GREECE has dominated news in recent months, for all the wrong reasons. Its inability to pay its bills and the dogged fight of its coalition government to ward off austerity measures advanced by its European Union (EU) lenders is now common cause. The Greek government lost, of course. Beggars are hardly the best placed to choose.
There is a long road ahead for Greece and the EU, but it appears that a short-term solution has been found. What the imbroglio has highlighted are the challenges of regional economic and fiscal union.
While EU members may regard themselves as autonomous political regions the reality is that this is not so. The very idea of monetary and economic union introduces a tension between national and regional political imperatives.
Peaceful coexistence may be possible most of the time but it is impossible to prevent tensions from exploding. So it came to pass that the majority of Greek citizens refused to support measures designed to protect the interests of the broader EU, precipitating a geopolitical argument of which the effect will be felt for years.
Having enjoyed the benefits of being part of the EU, Greeks now find themselves in a corner of their own making.
They chose to be part of the EU to begin with. They knew the rules but internal political choice ensured that Athens would find itself in conflict with those fiscal and monetary rules. When that happened, its polity was unable to control its instincts in favour of its other interests, which is understandable behaviour.
Greece is not the only country in which noises are being made about EU membership. The UK is facing similar internal political rumblings as the Conservative Party questions the benefits of membership. It will be interesting to see how far the discussion goes, but at least it is being held under conditions of relative fiscal stability, not the mess Greece finds itself in.
The task ahead is one of deep reflection for individual EU countries and for the body as a collective. Is it possible to retain the union without putting measures in place that are likely to make democratic political choices in individual countries obsolete? Such a question is important because the EU will sink rapidly if it cannot have strict disciplinary mechanisms that penalise bad political choices that result in horrendous economic and fiscal outcomes for individual members. The problem with writing off Greece’s debt without the requisite political and other reforms is that the behaviours that generated the trouble are likely to persist.
In Greece, a new social contract is required. It is pointless for its citizens to cry foul against the EU when there has been tax avoidance for years because the authorities didn’t bother to make collections efficient.
The EU’s injunction for tax and other reforms is premised partly on more effective and harsher tax revenue collection, something no citizen willingly subscribes to unless they are South African and the collector is the South African Revenue Service. The Greeks don’t have the equivalent in terms of capacity or enforcement. To arrest Greece’s culture of tax evasion will require more than new laws — it will need a new ethos among citizens.
Whatever has been agreed to now, and in the future, makes the same flawed assumption — that political choices will be made with the prescripts of EU membership in mind. This will not happen.
The situation has also highlighted the extent to which crises in member states can perpetuate regional rivalries, threatening the sustainability of the union. Germany is not liked in Greece but German taxpayers, whose incomes are taxed heavily, could question the benefits of an EU concept that requires their country to make money available to other members, irrespective of their transgressions.
Unions work until individual countries refuse to surrender their sovereignty for the preservation of the ideal. Someone always pays dearly.
Evzone presidential guards near the Tomb of the Unknown Soldier outside the Greek parliament in Athens, Greece, on Sunday. Picture: BLOOMBERG/MATTHEW LLOYD
GREECE has dominated news in recent months, for all the wrong reasons. Its inability to pay its bills and the dogged fight of its coalition government to ward off austerity measures advanced by its European Union (EU) lenders is now common cause. The Greek government lost, of course. Beggars are hardly the best placed to choose.
There is a long road ahead for Greece and the EU, but it appears that a short-term solution has been found. What the imbroglio has highlighted are the challenges of regional economic and fiscal union.
While EU members may regard themselves as autonomous political regions the reality is that this is not so. The very idea of monetary and economic union introduces a tension between national and regional political imperatives.
Peaceful coexistence may be possible most of the time but it is impossible to prevent tensions from exploding. So it came to pass that the majority of Greek citizens refused to support measures designed to protect the interests of the broader EU, precipitating a geopolitical argument of which the effect will be felt for years.
Having enjoyed the benefits of being part of the EU, Greeks now find themselves in a corner of their own making.
They chose to be part of the EU to begin with. They knew the rules but internal political choice ensured that Athens would find itself in conflict with those fiscal and monetary rules. When that happened, its polity was unable to control its instincts in favour of its other interests, which is understandable behaviour.
Greece is not the only country in which noises are being made about EU membership. The UK is facing similar internal political rumblings as the Conservative Party questions the benefits of membership. It will be interesting to see how far the discussion goes, but at least it is being held under conditions of relative fiscal stability, not the mess Greece finds itself in.
The task ahead is one of deep reflection for individual EU countries and for the body as a collective. Is it possible to retain the union without putting measures in place that are likely to make democratic political choices in individual countries obsolete? Such a question is important because the EU will sink rapidly if it cannot have strict disciplinary mechanisms that penalise bad political choices that result in horrendous economic and fiscal outcomes for individual members. The problem with writing off Greece’s debt without the requisite political and other reforms is that the behaviours that generated the trouble are likely to persist.
In Greece, a new social contract is required. It is pointless for its citizens to cry foul against the EU when there has been tax avoidance for years because the authorities didn’t bother to make collections efficient.
The EU’s injunction for tax and other reforms is premised partly on more effective and harsher tax revenue collection, something no citizen willingly subscribes to unless they are South African and the collector is the South African Revenue Service. The Greeks don’t have the equivalent in terms of capacity or enforcement. To arrest Greece’s culture of tax evasion will require more than new laws — it will need a new ethos among citizens.
Whatever has been agreed to now, and in the future, makes the same flawed assumption — that political choices will be made with the prescripts of EU membership in mind. This will not happen.
The situation has also highlighted the extent to which crises in member states can perpetuate regional rivalries, threatening the sustainability of the union. Germany is not liked in Greece but German taxpayers, whose incomes are taxed heavily, could question the benefits of an EU concept that requires their country to make money available to other members, irrespective of their transgressions.
Unions work until individual countries refuse to surrender their sovereignty for the preservation of the ideal. Someone always pays dearly.
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