Papandreou's choice: Scylla or Charybdis

And yet the Greeks remain pro-European.

When we thought we had seen it all, as the latest EU summit had produced a deal that was supposed to draw a line under the debt crisis in parts of the eurozone and set the foundations for a healthy future for the single currency the unexpected happened. The Greek PM called a referendum and shocked the whole world as much as he shocked his own government.

European Union leaders are left speechless in disbelief, the markets fell in an existential depression and the Greeks are trying to make peace with the idea they will have to chose between Scylla and Charybdis.

George Papandreou's decision has been described, in equal measure, as blackmail, madness, suicide, even treason? He has obviously run out of political capital. His EU partners do not trust him. At home, many within his own party seem prepared to vote against the new bailout plan (and the new austerity measures that come with it).

So in a moment of desperation he has decided to pose the most impossible of questions to the Greek people. Punishing austerity or certain bankruptcy, humiliating poverty or real starvation, a place in the EU or relegations to the margins of Europe? His hope is that they will support the new bailout plan, offering him political legitimacy to continue implementing the measures imposed by Greece's international creditors in return for loans, financial guarantees and a reduction in the overall size of its debt.

But there lies the problem. The reason why we are still here after two years is that the IMF programme has failed. The remedy used requires violent reduction in the size of the state, deep cuts in spending on public services and relentless privatisation, despite how depressed the value of national assets is.

But those measures have led to the suffocation of economic activity. Unemployment has gone up dramatically, those who still have a job have seen their wages cut significantly, consumers' purchasing power has fallen exponentially, confidence in the economy has disappeared and higher taxes have wiped out what was left.

As a result Greece has been locked in a recessionary vicious circle with no credible plan for growth. If you couple that with a strong sense of injustice among the Greek people who see the political and business elites go unpunished for administrative incompetence, corruption and tax evasion, then we have an explosive mix. As a result there is no guessing when Greek society will explode.

So with a population at the verge of suicide, the outcome of any plebiscite is unpredictable, to put it mildly.

The irony is that the Greeks remain pro-European. They would chose to stay part of the eurozone everyday of the week. What they have come to resent is not so much the EU but the political and economic orthodoxy that is currently in power across Europe. They have been confronted with a set of neo-liberal economic policies that are religiously obsessed with austerity.

As economic growth in Europe is stalling the effects of this ideologically driven economic model are becoming obvious. The European south is stagnating, even big economies that enjoy the confidence of the markets (and have been allowed by them to print money at will) find it difficult to achieve and maintain even the most anaemic levels of growth.

And because the European economy is very interconnected and depends on intra-EU trade as much as it does on extra-EU trade the effects of that stagnation are starting to be felt even in the most affluent, and fiscally healthy, parts of the EU as well.

There is a solution though and it is based on an alternative economic model. Austerity must be replaced by investment. Not just at the national but at the European level as well. There are economies of scale to be achieved, there is added value in spending at the EU level and there is huge need for investment across the continent.

Furthermore, indebted countries must be given more time and better terms to repay their debts and balance their books. That balancing act needs to happen across the EU. In a single market the existence of deficit countries has a direct relation with the existence of surplus countries. If we are to have a common market, with a single currency we also need an integrated economic policy that evens out imbalances, reducing the distance between surpluses and deficits. In addition, the banking sector needs to be cleared out.

European banks are in effect global banks so IMF funds should go into re-capitalising these global banks and ridding them of bad debts, imposing loses on investors that make bad investments. EU funds should be invested in the real economy, in education, research and development, green technologies, telecommunication and energy infrastructure that will help the EU deliver growth and jobs.

Last but not least, efforts to restructure the architecture of the eurozone must be redoubled, with emphasis on economic convergence and common governance via supranational and directly elected institutions. A common currency deserves a common government, one elected by the people and for the people.

The Greeks have been asked a question. But as they are deliberating their answer they pose an even more important question to the EU as a whole. After two years of failed economic policies it is time the EU considered a different plan. One that invests in its people, in its social economic model, in its future as an unified continent.

The stakes could not be higher, not just for the Greeks. But for the EU as a whole.

Petros Fassoulas is the Chairman of the European Movement UK.

Petros Fassoulas is the chairman of European Movement UK

Getty.
Show Hide image

The Brexit Beartraps, #2: Could dropping out of the open skies agreement cancel your holiday?

Flying to Europe is about to get a lot more difficult.

So what is it this time, eh? Brexit is going to wipe out every banana planet on the entire planet? Brexit will get the Last Night of the Proms cancelled? Brexit will bring about World War Three?

To be honest, I think we’re pretty well covered already on that last score, but no, this week it’s nothing so terrifying. It’s just that Brexit might get your holiday cancelled.

What are you blithering about now?

Well, only if you want to holiday in Europe, I suppose. If you’re going to Blackpool you’ll be fine. Or Pakistan, according to some people...

You’re making this up.

I’m honestly not, though we can’t entirely rule out the possibility somebody is. Last month Michael O’Leary, the Ryanair boss who attracts headlines the way certain other things attract flies, warned that, “There is a real prospect... that there are going to be no flights between the UK and Europe for a period of weeks, months beyond March 2019... We will be cancelling people’s holidays for summer of 2019.”

He’s just trying to block Brexit, the bloody saboteur.

Well, yes, he’s been quite explicit about that, and says we should just ignore the referendum result. Honestly, he’s so Remainiac he makes me look like Dan Hannan.

But he’s not wrong that there are issues: please fasten your seatbelt, and brace yourself for some turbulence.

Not so long ago, aviation was a very national sort of a business: many of the big airports were owned by nation states, and the airline industry was dominated by the state-backed national flag carriers (British Airways, Air France and so on). Since governments set airline regulations too, that meant those airlines were given all sorts of competitive advantages in their own country, and pretty much everyone faced barriers to entry in others. 

The EU changed all that. Since 1994, the European Single Aviation Market (ESAM) has allowed free movement of people and cargo; established common rules over safety, security, the environment and so on; and ensured fair competition between European airlines. It also means that an AOC – an Air Operator Certificate, the bit of paper an airline needs to fly – from any European country would be enough to operate in all of them. 

Do we really need all these acronyms?

No, alas, we need more of them. There’s also ECAA, the European Common Aviation Area – that’s the area ESAM covers; basically, ESAM is the aviation bit of the single market, and ECAA the aviation bit of the European Economic Area, or EEA. Then there’s ESAA, the European Aviation Safety Agency, which regulates, well, you can probably guess what it regulates to be honest.

All this may sound a bit dry-

It is.

-it is a bit dry, yes. But it’s also the thing that made it much easier to travel around Europe. It made the European aviation industry much more competitive, which is where the whole cheap flights thing came from.

In a speech last December, Andrew Haines, the boss of Britain’s Civil Aviation Authority said that, since 2000, the number of destinations served from UK airports has doubled; since 1993, fares have dropped by a third. Which is brilliant.

Brexit, though, means we’re probably going to have to pull out of these arrangements.

Stop talking Britain down.

Don’t tell me, tell Brexit secretary David Davis. To monitor and enforce all these international agreements, you need an international court system. That’s the European Court of Justice, which ministers have repeatedly made clear that we’re leaving.

So: last March, when Davis was asked by a select committee whether the open skies system would persist, he replied: “One would presume that would not apply to us” – although he promised he’d fight for a successor, which is very reassuring. 

We can always holiday elsewhere. 

Perhaps you can – O’Leary also claimed (I’m still not making this up) that a senior Brexit minister had told him that lost European airline traffic could be made up for through a bilateral agreement with Pakistan. Which seems a bit optimistic to me, but what do I know.

Intercontinental flights are still likely to be more difficult, though. Since 2007, flights between Europe and the US have operated under a separate open skies agreement, and leaving the EU means we’re we’re about to fall out of that, too.  

Surely we’ll just revert to whatever rules there were before.

Apparently not. Airlines for America – a trade body for... well, you can probably guess that, too – has pointed out that, if we do, there are no historic rules to fall back on: there’s no aviation equivalent of the WTO.

The claim that flights are going to just stop is definitely a worst case scenario: in practice, we can probably negotiate a bunch of new agreements. But we’re already negotiating a lot of other things, and we’re on a deadline, so we’re tight for time.

In fact, we’re really tight for time. Airlines for America has also argued that – because so many tickets are sold a year or more in advance – airlines really need a new deal in place by March 2018, if they’re to have faith they can keep flying. So it’s asking for aviation to be prioritised in negotiations.

The only problem is, we can’t negotiate anything else until the EU decides we’ve made enough progress on the divorce bill and the rights of EU nationals. And the clock’s ticking.

This is just remoaning. Brexit will set us free.

A little bit, maybe. CAA’s Haines has also said he believes “talk of significant retrenchment is very much over-stated, and Brexit offers potential opportunities in other areas”. Falling out of Europe means falling out of European ownership rules, so itcould bring foreign capital into the UK aviation industry (assuming anyone still wants to invest, of course). It would also mean more flexibility on “slot rules”, by which airports have to hand out landing times, and which are I gather a source of some contention at the moment.

But Haines also pointed out that the UK has been one of the most influential contributors to European aviation regulations: leaving the European system will mean we lose that influence. And let’s not forget that it was European law that gave passengers the right to redress when things go wrong: if you’ve ever had a refund after long delays, you’ve got the EU to thank.

So: the planes may not stop flying. But the UK will have less influence over the future of aviation; passengers might have fewer consumer rights; and while it’s not clear that Brexit will mean vastly fewer flights, it’s hard to see how it will mean more, so between that and the slide in sterling, prices are likely to rise, too.

It’s not that Brexit is inevitably going to mean disaster. It’s just that it’ll take a lot of effort for very little obvious reward. Which is becoming something of a theme.

Still, we’ll be free of those bureaucrats at the ECJ, won’t be?

This’ll be a great comfort when we’re all holidaying in Grimsby.

Jonn Elledge edits the New Statesman's sister site CityMetric, and writes for the NS about subjects including politics, history and Brexit. You can find him on Twitter or Facebook.