Greece still has many hurdles to jump through before it can see its 86bn euro bailout being enacted. First, a vote in the Greek parliament is needed by Wednesday, which seems likely with opposition support. Parliaments in several eurozone states also have to approve the new bailout. In the longer term, Greece’s economy will likely enter a serious recession – a contraction of 3%, a rise in unemployment above 26%, and that’s before the ECB announces any further emergency liquidity (ELA) to prop up Greece’s virtually bust banking system, with capital controls to be kept in place for some time yet, and banks of course, still closed. And on Alexis Tsipras’ desk, a bill of 3.5bn euros to be paid to the ECB by next Monday.
With the vote on Greece’s bailout producing a decisive ‘no’ vote last Sunday, it was as much a referendum on prime minister Alexis Tsipras and his Syriza government, who now face supporting a more draconian bailout than was previously offered. The shift to populist parties across Europe is a trend that is set to continue, given the success of UKIP as a significant player in UK politics, the rapid rise of Podemos and latterly Ciutadans in Spain, as well as other parties across the continent challenging the consensus and traditional party politics. Together with this is a growing probing of democracy in Brussels, as many politicians will use the Greek deal as a means of making bold statements on the brutal nature of negotiations EU-style. Among them, the politics – and fairness – of austerity – endlessly debated between economists, its effects witnessed on every level in pharmacies and homes in Greece.
Talks around the table about Greece’s bailout flared up European divisions on the country’s exit from the single currency it has just avoided. Similar rifts on the migrant crisis have divided north and south Europe – the lion share of the 137,000 people in the first six months of the year arriving at the shores of Italy and Greece, the majority fleeing from Syria’s bloody civil war, according to a recent UNHCR report.
A look at headlines in recent days points to the continued scale of this problem. “Hungary begins work on border fence to keep out migrants”. 80,000 migrants have already reached Hungary this year, 80% of them from Syria, Iraq and Afghanistan. In fact, Hungary received more refugees per capita than any other EU country apart from Sweden. The threat of migrants is causing other European states to erect walls and fences, a physical and symbolic image of this problem.
The solidarity needed to implement Brussels’ plan to distribute migrants more fairly throughout Europe and ease the pressure on its most vulnerable states was in short evidence, after the plan was rejected at the end of June by European leaders, confirming again the toxic nature of immigration.
Long ignored in the European news cycle has been Ukraine. Its economy is forecast to shrink by nine percent this year, so precarious the situation remains in the country. Russia’s frozen conflict in the east has affected production, as a trade war continues. Gas supplies from Russia to Ukraine, as of the beginning of July, have been halted.
Ukrainian president Petro Poroshenko spoke yesterday of Russia’s plan to make Ukraine a “state of bondage”, wishing to exert political influence through the conflict in the east. He said: “Ukraine won’t allow that.”
He also warned of a new spike in military activity in Donbass: “We’ve got information that there is a record large number of the armed forces of the Russian federation along with the border of Ukraine.”
The Greek deal this morning has also staved off the threat of Russian economic assistance for the crippled southern European economy. Russian president Vladimir Putin was keen to ally with Tsipras, the latter describing Russia as one of “Greece’s most important partners” just last month. In addition, NATO movements in the Baltics to counter Russian aggression look unlikely to end any time soon.
A cocktail of economics and politics have already made for an incredibly turbulent year for Europe and its institutions. Disagreements are likely to create further divisions, proving the difficulty in mastering the art of diplomacy in such a divergent continent.
Andrew Connell 