Could Greece be leading Europe’s ‘March for the Alternative’?

By Richard Howitt MEP

Of the 29 most industrialised economies in the world, the country with the second fastest and deepest cuts is the United Kingdom of David Cameron and George Osborne.

The only country where deficit reduction is more rapid is Greece.

So in a week where Socialist and Democrat MEPs are gathering in Athens, what are the political lessons from Labour’s sister party PASOK for how the left in Britain and across Europe should respond to the crisis?

First, dismiss from your mind Tory Eurosceptic sneering about the Eurozone. PASOK won elections in Greece following the failures of the previous conservative New Democracy government. Despite the severe impact of cuts and unrest on the streets, they retain public trust for their handling of the crisis, recording continuing opinion poll leads. Most of all, the proposals for much-needed economic reform in Greece were integral to PASOK’s manifesto and not reluctantly imposed from outside.

But the clear message to us from our PASOK colleagues is that Socialists in Europe should distinguish between reform and austerity.

‘Too far, too fast’ should not simply be the refrain for Labour’s two Eds, but for Socialists across Europe.

Within five years cuts projected for the EU as a whole will see public investment fall to 1.5% of GDP instead of 2.5% in 2010. Unemployment already standing at 23 million continues to rise.

So at last week’s European Council, it was crucial that arguments from the left and trade unions were successful in averting agreement of a Euro-pact which had threatened to be entirely deflationary and lock-in permanently monetarist fiscal policy at the EU level.

The minority of centre-left governments, including Greece, were successful in getting important references to job creation and to respect for collective bargaining in to the agreement. Germany failed in its insistence that each country would have to introduce constitutional requirements to respect the pact. But Conservatives succeeded in rejecting any reference to social rights.

Speaking to the Socialist Group of MEPs, Greek Prime Minister George Papandreou says Greece has cut the deficit by 6%, reformed pensions to make them viable, opened up more than a hundred professions, introduced privatisation from roads to airports to gaming, now publishes all government expenditure on the internet and that the country is actually on track to be in surplus by 2012.

“We were not a poor country but a country of poor governance,” he told us.

But Papandreou slams the Conservative myth that the markets will solve everything, when the banks and the credit rating agencies refuse to acknowledge what the painful reforms have achieved.

He also hits out at Conservative claims that the crisis is one of high welfare spending and profligacy, when the real blame should fall on lack of transparency in financial markets and corrupt practices in the financial sector.

He identifies this as a problem not of corruption, but of democracy itself threatened by a ‘super class’ in which wealth, power and influence are over-concentrated in the hands of a few.

“Europe needs a democratic revolution to strengthen our institutions just as much as those protesting in Tahrir Square,” he told us.

It is rare to hear such language from a party of government not opposition, and carries real authority when spoken from a record of economic responsibility.

But private discussions with PASOK colleagues suggest there are three principal lessons from the Greek crisis to Labour and our sister parties across Europe.

First, it is essential for the left to offer a vision. Parties of the right treat cuts as an accountancy exercise and give those suffering pain little hope that it can still lead to a better future.

Second, the European left has to support new ways of raising money, including full support for a transnational financial transactions tax – the socialist campaign for a ‘Robin Hood’ tax – and for the creation of a Euro Bond. We need the money but we also need to show the political realism that raising revenue demonstrates.

Third, although the European Council failed to countenance it, Socialists cannot stand by as welfare is dismantled and must refuse to accept Conservative attempts throughout the EU to strip away Europe’s social model.

Committing Greece to an alternative economic model of environmentally sustainable and high value-added production, Papandreou puts it succinctly: “Competitiveness should be based on quality not inequality.”

On the very day we met with PASOK, the markets lowered Greece’s credit rating once again. It showed how the economic solidarity the EU has given to Greece needs to be matched by political solidarity amongst Socialists symbolised by our joint meeting this week.

Greece may be struggling to calm the markets but its experience should excite all those who suggest it is the markets themselves which need reform.

Richard Howitt MEP is Labour Member of the European Parliament for the East of England.