The Staggers

The New Statesman’s rolling politics blog

Greece and France have defied the eurosceptics

Both countries voted for pro-European politics and confounded the anti-EU right.

By Denis MacShane Published 18 June 2012 10:11

UK Independence Party leader Nigel Farage. Photograph: Getty Image

UK Independence Party leader and MEP Nigel Farage. Photograph: Getty Images.

So what does the eurosceptic elite, which controls most of the media, the governing party and has its representatives in both the Lib Dems and Labour, do now? For months, we have been told that "Eurogeddon" or "Grexit" was just round the corner. Lucky Britain with its pound and made-in-Britain recession was not involved as the dreadful Europeans, with the deadweight euro around their necks, would sink below the waves. The best and the brightest of monolingual English commentators flooded into the Plaka in Athens to sip their ouzo with their columns already written, explaining how the Greeks pulled the plug on the euro. The Greek people have let them down.

In the French election, the left-wing windbag, Jean-Luc Mélenchon, was given star treatment by the BBC and English papers, who love a leftie as long as he beats up on Brussels. Then it was the turn of Alexis Tsipras. The Financial Times cleared away its usual stable of Nobel-prize winners on its comment pages to welcome the populist posturing of the new anti-Brussels oracle of Delphi. He said Greece would stay in the euro but not meet a single condition of continued EU help.

Both Mélenchon and Tsipras have a critique of the way the economy has been run in their countries and, more broadly, in Europe in recent years. They are right to reject the recession-generating austerity of British and German conservatives. But it is one thing to denounce 1930s economics, another to come up with policy that makes sense to a democratic electorate. In both France and Greece, voters had a second chance over multi-round elections to reflect and, in the end, they voted to reject the false prophets who offered simplistic solutions that could not work. They also rejected the advice from British pundits like Norman Lamont, Nigel Farage, David Owen, and nearly all press commentators, who insisted that the euro was all a dreadful mistake and the sooner Greece was booted out, the better.

There was generalised talk about the need for a referendum, promoted by both Tories and Labour, as if a single plebiscite (on what question exactly is never made clear) would settle the Europe question once and for all in British politics. Among our political and media elites there was an almost Trotskyist fervour of “the worse the better” as if a collapse into chaos of banks closing down and the euro being forcibly converted into drachmas or pesetas would be a ritual purging of Europe into a new entity approved by the bankers and bank-rollers of entrenched British euroscepticism.

But as so often, Europe failed to conform to the eurosceptic script. Both the Greeks and the French voted for pro-European middle-of-the-road politics. Neither the victory for the left in France or New Democracy’s win in Greece solves any of the underlying problems both countries face. Hard decisions have to be taken and there will be social unrest just as there was a year ago in Britain or as we suffer when doctors and bus drivers go on strike. There is no Brussels fix or German cash cow that can solve the democratic capitalist world’s core problem, one neither the US nor Europe will admit, namely that debt-driven economics and state-financing no longer works.

But just as the US keeps rolling on, so does Europe. Britain can join in a conversation about what needs to be done with the new MPs in Paris and Athens. Or we can believe the Greeks and French have made a terrible mistake and keep pumping eurosceptic iron, hoping the final crisis is only around the next corner.

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Tags: Greece France Europe

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24 comments

Wed, 2012-08-15 15:47 — Iany (not verified)

The EU is the best thing to happen in history of Europe to bind it together and prevent conflict.

But this foolish monetary union is driving Europe apart by creating huge trade and debt imbalances. An optimum currency area with France, Germany and the former D-Mark zone countries (and maybe Britain eventually) is fine for a smaller workable Eurozone.

But the periphery countries should drop out, devalue and form some kind of snake system (as not to go to the other extreme of zero sum competitive devaluations).

To suggest this course will lead to the break up of the EU, as some Euro advocates are arguing, is ludicrous.

The alternative, being proposed is a full scale fiscal, which will turn national governments into toytown councils run by monetarist bankers in Frankfurt (Hollande can huff and puff about reform but he has no leverage), in order to replicate the economic conditions that are likely to come about through the PIIGS leaving the Eurozone anyway.

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Fri, 2012-06-22 12:44 — mvrs75 (not verified)

MacShane puts his ignorance on display.

In Greece, ND and PASOK rigged the system in their favor with a +50 seat bonus. And even if you disregard that the majority of voters voted against the pro-Euro parties, the reality is that most Greeks voted for 'no austerity for us, Germany will pay'. The same thing happened in France, where people voted for the 'no austerity for us, Germany will pay' socialist party.

None voted for 'Europe', they all voted for 'a free ride for me, my neighbour will pay' policies of the usual suspects.

The Euro is a project designed by the bankers to get ever increasing bailouts and guarantees at the expense of the taxpayers. The Euro is a neo-liberal banker-inspired project designed to enrich the rich and impoverish the rest.

But we, Netherlands, and also Germany, we won't pay, and we'll make our politicians reject any softening of the terms for Greece.

Tue, 2012-06-19 16:48 — Will Podmore (not verified)

Denis MacShane writes blithely, "Hard decisions have to be taken" and "debt-driven economics and state-financing no longer works."
So he, like the rest of the Labour Party, has clearly bought the neoliberal lie.
But attempts to regain competitiveness and work down the debt burden through austerity, i.e. poverty, are bound to fail. Ask Paul Krugman, who knows something about economics, unlike Denis.
Cutting public deficits cuts demand both at home and in other eurozone members. Countries pedal ever harder to stay put. Cutting wages and prices increases the real value of debt, thereby further weakening the banks.

The EU calls for more poverty, yet public and private sectors can only deleverage by creating large current account surpluses, which is not possible given most members’ huge external debts and low exports.

Leaving the euro is the most powerful policy tool to create growth. During the past century 69 countries successfully left currency areas. These countries then grew again quickly. After their 1997 devaluation, Indonesia, South Korea, and Thailand suffered short, sharp downturns, but then grew quickly for the next decade and achieved pre-crisis GDP levels within two to three years.

In 2002 Argentina defaulted and devalued, imposing a 50 per cent loss on banking sector assets. The government chose to drain the banks of capital (to the public’s gain) and sent the banking system into insolvency (to be rescued by the government). After just one quarter of contraction, its economy grew by more than 8 per cent a year, led by an export boom spurred by the much lower exchange rate, until the world crisis started. This all exploded the standard forecasts that it would lack access to international credit and to international trade and that its economy would crash.

Orderly defaults, debt rescheduling and devaluations are inevitable and desirable. Countries will redenominate sovereign debt in local currencies, recapitalize, restructure and shrink their banks, and force losses onto the bondholders.

It would be best to announce the end of the euro on the first exit. Otherwise the markets would just line up to attack the next weakest link. The single currency was based on the impossibility of exit. Once there is an exit, then the euro project is over.

Once it becomes clear that a country needs to leave the eurozone, it should do so at once. Accepting more and more bail-outs before finally leaving would cause far more damage. But the EU makes it really hard for countries to leave, hurting them to try to prove that leaving is bad for you. For examples, EU treaties oblige eurozone members to have the euro as their currency and the capital controls needed for an orderly exit are illegal under EU law.

Tue, 2012-06-19 12:55 — Kaufman Wesley (not verified)

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Tue, 2012-06-19 10:31 — traducere simultana

It's great that the Greek chose Europe because this way they have more chances to solve their internal affairs.
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Tue, 2012-06-19 08:13 — Tirupati Darshan (not verified)

well we can't because we not greek or french

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Tue, 2012-06-19 01:15 — lisacat1999 (not verified)

A delusional article by McShane which is worth cutting out and framing for when the Euro finally implodes in a few weeks or months at most.

And a politician at pains to celebrate the success of the conservatives in Greece whilst describing Melenchon as a "left wing windbag" can only be at home on the political right. Merkel's CDU is McShane's natural political home.

Mon, 2012-06-18 22:34 — Abraham Lincoln (not verified)

Congratulations. This you have just won an award for most silliest article of the day.

Mon, 2012-06-18 21:48 — C H Ingoldby (not verified)

The Greek people are being driven into grinding penury by the Euro and McShane thinks that Europe will just keep 'rolling on'.

Are you deluded or do you just not care about the crippling misery being inflicted by the Euro?

Mon, 2012-06-18 20:10 — Marky_d (not verified)

Did people really elect this guy to represent them? Amazing. I'm actually lost for words.

Mon, 2012-06-18 20:10 — Marky_d (not verified)

Did people really elect this guy to represent them? Amazing. I'm actually lost for words.

Mon, 2012-06-18 19:55 — Mike J (not verified)

MacShane - your article is sickeningly false. There can only be two reasons for this. Either -

1. You lack the mental capacity forobservation, reason and logic
or
2. You are deliberatly misleading people for political and/or personal gain

Anthony (Little Englander and Proud)'s picture

Mon, 2012-06-18 18:39 — Anthony (Little Englander and Proud) (not verified)

Dear O' dear , smell the Dennis desperation. Surly this article is a wind up.

Mon, 2012-06-18 16:40 — jaded48 (not verified)

They've been brainwashed by Europe.We haven't - yet.

Mon, 2012-06-18 16:24 — Robert Taggart

At least 'we' are not Greek or French !

Mon, 2012-06-18 15:44 — blingmun (not verified)

What planet is Dennis MacShane on? Here on planet Earth the bail outs go not into the pockets of ordinary Greek people but to the banks who made a killing when times were good and then got State funding when things went south. And yet on planet MacShane, the anti-EU rhetoric is not the true sentiment of columnists and bloggers who fear that democracy is being dismantled by technocrats and treasonous politicians. No, myself and others like me are in fact bankrolled by the very bankers who benefit most from the current status quo.

You couldn't make it up. Unless you were Dennis MacShane. As one of the other commenters said, he really should consider fiction instead of politics.

Mon, 2012-06-18 15:27 — V (not verified)

Denis McShane, you live in a deluded dream world inhabited only by the political elite aka you and your slimeball globalist friends. To claim that the media elites are anti-EU is a joke, to claim the Conservative party is anti-EU is a joke: but to claim to the Euro is alive and well and that the Greek people voted to stay (it is obvious the election was a fraud (although with EU + UN aka NWO observers, this will of course be covered up). If, as you claim the EU is such a wonderful thing, then what have you got to fear from a referendum? I mean it's amazing, we're all surely going to vote to become a province of Europe and to be proud Europeans??? So give us our referendum and we'll surely tow the line of your "thought up by gods" European project. I'll tell you three four things you feat McShane: people, democracy, liberty and nation states. War is coming to Europe and when Europe burns, you and your elite cronies will be to blame.

Mon, 2012-06-18 15:53 — blingmun (not verified)

You just don't get it do you. The referendum in 1975 was legitimate because it concerned piddling matters relating to trade and certain aspects of Britain's industrial policy. It had nothing to do with big issues like sovereignty, governance, rule of law, democracy etc.

The referenda in Holland, France, Ireland etc. are all either legitimate, or not, according to whether or not the electorates voted in a way acceptable to Brussels.

You must understand that there is a cake. Dennis MacShane will eat the cake. And he'll still have a cake.

Anyone who disagrees is a swivel-eyed, probably fascist, little Englander.

Mon, 2012-06-18 13:46 — Arthur Kent (not verified)

What a load of rubbish. For you to infer that the bankers and banking elite are Euroskeptics is laughable. The bankers orchestrated and enabled the Greek implosion. They won't let Greek go until they have seized all of Greeks most profitable assets at liquidated prices (Greece has already lost tonnes of it's national gold reserves and many of it's most powerful shipping concerns are now in the hands of foreign investors) The election was rigged. http://rockthetruth2.blogspot.ca/2012/06/greeces-rigged-election.html

Mon, 2012-06-18 12:43 — Stuart Eels (not verified)

Dennis MacShane, you should write ficton for a living, if you and yours were so sure that we want to be good Europeans, you would have had the courage to have called a referendum on an exit. Sadly, you all know what side your bread is buttered on, I suppose it will be Lord MacShane, one day soon.