Skip to main content
Menu

Main navigation

  • About
    • Annual Reports
    • Leadership
    • Jobs
    • Student Programs
    • Media Information
    • Store
    • Contact
    LOADING...
  • Experts
    • Policy Scholars
    • Adjunct Scholars
    • Fellows
  • Events
    • Upcoming
    • Past
    • Event FAQs
    • Sphere Summit
    LOADING...
  • Publications
    • Studies
    • Commentary
    • Books
    • Reviews and Journals
    • Public Filings
    LOADING...
  • Blog
  • Donate
    • Sponsorship Benefits
    • Ways to Give
    • Planned Giving

Issues

  • Constitution and Law
    • Constitutional Law
    • Criminal Justice
    • Free Speech and Civil Liberties
  • Economics
    • Banking and Finance
    • Monetary Policy
    • Regulation
    • Tax and Budget Policy
  • Politics and Society
    • Education
    • Government and Politics
    • Health Care
    • Poverty and Social Welfare
    • Technology and Privacy
  • International
    • Defense and Foreign Policy
    • Global Freedom
    • Immigration
    • Trade Policy
Live Now

Blog


  • Blog Home
  • RSS

Email Signup

Sign up to have blog posts delivered straight to your inbox!

Topics
  • Banking and Finance
  • Constitutional Law
  • Criminal Justice
  • Defense and Foreign Policy
  • Education
  • Free Speech and Civil Liberties
  • Global Freedom
  • Government and Politics
  • Health Care
  • Immigration
  • Monetary Policy
  • Poverty and Social Welfare
  • Regulation
  • Tax and Budget Policy
  • Technology and Privacy
  • Trade Policy
Archives
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • September 2009
  • August 2009
  • July 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • February 2009
  • January 2009
  • December 2008
  • November 2008
  • October 2008
  • September 2008
  • August 2008
  • July 2008
  • June 2008
  • May 2008
  • April 2008
  • March 2008
  • February 2008
  • January 2008
  • December 2007
  • November 2007
  • October 2007
  • September 2007
  • August 2007
  • July 2007
  • June 2007
  • May 2007
  • April 2007
  • March 2007
  • February 2007
  • January 2007
  • December 2006
  • November 2006
  • October 2006
  • September 2006
  • August 2006
  • July 2006
  • June 2006
  • May 2006
  • April 2006
  • Show More
February 3, 2015 10:58AM

Will Greece Unravel the European Experiment?

By Doug Bandow

SHARE

The Greek elections, in which the radical left-wing Syriza won a near majority, shattered the Brussels consensus.  A breakdown of the European bail-out program might make a Greek exit from the Euro (“Grexit”) the only feasible option.  And the popular revolt against outsiders dictating economic policy may block new attempts to expand Brussels’ power over EU members.

Europe remains the world’s most important economic unit.  However, the EU failed to live up to the grand hopes of the Eurocrats, the academic, bureaucratic, business, media, and political elites who dominate continental politics and policy.  Voters rejected the proposed constitution to expand Brussels’ authority and reduce national independence a decade ago. 

The Eurocrats then repackaged the convoluted constitution as an incomprehensible treaty, for approval by national parliaments. More power shifted to Brussels. 

However, multiplying bureaucracy stifled action.  Loyalty to the EU failed to extend beyond the organization’s sprawling headquarters buildings in Brussels. 

Then the Euro crisis exploded.  The Eurozone created a common currency.  Only 19 of 28 EU members today belong, but in theory all are supposed to eventually join.  Even the Euro’s architects recognized the inherent instability of creating a monetary union without a common budget.

Once in, Athens borrowed at essentially German interest rates and spent wildly.  Soon the loan bills came due and Athens couldn’t pay, which triggered a cascade of crises and bail-outs.

Although nominally concerned about Greece and other aid recipients, many Eurocrats had a larger purpose in mind.  Said German Chancellor Angela Merkel:  “We must overcome the architectural flaws that worked their way into the economic and monetary union during its formation.”  Thus, Euroelites used the crisis to bludgeon the European public to accept further continental consolidation. 

European leaders insisted that no country, no matter how badly indebted, should leave the Eurozone.  The EU would lend more in return for economic austerity.  Although the Greek economy has started growing again, it shrank a quarter since 2008 and unemployment still tops 26 percent. 

That explains why Greeks voted for Syriza, which offered dreamy promises of more spending along with angry demands for debt relief.  The Eurocrats imagined that Tsipras would moderate like so many previous radicals had done.  But so far he and his party have given no indication of retreating. 

Doing so would disillusion Syriza’s supporters, who voted for non-violent revolution against a corrupt, failed establishment.  Tsipras also would risk his government—Syriza is a coalition of leftist parties. 

Crisis could come quickly.  The existing bailout program ends in a month.  Tax revenues are down, borrowing will become difficult, spending is set to spike.  Grexit might look attractive to Athens.

This horrifies the Eurocrats.  Worried Chancellor Angela Merkel:  “If the Euro fails it’s not just the currency that fails, but Europe and the idea of European unification.” 

Yet if European leaders blink in their game of financial chicken with the Tsipras government, their credibility will be destroyed.  If the Troika proves willing to deal, other states will demand similar concessions.  Caving in to debtors also would anger the wealthier countries footing the bill. 

Although the European Union is separate from the Eurozone, a break in the latter would impact the former.  And the EU already faces increasing challenges.  In part because of the lack of popular accountability, electoral opposition to Brussels is exploding.

Euroskeptic parties polled well in last year’s European Parliament elections.  These groups are playing an ever greater role in national contests as well.  As I point out in National Interest online:  “If Tsipras delivers on his promise that “Democracy will return to Greece,” popular opposition to the EU as well as Euro could swell elsewhere.”

Alexis Tsipras and Syriza have delivered an electoral earthquake.  Even if Syriza’s economic nostrums fail, its electoral victory may end up reinvigorating popular sovereignty and accountability throughout Europe.  That could make radical party’s victory worthwhile.

Related Tags
Defense and Foreign Policy, Government and Politics

Stay Connected to Cato

Sign up for the newsletter to receive periodic updates on Cato research, events, and publications.

View All Newsletters

1000 Massachusetts Ave, NW,
Washington, DC 20001-5403
(202) 842-0200
Contact Us
Privacy

Footer 1

  • About
    • Annual Reports
    • Leadership
    • Jobs
    • Student Programs
    • Media Information
    • Store
    • Contact

Footer 2

  • Experts
    • Policy Scholars
    • Adjunct Scholars
    • Fellows
  • Events
    • Upcoming
    • Past
    • Event FAQs
    • Sphere Summit

Footer 3

  • Publications
    • Books
    • Cato Journal
    • Regulation
    • Cato Policy Report
    • Cato Supreme Court Review
    • Cato’s Letter
    • Human Freedom Index
    • Economic Freedom of the World
    • Cato Handbook for Policymakers

Footer 4

  • Blog
  • Donate
    • Sponsorship Benefits
    • Ways to Give
    • Planned Giving
Also from Cato Institute:
Libertarianism.org
|
Humanprogress.org
|
Downsizinggovernment.org