The Greek tragedy, European economic policy and Austria

Hakan Akbulut

The ruling Social Democratic Party (SPÖ) and the People’s Party (ÖVP) have been defending the aid package to Greece, saying it was a necessary and indispensable measure. They have also repeated that not only Greece but also the Euro was at stake and that not helping Greece would be much costlier than providing the levels of aid agreed upon.[1] Finance Minister Josef Pröll from the ÖVP pointed to credits granted by Austrian banks to Greece amounting to 5 billion Euros in order to underline the necessity of the aid package, while the Governor of Austria’s Central Bank (OeNB), Thomas Nowotny, termed the package a “vaccination” which should help others forgo infection.[2] The ruling parties also emphasised that Greece had agreed to adopt and implement “harsh” austerity measures, which constituted a pre-condition for receiving the aid promised. Both the Alliance for the Future of Austria (BZÖ) and the Freedom Party (FPÖ) opposed the aid package, arguing that Greece would never be able to pay back the money of the Austrian taxpayers. In contrast, the Greens welcomed the aid package, arguing that otherwise a chain reaction could be set off entailing the necessity for additional aid packages for banks and leading to a devaluation of the Euro.[3] The President of the Austrian Trade Chamber (WKO), Christoph Leitl, also publicly supported the aid package, warning against a possible conflagration.[4] As for the public, according to a poll conducted among 500 Austrians for the magazine Profil, they are divided on the issue.[5] While 48 percent of the respondents stated that they supported financial aid to EU countries facing severe problems, 42 percent indicated that they opposed the idea.

Whereas the way the EU finance ministers reached the decision on Greece was not a topic of controversy in the related debate, the question arose as to whether the government could make such financial commitments without involving the parliament. The coalition partners ÖVP und SPÖ argued that the so-called Zahlungsbilanzstabilisierungsgesetz – a federal law adopted in 2009 in the face of the banking crisis which allows the finance minister to offer financial aid to countries Austria is economically closely associated with – provided the legal basis for the commitments made.[6] However, as the bill only allowed for transfers amounting to 2 billion Euros to a single country and Austria had accepted a credit line of 2.3 billion Euros in the case of Greece, the bill required amending. The opposition parties, on the other hand, argued that the aforementioned bill did not authorise the government to make such financial commitments and that additional parliamentary authorisation – that is to say a new law – was required. The Freedom Party had even been demanding a referendum on the issue. Nevertheless, the government, having the majority in parliament, changed the bill raising the credit line to 2.3 billion Euros.[7]

Both FPÖ and BZÖ have been claiming that Greece had joined and remained in the Monetary Union by providing false data to the Union. Moreover, from the very beginning of the crisis, the FPÖ has been demanding that Greece should be ejected from the Monetary Union. Member of European Parliament (MEP) Andreas Mölzer (FPÖ) argued that the current system was not viable and maintained that two different currency areas should be established – a hard currency region including countries like Germany, Austria and the Netherlands vs. a soft currency region with members like Greece, Spain or Portugal.[8] From the point of view of the BZÖ, Greece should leave the Monetary Union, though on a voluntary basis. While the ruling parties do not support the idea of throwing countries out of the Monetary Union, the German proposal to revoke the voting rights of countries that do not stick to the stability criteria is not rejected. Overall, all political actors have been calling for better control and monitoring mechanisms. In line with this, Finance Minister Josef Pröll (ÖVP) called for more powers for Eurostat and for the ECB to scrutinise the budgetary situation of member states and the data they provide, which should enable the Eurogroup to propose corrective measures at an early stage.[9]

There seems to exist a general understanding that further fiscal and economic coordination and stricter supervision are required on a European level. MEP Hannes Swoboda even stated that a common economic government constituted a necessity.[10] In a similar fashion, the President of the Austrian Federal Economic Chamber, Christoph Leitl, called for a common and binding economic policy.[11] At the same time, phrases such as deepening coordination and cooperation seem to require further specification and detailing, except for when used with general demands and ideas such as establishing a financial market supervision system on a European level, introducing a financial transaction tax and founding a European rating agency and an EU Monetary Fund. However, as the discussions on the Europe 2020 Strategy show, too much interference in budgetary and economic affairs does not seem to be desired.

While the reaction of the ruling parties to the Europe 2020 Strategy was positive in general, together with the opposition parties they criticised certain centralistic tendencies in the paper.[12] Ewald Stadler (BZÖ) argued the paper was reminiscent of economic plans presented by the communist party in the former Soviet Union. In the view of MEP Mölzer (FPÖ), the strategy de facto introduced a European economic government.[13] Apart from that, the parties in the parliament concurred that social aspects (especially poverty) were not paid due attention in the Strategy. According to the Green MEP Lunacek, the Strategy constitutes a repetition of the very same ideas and defects of the Lisbon Strategy by focusing on Gross Domestic Product growth, neglecting social aspects, and lacking binding goals.[14] In a similar fashion, the Strategy was criticised by the Austrian Trade Union Federation (ÖGB) for not paying due attention to the creation of new jobs and to job quality.[15] The reaction of the WKO was in general positive.[16]

[1] See for example Der Standard, 4 May 2010.

[2] Die Presse, 23 April 2010.

[3] Der Standard, 29 April 2010.

[4] WKO: Leitl zu Griechenland: “An gemeinsamer EU-Wirtschaftspolitik führt kein Weg mehr vorbei”, 29 April 2010, available at: (last access: 4 May 2010).

[5] Cf. Die Presse, 20 May 2010.

[6] Der Standard, 29 April 2010.

[7] Die Presse, 19 May 2010.

[8] FPÖ: Mölzer: Kerneuropäische Hartwährungszone als Ausweg aus der Euro-Krise, 3 May 2010, available at: (last access: 4 May 2010).

[9] Der Standard, 7 May 2010.

[10] Der Standard, 3 March 2010.

[11] Ibid.

[12] Parlament der Republik Österreich: Kritische Stimmen zur Strategie Europa 2020, 24 March 2010, available at: (last access: 20 May 2010).

[13] FPÖ-Parlmentsklub: Mölzer: EU2020-Stragie darf nicht nationalstaatliche Restsouveränität aushöhlen, 3 March 2010, available at: (last access: 4 May 2010).

[14] Die Grünen: Lunacek zu Barroso: Alte Lissabon-Ideen statt Grüner New Deal, 3 March 2010, available at: (last access: 10 May 2010).

[15] ÖGB Europabüro: DGB und ÖGB kritisieren geplante Ausgestaltung von EU 2020-Strategie, 23 April 2010, available at: (last access: 4 May 2010).

[16] Der Standard, 3 March 2010.