Monday, May 21, 2012

When the EU threatens, stay cool!

For some time now, Greeks have felt deprived of their sovereignty by the EU. There are countless examples which could support such a feeling. Greeks went up in arms about that. While such an emotional reaction is understandable, it is far more effective to stay cool.

In early 2000, the conservative People's Party of Austria (ÖVP) entered into a coalition with the Freedom Party (FPÖ) to form a government. At that time, Austria was already one of then 15 EU members. The EU did not like the new government because the FPÖ was lead by a man named Jörg Haider (who did not become a member of the government). Wikipedia describes this (accurately) as follows:

In an attempt to pressure Schüssel's democratically elected government into submission, the heads of the governments of the other 14 EU members decided to cease cooperation with the Austrian government, as it was felt in many countries that the cordon sanitaire against coalitions with parties considered as right-wing extremists, which had mostly held in Western Europe since 1945, had been breached. Because nothing in the legal framework of the European Union supported an official measure, informal (and officially non-existent) "sanctions" were imposed by mutual consent. For several months, other national leaders (most of all France's president Jacques Chirac, Germany's chancellor Gerhard Schröder, and leading Belgian politicians) ostracized the members of the Schüssel government, refusing basic social interaction and keeping unavoidable contacts to the legally required minimum. (However, the very same European Union politicians had not even considered such measures against Italy earlier in 1994, or afterwards in 2001, when the highly controversial Silvio Berlusconi established his governments with right-wing Alleanza Nazionale and the outspokenly anti-European Lega Nord.)

EU-law did not provide a way out of the impasse which followed because the "sanctions" imposed on Austria were not founded in the EU-Charter. The Austrian Chancellor would attend EU-conferences where he was not greeted by handshake and isolated during discussions.

Fortunately, Austria had a Chancellor one of whose major strengths was to stay cool under pressure. Not only did he react to all of this matter-of-factly but he even came up with a solution out of this diplomatic impasse: he suggested that the EU should send a Group of Wisemen to Austria to issue a report on the situation in Austria. In that report, the wisemen concluded that Austria was a democracy and that it had a state of law. This allowed the EU to withdraw sanctions against Austria which sanctions were not founded in the EU-Charter. Careful as the EU is, they stated that they would continue "to monitor the situation in Austria carefully".

From then on, the new government had become a government which no longer had anything to lose, domestically or internationally. This encouraged the government to embark on implementing a series of important reforms (above all a pension reform) which triggered a brief "Golden Age" for the Austrian economy. The German Chancellor Gerhard Schröder had been one of the fiercest critics of the new Austrian government. A few years later when the German economy was in deep trouble for lack of reforms, he could read a coverstory in Der Spiegel which was titled "Are Austrians perhaps the better Germans?"

And the moral of the story for Greece? Play the game which the EU wants you to play on the outside and pursue your own agenda. But you have got to have an agenda!!!


  1. There may be some misunderstanding, but I am afraid that the advice "Play the game which the EU wants you to play on the outside and pursue your own agenda" sounds much like what Greek governments have done for years, with enormous damage to the EU and to their own country.
    I can understand that there is resentment against too much interference from European institutions. (That sort of resentment is growing also in other member states, and I think in some policy areas it is justified, because the EU institutions do not always respect the principle of subsidiarity, that is they create too many regulations at the European level which are at best unnecessary and sometimes damaging.)
    But as far as the euro area is concerned, matters are different. Membership in that group is voluntary, but it is connected with a (voluntary) loss of sovereignty. If you want to enjoy the advantages of membership, you must accept that loss of sovereignty and you have to observe the rules. - If you join a club of non-smokers, you have to stop smoking. You cannot continue to smoke and on top of that expect the other members to pay for your cigarettes.
    I would, however, fully agree with you when you want to say that the EU (and all member states) should refrain from advice and criticism on national elections. Whom people elect for their national parliaments, that is exclusively a national matter. And in the case of Haider, I think that indeed the reaction of European institutions was inappropriate.

    1. My wording of "pursuing your own agenda" can lead to misunderstandings. I see that now.

      The "own agenda" is, to me, a plan by a national government to get their country in shape through reforms and make it a very attractive place for investment. No new jobs without prior investment; no new investment without the right kind of business conditions.

      Such a plan might be in conflict with the powers that be because they might prefer to first bail out banks to calm markets. My suggestion is: go along with such wishes because that really doesn't harm you but do that only if and when you get support for your own agenda. If your agenda is good, it will be impossible for the powers that be not to support you.

      My criticm of Greece is that it has not yet come up with any agenda to make the country a good place to do business.

    2. Thank you for this clarification! I get your point now, and I agree with it.