The Ugly Heart of the European Project

From Edward Harrison, at Foreign Policy, "Over the past week, European institutions have shown no qualms about bullying, arm-twisting, and humiliating a sovereign nation and its people":

Going into this past weekend, it looked as if the Grexit crisis that had occupied the world’s attention for weeks was finally heading into the final stretch.

Under pressure to comply with creditor demands, on Thursday Greece tabled a proposal that contained harsher austerity measures than the proposal that the Greek people had overwhelmingly rejected by referendum just one week prior. Prime Minister Alexis Tsipras then quickly garnered parliamentary approval for his proposal, to avoid the country’s economic collapse, returning to the negotiating table this weekend. Under pressure to make labor reforms, liberalize markets, and accelerate privatization in the face of threats to exclude Greece from the eurozone from German Finance Minister Wolfgang Schäuble, Greece had caved. It was total and complete capitulation — the white flag, if you will.It was total and complete capitulation — the white flag, if you will. Surely, it seemed by Friday morning, an agreement was close at hand.

But once Greece was at the table, something strange happened. The creditors upped the ante, looking for Greece to sign up to even more draconian and harsh terms. After hours of bickering, the negotiations ended with no conclusion and yet another ultimatum backed by Germany and its allies in the Netherlands, Austria, and the former eastern Bloc: either Greece accept the Eurogroup’s latest, more austere proposal for a bailout, ratify this series of reforms through Parliament by Wednesday or leave the eurozone “temporarily.” The demands included spending cuts, accelerated privatization, resolution of non-performing loans in the Greek banking system, and many other measures, all to be accomplished under the watchful eye of the Troika to ensure compliance. Italian Prime Minister Matteo Renzi saw these harsh terms as an attempt to humiliate Greece — as did many others commenting via Twitter.

Last Monday, I wrote on how the Greek referendum wouldn’t, and couldn’t, have changed the country’s reality. And that reality — the one that remains in place today — is that Greece faces one of only two possible outcomes: either harsh austerity and continued economic suffocation or exclusion from the eurozone, the so-called Grexit. The latter being a move that would precipitate a collapse in the banking system and economic turmoil.

Some may have believed that the overwhelming “no” vote of the referendum might have strengthened Greece’s hand, by creating an ugly dynamic in which the creditors appear to be overriding the democratically expressed wishes of a sovereign nation. After this weekend, those hopes have been dashed. The Greek government remains a supplicant, asking for mercy from its creditors, with little to no bargaining power.The Greek government remains a supplicant, asking for mercy from its creditors, with little to no bargaining power. And the institutions, known as the Troika, have shown no qualms about trampling over delicate sovereignty issues. What transpired this past weekend and the days leading up to it was pure power politics...

Like I said. That's harsh.

See also, "'Toxic' Deal Will Plunge Greece Into Turmoil After Tsipras 'Crucified' by EU Leaders at Summit, Say Analysts."