Greece eurozone exit fears: why the birthplace of democracy needs a bit of give


Democracy, with all its enormous benefits and unsettling drawbacks, was born in Greece. The least worst of government systems, as Winston Churchill categorised it, democracy has been the foundation of stable, peaceful, independent and economically-thriving nations.

In some cases, though, the power of the ballot box can push leaders into dog-whistle decisions: electorally popular but usually wilfully short-sighted and potentially damaging. Turkeys don’t vote for Christmas. Financially struggling voters don’t vote for politicians who promise more austerity, more cuts, on-going penury.

Greece, in recent months, has exemplified the best and worst of democracy. Fed up with bleak austerity measures, in January this year Greeks turfed their government, and, with it, the prospect of yet more of the cuts and reforms thought necessary to haul the benighted nation out of the red.

The election winners, leftists led by Alexis Tsipras, were hailed by many as saviours – the leaders who would roll back the hardline economic policies that have up-ended many Greek lives.

Yet everyone agrees, including Tsipras and his ministers, that some measure of austerity is needed. Greece owes a staggering amount to international creditors, including the “troika” – the International Monetary Fund, the European Commission and the European Central Bank. These creditors want their money back and they demand the Greek government agree to a stringent repayment plan for money owed. Greece has to haul itself out of a quagmire brought on by long-term overspending​ and rampant tax evasion, and Greek debts have to be paid.

Creditors want more cuts to public sector jobs and more reform to the unwieldy and unsustainable pension system, a widespread increase to the once comparatively low age of retirement (an increase which has been promised in the past) and the blanket elimination of any remaining of the bizarre benefits that once riddled the Greek welfare system.

This is not what Greeks voted for and the Tsipras government is dragging its feet on implementing yet more cuts. Ordinary Greeks are already struggling with the existing swingeing austerity measures. More, and more severe, cuts would be most unwelcome, and, in some cases, positively dangerous to Greeks who are doing without expensive medicines and healthcare, and sometimes – according to reports – without enough food.

Tsipras​ and his colleagues, including the nation’s Australian-Greek dual national finance minister, the implacable Yanis Varoufakis, are so far refusing to buckle to all creditors’ demands, and European leaders have been just as immovable. Barring a last-minute deal, Greece will likely default on a scheduled loan repayment due by the end of the month, paving the way for the benighted nation getting booted out of the eurozone.

The prospect of Greece returning to the drachma and economic isolation outside eurozone borders has focused the minds of everyone involved. Most observers agree Greece that would do better to stick with the EU, no matter the anguish of the necessary austerity. But the prospect of Greece getting pushed out of the euro, and possibly and eventually leaving the EU entirely, is taking on an alarming reality.

It would probably make economic sense for creditors to give Greece a slightly better deal, rather than wave goodbye. But the creditors are reluctant: appalled at the idea that well-run economies should have to pay for feckless Greek overspending​. Perhaps more importantly, European leaders don’t want to be seen caving in to blackmail.

Yet a Greek exit from the euro would be a terrible blow to European harmony, and set a nasty precedent for other debt-laden nations in Europe.

For all its problems, and its characterisation as a busy-body, fussy, red-tape obsessed, time-waster, on the widest view the European Union has helped European nations keep the peace and work together. The Union has pushed the importance of human rights and due legal process, and nations that want to join the EU – and many do – must agree to these principles. The EU, as a bloc, has far more economic and political heft than individual European nations, and it can exert pressure to win benefits for all members.

Both Greece and the creditors will have to push a bit and wiggle a bit to get the deal done. It’s in everyone’s interests to make it work. A bit of give is needed to avoid the historic first rupture of the noble plan of European unity.