People wait to withdraw cash from an ATM in downtown Athens. Photo: Iakovos Hatzistavrou/AFP/Getty
Show Hide image

From taxi drivers to surgeons, everyone in Greece is now an expert on the country’s debt

The strange thing has been how few Greeks, whether politicians, business people, journalists or whoever, took the idea that their country might leave the euro seriously.

Greece is at the centre of the economic crisis: the worst-hit and longest-suffering part of the dev­eloped world. Five (or, depending on how you count it, seven) years of crisis have produced a country inured to grim financial news and plugged in to repercussions in the eurozone.

Social media – and especially Twitter – is everywhere. Hour by hour over the past few weeks, people have been following the latest developments in Brussels and Frankfurt in real time. Recently, I interviewed a neurosurgeon just after he’d removed a benign tumour. In between operations, he and his colleagues chatted about what the blogs were saying and showed each other tweets from eastern European finance ministers. A taxi driver, in broken English and with no prompting, recommended that I follow the FT’s Brussels bureau chief, Peter Spiegel, on Twitter. “He points out [Jean-Claude] Juncker’s lies,” he told me.

I could very happily make a Newsnight film in Athens speaking only to local taxi drivers. I’ve met former centre-right New Democracy voters who went for Syriza – “They promised ten things but if they do only two, I’ll be happy” – and taxi drivers with a better understanding of debt dynamics (the relationship between debt, interest rates and growth) than many politicians. I have also been reminded of the scale of the disaster that has hit the country. When someone tells you that they’re just glad they don’t have any children growing up in Greece, it’s hard to know how to respond.

 

Protest politics

Protests, demonstrations and marches have been near-nightly events in central Athens. I’ve seen Syntagma Square filled with anti-austerity campaigners, communists and pro-Europeans.

The last of these aren’t your usual demo-going suspects. Better-dressed and slightly older, they occasionally seem at a loss what to do with their hours in the square. Some of them choose to fill the time by offering “helpful” advice on the piece to camera I’ve just recorded, in order to “better reflect” what has been happening.

The crowds got very big some nights in the week, enough to overwhelm the mobile-phone networks. But they were never large enough to pass a good friend’s definition of a “huge” Greek rally: the McDonald’s in Syntagma has always stayed open.

 

Interesting times

While I’ve been here, I have spoken to a lot of Greek businesses, large and small. I’ve heard a huge list of everything that is wrong with the economy, from broken, illiquid (and now closed) banks, to over-regulation, plus the shortage of demand and spending power. Not a single business has mentioned the issue the government has made its main red line – the level of government debt.

That sort of makes sense. The level of Greece’s government debt is very high, yet the burden of servicing it is very low. Interest payments as a share of GDP are among the lowest in Europe. The debt has already been rescheduled, restructured and reduced. It’s still far too high and another write-down will be needed in the future, but on the ground it doesn’t feel like a pressing short-term problem.

 

The final countdown

Each day after filming and editing, the finished package had to be sent back to London before I headed to the BBC “live point” to appear on the show. The broadcast packages are sent via the internet and the BBC’s system provides a helpful timer showing how long it will take to send each file.

I noticed over this past week that the timer has an unhelpful habit of resetting itself. It will say there are four minutes to go – and then suddenly jump back up to nine. That is what this crisis has felt like over these few months: a timetable that keeps getting reset, with “final” deadlines that keep slipping.

As long as both sides are talking, a way will always be found to keep the clock running. Most of the supposed “hard” deadlines have been based around dates when payment is due on Greece’s debts, but to take that seriously is to impose a financial logic on a political problem. The debt is now almost entirely to “official creditors” – the IMF, the ECB, and other eurozone governments – so missing a payment is as much about international relations as economics.

 

Wolf at the door

The strange thing has been how few Greeks, whether politicians, business people, journalists or whoever, took the idea that their country might leave the euro seriously. Most seemed to expect a deal at some point and thought that any talk of a Grexit was scaremongering. The Yes campaign argued that a No vote could lead to exit, but many No voters just didn’t believe them. Perhaps this is because they’ve been here before. There is an element of “the boy who cried wolf” at play. But it is often forgotten that the fable did end with the arrival of a wolf.

 

Wrong call

The referendum was a huge moment for Greece, for the eurozone and for the EU. But there is still some debate, in Greece and outside, over why it happened and what it represents. Was it a strategic masterstroke from Syriza which united the Greek people and bought concessions from Europe? Or a desperate gamble by a government that had run out of options?

Syriza’s negotiating strategy with Europe since January had sought to win concessions based on three assumptions: that a Greek threat to leave the euro would cause severe market jitters and pressure Europe into a deal; that the Greek economy was in a strong enough position to weather uncertainty while the European Central Bank would keep funding the banks; and that left-leaning governments in Italy and France would provide support.

All three of these assumptions were reasonable. All three turned out to be wrong.

Duncan Weldon is economics correspondent for BBC2’s “Newsnight”. @DuncanWeldon

Duncan Weldon is a senior policy officer at the Trades Union Congress. He blogs for them at Touchstone.

This article first appeared in the 09 July 2015 issue of the New Statesman, The austerity war

Photo: Getty
Show Hide image

Brexiteers want national sovereignty and tighter borders – but they can't have both

The role of the European Court of Justice is a major sticking point in talks.

Why doesn't Theresa May's counter-offer on the rights of European citizens living and working in Britain pass muster among the EU27? It all comes down to one of the biggest sticking points in the Brexit talks: the role of the European Court of Justice.

The European Commission, under direction from the leaders of member states, wants the rights of the three million living here and of the British diaspora in the EU guaranteed by the European Court. Why? Because that way, the status of EU citizens here or that of British nationals in the EU aren't subject to the whims of a simple majority vote in the legislature.

This is where Liam Fox, as crassly he might have put it, has a point about the difference between the UK and the EU27, being that the UK does not "need to bury" its 20th century history. We're one of the few countries in the EU where political elites get away with saying, "Well, what's the worst that could happen?" when it comes to checks on legislative power. For the leaders of member states, a guarantee not backed up by the European Court of Justice is no guarantee at all.

That comes down to the biggest sticking point of the Brexit talks: rules. In terms of the deal that most British voters, Leave or Remain, want – a non-disruptive exit that allows the British government to set immigration policy – UK politicians can get that, provided they concede on money and rules, ie we continue to follow the directions of the European Court while having no power to set them. Britain could even seek its own trade deals and have that arrangement.

But the problem is that deal runs up against the motivations of the Brexit elite, who are in the main unfussed about migration but are concerned about sovereignty – and remaining subject to the rule of the ECJ without being able to set its parameters is, it goes without saying, a significant loss of sovereignty. 

Can a fudge be found? That the Article 50 process goes so heavily in favour of the EU27 and against the leaving member means that the appetite on the EuCo side for a fudge is limited. 

But there is hope, as David Davis has conceded that there will have to be an international guarantor, as of course there will have to be. If you trade across borders, you need a cross-border referee. If a plane goes up in one country and lands in another, then it is, by necessity, regulated across borders. (That arrangement has also been mooted by Sigmar Gabriel, foreign minister in Angela Merkel's government. But that Gabriel's centre-left party looks likely to be expelled from coalition after the next election means that his support isn't as valuable as many Brexiteers seem to think.)

On the Conservative side, a new EU-UK international body would satisfy the words of May's ECJ red line. On the EU27 side, that the body would, inevitably, take its lead from the treaties of the EU sans Britain and the ECJ would mean that in spirit, Britain would be subject to the ECJ by another name.

But it comes back to the Brexit dilemma. You can satisfy the voters' demand for non-disruptive control of British borders. You can satisfy political demand for sovereignty. But you can't have both. May – and whoever replaces her – will face the same question: who do you disappoint?

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

0800 7318496