English version of the article published in El Mundo February 22, 2015.
(Versión en inglés de mi artículo publicado en El Mundo el 22 de frebrero de 2015).
The negotiation between the Eurogroup and the Government of Alexis Tsipras has revealed the enormous constraint posed by the European Union for any country wishing for eccentric solutions. Although there is still no fiscal union or Eurobonds, the common currency already represents a massive mutualisation of the country risk, and this is evident in the case of small countries of the euro.
The first restriction that often meets the desire of a politician is the reality. But it is easy to overcome it through narrative strategies. Pure demagoguery, exacerbation of national sentiment and targeting of enemies tend to be the most common mechanisms for “story-telling”. It is a hugely effective formula because profitability at the polls is high, and its cost is relatively low.
A second constraint of the will of the ruler are the markets. If markets lend them money to finance their politics, it’s fine. (It’s bad for future generations who will pay the debt, but the elections must be won in the present). But it can happen, as happened to Spain – at least moderately from 2010 and critically in 2012-, that markets penalize you and so, the risk premium raises. Then, the politician has no other choice than thoroughly rectify or design and implement more complex policies.
The euro is a restriction that is placed between the reality and the markets. Membership to this club allows you to challenge the reality with the help of your partners. If Greece were not in the euro, it would be in default from 2010 and outside capital markets. We must remember that in the 19th century, when Athens did not pay its external debt, it was marginalized from the international credit for 50 years.
But belonging to the club also implies a restriction. The Minister Varoufakis has been commissioned to verify to what extent the other democracies of the euro (which the Financial Times columnists tend to ignore) are willing to finance the mandate which the Greek people gave to Syriza. The test will come at a crucial stage on Monday, when the euro group will examine the viability of its economic measures. All narrative strategies should stay trapped into the strainer. I.e. the only choice for Tsipras is to undertake a deep reform of his country. As its ideological paradigm -Communist until 1991 and since then radical socialism- has not given rise to viable reforms in the EU, he has two options: or change the world (voluntarily abandoning the euro, EU and seeking the protection of Russia) or change his paradigm and be pragmatic, i.e. to take the path of Lula da Silva and others.
The Greek case shows how the EU works as life insurance against the adventurous policies. The restriction is greater the more weak is the country. This is what I meant in the presentation of my book Lions against gods when I said that EU membership affected strongly the wishes of those who requested the opening of a constitutional process in Spain. It is not the same to write down a Constitution from scratch, during a delicate transition in the midst of the Cold War, than to redefine the Spanish Constitutional Pact in an environment that has been already marked by the European Union.
The EU is an insurance against the follies of the revolutionary parties, but also limits the political innovation. Since it is hard to imagine that extremists succeed simultaneously in 28 countries, the only feasible revolution would be outside the euro or the EU. After the Greece case, this may also have an unexpected effect: so, even the more opportunistic politicians will seem to be acceptable to us once they show an understanding with the troika or its successors.