Is Austerity Undermining Democracy? A Look at Greece.

The European Project, a phrase that has dominated the news recently, is more and more conceived of as a wholly economic idea: a group of countries working together to ensure a free-market, neoliberal climate, independent of economic conditions. It is pursued whether it is a time of plenty or a time of destitution.

This purely economic view represents, however, a general failure by Europe’s elite to understand that the economic community cannot flourish if the democratic aspect of the European Project is not firmly entrenched and maintained as the bedrock of society. Without the widespread stability that democracy provides, economic prosperity cannot be ensured, and the current actions of the EU, particularly in terms of their dealings with Greece, seem to illustrate a serious failure to understand this.

Because the crisis is insulated in Greece, and seems to pose no economic threat to the rest of the continent, with bond markets stable even in other vulnerable countries, the EU appears happy to continue imposing unpopular austerity measures, which lack a mandate, on the Greek population. What they are failing to perceive, however, is that through their actions, they are fatally undermining Greek democracy, and thus in turn, one of the key pillars on which the European Project’s economic success is based.

The problem posed to Greek democracy by the EU’s actions is inherent within the bailout deal given to Greece in 2010 and 2012. The bailout is essentially the same as a Structural Adjustment Programme (SAP) – money is leant in return for structural changes; in this case, changes that reorganize Greece into a neo-liberal, small-state economy.

The reason this poses a threat to democracy is that, although historically, structural adjustment programmes can be very effective at maintaining struggling democracies, the cases of this are those in which the SAP is maximalist in type, whereashe Greek bailout is minimalist. Maximalism, in this context, is the principal of giving more aid than the state and democracy actually requires in order to continue existing, rather than the bare neo-liberal minimum. This enables the state to enjoy some choice about how it runs, rather than being completely constricted to the smallest state possible, which is inherent within minimalist, austerity SAPs.

The reason maximalism is important in the context of democracy, and thus why we should be pursuing it in the context of the European Project is, that it allows democratic choice, even if somewhat restricted, to still exist. Although the state will unlikely be able, in the economic circumstances, to be extravagant, maximalist SAPs put it in a position to decide, or rather, let the people decide, whether they want to expand or contract the state to some extent. Thus, if the population votes for social democracy, as the Greeks have with Syriza, they are enabled to have at least some measure of it, rather than the bare austerity budget, which only allows for neo-liberal small-state economics. This choice is fundamental to democracy. If people do not have a choice between parties, then why would they bother voting?

Minimalist, or austerity SAPs, like the Greek bailout package, are completely derogatory to democracy, since they deny people this choice. Minimalist SAPs have been dominant ever since the fall of communism. Declining voter turnout is symptomatic of this in all the new democracies funded by SAPs, whether it is Mozambique or Angola. People become disinterested in democracy, because even if parties publicly espouse different policies, they are all tied inextricably to austerity budgets. Thus, countries could drift to authoritarianism—where either one party becomes completely dominant—because there is no point voting for the others.  Another result could be electoral success for extremist and anti-democratic parties because people lose faith with the system itself.

Ominously, this is already evident in Greece. As Simon Tillford, of the Centre for European Reform has argued, the Social Democrats of Europe, in the form of Pasok in Greece, have “immolated [themselves]…by enforcing what amount to reactionary policies in the name of the European Monetary Union.” The centre-left have been hamstrung into austerity policy, and so have ended up not providing a democratic alternative. This has resulted in the further-left, and more anti-Europe Syriza triumphing in their place. If Syriza continues to be held to austerity in the same way, then it is difficult to see any result but increasingly extreme lurches to the far-ends of the ideological spectrum, which are in turn more and more anti-democratic.

Pablo Iglesias of the socialist Spanish party Podemos has rightly suggested that because of this “the viability of the European Project [itself] is at stake”. The further the electorate must roam to find anti-austerity policies, the closer to anti-Europe, and, more importantly, to anti-democratic parties and ideologies they will be. The 2015 legislative elections were the first time in recent Greek history that parties heavily sceptical towards the current incarnation of the European Project gained more than 50% of the vote. Extremists with fundamentally anti-democratic tendencies took an unprecedented 15%. In Greece, somewhere around 30% of the vote is enough to form a government. If this trend continues, then an extremist government in Greece is a distinct possibility, and clearly, this is unfavourable to both democracy and economic stability.

German finance minister Shäuble justifies the strict enforcement of the austerity measures even after Syriza’s victory because he feels that “Elections change nothing”, and that “there are rules” that must be followed. What he fails to see is that if elections mean nothing, then democracy means nothing, and so a fundamental stepping-stone to the economic success of the European Project begins to break down. Certainly, it would be a bad fiscal precedent for the Eurozone to set if it let Greece pardon its debts completely. But, if the debt is not alleviated at all, and there continues to be a situation in which 90% of the bailout money is in fact used to service debt, then the Greeks will not only want nothing to do with Europe, but nothing to do with a democracy which is not allowed to offer them a choice. This is the fatal flaw in minimalist SAPs.

Although, in our Eurocentric world, it seems to matter little to us if African democracies fail to live up to western standards, it must surely be of greater importance if European democracy begins to falter. The EU, because of its economic tunnel vision, fails to realize that if this happens, as it appears to be doing in Greece, then economic security and prosperity are a pipedream. Democracy must be secured first if the European Project is to survive.

The solution lies in front of us. Tsipras has asked for more money to allow austerity to be alleviated and debt repayment to be tied explicitly to growth. He is not asking for a cancellation, but the European Project’s equivalent of a maximalist SAP. It should be given to him, otherwise Europe faces ever increasing extremism and unrest, neither of which are conducive to European democracy, and both of which hinder economic success.

If you are interested in writing a policy recommendation on how the EU should handle austerity measures and what should their next step be, please email editor@kingsthinktank.org

George Houghton

Energy and Environment Editor

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