June 29, 2015

Greece; Deathplace of Democracy

The word Referendum comes from the Latin referre (to bring back) and demos is Greek for the people as a political unit; demos is the root of the word Democracy; so a referendum brings a decision back to the people. As representative democracies European States hold elections to choose their governments giving elected representatives a mandate to represent their political choices. The Greek people chose Syriza to represent them in the broken institutions of a European Union in crisis; the Greeks chose to end Austerity. If representatives can't make a political decision, because it is contrary to their mandate, the decision can be brought back to the demos in a referendum; or at least that is how things used to work.

Welcome to post-crisis EU democracy.

Since 2009 and the financial crisis in the EU, decision-making has been deferred to a financial triumvirate, the Troika, and to the Eurogroup. In latin triuviratus means unofficial coalition of power. Julius Caesar, Pompey and Crassus were the first triumvirate. When the Senate told Julius Caesar to step down as military leader of Rome, he crossed the Rubicon. He proclaimed himself “dictator in perpetuity”. Triumvirates are not known for love of democracy.

The Eurogroup works with the Troika's mandates (called Memoranda of understanding). The group is democracy light, or rather, it used to be. This flexible ad-hoc 'group' has one representative (a finance minister) for each nation in the Euro currency. Neither Denmark nor the UK are members because they don’t use the Euro. As and from Monday the 29th of June, neither is Greece.

On Friday the 27th of June, Yanis Varoufakis, Greek Finance Minister was invited to the Eurogroup meetings. He told his ‘partners’ about the referendum:

"we do not have a mandate to [vote on] the institutions’ proposals […] cognizant of the critical moment in history […] Fully aware of how weighty our decision is, we feel obliged to put the institutions’ proposal to the people of Greece"

On Monday the 29th Varoufakis conveyed his government’s decision to the other Eurogroup ministers that the Greek people should make a decision whether or not to accept the Memorandum of understanding imposed on him as a take-it-or-leave-it option by the Eurogroup. This memorandum affects the lives of Greek citizens directly; especially the poor. Syriza was elected to oppose Austerity; the Eurogroup imposed more Austerity. Syriza drew red lines to ring-fence certain vulnerable groups; the Eurogroup said the creditors said no, requiring more reductions in old age pensions and 23% VAT. These measures affect the poor disproportionately. Yanis Varoufakis asked for an extension of a little more than a week’s financial support for Greece while the Greek people decided whether to accept or reject the Eurogroup proposal. That, it seems was too much democracy for the Eurogroup. On Monday the 29th of June Yanis Varoufakis wrote the following in his blog:

"the Eurogroup President rejected our request for an extension […] suggesting that the 18 ministers (that is the 19 Eurozone finance ministers except the Greek minister) reconvene later to discuss ways and means of protecting themselves from the fallout.

At that point I asked for legal advice, from the secretariat, on whether a Eurogroup statement can be issued without the conventional unanimity and whether the President of the Eurogroup can convene a meeting without inviting the finance minister of a Eurozone member-state. I received the following extraordinary answer: “The Eurogroup is an informal group. Thus it is not bound by Treaties or written regulations. While unanimity is conventionally adhered to, the Eurogroup President is not bound to explicit rules.” I let the reader comment on this remarkable statement.”

For the Eurogroup direct democracy is an anathema to flexibility; and markets, we know, must be flexible. The European sovereign debt crisis is no longer just financial; it never really was. The crisis is institutional. It has become a crisis of democracy.

The EU might mandate democratic government members; but terms and conditions apply. Julius Caesar would have been proud.

Tony Phillips is Coordinating Editor of Europe on the Brink; Debt, Crisis and Dissent in the European Periphery Zed Books (soon to be available in Greek from Topos Books.)

Posted by Tony Phillips at June 29, 2015 08:05 PM