What happens when the Greek government sets policy according to the dictates of foreign creditors, not the wishes of Greek voters?
The new left-wing government now has power in Greece for one reason only: they promised to end austerity.
The entire point of democracy is that a nation’s people are sovereign. They vote for people who are supposed to represent their interests and make laws accordingly.
But that is not what is happening in Greece because the concept of national sovereignty is contrary to the concept of foreign creditors.
Thus, the New York Times reports,
Greek leaders scrambled on Sunday to come up with a list of proposed changes to the nation’s austerity program that would be acceptable to their creditors by a Monday deadline, even as they faced a revolt by members of their own radical-left party, angered that the government had bent to demands by Brussels.
An 11th-hour deal reached on Friday by Greece and eurozone finance ministers did nothing immediately to reduce the obligations Greece must fulfill to keep a lifeline of cash coming and avoid insolvency for the heavily indebted government.
The sole concession to Athens was to allow it to propose changes to the requirements agreed to with creditors by the previous Greek governments, in effect allowing Athens to change the shape of its obligations, not reduce them.
The problem is that this government came to power by promising to end austerity. This raises the question of whether they are about to break that promise.
Victory or not, the deal agreed to Friday has immediately put Mr. Tsipras in a tight corner at home, where pressure has mounted on him to pare back his government’s austerity program, despite pressure from Brussels.
As the Tsipras government worked Sunday to devise changes to propose, a chorus of lawmakers took to the airwaves and social media to condemn the deal, opening the way to a potentially embarrassing backlash in Parliament in Athens. At least one Syriza lawmaker threatened to resign.
The criticism was accompanied by furious speculation about how any proposed overhauls might affect citizens who voted in large numbers for Syriza, the anti-austerity party, with the express goal of easing hardships linked to the conditions of European loans.
The problem is that, the minute a nation decides to go into debt, it is compromising its national sovereignty. It now is “owned” by creditors who have the right to make demands on the nation and dictate its policies. At first this is just a theoretical problem that can be ignored. But when a country reaches Greece’s state, it becomes a practical matter.
The problem is that Greece wants to continue to borrow to continue spending and yet not pay back their debts. They can’t have it both ways. They can reject a dictated austerity imposed by foreign power, but they have to face the consequences of a budget deficit.
Ultimately, Greece ought to go back to its own currency and try to cover its expenses with taxes and other sources of revenue. That would involve a kind of “austerity,” but it would allow them to rebuild their economy.