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

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North Yorkshire has approved the UK’s first fracking tests in five years. What does this mean?

Is fracking the answer to the UK's energy future? Or a serious risk to the environment?

Shale gas operation has been approved in North Yorkshire, the first since a ban introduced after two minor earthquakes in 2011 were shown to be caused by fracking in the area. On Tuesday night, after two days of heated debate, North Yorkshire councillors finally granted an application to frack in the North York Moors National Park.

The vote by the Tory-dominated council was passed by seven votes to four, and sets an important precedent for the scores of other applications still awaiting decision across the country. It also gives a much-needed boost to David Cameron’s 2014 promise to “go all out for shale”. But with regional authorities pitted against local communities, and national government in dispute with global NGOs, what is the wider verdict on the industry?

What is fracking?

Fracking, or “hydraulic fracturing”, is the extraction of shale gas from deep underground. A mixture of water, sand and chemicals is pumped into the earth at such high pressure that it literally fractures the rocks and releases the gas trapped inside.

Opponents claim that the side effects include earthquakes, polluted ground water, and noise and traffic pollution. The image the industry would least like you to associate with the process is this clip of a man setting fire to a running tap, from the 2010 US documentary Gasland

Advocates dispute the above criticisms, and instead argue that shale gas extraction will create jobs, help the UK transition to a carbon-neutral world, reduce reliance on imports and boost tax revenues.

So do these claims stands up? Let’s take each in turn...

Will it create jobs? Yes, but mostly in the short-term.

Industry experts imply that job creation in the UK could reflect that seen in the US, while the medium-sized production company Cuadrilla claims that shale gas production would create 1,700 jobs in Lancashire alone.

But claims about employment may be exaggerated. A US study overseen by Penn State University showed that only one in seven of the jobs projected in an industry forecast actually materialised. In the UK, a Friends of the Earth report contends that the majority of jobs to be created by fracking in Lancashire would only be short-term – with under 200 surviving the initial construction burst.

Environmentalists, in contrast, point to evidence that green energy creates more jobs than similar-sized fossil fuel investments.  And it’s not just climate campaigners who don’t buy the employment promise. Trade union members also have their doubts. Ian Gallagher, Secretary of Blackburn and District Trade Unions Council, told Friends of the Earth that: “Investment in the areas identified by the Million Climate Jobs Campaign [...] is a far more certain way of addressing both climate change and economic growth than drilling for shale gas.”

Will it deliver cleaner energy? Not as completely as renewables would.

America’s “shale revolution” has been credited with reversing the country’s reliance on dirty coal and helping them lead the world in carbon-emissions reduction. Thanks to the relatively low carbon dioxide content of natural gas (emitting half the amount of coal to generate the same amount of electricity), fracking helped the US reduce its annual emissions of carbon dioxide by 556 million metric tons between 2007 and 2014. Banning it, advocates argue, would “immediately increase the use of coal”.

Yet a new report from the Royal Society for the Protection of Birds (previously known for its opposition to wind farm applications), has laid out a number of ways that the UK government can meet its target of 80 per cent emissions reduction by 2050 without necessarily introducing fracking and without harming the natural world. Renewable, home-produced, energy, they argue, could in theory cover the UK’s energy needs three times over. They’ve even included some handy maps:


Map of UK land available for renewable technologies. Source: RSPB’s 2050 Energy Vision.

Will it deliver secure energy? Yes, up to a point.

For energy to be “sustainable” it also has to be secure; it has to be available on demand and not threatened by international upheaval. Gas-fired “peaking” plants can be used to even-out input into the electricity grid when the sun doesn’t shine or the wind is not so blowy. The government thus claims that natural gas is an essential part of the UK’s future “energy mix”, which, if produced domestically through fracking, will also free us from reliance on imports tarnished by volatile Russian politics.

But, time is running out. Recent analysis by Carbon Brief suggests that we only have five years left of current CO2 emission levels before we blow the carbon budget and risk breaching the climate’s crucial 1.5°C tipping point. Whichever energy choices we make now need to starting brining down the carbon over-spend immediately.

Will it help stablise the wider economy? Yes, but not forever.

With so many “Yes, buts...” in the above list, you might wonder why the government is still pressing so hard for fracking’s expansion? Part of the answer may lie in their vested interest in supporting the wider industry.

Tax revenues from UK oil and gas generate a large portion of the government’s income. In 2013-14, the revenue from license fees, petroleum revenue tax, corporation tax and the supplementary charge accounted for nearly £5bn of UK exchequer receipts. The Treasury cannot afford to lose these, as evidenced in the last budget when George Osborne further subsidied North Sea oil operations through increased tax breaks.

The more that the Conservatives support the industry, the more they can tax it. In 2012 DECC said it wanted to “guarantee... every last economic drop of oil and gas is produced for the benefit of the UK”. This sentiment was repeated yesterday by energy minister Andrea Leadsom, when she welcomed the North Yorkshire decision and described fracking as a “fantastic opportunity”.

Dependence on finite domestic fuel reserves, however, is not a long-term economic solution. Not least because they will either run out or force us to exceed international emissions treaties: “Pensions already have enough stranded assets as they are,” says Danielle Pafford from 350.org.

Is it worth it? Most European countries have decided it’s not.

There is currently no commercial shale-gas drilling in Europe. Sustained protests against the industry in Romania, combined with poor exploration results, have already caused energy giant Chevron to pull out of the country. Total has also abandonned explorations in Denmark, Poland is being referred to the European Court of Justice for failing to adequately assess fracking’s impact, and, in Germany, brewers have launched special bottle-caps with the slogan “Nein! Zu Fracking” to warn against the threat to their water supply.

Back in the UK, the government's latest survey of public attitudes to fracking found that 44 per cent neither supported nor opposed the practice, but also that opinion is gradually shifting out of favour. If the government doesn't come up with arguments that hold water soon, it seems likely that the UK's fracking future could still be blasted apart.

India Bourke is the New Statesman's editorial assistant.