Eurozone

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It’s happening. Right now, across the ocean, citizens of the United Kingdom are running to the polls to answer the big question:  Should the UK remain a member of the European Union or leave it (or, as they say, Brexit)?

“It’s a once in a life-time opportunity to get back the independency and self-governance of this nation,” believes Nigel Farage, leader of the pro-Brexit United Kingdom Independence Party (UKIP).

“Leaving would be the gamble of the century,” warns Prime Minister David Cameron “and it would be our children’s future on the table if we were to roll the dice.”

Saying that the issue is polarizing would be quite an understatement. So would be saying that the race is tight. By tonight, just about half of the UK will be exhaling in relief as the rest sinks into deeper anguish and anxiety. Which is will be which and why does it matter so much?

If you have waited until the very last moment to learn about the stakes of what’s happening today, here is what you should know.

What is the Brexit and Why is it Happening Now?

You probably heard that part and if so, you can skip right on to the next point. If not: Hi, welcome to the world! I promise it’s much better than the rock you’ve been living under.

Brexit is the very catchy abbreviation for the British exiting the European Union (EU).

The European Union is an economic union between 28 countries. Its first iteration was formed in the 50s in the wake of the Second World War. The big idea was that giving common institutions and economic interests to European countries would prevent them from tearing each other apart again.

The UK has been a member of the EU since 1973 and has had increasingly mixed feelings about it for just as long.

The last few years have been especially troublesome for the European Union. The addition of a number of smaller countries with struggling economies to the ranks, the plummeting of the Euro and the refugee crisis all nourished growing frustration across the continent and particularly in Britain.

While conservative Prime Minister David Cameron wants the United Kingdom to remain in the Union, both the opposition and his own party kept pressing him to address the issue. In 2015, Cameron promised that he would put it to a vote in a referendum if he won the general election.

Who Wants to Leave, Who Wants to Stay

The United Kingdom’s population is split 50/50 on the issue, but polls show a pretty clear demographic divide between pro-EU and pro-Brexit supporters.

The first group is young and college-educated and they live either in London, Scotland or Ireland. They mostly support the Green Party or the Labour Party.

The people in the second camp are typically over 60 years old, with the equivalent of a high-school diploma and a career in manual labour. They overwhelmingly support UKIP or the Conservative Party.

The most vocal advocate for leaving the Union is UKIP. Much like the Front National in France and Donald Trump in the US, UKIP is keen on blaming all of the population’s problems on immigrants. To them, the EU’s open-circulation policies are a threat to the stability of the British economy and its national security.

This viewpoint is also popular amongst the conservatives, whereas the Green party and Labour are convinced that the UK is better off within the Union. So is Conservative Prime Minister David Cameron.

david cameron
British Prime Minister David Cameron (Zuma Press)

The vast majority of the International community is also hoping that the UK decides to stay.

The Case for Leaving

A really significant argument for the Brexit is the questionable democracy of the EU.

Many feel that too many decisions depend on unelected officials in Brussels. As Conservative Boris Johnson, then mayor of London, put it: “the more the EU does, the less room there is for national decision-making.”

Local representatives are often up against cumbersome economic regulations for their smallest initiatives, as well as hand-tied by EU policies for bigger decisions.

While the right wing campaign for Brexit tends to present the EU as a meddlesome left-oriented power, some people at the other end of the political spectrum view it first and foremost as a protector of corporate interests and power imbalance.

British journalist Paul Mason bluntly accused the EU of providing “the most hospitable ecosystem in the developed world for rentier monopoly corporations, tax-dodging elites and organized crime.”

Those arguments, as sensible as they may be, didn’t get much attention. The Brexit movement preferred attacking the EU’s bureaucracy and, especially, its handling of immigration.

Boris Johnson (Reuters)
Boris Johnson (Reuters)

The financial contribution the UK makes to the EU was also often mentioned as a source of resentment. It is notably Boris Johnson’s favourite talking point. It is even written “We send the EU £350 million a week” on the side of his campaign bus.

The number is disputed by many, though. According to Fullfact, an independent fact-checking charity, the net contribution the EU received from the UK in 2015 amounts to £8,4 billion (around £161 million per week).

The Counter-Argument

However, it is not certain that leaving the EU would allow the United Kingdom to regain control over its immigration policies and economic regulations. Not if London wants to negotiate access to the EU market.

There are countries outside the Union which were granted privileged access to it, but only because they agreed to respect the EU regulations. Norway, for example, is applying 75% of them. The same would probably be asked of the UK.

The European Union might not be particularly agreeable in the negotiations with a parting country, analysts have noted. It would be foolish to expect many concessions.

Being part of Europe’s single market exposes local businesses to a sometimes brutal competition. But the UK has done pretty well for itself. As it is not part of the Euro zone, it escaped the 2008 financial crisis with remarkably few damages. The unemployment rate and public debt are still low comparatively to other countries within the Union.

A lot of corporations choose to establish their headquarters in London because it allows them to conduct their business everywhere in Europe. But this only works as long as Britain is part of the EU. Banks and businesses will probably flee if they no longer have access to the trading advantages of the Union.

Furthermore, it is estimated that around three million jobs around the country are linked to the EU and could quite simply disappear in the event of a Brexit.

There are many more predicted upsides and downsides for the economy, but one thing seems to be certain: the initial shock will be brutal. The most catastrophic estimates warn that the Country’s economy could shrink 7% in the next year, but even the most optimistic ones remain worrying.

Another source of concern is the clear geographical cleavage of the public opinion. Northern Ireland and Scotland are overwhelmingly against leaving the Union. Their already complicated relations with London might not endure the additional tension.

It was only two years ago, after all, that 44% of Scots voted in favour of independence from the UK. If the United Kingdom elects to leave de EU, it might not stay united for very long.

Why Does the Rest of the World Care So Much?

Whatever the potential long-term benefits, economists agree that a British exit from the EU will hugely disrupt the global economy. Finance magnate and influential progressive intellectual George Soros even predicted that the sterling will take a “black Friday” plunge if the referendum’s results favour the Brexit.

Britain is the world’s fifth largest economy. It would be the first country to effectively leave the EU, but it’s certainly not the only one thinking about it.

Eurosceptic movements are gaining momentum across the continent. Lead by left-wing politicians tired of submitting to the austerity conditions imposed for bailout in poorer economies, and by extreme right parties tired of bailing out everyone else in richer countries.

The fear of a domino effect is very real. Close economic allies of the UK, like Finland, Netherlands and Denmark, would have significantly less incentive to remain in the Union. Others are also inspired by the idea of setting their own immigration quotas.

Back in February, the Czech PM warned that if the UK decides to part ways, “a debate about Czech Republic’s withdrawal is to be expected in the following years.” Official opposition in Austria also promised to organize a referendum of their own if they were elected.

Polls close at 10pm tonight (Thursday) UK time, so roughly around the time this article is being published, but results should only be known around 7am Friday in Britain, or 2am Eastern.

* Featured image: Al Jazeera Creative Commons

NewsPolitics

Not more than 24 hours ago was I here writing up a summary of the pivotal talks for the future of the Eurozone that are taking place in Brussels and now everything, or almost everything, has changed.

In the last day of almost non-stop negotiations, a already humiliated Tsipras has been dragged through the mud in an unbearable and horrendous manner. The Germans, believe it or not, have towed a harder line, completely redefining the notion of intransigence altogether, refusing and shutting down Greek propositions and pushing for harsher measures and lighting bolt reforms. Tsipras and his team of advisors went through what was dubbed by observers as a session of “mental waterboarding,” a preview of what might be in the works for the Greek people within the days to come.

The German Grexit

The most amazing turn of events was that, finally, Germany’s hidden agenda for a Greek exit from the Eurozone has surfaced in one of the four draft propositions that circulated on social media and throughout the mainstream media during the talks that lasted for a record 17 hours. The German will to precipitate and encourage the Grexit outcome is telling. The German government wants to send a strong signal and it’s nothing “personal.” It has more to do with the anti-austerity movements that are brewing throughout Europe, and not just in Greece.

Surely the German position wasn’t improvised and, unlike some have said, Merkel and her administration are not being irrational. The Germans, politicians and public, aren’t suffering from some sort of PTSD acquired during the hyperinflation crisis of the 1930s or an incommensurable will to humiliate and trample Greece. (This has been accomplished ten fold over the past five years) They are very much conscious of their program and nonchalant about its application.

Make no mistakes. This will be the Versailles Treaty of the Eurozone.

2011_Greece_Uprising
100,000 people protest against the austerity measures in front of parliament building in Athens (29 May 2011). From Wikipedia.

Restructuring of the Greek State Instead of the Greek Debt

The German program, the austerity program put forward by the German delegation among others, has one essential objective: to put the Greek people under guardianship by nullifying their voting system. The Eurogroup’s end isn’t merely to humiliate Greece, but to restructure the Greek state from the top down, leaving it devoid of any input from its own citizens.

But this restructuring goes further. The Eurogroup, which seemed to be on the defensive after the victory of the #OXI (isn’t that a far away memory?), is now demanding that Greece privatize 50 billion euros in public assets. The Greek state must become an empty shell. First, the utilities markets will have to be liberalized. But 50 billion euros means much more than an austerity-lite. The propositions the Eurogroup have put on the table call for the complete dismantlement of the Greek state and the transfer of its assets into the hands of third party management – technically a bank would run the bulk of Greece if this proposition goes through.

“There is no alternative”

The program put forward by Team Austerity is more than just the economical restructuring of Greece, it’s a way to cleanse Greek of its socialistic tendencies and of the “democratic mistake” of SYRIZA.

In a Europe where Socialist parties are the shadows of their former selves, at best lending a human face for austerity measures and at worst selling out their “working-class” constituency to legitimize deeper cuts. SYRIZA had been the first major threat against the neoliberal hegemony to have surfaced on European soil within decades, since the election of François Mitterrand in the 1980s and the implementation of the Programme Commun – which also resulted in utter failure. The neoliberal discourse has, within the past years, been shaken to its core and radical left-wing oppositions have appeared as an alternative. The German position reaffirms what Thatcher had said a few decades ago: “there is no alternative.” What German intransigence means, more than anything else, is that the reform approach of social-democratic governments with the current rapport of forces and within the Eurozone is unrealistic and has proven to be an impossible mission.

No to austerity
Anti-austerity demo in Edinburgh. 14 Feb, 2015. Photo by Digi Tailwag. Flickr CC BY-ND 2.0.

The Lineage of a New Absolutist Supranational Entity

The German proposition is using Greece to shift the current dynamic within the Eurozone. Within the past two decades, European federalism has been refused most notably in the referendum of 2005, in which both the French and Dutch electorates voted against the proposed European Constitution, thereby refusing federalism. Today, the technocratic federalism, which was rejected by the electorates in the past, is making its comeback in an astonishing way, through austerity. The dynamic of “economic integration,” the implementation of a common currency and of a common free trade zone has come to trump the democratic procedures of most member states. If this deal goes through, it’s not just Greece that must be worried, but every small European member state that has a sizeable amount of debt.

Thus the lineages of a new form of absolutist state have been formed – a state that is technically independent, but in reality completely subdued to the will of unelected lenders, bankers, and technocrats. Could it be that Greece, the cradle of western democracy, is also set to be it’s gravesite? Only time will tell.

What is to be Done?

For left-wing movements, there are many more questions than answers that arise as the final outline of yet another humiliating deal for Greece is drawn. How can there be a break with the Eurozone? How must we reform the European Union and European institutions? Is reforming this corrupt system even possible?

But most importantly, as the conversations draw to a close in Brussels, there are three points to be made about the future and the survival of socialist and social-democratic movements that refute the neoliberal stranglehold and want to challenge it:

First, Oxi, a “No” against savage neoliberalism and barbaric liberalization and privatization is possible. Sections of European society, public service workers, the youth, the unemployed, the underemployed, migrant workers, the service class and the working class are ready to be mobilized. We must take the necessary lessons from the Greek referendum and implement them broadly.

Second, the reaction against the Greek Oxi vote was international. A globalized reaction can only be met with a globalized revolt. European anti-austerity movements must organize in a transnational manner and create strong and enduring alliances amongst each other. Actions must be coordinated simultaneously. In other words, international general strikes and transnational movements must foster a strong consortium of action.

Third, we must be ready to break – but that is easier said than done. What a break means and how it is to be achieved are the primordial questions. These questions do not seem to have been drawn up on the SYRIZA planning board. The drawing of this solution might make us question the entirety of our strategic and our tactical outlook. One thing is certain, this new solution must be drawn within the context of incredible financial pressure and blackmail. Grexit or not, default or not, that will remain the case.

A luta continua.

NewsPolitics

The Eurogroup emergency meeting came to an abrupt end at 12 a.m. Brussels local time, after 9 hours of excruciating debates.  The vacuum of information caused by the Eurogroup’s closed-doors meeting fostered a twilight zone of sheer terror for some – most of the Greeks –  and patchwork of divergent rumours were abundant: that the Germans would oppose any kind of deal; that, according to a few tweets, the opposition turned into a Finnish ultimatum, and that the Grexit was finally precipitating and imminent.

Within this void, various countries’ positions formed stark opposites. Compare the eternal French “joie de vivre” and the Italian “end to humiliation” with the Finnish, German and Dutch tough-on-Greece stance. All of this underlines that, whatever the outcome of the Eurogroup talks this week, the European project has capitulated and this might merely be the visible tip of a much more profound crisis. The specter of Greece haunts Europe.

A modernization of the Greek economy? The New Greek Proposition

The proposition that the new Greek finance minister Euclid Tsakalotos tabled Thursday wasn’t in itself that different from the propositions that were deemed inacceptable by his ex-colleague Varoufakis not more than a week ago and which were also massively refused by the Greek public.

The new Greek proposal consists in its main outlines of cuts to pensions, which have already dilapidated since the onset of austerity measures in Greece, a rise in the sales tax (VAT), the progressive phasing-out of the VAT exemption for Greek islands, and the privatization of the last of the Greek public assets i.e. the port of Piraeus, which has been a point of contention.  Within the this potpourri of austerity on steroids the only silver-lining – if any –was to be found in the propositions of rising the corporate tax rate and the abolition of the exemption of taxation for ship-owners; a relic of the fascist dictatorship of colonels. These latter proposals were already turned down in previous negotiations by the Eurogroup.

Euclid Tsakolotos
Euclid Tsakolotos. Photo from Sinn Feid, Flickr CC by 2.0.

The emphasis was put on the “modernization” of Greece, by putting in place  necessary measures and adjustments to move Greece forward. This being said, drastic efforts have been put in place over the past few years to ensure that end; however the European Union has been unwilling to help with the said “modernization,” especially in terms of its financial framework, its taxation system and coming to its aid in its fight to prosecute tax evasion. The amount of Greek euros held in financial safe-havens like the London, Luxembourg and Switzerland in general, is incalculable.

Tsipras and the coup of the extreme-center

It might seem extraordinary, schizophrenic even, that, in less than a week, the Greek position, which seemed to be at the pinnacle of its power, invigorated by a crushing “Oxi” vote and the resignation of one of the main political leaders of the political opposition Antonis Samaras, capitulated to the rapacious force of the creditors. But to think anything different was failing to see the prophetic signs that those who had pillaged Greece for the past five year – some might say for decades – had any will to relinquish their hold of the Greek economy.

Thursday, as the first outlines of the new Greek proposition were tabled and the new package was put for before the Greek parliament to be voted upon, even the Greek prime minister couldn’t hide the calamity that was before Greek legislators.

“Between a bad and a catastrophic choice, we are forced to choose the first […] it’s not easy but we have to,” Tsipras said. During a tense and fratricidal debate, 251 MPs, many from the ranks of the governing coalition and those of the neoliberal extreme-centre (Potami and New Democracy) voted in favour of the new proposition. Notably, Tsipras lost the foundations of his governing majority and a split within SYRIZA (of its left platform) is imminent. The anti-austerity majority rising from the still fuming victorious Oxi vote was thus transformed, within the space of a few days, into its most dreaded enemy: a reconstituted, reinvigorated, extreme centre.

å 0Z ´ ý
The Eurogroup meets

From financial waterboarding to financial strangling

But this “strategic retreat,” as some have dubbed it within the European left, was the obvious outcome of the negotiations from the moment ex-finance minister Varoufakis resigned amidst the elation of the crushing victory of the Oxi camp as the final votes were being counted in last weeks referendum. The stance that Tsipras took, that a strong Oxi vote was a tactical maneuver to strengthen the Greek negotiating position didn’t materialize. Instead, the hounds of austerity saw the referendum as a provocation.

The first move of the Eurogroup through the European Emergency Liquidity Assistance (ELA) was to maintain their stranglehold on the Greek public, through withholding funds that should have enabled Greek banks to reopen within this past week. This position was no different from the ELA’s position to cut all funding to Greek financial institutions from the day the referendum was called.

Using such tactics, which have come under none or very little criticism through the European partners, as ex-finance minister Varoufakis announced the morning of the referendum, was a move with the objective of terrorizing and subduing the Greek people into voting in favour of the dictum of the Eurogroup.

With all the frenzy of a Grexit, few have noticed that Greece has been de facto under a financial embargo, which has pushed it to the fringes of the Eurozone and was a consequence of European policy and not the hidden agenda of the Greek government.

Tsipras speaks
Tsipras speaking

A symbolic death for Europe

Two dynamics have been lethal for the Greek cause within the negotiations.

First: The Eurogroup reigns supreme. Europe, having pushed its weight around, has proven that it is the only relevant instance, that its members are the real deal brokers behind the curtains, and that’s where power lies within Europe outside of the public sphere: in a place at the antipodes of democracy.

Second: the Greek referendum had a huge symbolic importance but unfortunately not much more than that. The Oxi of 61% of Greeks within the current framework of the European Union is only binding to those that care for the notions of democracy and popular sovereignty. Those notions are alien to the Schäubles and Dijsselbloems of this world.

Many have stated the cataclysmic consequences of a Grexit for Greece, but little have measured the consequences this entire process has had on the future of the European project. While making his way through the hoards of journalists awaiting some newsworthy shred of information, Dijsselbloems stated that it was “still very difficult because of the lack of confidence that reigns between lenders and the Greek government.”

The European institutions have proven right – some would say once again – the Eurosceptics in their view that the EU has a complete disregard for the democratic will of the peoples it supposedly represents. The distrust between the peoples of Europe and the European institution has taken various forms. “Fascistoid” and xenophobic political formations have capitalized on this lack of confidence. The EU that sought to “modernize” Greece is in need of a profound “modernization” itself, which is why, today, the downfall of Greece might not necessarily mean the downfall of the EU. However, for the sake of a brighter future, it must mean its demise.

As Zoe Kostantopoulou said addressing the Greek parliament, “The No of the Greek people stands above us all.” “No”s in more languages than one will come in future and that’s the specter that haunts Europe.

News

We are now entering the terminal stage of austerity, a disease whose symptoms are most acute and visible in Greece. Within the past few weeks, a macabre cortege of politicians, economists, bureaucrats and technocrats have tried in every way possible to asphyxiate any sign of recovery and nullify any sentiment of hope and optimism within the Greek people. The degenerate disease has spread to such a degree that even the antibodies, the last democratic pulsations, ultimate rampart of health, attempting to salvage a thread of dignity within a sea of humiliation, have been declared by the prognostics of the charlatans of high-finance as viruses that must be eliminated.

Today as Greeks turn to the polls, with the ponderous task of breaking with the dictum of austerity, never has the real purpose of such an ideology been as clear. No matter what the outcome of the Sunday referendum vote might be, the process in itself has already accomplished a great deed, that of debunking the mysticism of austerity.

It’s like the story of the Emperor’s New Clothes. Only the technicians of austerity think that their rhetorical verses still charm, when in fact the rhetoric of austerity is naked.

In the past week, the incompatibility of the democratic process with austerity was once again unveiled for all to see. First there were the calls from the European elite that a referendum was unreasonable.Then there were direct calls for regime change.

It has been a understood rule, since the onset of the 2008 crisis, that austerity and democracy don’t mesh, that austerity is fundamentally incompatible with democratic proceedings and the two are mutually exclusive. Through the intransigent stance of the Eurogroup, i.e the Troika, austerity has revealed itself to be more of a means than an end.

The Greek Crisis, the imposing of austerity by the world financial institutions, has never been about “debt” or the extreme moral necessity of repayment for the well-being of the global financial system. Austerity in itself is void, it services a specific purpose: creating a rhetorical and moral leverage for the restructuring of the societies in which it’s applied.

Austerity in Greece isn’t merely an economic doctrine, serving a specific economic purpose, but a means to justify the usurping of democracy, the transfer of the common wealth into the private sector through privatizations, the militarization of police forces and socially conservatives policies in the name of budget priorities and adjustments.  Austerity is an ideology as per the premise of The Fourth Revolution written by Woolderidge & Micklethwait as a “restructuring of the state,” not a downsizing of it.

As Lenin analysed the world of 1917, he concluded that imperialism was the highest form of capitalism, its final stage in many ways. Lenin identified that imperialism was a by-product of capitalism, that it could only exist as an ideology as an extension, as a rhetorical tool at the service of capitalism, of the “liberalization” of the markets i.e the forced creation of new markets through capitalism.

Within the analytical framework put forward by Lenin, ideologies that appear to be situated outside of capitalism such as nationalism, imperialism, colonialism, are actually fundamentally integrated into the capitalist dynamic. At the time (just like today), imperialism was an ideology that mobilized a humanist rhetoric to justify its utter brutality. The commercial and financial elites of the time used the Gun Boat Policy and delusional humanistic principles of the burden of the white man to subjugate and exploit most of the world.

What imperialism was for capitalism yesterday, austerity is for capitalism today. The so-called “need to civilize” of the time is called “the need to balance budgets” today.

Austerity is the highest form of capitalism we know today, a sort of necrophilic vampirism, an ideology that promotes capitalism in its purest form. But “purity” entails fragility.

At this point, given the current disposition of forces, the current rapport of forces, the Greek referendum appears as the shattering moment of this porcelain ideology. The victory of the OXI camp would call into question the legitimacy of the moral premises of austerity. Austerity as an ideology, such as imperialism, only exists because of the belief that people give to the moral premises that lay at its foundation.

The Greek people have the awesome opportunity to shatter the glass castle of austerity. But all in all, it’s only a matter of time until people see through the mirage. In that light, we can found a new moral foundation in which people trump profit.

* Featured image by Ggia via WikiMedia Commons, licensed under Creative Commons