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  1. Politics
1 July 2015updated 26 Sep 2015 6:46am

In this week’s New Statesman | Crisis Europe

A first look at this week's magazine.

By New Statesman

Crisis Europe
3-9th July 2015

 

Featuring

Owen Jones: The European elites are determined to stop the revolt against austerity in Greece from spreading.

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Brendan Simms: Why we need a British Europe rather than a European Britain.

Simon Wren-Lewis: The Greek people have paid for their governments’ mistakes.

Helen Lewis: When is a terrorist not a terrorist?

George Eaton meets Shadow Chancellor Chris Leslie.

George Eaton: As George Osborne prepares further austerity, the crisis in Europe has come to his aid again.

 

Owen Jones: Europe’s elites are determined to break Syriza – and stop the revolt against austerity from spreading

In his NS column, Owen Jones writes that “the EU great powers” decided that Syriza had to be broken long before the party was even elected:

In a eurozone where more than 11 per cent of the citizens are without work, including half of all young Spaniards, the social devastation endured by the poor has been sustained by a simple doctrine: “There is no alternative.” If Greece threatens that narrative, it has to be punished.

After France’s François Hollande abandoned his left-wing mandate almost as soon as he marched into the Élysée Palace, Syriza’s dramatic triumph in January represented the first time Europe’s anti-austerity movement had seized power in a national election. Since then, Europe’s great powers – the European Union, the eurozone’s unaccountable Central Bank, the IMF, the German government – have all conspired to make an example out of the party. Greece is a rebellious eurozone province, and if its democratically elected insurgents are allowed to succeed, the doctrine of “There is no alternative” will be shattered and a growing populist left will be emboldened.

Jones argues that the “powers” are seeking to achieve this by forcing Syriza “to impose another dose of disastrous austerity, in violation of the party’s clear electoral mandate”.

He writes:

Syriza’s fate will also be used to hammer opponents of austerity. Resisting the prevailing economic common sense of our time (it will be claimed) is demonstrably futile and self-defeating. Greece’s woes are the product of overspending, and so on. That the likes of Goldman Sachs helped to massage Greece’s books to allow it to enter the eurozone in the first place will be forgotten. The irresponsible lending of German and French banks will be forgotten, too.

 

Brendan Simms: The Churchillian solution

The Cambridge history professor Brendan Simms writes that to understand the future of the EU, we need to look at the Union’s past:

In September 1946 Winston Churchill announced that it would require an “act of faith” to save Europe from “infinite misery and indeed from final doom”. Only the creation of a “kind of United States of Europe”, he argued, would rescue the continent from further chaos. He was speaking, of course, in the immediate aftermath of the Second World War. The European situation today is less dramatic, but still highly alarming. We face a series of interlocking challenges that are individually and cumulatively bringing the continent to its knees.

He writes that a “full federal union of the eurozone” would be “very much in Britain’s interest”:

It would save the euro, rescuing the British from the danger of economic contagion after a blowout of the common currency, or interminable deflation through austerity. By stabilising the continent militarily and containing Putin, the new state would reduce the strain on the two countries bearing the largest burden of deterrence in the Baltic and elsewhere – the United States and the United Kingdom. This benefit should outweigh and transcend the old British thinking about the balance of power, which might otherwise tempt London to oppose the creation of a single, potentially dominant continental European state. After all, the establishment of the United States of America eventually relieved Britain of responsibility for the western hemisphere, and supplied a vital ally against the terrible challenges of the 20th century. Likewise, the creation of a cognate eurozone union within Nato would secure the UK’s eastern flank for generations, and free up British capacity for involvement in other parts of the world.

Winston Churchill pointed the way to such a solution nearly 70 years ago, just after the Second World War. In his celebrated Zurich speech of September 1946, the former British prime minister urged the full political union of the continent in “a kind of United States of Europe” under the “principles embodied in the Atlantic Charter”. Strikingly, however, Churchill conceived of this United States of Europe alongside but not including the United Kingdom and the British “Commonwealth of Nations”: that is, the empire. This Churchillian model of a single eurozone state without Britain but associated with her is the only solution possible today, in my view. It demands federation within the eurozone and confederation between the new state and the UK.

Simms concludes:

The United States originated as a breakaway state from the United Kingdom, based on the principles of the Anglo-Scottish Union. By the same token, Europe can only become more British by separating from Britain. If it does so, and thereby realises its potential, the resulting polity will eventually be more powerful than these two previous mighty unions put together. In this way, the Europeans would become more “British” than the Americans and, indeed, the British themselves.

 

Simon Wren-Lewis: The Greek people have paid for their governments’ mistakes – and for the errors of the Troika 

In his Economics column, Simon Wren-Lewis writes that “to make sense of the confrontation between the Syriza government in Greece and the Troika (the European Commission, the European Central Bank and the International Monetary Fund)”, it is vital to “understand the one big mistake that each side made”: 

The mistake on the Greek side is well known. In the years following the formation of the eurozone, the Greek government borrowed far more than it should, sometimes secretly. When the full extent of that fiscal profligacy became known, the financial markets realised that default was a distinct possibility, and the government was no longer able to borrow from them. 

[. . .]

The Troika’s big mistake was what it did with the larger part of its rescue package. If it had done nothing, the Greek government would have been forced to default on its debt, and those who owned that debt (Greece’s creditors) would have received very little or nothing. Instead, the Troika partly bailed out these creditors, who included many of their own leading banks, in Germany and France in particular. In effect, what the Troika did was to buy much of the Greek government debt owned by these private-sector institutions, at discounted prices. From the Greek government’s point of view, this replaced private-sector debt with debt owned by the Troika.

Wren-Lewis adds that over the past year, “the Greek government has managed to achieve approximate primary budget balance”:

. . . its taxes cover all its spending, excluding interest payments. It is no longer asking for more money to cover spending, but simply additional loans to pay back interest and maturing loans. In short, it needs money from the Troika to repay the Troika. As the price of these loans, the Troika is demanding yet more austerity. The Syriza government wants to avoid this to give the economy a chance to recover.

[. . .]

So why does the Troika insist on continuing with austerity? The Troika contains many different views and interests. Some may still not believe, despite all the evidence, that austerity hurts growth. Perhaps others are happy to see a left-wing government fail, because it does not accept the received wisdom from Brussels and Frankfurt on what good economic policy involves.

He concludes:

The Greek people have already paid highly for their own governments’ mistakes before 2010. Now it seems they must suffer as a result of the Troika’s errors. That the governments of the eurozone continue to display a macroeconomic understanding of fiscal policy equivalent to that of Angela Merkel’s imagined Swabian housewife is perhaps not surprising – it has been a consistent pattern since the eurozone began. More surprising is the behaviour of the IMF, established to represent the international community and full of hundreds of economists. That it had the means to stop this happening but chose not to do so is equally tragic.

 

Helen Lewis: When is a terrorist not a terrorist?

For her Out of the Ordinary column, Helen Lewis considers the widely varying ways we talk about terrorist attacks:

When is a terrorist not a terrorist? When he’s a white man, of course. Then he’s a lone wolf. Or a madman who couldn’t have been stopped. Or, most sympathetically, he’s the victim of a tragic mental illness.

Comparing and contrasting the media treatment of ideologically driven attacks by Dylann Roof, Anders Breivik and Seifeddine Rezgui, Lewis writes that our society refuses to call white terrorism what it is, out of fear:

Violent masculinity ranks alongside white supremacy as a social force that is too painful to address. There was initial press excitement when Nicholas Salvador beheaded 82-year-old Palmira Silva in her back garden in Enfield last year. He was a “Muslim convert”, according to the front pages, and had probably been inspired by Isis propaganda videos. The story that emerged at his trial was of a more mundane type of horror: a paranoid schizophrenic who had recently lost his job, Salvador beheaded Silva thinking she was Hitler reincarnated. As I wrote at the time, Silva was the third woman beheaded in London in 2014: the other two attracted barely any attention at all because the prime suspects were their husbands.

If these men were Islamic extremists, it would have been perversely reassuring: we would have a neat explanation for their actions and the solution would have been nothing to do with “us”. But, like Dylann Roof, murderous husbands are not ­easily turned into Others – not least because a woman is most likely to be murdered by a current or former partner. Misogyny, like racism, is an ideology that benefits the powerful. That is why the term “terrorist” is guarded so jealously. It’s a restriction on who, and what, is allowed to terrify us.

 

George Eaton speaks to the shadow chancellor, Chris Leslie

Labour must “get really serious about public-service reform”

“For Labour, if you’re going to continue to ask people to support the project of collective provision of public services you have to be able to prove that you’re managing those resources well. Now, that requires us to get serious, for the Labour Party to get really serious about public-service reform, and sometimes that is going to be challenging to the traditional ways of delivering those public services.

“I think some of the structures that are around in public services are very outdated and duplicative. We need to declutter; there’s a strong bit of spring cleaning that’s still needed. It’s not just closing down quangos, it’s also saying, ‘Well, look, 43 police authorities, 300-plus local authorities.’ There’s lots of questions we’ve got to start asking about proper consolidation.”

On whether he’d like to remain shadow chancellor under the next leader:

“I’d like to stay doing an economic brief. It’s a team sport and whatever the team choose to allocate me to . . . I’m not sure what’s going to be happening after that September announcement, so we’ll see what [crops up]. It’s a really important job.”

On why he no longer supports a 50p tax rate:

“For us, everything is now under review. I personally think the priority is going to be whether the 45p rate is going to fall to 40p – so, in a sense, the issue of the 50p rate has now moved off the agenda. I have a feeling this is going to be a question of priorities. To me, it wouldn’t be right to cut the 45p rate at a time when the deficit is still so high and the cuts to pretty vital services are going to be so particularly deep.”

 

George Eaton: As George Osborne prepares further austerity, the crisis in Europe has come to his aid again

For his column this week, the NS political editor, George Eaton, considers the Chancellor’s austerity programme in the light of Greece’s second bailout. He writes:

In the five years since his austerity programme began, George Osborne has had no greater ally than Greece. The fate of that benighted nation has long served as a justification for retrenchment at home. “You can see in Greece an example of a country that didn’t face up to its problems and that is the fate that I want to avoid,” the Chancellor said before his first Budget in 2010. Ahead of his seventh, he was able to resurrect this argument, citing the crisis as proof of the need to “get our own house in order”.

Now, as Osborne prepares for his emergency Budget on 8 July, opposition politicians and economists rightly contend that it is a surfeit, rather than a dearth, of austerity that has immiserated Greece. But as Labour learned to its cost, political stories trump economic realities. The narrative that the UK and Greece spent like drunken sailors – and that only one has had the fortitude to sober up – resonates more with voters than John Maynard Keynes’s paradox of thrift.

He writes that the latest developments in Greece support Osborne’s plan:

For Osborne, the latest and most severe stage of the Greek crisis has arrived with good timing. It is harder to justify continued austerity when the economy is expanding. Those voters who lose out begin to wonder where the proceeds of growth are going. Yet the spectre of Greece enables Osborne to argue that fiscal consolidation must continue in order to establish an insurance fund against future crises. The public might not like austerity but, as the last parliament demonstrated, it is prepared to tolerate it as a necessary treatment.

He concludes:

As a result of the enduring shock that the Tories have a majority of any kind, its modesty (12 seats) is too easily forgotten. By cutting the top rate [of income tax], a policy for which he has no mandate, Osborne could immediately overreach. The task of imposing further austerity is formidable enough without gifting some voters an exemption. Greece has given the Chancellor the script he needs: one of shared sacrifice to stave off a comparable national humbling. He should resist all inducements to depart from it.  

Plus

Helen Lewis on Richard Desmond.

Adam LeBor: Five books on living, working and dying in Palestine.

Suzanne Moore: A man with a ponytail appeared with a bucket, a tube and some Vaseline. It was time for my colonics.

Lucy Hughes-Hallett on Genghis Khan and Saladin – the men who invented global terror.

Kate Mossman on Amy Winehouse and Brian Wilson.

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