Greek 'democracy' means little to creditors

MAD RUSH: A National Bank of Greece employee distributing priority tickets to pensioners, who were lining up to withdraw part of their pension, in Athens on July 1. Under capital controls, pensioners can withdraw 120 euros (S$180) per week.


    Jul 09, 2015

    Greek 'democracy' means little to creditors

    THOSE who thought up the concept of democracy in Greece two millennia ago could not in their wildest dreams have imagined what is transpiring at this moment. But, then again, knowing about democracy does not necessarily mean you know everything.

    The modern Greeks are learning the hard way how an "ideal" can disintegrate into thin air when something far less abstract - like money - takes control. Which is why we have been saddened (or entertained, depending on where you come from) by what is going on in Europe.

    The Greek referendum on Sunday was democracy's last-ditch effort to stay relevant. Mind you, ballot boxes are the last thing money needs. You go to vote for "minor" things, like whether certain people you hardly know should serve in Parliament or the presidency.

    When it comes to "major" things like whether, when and how you should pay off your debt, the "majority" do not decide, the creditors do.

    In other words, if a bank has 100 debtors, those debtors cannot hold a vote to legitimise their collective default. They cannot just say to the bank: "We live in a democratic world, so here's our joint decision not to pay you. Take it." The world does not work that way.

    When the Greeks invented democracy, people were probably more idealised than monetised. Today, it is the other way round. Throw in massive amounts of money and democracy can get a little confused.

    If an entire country votes to default, is that democracy? If a continent votes to override that country, is that democracy? If the rest of the world votes to veto the continent, is that democracy? If the world's vote should count as the ultimate democracy, why do we need the United Nations Security Council?

    This last question, of course, does not involve money, not directly at least, but you get the idea. Democracy is what some people say it is, not what the majority think it is.

    When push comes to shove, democracy in its most original sense fades. That is not its fault. The ideal is great, but those proclaiming to cherish it cannot just go all the way. When massive economic interests are at stake, who cares what the majority want or think should be done?


    Back to Greece, we cannot say democracy has worked wonders. It is a "Greek tragedy" with strong democratic flavours.

    Populist leaders have played a big role in taking the nation to the crisis point. Voters wielded their power and achieved immediate gains or respite, in the process overlooking their long-term, sustainable future. And there have been several "democratic" exercises in the European Union associated with the Greek woes.

    Democracy's misery will be complete if Greece, the birthplace of democracy, has to turn to Russia.

    However, seeking support from democracy's archenemy should be Greece's strongest bargaining chip. The nation that invented democracy might have to hold its creation hostage, so to speak.

    "If you do not help me, democratic world, I will have to turn to the other side," Greece can say to the likes of Germany, France and the United States. "Of course, I would be embarrassed, but I have nothing to lose."

    So the referendum might not be democracy's last-ditch attempt to stay relevant after all. The real judgment day comes when the "free world" makes a final decision on whether Greece should be cut loose and engulfed by the not-so-free world.

    The Greeks must be ready for anything by now. If someone were to offer them US$10 billion (S$14 billion) in exchange for the suspension of elections for, say, five years, they would likely bite his hand off in eagerness.

    But Greece seeking assistance from undemocratic sources is not the worst-case scenario. The country could go up in flames and that would certainly be embarrassing to the democratic world.

    Financially, the phrase "too big to fail" refers to big banks. Democratically, it might soon refer to Greece.


    The problem is that, if money is used to rescue democracy, a different set of troubles will emerge.

    First, democracy will owe its survival to money - truly a bad situation. A precedent will be set, and there are other big debtors itchy about default that are keenly watching the developments.

    Spain is not in good shape, and neither is Portugal. "Let's vote to default" is one thing that lovers of democracy and creditors alike do not want to see becoming a trend.

    It is a long, bumpy road ahead. The Greeks have tried to apply their ancestors' invention to the current crisis, but it seems their ballot boxes will not provide the final answer. A lot will depend on what those who lent them money have to say.

    It is tragic. It is ironic. And it is probably sadistic, too.