The Overreach of the China Hawks
Aggression Is the Wrong Response to Beijing
As the Greek negotiating team was preparing its latest reform proposal for the country’s creditors, I was walking to the Montparnasse metro station in Paris on my way to the Council for European Studies conference held at Sciences Po. At the station, a woman my age was standing behind the ticket booth. In her attempt to help me buy the most appropriate tickets for the next three days, I (apologetically) revealed to her that I am Greek and that I do not speak French. When she heard the word “Greek,” she put her hand close to her heart and repeated the word in French with compassion and solidarity. She asked me to wait for a second. In 30, she came back with her own credit card, swiped it, and handed over to me the first of the three tickets saying: “This is from me. For Greece.”
It is besides the point that I did not personally need this form of solidarity. It was also of little matter that many of my compatriots would find this story depressing. What resonated in the moment was that this exchange was exactly what the founders of the European Union envisaged: a solidary group of European citizens living in peace and prosperity.
Instead, many EU bureaucrats, ministers of finance, and heads of state saw—and some still see—the Greek crisis as a case study in moral hazards. Greece, the thinking goes, needs to fail now in order to discipline other unruly countries. Its governing party, Syriza, needs to fall in order to dampen the European public’s support for parties that are challenging the EU status quo. From this point of view, a hard line toward Greece is a necessary evil.
This logic, however, fails to understand the real problem in Greece and the psychology of the European public. Indeed, from the periphery, it is the European core, mainstream elites, officials, and institutions that all look rather euroskeptic—that is, skeptical of the very idea of unity, prosperity, democracy, solidarity, and mutual respect for which EU founders worked so hard to nurture. As of this writing, it appears that these elites have reached a deal with Greece, but the way they manage the relationship from here on out remains crucial. To avoid fueling the very euroskepticism and sovereigntist tendencies they want to quell, they have to abandon all ideas of vindictiveness and, instead, foster a spirit of cooperation among equal partners.
FROM GREFERENDUM TO AGREEKMENT
It is not only euroskeptics that sided with the “no” vote, though, but also eurocritics who don’t want to leave the union but want to reform it.The forces supporting Europe’s status quo, namely the euro-establishment spearheaded by the German government, found an opportunity in the Greek financial crisis to reaffirm their commitment to austerity as the main way to guarantee Europe’s continued economic competitiveness. But there are plenty of people who oppose those forces. In fact, at the moment, the deepest divide within European societies is between those who want to leave the EU—in the Greek case this camp is represented mainly by the Communist Party, Golden Dawn, along with some of the more radical members of Greece’s coalition government—and those who want to stay in the union but reform it.
In the first camp are euroskeptics of both the right- and left-wing varieties. They range from the United Kingdom Independence Party’s Nigel Farage to Jobbik’s leader Gábor Vona in Hungary, and they have found in the Greek crisis an opportunity to intensify their rhetoric and accuse the EU for operating as a “prison of nations.” It is no accident that during Greek Prime Minister Alexis Tsipras’ address to the European Parliament last week, euroskeptic parliamentarians of all stripes held up “no” (όχι) signs—in support of Greeks’ recent “no” vote on the June 25 plan proposed to the Greek government by the creditors.
It is not only euroskeptics that sided with the “no” vote, though, but also eurocritics who don’t want to leave the union but want to reform it. In this camp are a number of parties and figures, including the Podemos party in Spain and Lega Nord in Italy. Some in this camp prefer merely an inter-governmental union. Others envision a federal Europe. Tsipras himself is a eurocritic; he is not against the European Union project as a whole, but would like to see less austerity, more democratic EU institutions, and more redistribution of wealth.
Core Europeans might have interpreted Greece’s “no” as a vote against the euro or even Europe. But, in fact, the Greek people tried to send multiple messages with their vote. For his part, Tsipras interpreted the vote as a “yes” to a different type of Europe. It is questionable whether the referendum led to a better deal, but it gave Tsipras more power at home to get his way. He isolated domestic opposition, turned Syriza into a more cohesive party, and avoided becoming a “Left Parenthesis”—a phrase that refers to a short-lived government of the Left in Greece that some had predicted or wished for.
The vote also deepened cleavages in Greek society, particularly between the young in poor neighborhoods, who tended to vote “no,” and those over 65 and in wealthy neighborhoods, who tended to vote “yes.” Young Greeks, who rightly feel that they had no part in the system that led Greece to financial ruin, are less tolerant of the current deal and status quo European institutions. The Greek youth, who are experiencing 60 percent unemployment rates, have very little patience. They bristle at the humiliating way in which the euro-establishment treated Tsipras and the Greek people. With deep feelings of marginalization, many eurocritics have been pushed into becoming euroskeptics.
How far this process has gone is hard to quantify. In Greece, it is indicative that many Syriza parliamentarians, as well as the head of the Greek government’s minor coalition partner, Panos Kammenos, openly opposed the latest deal as the product of blackmail by the EU. Elsewhere in Europe, Britain’s upcoming “in/out” referendum to decide its own EU membership will be a critical test. For Europe to survive such trials without significant—if not irreparable—damage, the euro-establishment camp needs to demonstrate that it understands where the legitimacy of the European Union project lies: building an ever closer union of peace, prosperity, respect for human rights, and democratic governance. The deal struck on July 13 is far from a promising first step toward this goal.
Namely, the agreement, which was reached after a marathon summit, could lead to a third bailout for Greece, which would come with the transfer of 50 billion euros ($55 billion) worth of Greek assets to a new fund for the recapitalization of Greek banks, immediate pension and tax reforms, and the reversal of many of the economic measures the Greek government has passed since its election in late January. Not surprisingly, when the newest demands became publicly known, Twitter exploded with hashtags such as #ThisIsACoup.
During several decades of economic growth and expansion of the welfare state, EU polities managed to downplay the frictions among and within them. Then the financial crisis hit. The alliances that formed as a result—and the ensuing debates over austerity—cut across the traditional Left-Center-Right ideological axis. In fact, the social cleavages currently dividing EU member states and the populations within them are the product of a dual integration crisis: European and national. The European integration crisis was brought on by the challenges emerging from the recent financial crisis coupled with tensions surrounding the EU’s uneven economic and political development. Meanwhile, the demographic decline across the continent and the inability of European societies to successfully integrate immigrants brought to the fore national integration problems.
The social cleavages currently dividing EU member states and the populations within them are the product of a dual integration crisis: European and national.Greece was not the only country that faced a financial debt crisis. Cyprus, Ireland, Portugal, and Spain did as well. In all cases, democratically-elected governments no longer had the ability, due to their participation in the eurozone, to devalue their currency or inflate their economies by printing money. As I wrote in Perspectives on Politics, “they were faced with two suboptimal options: to default or to implement austerity measures (internal devaluation).” Meanwhile, the European institutions opted for policies that would punish the already-suffering countries as a way to prevent further contagion. “These developments have since given rise to Euroscepticism throughout the EU, leading to a growing public dissatisfaction in the crisis-stricken countries with their own governments but also with the European Commission and the European Central Bank, and reminding everyone of the democratic deficit problem that has long existed within the European Union.”
It is perhaps bad luck that all this happened while the region’s poorest were hit with other economic and social challenges. Migration from outside of Europe and from within it, coupled with the governments’ failures to successfully integrate the new arrivals, left some Europeans jobless or fearful for their jobs and uncertain about their place in the continent’s social fabric. In turn, they believed that both their national governments and the EU had let them down, and their euroskepticism took on a decidedly nationalist and populist tinge.
In Greece, most—if not all—citizens agree that the policies of the past five years have utterly failed; they also agree that the “patronage social contract” that underwrote political rule for the past four decades is bankrupt. Meanwhile, even those who supported the “no” vote in the recent referendum—those who consider Greece a “colony of debt”—are internally divided on quintessential questions such as whether one is born Greek or can become Greek. France, Germany, Italy, Spain, and others are all facing similar identity crises, which is only exacerbated by the economic situation and the pressures on the welfare state.
All this is happening while austerity—chosen as the main way to keep the euro strong and the EU competitive—has undermined popular support for the union across Europe, not just in Greece. These developments constitute the dual integration crisis: EU and national. The safest way out of this predicament is an ever closer union, a political Europe with a fiscal union and democratically elected institutions that would redistribute more wealth and would achieve competitiveness through innovation, not austerity and internal devaluation. The hope for such a Europe is still alive. The woman I met in the Montparnasse metro station is a testament to this.