning economists, the bloody reality will result in economic and human carnage in the short-term. This will, hopefully, quickly be followed by much more rapid recovery and prosperity than possible under the current “muddling through” option within the Euro. But don’t bet on it: economic theory and reality are usually out of sync, as the last five years should have once gain proved.
  20. A last word on the matter. Good luck to the Greeks today. I would not like to be in their shoes and I can only hope that they will make the right decision for Greece, as well as for the rest of us.

 

 


The Return of the Greek Drachma … err Drama!

© Ricardo Pinto, 2015, AngloDeutsch™ Blog, www.AngloDeutsch.EU

Greece is widely considered to be the cradle of democracy. The theatre of ancient Greece is also considered to be the fountainhead of the Western dramatic tradition, and it shows. The earliest Greek dramas emerged during the 6th Century BC and the term “drama” is derived from the Greek word for action (to do or to act). Indeed, the three main dramatic genres, namely tragedy, comedy and satire (tragicomedy or burlesque), emerged from Athens.

It is just as well that drama is a Greek invention because in the last five months, a mixture of “comedy” and “satyr” is exactly what the Syriza-led government has been serving-up on the European Union (EU) stage. For the final act, it is quite possible that “tragedy” will complete the fascinating yet frightening performance that is unfolding before our eyes. The end product of the Greek drama could well be a return to the Greek drachma.

Greek Drama: paving the way for the drachma?

Dramatic structure refers to the framework of a dramatic work such as a play or a film.  According to Gustav Freytag, dramas can divided into five parts or acts (also called Freytag’s pyramid), as illustrated below.

Freytag's Pyramid and the Greek Drama

I would like to take the liberty of applying Freytag’s pyramid to modern-day Greece, as far as the Eurozone crisis and its future in the EU are concerned. Bear with me.

Act 1. Exposition

This introduces important background information to the audience such as the setting before the main plot in the form of flashbacks, characters’ thoughts, background details, etc.

The first Act of the latest instalment of the Greek drama started during the General Election of January 2015. The Syriza party, indeed almost all Greek parties, told more or less the same narrative and provided the same broad analysis of the background to the plight of Greece and the Greeks. The plot can be summarised as follows: the Greek troubles are the result of the Euro and EU, the Troika (ECB, IMF and EC) has imposed unbearable burdens on the Greek people, resulting in a collapse of GDP, reduction in income and pensions (internal devaluation), very high levels of unemployment, etc. This has all been done in the name of austerity, which has principally served to rescue German and French banks, as well as the Eurozone as a whole but Greece itself. The Greek people have suffered enough. Austerity must end and Greece must regain its self-respect.

Interestingly, the above exposition concentrated almost entirely on the period post-2009, when Greece was rescued from bankruptcy by the EU. The first Act makes clear that the protagonist (Greece) has been treated very badly by the main antagonist in the drama, the Troika / EU / Eurozone / Banks but that enough is enough. The protagonist´s exposition somehow leaves out the decades of corruption, mismanagement, clientelism and sheer incompetence of generation upon generation of Greek leaders that necessitated a rescue by the rest of the Eurozone in 2009 in the first place. But such is the nature of dramatic plots. It is not convenient to set out the background in painful detail, including the fact that Greece had the chance to exit the EU but chose instead to remain and be part of the euro while taking the painful internal devaluation that it implied and which countries in a similar position have also gone through. The previous government signed-up to the bailout conditionality but clearly the mood has changed after five years of painful austerity.

A key aspect of the exposition was the election manifesto. As I have previously discussed, the Syriza programme did prioritise an end to austerity, however, any reading of its pledges would lead to the conclusion that it was both contradictory and unrealistic.

It called for Greece to remain in the EU and Eurozone yet basically roll back the commitments made by the previous government as part of the conditionality for the bailouts, while at the same time calling for an end to privatisation, restoration of lost state jobs, raising of minimum incomes and pensions, free health provision and much else beside. That is all very well during a general election, except for two minor issues: Greece is broke and the only way this can be done is if others pay for it in the short, medium and possibly long-term, yet permanent bailouts are forbidden by various EU treaties for a very good reason.

The EU rescue packages were designed to stop Greece from becoming bankrupt as a result of its own decisions made over a period of decades and did indeed manage to keep them in the Eurozone and the EU, something which the Greek people have always insisted upon. They were designed primarily to buy Greece time to regain competitiveness through reforms agreed to by the previous government. Five years later, this is all interpreted as no more or less than national humiliation, bullying and dictatorship on the part of the EU, with Germany and the Troika singled out for special attention. This was a cracking opening Act in the play.

Act 2. Rising Action

The rising action is a series of events that begin immediately after the exposition (introduction) and builds up to the climax. The entire plot depends on these events to set-up the climax and the satisfactory resolution of the story.

A series of events took place immediately after the election, which set the course for the current Greek drama.

As I have previously discussed, instead of picking a mainstream coalition partner, Syriza chose the Independent Greeks Party which was committed to revoke the agreements between Greece, EU and the Troika, prosecute those who negotiated them, repudiate part of Greece’s debt and require German war reparations for the invasion and occupation of Greece during WWII. Syriza selected this party over other moderate alternative partners. This was widely interpreted and an immediate slap in the face for Germany, by far the most important contributor to past, present and future EU bailouts. Not a good start to negotiations, but great drama.

Syriza then took it as read that being elected actually gave it a mandate to end  austerity in Greece. Under a scenario where Greece would leave the Eurozone and possibly the EU, this would have been correct. Just because they were elected on the basis of a contradictory and unrealistic manifesto, does not give a country the right to implement it unless it assumes responsibility for the costs associated with such a manifesto. Clearly, all the other Eurozone countries would need to pay for a Greek programme that they had absolutely no control over. But if they are to agree a further bail out, they naturally have to approve the basis or conditionality associated with further funds, since they have their own electorates to consider. Instead, Syriza chose to act as if the other countries owed it to Greece to agree their programme by virtue of their electoral mandate.

Furthermore, Syriza and the Independent Greeks Party made a series of important appointments based on political dues to take-on the Troika, rather than selecting experienced and diplomatic negotiators, steeped in the EU way of doing things.

A critical decision was the appointment of the unelected Yanis Varoufakis as the Finance Minister. A bike riding, fiery blogger with a penchant for game theory who describes himself as a “libertarian Marxist” was not necessarily an inspired choice for dealing with 27 other EU Finance Ministers. While he may be a highly regarded economist, he has almost no political experience, except for a period during 2004 – 2006, when he served as an economic adviser to George Papandreou.

Alexis Tsipras, the other main character in the play, can hardly be considered a mature politicians himself, having first been elected to the Greek Parliament in 2009. But initially both Alexis Tsipras and Yanis Varoufakis were widely fêted by the European media for being a contrast to the previous government – young, handsome, tieless, bike riding (Varoufakis), living in a modest neighbourhood (Tsipras), etc. The media throughout Europe loved this and the message that the Greeks were going to take on the austerity camp in the EU. But it was not only the media and the population of various countries that appreciated the rising action in the Greek drama. Many political parties, such as Podemos and other populist movements, saw the Syriza as a white knight in shining armour riding to slay the austerity dragon and reclaim its democracy from the clutches of the dreaded Troika.

Indeed, many economists and politicians in the EU were actually in tune with the message that after five tortuous years, the emphasis had to change. Instead of unrelenting austerity, collapsing GDP, falling incomes and standards, increasing poverty, deflationary pressures, the emphasis simply had to shift to investment, growth and employment. This had to be combined with flexibility in the bailout programme’s target of a surplus of 4.5% of GDP, so that it could be redeployed to achieve Syriza’s programme objectives.

Therefore, a series of events and individuals came together in the second part of the play that created the basis for the next Act in the political drama.

Act 3. Climax

The climax is the turning point. If the story is a comedy, things will have gone badly for the protagonist up to this point; now, the plot will begin to unfold in his or her favour. If a tragedy, things will go from good to bad or bad to worse for the protagonist, often revealing their weaknesses.

However, although the media, general public, economists and politicians were generally well disposed to the Syriza agenda for easing austerity and focusing on growth, the next  set of events gradually but systematically turned against the Greek government, leading to a crescendo of criticism and recrimination.

The talk of war reparations, right at the beginning of the term of government did not go down too well in Germany. Yet Tsipras and Nikos Paraskevopoulos (Justice Minister) kept banging this particular drum to the tune of € 341 billion in compensation (about the same as the overall Greek debts), knowing full well that this would goad German public opinion at a critical time in Greece’s negotiations. This was naïve to say the least and resulted in a general feeling on the part of the Germans of being blackmailed.  Just to add a bit fuel to the fire, Panos Kammenos (Defence Minister, Independent Greeks) seemed to consider it appropriate to threaten to send Islamist fundamentalists to Germany from among tens of thousands of migrants currently in Greece in revenge for the austerity measures he felt had been imposed on Greece by the Germans. That turned up the heat nicely, not least because other people had been under the impression that the Greeks had chosen to remain in the EU and Euro, sign-up to be bailout and take the bitter medicine of internal devaluation.

The choice of Varoufakis to negotiate the EU bailout was a little unfortunate. Varoufakis may well be a brilliant economist and he may well know more about the ins and outs of the financial crisis than all the other 27 EU Ministers of Finance put together. However, lecturing to them from the off was never going to be a winning strategy. From the beginning there was a fundamental personality and ideology clash between himself and Wolfgang Schäuble, the powerful, experienced and prickly German Minister of Finance, who wasted no time in making it clear to the Greek negotiators that their programme was unrealistic, their promises to their electorate had been misleading and that there would still be conditionality in negotiating EU bailouts.

The basic assumption which characterised the Greek position from day one was that they had the Eurozone countries by the balls and that they simply had to squeeze long and hard enough for their demands would be acceded to. In other words, the basis of negotiations, perhaps informed by game theory,  was that the Eurozone countries feared a Greek default and the contagion that would follow, and that this had the potential to deal a mortal blow to the Euro and the EU project.

But the EU finance ministers did not seem to be cowed by this threat, which I consider to be the worlds´s biggest game of chicken. Greece’s most natural allies in the anti-austerity movement, namely Italy and France, were quickly put off by the strident tones and lack of willingness to compromise. The Spaniards, Portuguese, Irish and Cypriots who were also following the internal devaluation route proved to be even more resistant to backing the Greek cause, no doubt fearful of similar populist movements in their own countries. And the northern group of EU countries, especially Germany, Finland, Slovakia, etc. and others were anxious of the consequences of capitulating to Greece’s insistent demands. As I previously wrote, moral hazard is the main reason why Syriza could not and will not force an EU capitulation. If the Greeks could manage to drive a coach and horses through the bailout terms and conditions, would others be tempted to follow their lead and would this be sustainable for the rest of the Eurozone?

The demand for 50% debt relief was denied, though everyone recognises that the current level of state indebtedness (180% of GDP and rising) is not sustainable and will need to be tackled at some point in the future, during calmer global economic times. There certainly was recognition of the need to allow Greece to use more of its primary budget surplus over the next few years. But Greece’s steely determination to avoid as conditionality to the extent possible in the future Eurozone rescue package, whilst simultaneously dismantling the few reforms implemented so far, such as rolling back privatisation, reemployment of former public employees and raising wages and pensions which it can ill afford, only served to harden opinion against Greece. The consequence after five months of intense negotiations and diplomacy is that remarkably little agreement exists on the overall package of reforms necessary to secure the latest tranche of the EU bailout worth Euro 7.2 billion.

It is tempting to conclude that the single most notable Greek achievement appears to have been the rebranding of the “Troika” into the “Institutions”.  This would be unfair, but everyone has noted the Greek government’s populist tendencies. Progress has been made on the reform programme, but there appear to be insurmountable sticking points, such as the primary surplus targets, VAT reform, privatization targets, minimum wage levels and pension reforms. These are all issues which impinge directly upon the country’s fiscal base and thus its debt sustainability, which is why both sides are sticking grimly to their guns.

Within a few months, the almost complete inability to make progress on these sticking points has raised tensions to critical levels. The resulting lack of confidence and trust means that several high-profile individuals no longer negotiate directly. Varoufakis has been removed from the Greek negotiating team for his abrasiveness and style. Schäuble has been side-lined because of his prickly relationship with Varoufakis and his conclusion that the way forward is a “velvet Grexit”.  Jean-Claude Juncker, the President of the European Commission and one of the key remaining Greek allies, has expressed his anger and frustration at Tsipras’ misrepresentation of the EU proposals. Many others have vented their frustration with the main protagonists of the Greek drama. The IMF has packed its bags and gone back to Washington saying it was pointless to stay while the two sides remain so far apart. Sigmar Gabriel, Germany’s vice-chancellor recently said that Europe and Germany will not let themselves be blackmailed or let the exaggerated electoral pledges of a partly communist government be paid for by German workers.

These almost unprecedented accusations and counter-accusations serve to harden positions and will make it ever more difficult to achieve compromise in the coming days. Instead of seeking common ground, the Greek Prime Minister reacted by accusing the IMF of “criminal responsibility” for the situation and that its creditors were seeking to “pillage”, “humiliate” and “asphyxiate” his country. For good measure, he added that if Greece fails, it will be the beginning of the end of the Eurozone.

As if that was not enough, others are raising the stakes. Germany’s EU Commissioner, Guenther Oettinger argues that Greece could face a “state of emergency” on 01 July 2015 and Josef Kollar, the vice chairman of Slovakia’s Finance Committee, accused the Greek prime minister of “swindling the whole world” and that “Politics should … be based on economic reality. And in reality, the drachma would be a rescue for Greece.”

The climax was reached in the third Act: there are open rifts and recriminations, the likelihood of Grexit is openly talked about, emergency measures and being discussed and a return to the Greek drachma is widely speculated upon.

Act 4. Falling action

During the falling action phase, the conflict between the protagonist and the antagonist unravels, with the protagonist winning or losing against the antagonist. The falling action may contain a moment of final suspense, in which the final outcome of the conflict is in doubt.

During mid-late June 2015, we enter the 4th and penultimate Act of the Greek drama. Nothing less than the future of Greece in the Eurozone is at stake. Unless Greece honours the € 1.5 billion repayment due to the IMF on 30 June, it is likely to default. Yannis Stournaras, the Governor of the Bank of Greece, has pitched-in to confirm that his country does not have enough funds to pay the IMF and sketch a less than reassuring scenario of the likely consequences of default.

The only solution is to resolve the critical sticking points in the little time that is left. In the past, I would have bet my bottom dollar in the EU’s ability to manage this. Today, following all the posturing and bickering, I am doubtful that the remaining issues can be resolved and a possible EU rescue package can be approved by the Eurozone governments in time for the IMF payment on 30 June 2015.  At the same time, the game theorists among the Fine Young Radicals remain convinced that the EU will shrink from pressing the euro Armageddon button and Greece will win take the prize.

Freytag’s pyramid predicts that the falling action may contain a moment of final suspense, in which the final outcome of the conflict is in doubt. There is only one politician with the stature to change the entrenched dynamics, and I certainly do not refer to either Mr Cameron or Mr Hollande, whose lack of leadership and vision is palpable. A last-minute intervention by Mrs Angela Merkel is the only hope for a compromise that satisfies all parties sufficiently to get a deal done but, as usual, she is keeping her cards close to her chest until there is no alternative but to act. But perhaps the situation is already past the point of acting.

At the moment, it is far from clear whether the protagonist or the antagonist will win the day. But in a way, it does not really matter because we have already entered uncharted territory where there will only be losers in this Greek tragedy.

Act 5. Dénouement

The comedy ends with a dénouement in which the protagonist is better off than at the story’s outset. The tragedy ends with a catastrophe, in which the protagonist is worse off than before.

And so we enter the final Act, but it is not clear whether this drama is a comedy, a tragedy or a mixture of the two.

It is still possible for the conflict to be resolved, reducing the tension and stress in Greece and Europe. If this happens, Tsipras, Varoufakis and the rest will be fêted for their high stakes brinkmanship and other countries will undoubtedly try to replicate the methodology deployed by the Greek government. But will this end happily for the Greeks and for Europe? I very much doubt it. There may be a rolling back from the reforms that the Troika/Institutions have been seeking so as to raise Greece´s own competitiveness, but this will only make it harder and take longer for Greece to regain economic traction compared with its neighbours. There may be further debt relief, but even if the level of indebtedness is scaled back to the supposedly sustainable level of 120% of GDP, the Greek economy would still need to perform well consistently for a stretch of time so as to avoid its debts mounting-up rapidly. There may also be implementation of many of the measures that the Syriza has been insisting upon and which are the source of the stalemate, but these will come at the expense of the Eurozone countries for the foreseeable future, many of which are significantly poorer than Greece and resent having to subsidise the Greeks’ minimum wages, pensions, etc. The seeds of doubt about the merits of continuing Eurozone membership have already been sown and will start germinating. If other countries such as Spain and Portugal follow the Greek model (moral hazard), several of the net EU contributors, not least Germany, may conclude that the limits of the EU and Eurozone have not only been reached but surpassed. As for the Greeks themselves, they may be in greater control of their own destiny but the reforms that have been so elusive in the past will still need to be implemented, which is not a given. Whatever happens, the Greek citizens will realise that austerity will not, in fact, have been stopped. Furthermore, unless the economy starts performing much more strongly, the latest tranche of the EU bailout will not last long. But after the extreme stress and friction of negotiating this agreement, there may not be much enthusiasm for another full bailout. The game theorists must realise that this is a consequence of their winner-takes-all and at-all-costs strategy. Grexit will remain a possibility. Or perhaps the Syriza government will begin to collect tax revenues vigorously, introduce effective reforms exceeding all expectations and pull the country back from the brink. The past is not necessarily a predictor of the future, but I doubt this will happen without strong and timely global growth to lift all boats, including the Greek one.

But it is possible, indeed likely, based on the latest statements emanating from all sides, that this Greek tragedy will end in catastrophe – yet another word of Greece origin. If Greece does not make the IMF repayment due on 01 July 2015, it is quite possible that a political rabbit will be pulled out of the bag and default will be averted. Angela Merkel is apparently fond of the saying: where there is a will, there is a way. But based on the current situation, sooner rather than later, the country will run out of money. At that point, all hell will break loose, despite all the warm and comforting reassurances from politicians that firewalls are in place to avoid contagion that would wreak havoc across Europe and possibly other parts of the world.

As I wrote in a separate blog post: Eastern Europe went through variants of shock therapy in the 1990s and the Russians, Poles and all the others will confirm that very little was predicted by economic theory, that recovery took much longer than anticipated and that they have absolutely no desire to ever experience such wanton destruction again. I would not wish this upon Greece or any other nation. I would much rather another round of muddling through in the classical European way instead of the destructive, unpredictable catharsis that is being floated. But I also know that many would disagree and not just in Greece.”

Having reflected on the last five months since the election of the Greek government, I am tending to the conclusion that the Greek drama may well end in a dénouement / catastrophe / catharsis resulting from the Fine Young Radicals’ refusal to compromise. They will take the hit, re-establish the drachma or something similar and do their best to move forward. Greece will then be fully in charge of its monetary policy, its currency, its dignity and everything else that its people, in an act of mass amnesia, believe Germany and the other Eurozone countries have taken away from them in the last five years. Of course, they cannot then expect further EU bailouts, will have to live within their own financial means and will rely on their own politicians to navigate the process of regaining international competitiveness.

Hold on! For a second I almost forgot that this is precisely the scenario that the Greek citizens have been bending over backwards and executing double somersaults to avoid. For otherwise they would surely have voted to exit the Euro/Eurozone/EU in one of their previous two general elections, rather than willingly go through the latest acts of this excruciating Greek drama.

Perhaps it really is true that we cannot have it both ways… even in the EU.


Moral Hazard and the Future of the Eurozone

The blame game

I greatly sympathise with the argument that Greece and its citizens have been through the meat grinder, otherwise known as austerity, in the last six years. But this is categorically not because of the EU, the euro, the Troika or Germany. It is down to Greece and the Greeks. Ask the Britons about their own version of austerity, which is nowhere near its end stage with a further GBP 50 bln of cuts in public expenditure scheduled in the next five years. Britain is in the EU but not in the euro, however, there are similarities in the causes that have led to the austerity that both countries are facing for the foreseeable future. The difference is that Britain retains control over its currency and interest rates and is able to manipulate both, while still needing to undergo a painful process of austerity. Despite the most serious economic and social stresses and strains since WWII, the political parties are consistent about the journey in the next five-year term of office.

Contradictions galore

The Greeks chose to join the EU and the euro. In their last two general elections, they have chosen to remain in both. They must either live with the consequences or leave one or both. If Greece chooses to stay in the euro, the only option is to submit to the process of internal devaluation so as to regain competitiveness. Greece can choose to leave the euro but it knows full well that it will still have to submit to a different and rather more unpredictable form of pain that would follow as surely as night follows day. What Greece cannot do is to continue to want to have it both ways, namely to blame everyone else, row back completely from its obligations and totally unshackle itself from any conditionality connected with on-going eurozone support.

I have already written two other posts about the future of the eurozone, centred on Greece and the current phase of uncertainty about the future of Europe:

  • The first focuses on Syriza and its commitments, which are contradictory and impossible to achieve given Greece’s current financial circumstances. It has also chosen a completely unsuitable coalition partner, when it had various more reasonable options. This is a serious miscalculation by its Fine Young Radical leadership.
  • The second focuses on the demands of the Greek leadership, which amounts to the world’s biggest game of chicken. The Greeks are assuming that the rest of the eurozone will blink first and simply cave-in to its demands so as to keep Greece in the euro, avoid contagion in the eurozone and possibly save the EU project as a whole. The new Greece wants to have its euro cake and eat it at the same time, but at the expense of all the other eurozone countries that have been standing by it through various rescue schemes. This approach is inconsistent with the principle that rescue packages must be time-limited, clearly earmarked and subject to conditionality otherwise, they become permanent transfers, which are illegal under both EU and national constitutional law.

Moral hazard and financial crises

This post focuses on the third reason why the Greek will, in the end, be unable to bounce the other eurozone countries into agreeing to its demands, leading ultimately to an abandonment of its major electoral platform. That reason is “moral hazard”, a pervasive and inevitable feature of the financial system and of the economy. Moral hazard arises when a contract or financial arrangement creates incentives for the party(ies) involved to behave against the interest of others.

Many of these moral hazards involve increased risk-taking: if I can take risks that you have to bear, then I may as well take them; but if I have to bear the consequences of my own risky actions, I will act more responsibly. Thus, inadequate control of moral hazards often leads to socially excessive risk-taking—and excessive risk-taking is certainly a recurring theme in the current financial crisis.

Turning back to the latest eurozone crisis, it is not so hard to see where the moral hazard arises from the Greek stance.

Greece, as well as the other countries bailed out by the eurozone countries, namely Spain, Portugal, Ireland and Cyprus, have benefited tremendously from being members of the EU in the first instance, as well as the ultra-low interest rates and other advantages of being part of the euro. All experienced sustained growth which delivered much higher levels of income and prosperity. The cause of the problems they commonly face was almost entirely self-imposed: they borrowed too much, paid themselves too much, relied on the construction sector too much and deregulated too much, all of which fuelled their economic growth until the bubble burst.  They can blame the banks and the fatcat banksters, they can blame the government, they can blame the establishment and clientelist elites, they can blame the EU, they can blame the euro, they can blame the troika, they can blame the Germans and they can blame the immigrants… and they certainly do. But facts are facts. Citizens borrowed too much, spent too much, focused too little on productivity, competitiveness and innovation, and kept voting-in politicians for more of the same. They did this for generations prior to even joining the EU and the advent of the euro, then accelerated the process until the music inevitably stopped.

To blame the EU and the eurozone countries for their plight, as Greece is currently, amounts to wilful collective amnesia. The Greeks want to stay in the EU and euro. They have taken on obligations connected with the various euro rescue packages which they now wish to roll back. There is no doubt that there has been and continues to be massive suffering and not just in Greece. I am all for finding solutions that generate economic development that allows Greece and others to turn the corner as soon as possible. I am all for productive, long-term investment. Greece desperately needs this, as does the rest of Europe.

There is no such thing as a free lunch

But I am not for debt forgiveness combined with rolling back all the commitments that the new Greek leadership insists upon. The reason is that it would amount to a permanent transfer union from all other eurozone countries to Greece, something which is not only forbidden but also increases moral hazard. If the other eurozone countries are expected to assume the resulting risk, then it cannot work. If I were Greek, I would be thrilled to reduce my own burdens while at the same time increasing my pension, my wages, my social benefits and all the rest of it, knowing that someone else will foot the bill. I would certainly agree with the thinking: “Let the strong eurozone countries carry the burden. They can afford it. I have suffered enough.”

This is at the one and same time totally logical and yet totally unconscionable, but it is precisely what would happen. Once the Greeks are granted their 50% debt relief and released from the conditionality of the eurozone rescue packages why should the country reform itself as the new Greek leadership promises? More importantly, why should the rot stop there? It is quite clear that the Podemos movement in Spain is carefully watching developments and others also look on with great interest. Once the principle of debt relief and release from conditionality is established, what is likely to happen at the next general election in those countries? If other anti-austerity parties are elected, would they not reasonably expect similar treatment from the eurozone countries?

It might be possible to absorb the resulting losses and implied on-going costs in the case of Greece, but the euro game would be up soon after. No one could afford it. This applies to Germany as much as to any other eurozone country that has been backstopping the various eurozone rescue packages.

I am resident of Germany and a taxpayer there and I can assure you that I do not fancy this scenario at all. You can take it for granted that my neighbours, no matter how Europhile they may be, care for it even less. While they may go on holiday to other countries of the EU, they have not lived and worked elsewhere and therefore do not have the friendships and family networks that I do and even I am dubious about this future. Germans are financially conservative not by nature but as a direct result of horrific experiences with financial and other catastrophes within living memory. Its ageing population structure simply reinforces this tendency. If moral hazard takes hold in the eurozone, it is not beyond the realms of possibility that Germany might experience a rapid and pronounced disenchantment with the EU and the euro. Were this to occur, it would be an unmitigated disaster for Europe.

I believe the new Greek government will fail with most of its contradictory anti-austerity drive. Its programme is completely unrealistic (except for their insistence that austerity must be counteracted with a pro-growth, productive investment programme), EU and national constitutional law forbid a transfer union and the obvious moral hazard connected with all other eurozone countries mean that this simply cannot be accepted.

The current Greek position would directly increase moral hazard in the EU to an unprecedented degree. If other countries were to follow suit, moral hazard will reach hitherto unimaginable levels. If I take a risk, I should bear the consequences. But if I take a risk at someone else’s expense, then it becomes moral hazard and I would consider this new EU and eurozone, where I would have to pay on an on-going basis for other countries’ decisions, to be little short of an economic nightmare. I would be in hock to third parties for the rest of my life, as would my children and my grandchildren.

I would remind the Greek Fine Young Radical leadership, as well as all the economists out there pushing for the eurozone to give-in to the Greek’s apparently reasonable anti-austerity, pro-growth demands, of a universal truth: there is no such thing as a free lunch. Someone will have to pay for it and I have no intention to be paying lunch for complete strangers from elsewhere in the EU for the foreseeable future.

Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Transfer Union and the Biggest “Game of Chicken”

The Greek David vs. the EU Goliath?

A cursory glance of much of recent media reporting and one could easily conclude that the EU is bullying Greece as a means of advancing its agenda of propping up the euro at the expense of the Greek economy and on the back of the Greek people. Our instinctive reaction is to support the plucky underdog in its monumental fight against the Eurocrat Goliath, especially if the undertone is that the bailout has only succeeded in helping the fat cat foreign banks, who have been making hay with the EU rescue funds while the Greek citizens starve. This could not be further from the truth, as I have previously written.

The recent media reporting has consistently demonstrated that the Syriza rhetoric which went down so well with the Greek electorate is failing to gain traction with the other eurozone countries that have been keeping the Greek economy afloat for the last few years. Instead of Mr Alexis Tsipras and Mr Yanis Varoufakis, Greece’s Fine Young Radicals getting their way with their contradictory demands, they are discovering that their European partners are not for turning, despite the high stakes game of poker being played.

Game of Chicken: who blinks first, loses

This is the world’s most dangerous game of chicken and everyone can see a potential crash looming ahead. Neither the EU nor the Greeks are giving way. The Greeks want to tear down the agreed programme of reform and the as they see it unreasonable conditions imposed on them by the hated “troika” (EC, IMF and ECB) and take back their sovereignty while at the same time staying in the EU and the eurozone and demanding a long list of concessions while being clearly not in position to pay for them either today or any time soon.

The obvious implication of the Greek stance is that the eurozone has foisted austerity upon the Greeks, that it is not working and that the eurozone owes the Greek people for the suffering that has been imposed on them against their will. There should be a significant debt write down, an immediate end to austerity and presumably continuing transfers from eurozone countries for the privilege of Greece not pressing the reset button by leaving the euro and defaulting on their debts. Such eurozone transfers would be expected by Greece not only now, but potentially for the foreseeable future until its economy has recovered fully and it is able to pay back its debts. Many cheer the Greek stance and their pluck in the face of the pro-austerity forces of the establishment, such as the Troika.

Interestingly though, none of the eurozone countries seem to be buying into this fairy tale despite the potentially catastrophic chain of events that could flow from such a game of chicken if contagion were to take hold in other similarly stricken eurozone countries. The lack of eurozone cave-in appears to have taken the Greek young radical leadership by surprise. Moreover, the public pronouncements being made, and not only by the Germans, appear to be hardening over time. Time is running out for Greece. The world‘s biggest game of chicken is unfolding before our very eyes with potentially disastrous consequences for Greece and eurozone. Many must wonder why the eurozone countries don’t simply press the financial reset button? Why must the poor Greeks continue to suffer, whereas through a magical stroke of the EU pen, they could simply forgive the Greek debt and move on?

The Germans always pay…

When it comes to the EU, the three most significant countries have always played a consistent game. The French are the visionaries that drive the ever closer union agenda, including in the establishment of the euro. The Germans are the ones that sign the blank cheques and effectively traded off their beloved DM for reunification. The Brits are the pragmatists that have only ever been interested in trade and finance, but been sceptical about almost everything else connected with the EU and would not touch the euro with the proverbial barge pole. In this story, the simple fact is that the much vilified Germans would almost certainly have signed on the dotted line and rescued the Greeks (and probably others) were it not for two seemingly innocuous words which few people ever mention in relation to the game of chicken currently being played, namely the “transfer union”.

… except if they simply cannot: transfer union

Firstly, let us be clear about the definition. A “transfer union” is basically characterised by permanent, direct and horizontal transfers between eurozone countries.  Quite simply, this is forbidden under EU and national law. The taxpayer in German and other EU countries has always been concerned that s/he might end-up assuming liability for the debts and deficits generated by other Member States. Consequently, the Maastricht Treaty and its successor treaties provided safeguards not least Article 125 of the Treaty on the Functioning of the European Union (TFEU), which contains the so-called “no bail-out” clause.  It requires that EU institutions (including the European Central Bank) must not assume liability for the debts of central, regional or local governments of the member states of the eurozone, nor must one member state assume liability for the debts of another. A recent amendment to Article 136 TFEU authorises eurozone members to set up the European Stability Mechanism on an inter-governmental basis, but this does not invalidate the no bail-out clause which forbids debt burden-sharing amongst eurozone members.

These legal restrictions are reinforced by others in the national constitutions of certain member states such as that of Germany. The German Federal Constitutional Court based in Karlsruhe has been particularly vociferous in blocking anything which affects Germany’s ability to act as a fully self-governing sovereign state.

Had it not been for the constraints blocking transfer union on the basis defined above, I believe that most German politicians would have already done whatever it takes to rescue Greece and the euro. They would have written a blank cheque in 2009, they would have done so today and they would have continued to do so for the foreseeable future until their own financial system was corroded. Never underestimate the importance of war guilt in German policy-making. The instinctive reaction of German politicians, certainly until the advent of Chancellor Gerhard Schroeder, was to pay first and think last about the consequences for the German taxpayer. Fortunately for the German citizen (or more to the point, unfortunately for the Greek citizen), the problem of the transfer union is a major stumbling block which inhibits the normal course of EU politics and results in the biggest game of chicken ever.

To be sure, some vertical transfers do take place between member states and the EU and back to member states. Article 3 III of the EU Treaty refers to economic, social and territorial cohesion and solidarity between the member states as one of the aims of the Union. Measures that are financed must correspond with the aims of the Union and have been agreed by the member states in the framework of the European Treaties and secondary legislation. The competitiveness and cohesion budget focuses on three elements: i) economic convergence of the least developed regions and member states ii) regional competitiveness and employment and iii) cross-border cooperation and the integration of regions and SMEs.

But the situation becomes much trickier in the case of the euro rescue package which now comprises three elements: i) the European Financial Stabilisation Mechanism (EFSM) run by the Commission, ii) the European Financial Stability Facility (EFSF) financed by the member states and iii) IMF aid. There have been numerous attempts to block the rescue packages on the legal grounds previously mentioned. All have failed because the rescue packages have been considered to be time-limited, with clearly earmarked loans and subject to strict conditionality. Funds are not paid out until economic policy conditions connected to the framework of the structural adjustment programme, are complied with. This is the basis of the euro rescue packages, otherwise they could not have been offered. This is the basis that Greece accepted the offered rescue packages.

New Greece or eating the euro cake and having it too

Prior to the advent of Syriza, it could be questioned if the loans would ever be repaid by Greece or if the conditions attached were being met in the manner anticipated. But with the new, explicit Greek demands, the position changes radically . As I have previously discussed, Syriza goes against all uneasy compromises which have been hammered out under the previous euro rescue packages. In essence it insists on the following:

  • Stay in the EU and the Euro.
  • Negotiate the level of the debt burden (175% of the GDP or €318 billion) immediately
  • Reboot the economy and create 300,000 jobs
  • Immediate end to austerity:
    • Tax reductions (abolish taxes & social contributions for 7 years & income tax of 30%)
    • Raise the minimum wage from €586 to €751
    • Re-introduce 13th month payment for the lowest retirement pensions
    • Distribute electricity or housing coupons and free access to public transport for the poorest 300,000 households
  • Introduce free healthcare for all.
  • Stop privatisation on its tracks.

This is the new Greece wanting to have its euro cake and eat it at the same time, but at the expense of all the other eurozone countries that have been helping it through various rescue funds. These demands, which its Fine Young Radical leadership is pursuing with vigour, would effectively overturn the current rationale of the rescue packages totalling €240bn and contravene the principle of no transfer union since it would lead to permanent, direct and horizontal transfers between eurozone countries. By requiring an immediate renegotiation of the debt burden by half (bearing in mind that many eurozone countries are significantly poorer than Greece on a per capita basis yet would have to bear the costs of debt reduction), it would represent a clear and unambiguous bailout by the other eurozone countries. By stopping privatisation and reintroducing a raft of measures which the country simply cannot afford to pay for, it would effectively amount to permanent, direct and horizontal transfers between the other eurozone countries and Greece, since the country cannot afford them now and is unlikely to afford them for decades. In other words, the current Greek negotiating position would represent a direct contravention of the EU treaties and, if successful, would trigger challenges at the EU level, as well as in the German Federal Constitutional Court, something which the German government rightly fears. And this is even before we discuss how the average tax payer and voter in eurozone countries will feel about contributing to increasing the minimum wage or pension in Greece to levels which they themselves do not enjoy in their countries.

In this game of chicken, Greece’s leadership has been betting that when push comes to shove, the rest of the eurozone will blink first and simply cave-in to its demands so as to keep Greece in the euro, avoid contagion in the eurozone and possibly save the EU as a whole.

But Greece’s Fine Young Radicals have underestimated the legal importance of the EU treaty and national constitutional barriers to the establishment of a transfer union. A European financial equalisation, with permanent, direct and horizontal transfers, is simply not possible, otherwise Germany and other leading eurozone national would probably have long ago given-in to the mounting economic and political pressures.

The limits to the EU and the euro

The day when the Greek citizen or any other EU citizen votes to increase its wages, pensions, social expenditure, etc. yet simply expects the taxpayers of other EU countries, be it the Germans or any other nationality, to foot the resulting bill on an ongoing basis is the day that the EU and euro will be dead and buried as far as I am concerned. This massive game of chicken potentially affecting the lives of the Greeks, the eurozone countries and other including Britons (though they may feel immune to it because of their own currency)  may go on for a while, but it will not last long. There will probably only be losers in this game started by Greece’s Fine Young Radicals. They will lose if things go wrong by accident or design, but nowhere as badly as the Greek people themselves who, in their desperation, have voted them in.

Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU


Syriza’s Electoral Success in Greece: the future of austerity in Europe

Syriza has just pulled off the most amazing of political coups. There is little doubt that the Greek voters were simply sick and tired of the parlous state of their economy, combined with years of austerity which have undoubtedly caused economic and social havoc. Things simply could not go on as before; something had to give. Politics gave, resulting in a stunning electoral success for Syriza and its young leader, Alexis Tsipras, already dubbed Sexy Alexi. The reality though, is that there is little of an appealing nature about the aftermath of the Greek election. There is nothing ahead but more turbulence and socio-economic strife in the short-term for Greece and the other countries undergoing austerity in the eurozone and beyond.

Demonizing Germany

Greek society has been traumatized by what has been happening since 2008/9. However, there seems to have been a strange collective loss of memory about the role of the Greeks in this tragedy. Instead there has been a deliberate and consistent demonization of the eurozone, the Troika and, most prominently, Germany itself, which has characterised this stunning electoral victory. On the eve of the election, Mr Alexis Tsipras said at his final campaign meeting: “On Monday we shall be done with national humiliation. We will have finished with orders from abroad,” 23rd January 2015. This theme was consistent during the lead up to the election and has continued since.

Let us consider the Greek role in that national humiliation and the role of those issuing orders from abroad, an euphemism for the EU, the Troika, the Eurozone generally and Germany in particular:

  • Greece’s problems did not start with joining the EU or the Euro.
  • They are the product of generation upon generation of decisions made by Greek leaders.
  • These same Greek leaders, at least since 1975, have been democratically elected.
  • Joining the EU in 1981 gave a massive social and economic boost to Greece.
  • Through its own macroeconomic decisions, it has built-up unsustainable levels of debt.
  • Through its lack of wage restraint, combined with lack of reform, Greek decisions led to a systematic loss of competitiveness during the long economic boom until 2008.
  • Extensive tax avoidance and evasion combined with corruption remains a problem.
  • During the last general election, the Greek people voted to remain in the EU and Euro.
  • The Greek government chose not to exit the Euro and thus sought support from the EU.
  • Even though EU treaties forbid eurozone states from assuming the debts of other states (bailouts), emergency rescue funds were formed to support debt crisis states to meet their financial obligations and buy time for reforms to regain competitiveness.
  • The Eurozone has provided various rescue funds which have avoided default and massive social and economic disruption. A long and painful “internal devaluation” is occurring.
  • The price of these rescues is a programme of reform and cuts, agreed with and signed off by the Greek government as the pre-condition for the various rescues.
  • The price, in terms of human suffering and the effects on the economy have been huge. Internal deviation has finally delivered growth but at the price of a reduction of 25% of GDP, 25% unemployment, 50% youth unemployment and 23% poverty rate.
  • This is now interpreted as humiliation, bullying and dictatorship, with Germany singled out.

It is a delusion almost gleefully perpetuated by certain parts of the media, to imagine that the EU, and Germany are responsible for all the above. This is the end-product of Greek voters’ decisions and their chosen democratically elected Governments, even if the average person now feels completely divorced from the traditional parties. People can bang on as much as they like about the EU, eurozone, Euro, Troika and Germany being responsible for the lot of the Greeks, but it rings hollow for anyone that cares to reflect on the reality. They may put-up their anti-EU and anti-Germany slogans, posters and graffiti to express their rage and helplessness, but the facts are different. None of this is to imply or deny that the Greek people have suffered tremendously or indeed to blame them for wanting a change from a downward vortex that they find themselves trapped in.

This is indeed a national humiliation, but one made in Greece. It is a travesty to leave unchallenged the assertion that Greece is simply taking orders from “abroad”. Greeks voted to remain in the EU and the euro at the previous General Election and this is what their previous democratically elected government delivered. The EU and Eurozone have made extensive efforts to meet the wishes of the Greek electorate, while also keeping the economy afloat and the country in the euro. No one suggested that there would not be a price pay in terms of painful reforms required from internal devaluation, as opposed to default which would have been at least as painful.

There was an outpouring of joy about the Greek election results and the expression of solidarity in many European countries. The hope is that this election result will spell the end of “Germanic” austerity in Europe. So let us examine what exactly the Greeks have just voted for.

Unsustainable to the Nth Degree

For those that are not aware of it, Syriza stands for the Radical Left Coalition. The Greeks have voted (36%) for a party which has a series of policies which stretch credulity beyond breaking point:

  • Stay in the EU and the Euro.
  • Negotiate the level of the debt burden (175% of the GDP or €318 billion) immediately
  • Reboot the economy (New European Deal and Investment Bank) and create 300,000 jobs
  • Bring about an immediate end to austerity:
    • Tax reductions (abolish taxes & social contributions for 7 years & income tax of 30%)
    • Raise the minimum wage from €586 to €751
    • Re-introduce 13th month for the lowest retirement pensions
    • Distribute electricity or housing coupons and free access to public transport for the poorest 300,000 households
    • Introduce free healthcare for all.
  • Stop privatisation on its tracks.
  • Various other pledges, depending on the source considered.

Individually all the above items are logical, especially in a country which is in economic and social turmoil. Collectively they certainly are not. The only radical thing about this programme is that Syriza wants to have its cake and eat it, and has managed to persuade the exhausted Greek voter to buy a ticket for a bumpy ride. How is all this possible to achieve given the parlous state of the Greek economy?

If Greece wants to finish with “orders from abroad”, it could have done so at the last general election and it can certainly do so now by leaving the euro and/or the EU, but it cannot have it both ways. It cannot insist on staying in the EU and euro but require everyone else to prop-up the country and its standards of living for the foreseeable future. This is not a eurozone or an EU that almost anyone else would wish to be part of. The transfers from other countries implied are, rightly, forbidden by EU treaties.

That’s not all, folks

As if this was not challenging enough, Syriza has just made the situation a lot worse than it needed to be. Three seats short of an outright majority, it had to select its coalition party. Instead of going for the more moderate To Potami party (The River, 6% of the vote), Syriza selected the Independent Greeks Party (4.6% votes) as its coalition partner. So let us examine the Independent Greeks Party’s key election pledges:

  • Revoke the loan agreements between Greece, EU and International Monetary Fund (Troika) and prosecute those who negotiated them.
  • Repudiate part of Greece’s debt because it was created by speculators in a conspiracy to bring Greece to the edge of bankruptcy.
  • Require German war reparations for the invasion and occupation of Greece during WWII.
  • Oppose multiculturalism, reduce immigration and develop a Christian Orthodox-oriented education system.

Its leader Mr Panos Kammenos makes much play of the fact that ‘The Troika’ has turned Greece into a “laboratory animal” in an austerity experiment using “… public debt as a means of control.” Mr Kammenos concentrates his ire on Germany: “Germany is not treating Greece as a partner but as its master. … It tries to turn a Europe of independent states into a Europe dominated by Germany.”

He does not seem to focus much on the role his own countrymen have played in creating this Greek Tragedy for generations, even before joining the EU, before joining the euro 10 years ago and then going into a massive debt-fuelled public and private spending spree. No, apparently it is all the responsibility of the German banks that pushed piles of cash into the unwilling hands of Greek public and private borrowers. Apparently it is all the responsibility of the Troika for responding to the express wishes of the Greek electorate to remain in the euro at all costs. And it is all the fault of the hard-hearted Germans, hell-bent on European domination once again. The reality is different. All serious commentators agree that Germany is a “reluctant European hegemon.” Mrs Merkel leads because there is no one else to lead, with France imploding and Britain vacating the EU stage.

In selecting the Independent Greeks Party as its coalition partner over To Potami, Syriza has made a major miscalculation that will complicate the tough negotiations with the EU to come and the massive reforms which will continue to be needed for the foreseeable future, even if all of the Syriza pledges were to be achieved, which they most certainly will not.

Endgame: pressing the reset button

The endgame will not be long in the making both for Greece and for the whole of austerity Europe. The Spaniards, Portuguese and others including Italy and France look on curiously. Britain stands aloof, perhaps feeling protected by its own currency, yet still gripped by its own variant of austerity which is no less cruel. There is no doubt that what happens in Greece will have repercussions throughout Europe and not just in the eurozone.

A decision is imminent since the next round of discussions on the EU support to Greece is due. The newly minted Greek government is maintaining its tough talk but it is a high stakes poker game for both sides. Quite simply, the game is up for Greece if it fails to agree the next EU rescue. It will have to default and go through all that which it tried so hard to avoid since the last general election. The difference is that the suffering experienced so far with be a cakewalk compared with what would follow. On the other hand, if the EU does not compromise on austerity, the whole eurozone edifice could crumble. The chances are that a compromise will be found and the eurozone will simply muddle through, but there would need to be a very significant change to the current Syriza / Independent Greeks Party electoral programme to achieve a workable compromise.

But default is not out of the question. Many economists and commentators in Britain, Germany and USA are increasingly portraying default and dropping out of the euro as the lesser of two evils for Greece. The argument is that it would be best for Greece to pull out. What would follow is bound to be a short, sharp shock or so says economic theory (which did not prove all that sound in predicting the current financial and economic crash). The argument continues that countries such as Argentina have done it and the experience shows that default and a new currency is normally followed by rapid economic recovery. Their conclusion is that this scenario would be infinitely better than death by a thousand cuts via the current internal devaluation in the eurozone.

Maybe, maybe not.

I ask these economists and commentators: have you and you families experienced anything remotely like what the average Greek family already has in the last six years? Who are you to suggest to the Greeks that a round of short, sharp “shock therapy” arising from sovereign default is bearable for a country that has already suffered so much? What makes you so confident that Greece will arise Phoenix-like from the ashes, ready for rapid growth and regenerated from such a catharsis? How can you be so sure that contagion will not take hold in other eurozone countries?

Eastern Europe went through variants of shock therapy in the 1990s and the Russians, Poles and all the others will confirm that very little was predicted by economic theory, that recovery took much longer than anticipated and that they have absolutely no desire to ever experience such wanton destruction again. I would not wish this upon Greece or any other nation. I would much rather another round of muddling through in the classical European way instead of the destructive, unpredictable catharsis that is being floated. But I also know that many would disagree and not just in Greece.

So step-up to the plate Syriza / Independent Greeks Party: a lot rests on you so let us see what you can do.

Ricardo Pinto, AngloDeutsch™ Blog, www.AngloDeutsch.EU


The Anti-EU and Anti-Immigration Fixation: expedient politics?

This post, the first of a series of the AngloDeutsch™ Blog, focuses on the rise of anti-immigration and anti-EU and/or Euro discourse in Britain and Germany, with a focus on the role being played by both the mainstream and the populist parties such as UK Independence Party (Ukip) in Britain and Alternative für Deutschland (AfD) in Germany. It argues that there is a need for a more measured approach, especially in Britain, rather than simplistic analysis which my be politically convenient but serves only to fan the flames of populist fires.

Growing Anti-immigration and Anti-Euro Sentiment in Germany

The increasingly heated immigration debate reached Germany about the same time as it started in the United Kingdom (UK). Mr Thilo Sarrazin published a book called “Germany is doing away with itself” in 2010, which incidentally became the most popular book on politics by a German-language author in a decade. Its central argument was that Germany’s post-war immigration policy has failed, thus catalysing an intense and raucous nation-wide debate about the costs and benefits of multiculturalism. Mr Sarrazin advocated a more restrictive immigration policy (except for the highly skilled) and reduction of state welfare benefits, while making strong statements about Islam and the Turkish and Arab communities. Mr Sarrazin did not shy away from predicting the Germans will eventually be outnumbered by an underclass of Muslims (see below for echoes of Enoch Powell’s views). The popularity of the book (over 1.5 million copies sold) and various surveys illustrated that his arguments struck a chord in the country, especially with male, middle-class, middle-aged and elderly, conservatives.

The book broke an unwritten rule in Germany by discussing migration, ethnicity and Islam so openly and some might say provocatively. Germans have typically trodden lightly on such topics for obvious historical reasons. The debate even affected the leading conservative sister parties, namely the Christian Democratic Union of Germany (CDU) and the Christian Social Union of Bavaria (CSU). The Chancellor Angela Merkel, well-known for being Europe’s most accomplished politician at saying nothing that might upset anyone, even felt sufficiently emboldened to make one of her few unequivocal statements. In 2010 she stated that multiculturalism had “utterly failed” in the country. Despite concerns that it might happen, the furore of 2010 did not result in an anticipated new party to capitalise on the issue. Mr Sarazzin moved on other challenges, publishing another controversial book called “Europe doesn’t need the euro” in 2012, which once again went against the grain of national of public discourse.

Perhaps in recognition of its political value in Britain and elsewhere in Europe, the salience of the immigration debate has been increasing very fast in Germany. The CSU has been focusing on “poverty immigrants” and “benefit tourists” since 2013, causing German politicians to discuss new instruments designed to keep mainly Roma immigrants from Romania and Bulgaria out as far as possible. Last week, the CSU published a policy paper insisting that German should be spoken both in public and at home.The paper made a distinction between EU and non-EU immigrants; the requirement would apply only to the latter, not the former. There was widespread condemnation in the media that it is not for the state to determine which language people, immigrants or otherwise, choose to speak in their own homes.

In Germany, the Alternative for Germany (AfD) initially had a very narrower focus, namely leaving the Euro (not the EU, which currently no partly currently advocates). It is not by coincidence that it started gaining much greater traction with voters when it began to broaden its policies. Like Ukip, it has brought its guns to bear on the EU (the principle of subsidiarity, rather than exiting the EU) and immigration issues (asylum, immigration law on the Canadian model, etc.). Although this may change, for the moment, neither politicians nor the media discuss the issues in quite the same strident manner as in Britain.

Immigration and EU Scepticism in British Politics

By contrast, in the UK the meteoric rise of the UK Independence Party (UKIP), founded in 1993 and led by their jovial, pint-guzzling, fag-smoking Mr Nigel Farage, who like Mr Sarrazin does not mince his words in relation to immigration or the EU, has been remarkable. Under his leadership, UKIP’s star has been on an apparently inexorable rise, which unlike the German situation so far, is having dramatic consequences on Britain and potentially the EU. Whereas in April 2006 the Prime Minister David Cameron felt able to described UKIP members as being “fruitcakes, loonies and closet racists, mostly.” By 2013, its popularity and organisational capacity has increased so much that in the county council elections across England, Ukip poled an average of 23% in the wards where it stood and returned 147 elected councillors. Its biggest success was getting its first two Members of Parliament elected in Clacton and Rochester and Strood in late 2014.

Ukip has rapidly risen to prominence at the expense of a hemorrhaging of voters away principally from the Conservatives, but also from Labour and the Liberal Democrats. Its principal policy is simple but appealing, namely to withdraw from the EU and agree a free trade agreement instead. However, like the AfD it is no longer a single issue party. Ukip extols loudly and repeatedly the virtues of limited, controlled immigration and its intention to “take back control of the UK borders”. Work permits will be permitted to fill skills gaps in the UK jobs market so long as immigrants have a job to go to, speak English and have accommodation and health insurance. Immigrants will only be eligible for benefits (in work or out of work) when they have been paying tax and National Insurance for five years and will only be eligible for permanent residence after ten years.

The intention is clearly to slow down migration to “manageable” levels. Recent figures had shown a steep decline in net migration until 2014 (the subject of a forthcoming post), when they peaked once again, probably connected with a surge is Bulgarian and Romanian immigration now that the transition period is over. Ukip has coupled the anti-EU and anti-immigrant debate to remarkable effect. This double-pronged weapon is paying rich political dividends for them. However, as with many populist initiatives, while they may be superficially appealing, they would amount to a double-whammy with major long-term consequences if enacted by Britain. The fact is that there is a lot of political smoke and mirrors in the debate. The problems in Britain are long-standing and while they may well have been accentuated by immigration and the freedom of movement (though the jury is out on these), to conclude that the solution is to leave the EU in order to regain control of the borders is simply not credible.

The Ukip tail wagging the bulldog

In the UK, the “kippers” are having a dramatic effect, resulting in an increasing clamour in relation to the issue of immigration. Ukip has effectively manoeuvred the Conservative Party (along with its well-known and long-established Eurosceptic wing) into offering, should they still be in power in 2017, a straight in-out referendum as to whether to remain within the EU or not.  Furthermore, it has managed to push the Government, Liberal Democrats included, into a mooted renegotiation of the UK’s membership terms with the EU, including significant reform so as to repatriate powers to the nation-state. Most EU countries share a concern about the abuse of the subsidiarity principle and are inclined to be supportive, not least Germany. But the increasingly shrill nature of the UK position is making such reform harder to secure. Recent demands to abolish the principle of freedom of movement of workers were dismissed out of hand by the President of the European Commission, Mr Jean-Claude Juncker, as well as the key German politicians such as Mr Wolfgang Schäuble (unthinkable) and Mrs Angela Merkel (no tempering with the principle). The spat over the refusal to pay “anywhere near the amount requested by Brussels by December” appears to be little more than political bluster and posturing.

Also, the casual observer would be tempted to conclude that the immigration debate is increasingly histrionic in Britain. Seemingly every other day, the heat is turned up and the rhetoric becomes ever more intemperate. Mainstream politicians on all sides of the political spectrum, with the notable exception of the LibDems, have taken up the UKIP mantra of anti-EU sentiment combined with anti-immigrant rhetoric. This has become a normal part of the public discourse in the Houses of Parliament, on TV, radio and newspapers. It is hardly surprising that the public feels emboldened to express its views in an increasingly no-holds barred manner, verging on racism and xenophobia. Such discourse might well happen behind closed doors in other European countries but it not (yet) so open.

It is also not by chance that the escalation in immigration and anti-EU rhetoric in Britain has coincided with the recent bye-elections which the Conservative party has lost to Ukip in Clacton and Rochester and Strood. As the Ukip ratings went up, Ministers started banging on about the necessity to get rid of the EU’s freedom of movement principle, the PM refused to pay the additional EU tax which his government has agreed, etc. This smacks of short-term electioneering. However, a red line was crossed when the Defence Minister, Mr Michael Fallon claimed that certain towns are being “swamped” by immigrants and their residents are “under siege”. The Prime Minister’s Office reworded “swamped” with “under pressure” but the boat had already left the harbour. The escalation of emotive language being used by Government ministers is a clear trend that the rest of society takes its cue from.

This is nothing new in Britain. In 1978, Mrs Margaret Thatcher stated that large numbers of migrant workers and foreigners (from the new Commonwealth and Pakistan) meant that people were afraid that the country might be rather swamped by people of a different culture. This even before referring to Enoch Powell’s so-called “Rivers of Blood” speech in 1968 which is credited, at least in part, with playing a contributory role in the unexpected 1970 Conservative general election win.

While such political (and media) rhetoric is hardly new in British politics, it does mark a major new departure in the UK where the Government itself (and to some extent the Labour Party) seems to have lost a sense of moderation in relation to the political discourse on immigration and the EU. I expect this trend to intensify in the months until the General Election in May 2015.

If Ukip (and similar parties of its ilk) is indeed the driving force that is dominating the political discourse on the EU and immigration, this is bad news indeed for immigrants, for the EU and for Britain itself. By comparison the German President,Mr Joachim Gauk, frequently stressed the importance of solidarity vis-à-vis asylum seekers, stressing the virtues of immigration and integration. The German Government is paving the way for tightened asylum seeker law but also a more flexible Dual Citizenship law and strongly defending the principle of freedom of movement of people within the EU as being non-negotiable. At a recent immigration and integration event in November 2014 organised at the Headquarters of the CDU, something that would not be imaginable by the leading political parties in Britain, the Chancellor Mrs Angela Merkel stressed that “Germany has the chance to become a great integration country” and that “Islam now belongs to us.” The contrast in the political rhetoric could not be greater for countries that have more or less identical foreign-born as a percentage of the total population (12.3% and 12.4% in Britain and Germany respectively).

Austerity accentuates long standing problems

The omens are not good for the future of immigration and the EU; both are increasingly conflated and damned, especially in Britain. Ukip appears to have cornered the market of British political discourse and the Conservatives (and to a lesser extent Labour) are increasingly dancing to their tune, so as to avoid losing touch with an important segment of voters who are clearly experiencing a strong allure to these simplistic yet appealing overtures. Politicians of all hues and shades are increasingly latching on to this sentiment. The trend is reinforced by the apparent readiness of a notable portion of the media to sing along to these tunes in Britain, especially in relation to the anti-EU discourse. Without doubt increasing stresses and strains are evident in housing, education, health, transportation, etc. but these are long-term and systemic in nature. They have been greatly accentuated by the recent years of austerity, a process which is set to continue in Britain directly through government policies and indirectly in Germany through long-term wage restraint. They are not the consequence of a surge in net migration over several years cause by the EU and its freedom of movement principle. The discourse stressing these two elements at the exclusion of everything else cannot be left unchallenged.

In the next few posts I shall explore various migration themes and issues, from the perspective of Britain, Germany and the EU. I hope to contribute to a debate about this increasingly important topic before moving on to other issues such as the housing crisis and the future of the EU.

Ricardo Pinto, AngloDeutsch™ Blog, www.anglodeutsch.eu


Launch of the AngloDeutsch™ Blog

New AngloDeutsch™ Blog Launched

Today, the AngloDeutsch™ Blog was launched. The main reason is that Britain and Germany are countries that are absolutely critical to the future of Europe and the European Union. Yet, there is currently a gap in terms of comparing and contrasting the two countries in terms of various dimensions, such as economics, housing, health, etc. within the overarching context of the EU.

It was not always so. In the same year that Britain joined the European Economic Community in 1973, the Anglo German Foundation (AGF) was established in recognition of the fact that the Germany and Britain could learn a good deal from each other, not least to improve mutual knowledge between the two countries and deepen understanding of modern society and its problems. The AGF undertook policy-oriented comparative research on the Britain, Germany and what is now the European Union (EU). It was valuable to compare and contrast countries that were not only the two largest in the EU, which also exhibit rather different social, political and economic traditions. They are two of the largest EU trading and exporting nations, the people respect each other and, despite the differences, or perhaps because of them, they can learn from each other’s ways of doing things.

In 2009 the Trustees decided to abolish the AGF, the main argument being: “… other organisations at both national and European levels are now carrying this work forward, and the need for a specific institution for this purpose is no longer so compelling.” (Anglo-German Foundation for the Study of Industrial Society,p.3).

British and German Comparisons Growing in Importance

I disagree with this conclusion. Some 40 years on, the reality is that the need for comparative analysis and discussion in relation to Britain, Germany and EU is greater than ever before and it is far from obvious which other institutions are carrying this work forward. I believe that the last Trustees of the AGF would probably be astounded at how dramatically things have evolved since their decision to end the institution.

A number of momentous developments are affecting the socio-economic dynamic in Europe:

  • The recession that started in 2009 has morphed into full-blown global financial and economic crises. The sovereign debt and the commercial banking crisis drag on and the prospect of deflation still looms large in Europe and elsewhere.
  • The Euro and the significant political and financial reform efforts connected with ensuring that it is kept alive has resulted in enormous fissures arising between Britain, Germany and the EU countries. These tensions are, if anything, increasing over time.
  • The political strains of keeping the Euro (and thus the EU) together, not least through various forms of austerity, have taken a massive toll on the credibility of the EU as well as the level of cooperation and trust between nation states, not least the German-British-French axis. This applies doubly so to the so-called „PIIGS“ (Portugal, Italy, Ireland, Greece and Spain) and the north Europeans, especially Germany, Holland, Austria, Finland, etc.
  • The UK and DE play a critical role in the future of the EU. Germany has become the undisputed albeit reluctant European hegemon, though the jury is still out as to how long this status will last. The decisions and even ruminations of Europe’s preeminent politician, Angela Merkel, reverberate throughout the EU. The same cannot be said of David Cameron (and still less François Hollande) to the same extent. Still, the UK’s role in EU, influential though diminished, remains critical to the future of the EU (independent Sterling, monetary and fiscal policy, insistence on EU reform and devolving powers to the nation state, challenge to the freedom of movement principle, possible in/out referendum on whether to remain in the EU in 2017, etc.).

These stresses and strains are part and parcel of what has become a full-blown crisis of the legitimacy of the “European Project”, as understood since it was formed in 1951 by the Treaty of Rome. A process whose ambition was to “make war not only unthinkable but materially impossible”  (The Shuman Declaration, 9 May 1950) was not and could never have anything short of an economic, social and political project, even if the discourse was principally economic.

This ambition was not merely a Franco-German idea. Immediately after WWII Sir Winston Churchill was one of the first to call for a “United States of Europe” (“We must build a kind of United States of Europe. In this way only will hundreds of millions of toilers be able to regain the simple joys and hopes which make life worth living. ” 1946, p.1). The ambitions of the European Project have always been understood in its wider sense by its founder members, not least Germany, because of its particular historical specificities.  However, this ambition was and remains almost entirely an economic or trade issue in pragmatic Britain.

Longstanding concerns about the legitimacy of the EU, the steady erosion of the powers of the nation state (contrary to the principle of „subsidiarity“), the implications of principle of freedom of movement and indeed of the limits to the notion of „ever closer union“ in the EU have been forced to the foreground by the Euro crisis. These issues must be debated and tackled to maintain legitimacy with the people as well as the governments of all 28 EU nation states.

Britain and Germany at the leading edge of the EU

In this context, the British and German electorates have a critical role to play in the future of their respective countries, as well as that of the “European project”. They are at the nexus of the most important debates connected with the great issues confronting Europe, not least:

  • The future of the Euro and the EU (e.g. EU reform and in/out referendum in 2017).
  • The advent of anti-EU / Euro parties (e.g. the Ukip and AfD).
  • The solutions to the recession / depression, austerity and falling standards of living.
  • The debates on the future of housing, education, poverty, migration, health, ageing, etc.
  • But also the more fun things in life, such as sport and traditions such as Christmas.

Through the AngloDeutsch™ Blog, launched today, focuses mainly but not exclusively on Britain, Germany and the EU, it is hoped that a contribution can be made not only to better understanding in general but also to possible economic and social policy solutions and recommendations. This would be in keeping with the tradition of the now defunct AGF, even if the focus of a blog cannot be on rigorous academic research per se.

Focusing on the British and German perspectives has gained in salience. The target group of this blog is not the academic community, interest groups or indeed the politicians, though it is hoped that they too will get involved and/or be influenced by the AngloDeutsch™ Blog. The target group is anyone who has enough humility to be willing to learn about alternative ways of doing things, discuss different views and maybe implement some of the ideas, taking into consideration the uniqueness and specificity of every nation, region and locality. This aim is illustrated in the Box below.

The AngloDeutsch™ Blog aims to contribute to the policy process in Britain, Germany and the EU more generally by raising comparative economic, social and political issues and by stimulating an exchange of knowledge, views and experience between informed citizens in the two countries, as well as the EU.

 

To kick off the blog, the first few themes covered by the AngloDeutsch™ Blog will include the following:

  • The immigration debate.
  • Christmas traditions (since the blog is launched in December).
  • The housing crisis.
  • The future of the EU.

Other themes will follow as the blog evolves.

Ricardo Pinto, AngloDeutsch™ Blog, www.anglodeutsch.eu