Want democracy? Leave the eurozone

Greece's election result is academic, says Merryn Somerset Webb. The country is ruled by EU finance ministers and the ECB. The only way to get its freedom back is to leave the eurozone.


Greece isn't much of a democracy at the moment but it is still a sovereign nation

I went on Radio 4's Broadcasting House on Sunday morning with Ann Pettifor to talk about the Greek election. The idea was to talk about whether it really mattered who won (you can listen to it here, from about 11 minutes in). The answer, from both of us, was "no, not really."

If a person is deeply in debt and not producing the income to cover the interest plus a bit, he is beholden to his creditors one way or another to his mortgage lender, or perhaps to his bankruptcy trustees. If a company is deeply in debt and having the same trouble it management is at the mercy of its banks and its bond holders (see my post on Glencore here). The same goes for countries.

As long as Greece is determined to stay in the eurozone and run its affairs in euros, it is subject to the bailout plan agreed with its creditors. So whoever won the election, (however left wing or right wing, however pro-austerity or anti-austerity) would have had no choice but to have a go at delivering on the reforms and spending cuts that make up his bailout deal.

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You can only spend money as you wish if you have money. And Greece, with its €86bn bailout underway, quite clearly does not something the Greek people with their firm endorsement of Tsipras clearly understand. That doesn't mean that Greece has no options.

In the introduction to the 2012 edition of his book The Rotten Heart of Europe, Bernard Connolly pointed out that it was inevitable that the structure of the eurozone would cause financial crisis. Those suffering most would then be offered the chance to "sign away their sovereignty in return for some supposed economic palliative". They would have to choose between more Europe or no Europe.

"If a country declares that a new national currency is henceforth its legal tender and if that country's central bank withdraws from the Eurosystem, that country will be in infringement of the treaty. So what? The Commission issues hundreds of infringement proceedings every year and some of them years later find their way to the so called ECJ. Why should a country suffering the purgatory of monetary union (the official German view of monetary union as it affects others) accept it as an eternal hell for fear of ECJ censure any more than it worries about infringement procedures because it has not complied with NSU rules on, say, the size of print on packets of breakfast cereal?"

But Greece isn't exactly a financial paradise at the moment. It also isn't much of a democracy (it is ruled by the EU's finance ministers and the ECB). However it is still a sovereign nation. If it wants its freedom back, it can leave the eurozone (if not the EU). Then its next election would at least be worth voting in unlike the last one.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.