(link to part1)
Semi-sovereign governments in the periphery of Europe had no choice but to implement austerity measures. Otherwise there would not have been loans, which would have meant no money to pay salaries. This is the consequence of the poorly implemented monetary semi-union.
Why did the governments with money required austerity from the semi-sovereigns? One reason is that their banks had bought government bonds which they wanted to be sure would be honored. Therefore the priority was repayment of debt at the expense of social payments. However this does not explain the whole story. Another aspect is the need that lender governments had to cause the semi-sovereign populations to visibly suffer. Otherwise loans and cash transfers would have never been acceptable with the populations doing the lending. This aspect should not be underestimated. People do not easily transfer their money to others, and the need for parliament approved transfers requires the notion that the recipient is suffering and trying hard. In that aspect massive austerity does the job. A simple thought experiment should tell us that greeks and portuguese would be equally reluctant to transfer money to an hypothetical well-off south american middle class enjoying average-to-good living standards. Suffering is requirement for help (what else but constant visible suffering can explain the constant statements that Portugal is a success story in the implementation of the Bailout program?). Furthermore, given the association of debt with morality (see the views of David Graeber), suffering is seen as the just outcome for the accumulated debt (which is “immoral” and therefore deserves punishment). Finally, there is the ridiculous view that a national economy is like a family: I need not expand on this, but simultaneous mutual spending cuts everywhere, make everyone worse off.
Does this mean that weak semi-sovereigns have no responsibility? Of course not. During the Euro-years they happily navigated into the turbulent waters of unmanageable debt, low economic productivity, and disproportionally high labor costs.
In other circumstances, this level of austerity would have not been necessary. But in countries that lost the necessary institutions to handle these situations somewhat more smoothly, there was hardly a choice. What this means for the European project is, from the point of view of an internationalist as myself and many others, unbelievably sad and tragic. European solidarity was proven to be a rare commodity. Only at the verge of total catastrophe for all was Greece allowed to re-structure its debt, and anti-German slogans were easy to find everywhere in the periphery. The rift that was allowed to open between peoples, shows that Europe might be far from the warring days of the past century, but it is also nowhere near a real integration of peoples. It’s still us and them – from all sides.
Can semi-sovereignty be maintained? This is a political decision. It can, but it will require a strange co-habitation of peoples who are, evidently, not willing to support a real shared-sovereignty, but are also not willing to devolve to separate states. For this group, the way back is depressing and dangerous, the way forward is uncertain and controversial, and the current position is unsustainable. It’s not looking good.