The Greek Crisis matters to Scotland, Britain and Europe – as well as Greece
Sunday Mail, June 21st 2015
Europe is not a happy place.
The European Union has failed to agree a common stance on the human disaster of Mediterranean immigrants, while Vladimir Putin has used military aggression to alter the boundaries of Russia and Ukraine and annex Crimea, as Europe has stood by.
Closer to home, Britain is preparing for a referendum on whether or not to continue its EU membership – the first full member state to ever do so. And then most seriously, there is the continuing Greek crisis.
The EU has been through financial crises in recent times – from Portugal and Spain to Ireland – but the Greek one is the most serious yet. Current betting odds on whether Greece will leave the euro, the ‘Grexit’, have narrowed dramatically.
Deadlines come and go but the next crucial one is June 30th when Greece is due to repay €1.6bn to the IMF. This may be fudged or a short-term compromise agreed, but a huge bust-up is possible now or in the near-future. And as tensions simmer the European dream is slowly fading.
All of this is happening as British and Scottish economic assumptions continue on a predictable set of tramlines, as if nothing important is going on in the world. The Conservative election victory has given them a further air of economic credibility. Labour post-crash and post-election worry if they will ever be seen again as economically trustworthy. Yet, all of this is based on the current economic paradigm seamlessly continuing into the future.
The current crisis has political, legal and economic as well as psychological dimensions. There is the shifting sands of Europe as it becomes a more overt power structure and less a collaboration – one based on German economic and political power.
This creates ripples for Britain – with memories of the Maastricht Treaty and Tory fissures of ‘banging on about Europe’. But even more, a Europe where Greece is threatened and pushed closer to the exit door isn’t a Europe of co-operation. It brings back painful Greek memories of World War Two and Nazi occupation, of the Greek civil war of 1944-45 when the British put down a Communist uprising, and the military junta of 1967-74. Greece, despite being the home of democracy, knows its own version is a fragile thing.
This will have an impact on the UK in/out referendum which Cameron and the UK political classes blithely assume they have in the bag. A much more likely outcome is a 60:40, or closer, vote to stay in which decides very little and in which the forces of EU withdrawal and UKIP feel vindicated and emboldened. And that’s without considering a Grexit, in which case all bets would be off.
There are consequences for Scotland and in particular, for the independence question. Most of Scotland, whether for, against or agnostic, seems to assume that a second indyref is near to inevitable, and that if it comes, it will be won by the forces of independence.
However, such notions presume economic stability and calm. And a Grexit or continued crisis offers none of this. It could even pose a game changer in the Scottish debate, such might be the economic turmoil which might ensue for years.
A Grexit despite the relative small size of the Greek economy would create a financial tsunami across Europe. It would have dramatic implications for the euro and euro zone, the UK’s biggest trading partner. Some economic forecasters have estimated that it could significantly hit UK GDP, with Capital Economics warning it could wipe 10% off of UK shares. David McWilliams warned that ‘Greece is only 2% of European GDP, but remember a plug hole is only 2% of a bath.’
This is a crisis which goes straight to the heart of what Europe is meant to be, democracy, and the role of economics and politics. The European vision has turned out for all its benign intent to be fundamentally anti-democratic.
The euro zone and membership gave Greece an unsustainable boom and has now produced an unprecedented economic and social collapse. The European Central Bank has destroyed most of its credibility and may pull the plug on Greek membership of a currency union it is meant to support. Above all, this is a failure of the principles and practices of European solidarity.
This is the beginning of the end of the world of the last few decades: of the economic assumptions of Europe and the West that were given validation by the end of the Soviet Union and the establishment of the European Single Market.
The hyperbole of crony corporate capitalism, whether of a European or Anglo-American variety, has proven dogmatic and inhumane, and not that concerned with democratic, economic and social costs.
The prevailing economic orthodoxies have failed us in the last 30 years, been shaken in the crash of 2008, yet still stand before us – demanding more sacrifice. The Greek tragedy and crisis will turn out, whatever the outcome, to be a pivotal moment for Europe, and for the rest of us. And that includes the ingrained assumptions which define much of Scottish and UK public life.