The sight of proud Greek people in despair is so sad. Let’s get one thing clear, very little of the money loaned to Greece reaches them. You do not have to be a Nobel prize winning economist to follow the money trail.
It is in the pockets of private-sector creditors. The trickle that reaches Greek streets in the form of cash in circulation is a pittance. Varoufakis is right. The making of wealth has been corralled by the wealthy, the banks and financial systems in Germany and France. It boils down to a deal that a crooked street lender would be proud to see signed, a circular loan without end, plus a pound of flesh.
In my opinion, the mess Greece is in was caused by the ‘Troika’ (the European Commission, the European Central Bank, and the International Monetary Fund) from the deal forced on Greece in 2010. The repercussions are traumatic, a 25% decline in the country’s GDP. Greece’s youth unemployment, for example, now exceeds 60%. Is there another recession – perhaps it should be called depression – that has lasted so long and is guaranteed to last another five years? As far as the Troika is concerned Greece is biting the hand that feeds it.
In fact, Greece has done incredibly well in reducing its debt burden, better than the UK. They have reduced their deficit from 15% to 2%, and cut the pension burden 40% to 60%.
According to press statements, the Troika is still demanding that Greece achieve a “primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.” I look to respected economists for guidance: to a man (and a woman) they condemn that target as punitive because aiming for it will inevitably result “in a deeper downturn”.
The Greek premier Alexis Tsipras has warned that the current failure to agree a rescue deal for Greece spells the end of the Eurozone. In retaliation Tsipras has done the right thing, taken the Troika’s obstinacy to a plebiscite. And how the thought of real democracy at work angers the EU. But Tsipras is furious too. And he means business.
He presented his report to Parliament. Here is a brief extract:
“All the evidence we present in this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.”
Chapter One of the report concludes that, ‘the increase in debt was not due to excessive public spending, which in fact remained lower than the public spending of other Eurozone countries, but rather due to the payment of extremely high rates of interest to creditors, excessive and unjustified military spending, loss of tax revenues due to illicit capital outflows, recapitalisation of private banks, and the international imbalances created via the flaws in the design of the Monetary Union itself.’
It is also argued adopting the Euro led to a drastic increase of private debt in Greece to which major European private banks as well as the Greek banks were exposed.
Tspiras has played his ultimate chess move – a Referendum in which the population must choose the brutal package offered by the Troika (continued austerity and cuts in all public services and welfare) or no to the Euro and probably the EU. George Papandreou’s government tried the same tactic when he realised the conditions of loan offered to his administration was lethal, and would keep Greece poor. Those bastions of democracy, Germany and France forced his resignation, the Referendum was cancelled, and austerity unlimited imposed. The Troika repeats the folly. They intend to humiliate Greece. Again.
Jean-Claude Juncker bickers in public, making unstatesman-like comments that Tspras is vain. That, from the man presented to us as one of Tsipras’s only allies.
Finance Minister Varoufakis says the proposals for spending cuts and reforms are already so harsh and brutal the Germans themselves would never accept them. He said: “Greece will only commit to them if Europe agrees to a debt restructuring, investments and an end to the liquidity crisis.”
Meanwhile, bank at the media circus…
Meanwhile, our ‘liberal’ media veers from grudging sympathy to outright condemnation of the cradle of democracy as a nation of chronic work shy, tax evading, crooks.
Normally cautious politicians describe Tsipras as an ‘amateur.’ A radio reporter introduces Varoufakis as ‘flamboyant’, a description calculated to imply he is shallow and glib. Or gay. Tieless and riding a motorbike is considered over-the-top flashy for a serious politician. The increasingly eccentric BBC finance ‘expert’ Robert Peston dismisses Varoufakis as full of memorable phrases but unrealistic – another BBC staffer given free reign to toss in his private view as if writing a personal blog, like this.
Even the normally scrupulously fair human rights activist, Craig Murray, in an otherwise even-handed blog, falls foul of the colonial mentality. “We should not pretend that Greece is or was a socialist paradise. It has been a very corrupt country with elite tax impunity and a focus for money laundering for decades. Membership of the euro did indeed lead to lifestyle subsidy by the German taxpayer, there is no point pretending it didn’t. It also led to Greece being internationally uncompetitive.” That’s one hell of a sweeping statement, and dropping in the phrase ‘not a socialist paradise’ is exactly the jeer tossed at Scotland’s attempt to regain its sovereignty and self-respect led by the SNP.
It’s clear to me European leaders (not all) want to see the end of Alexis Tsipras’ leftist government. It must be damn uncomfortable to negotiate with an administration that is utterly opposed to the types of policies you uphold, policies that have reduced other nations to second-rate economies. Spain knows what that is like. The Greek government is determined to curb power that increases inequality, an ambition that won’t win them friends in high places. Oh for the good old romantic days of military juntas, regular assassinations of opponents, and administrations more favourable to our interests.
Other than proposing Greece’s debt is wiped out, (see previous essay ‘Greece’s Trojan Horse‘) allowing it to flourish without bleeding to death, and in a few years perhaps go to the World Bank for a humane loan, it’s hard (for me at least) to see what can be done.
But if I was in Greece now I’d vote to get out of the EU’s grip entirely, and take the initial pain… same principle as I expected to result from the Scottish Referendum, be in charge of your destiny, and practice democracy as you would wish it to be practiced – for the people!
“It is called a democracy, for the administration is run with a view to the interests of the many, not of the few” Thucydides on the constitution of the Athenian people.