Tagged with Greece

The Eurozone should respect Greek sovereignty

MerkelTsiprasThe bullying by Greece’s creditors continues. The latest ploy is to try, unilaterally, to interfere in Greece’s internal politics by re-defining the terms and purpose of Sunday’s referendum. It is patently clear that Tsipras called the referendum to ask the Greek people whether they accepted the latest bailout terms laid down by the creditors, yet the Eurozone 3 – Merkel, Hollande, and Juncker – are now claiming, on no evidence at all, that the referendum is about whether or not Greece wishes to stay in the Euro. It is no such thing. The technical question Greeks have to answer doesn’t even mention the single currency. The Eurozone leaders clearly fear that Syriza will win the referendum, and this clumsy attempt at interference is clearly designed to blackmail Greek voters into accepting the latest terms for a bailout extension. It won’t work.

The Eurozone line is that these bailout terms are final and there’s nothing further on offer. But of course that’s not true. They would say that, wouldn’t they? This is an extremely tense negotiation reaching its climax, and the participants will lay down conditions to try by any means to gain a settlement on their terms, saying for good measure that it’s their last offer, only to retreat to new terms and a new offer if their ‘final’ offer is rejected. In this case the cat is already out of the bag. The European Commission stated yesterday – for the first time in this long-drawn-out crisis, that it wanted to offer Greece debt relief. That is precisely what Tsipras has been demanding for 5 months throughout the stalemated negotiations. So why wasn’t this offered 5 months ago, and this whole crisis could have been averted?

It wasn’t offered then, and is only being offered now, because the most powerful interests within the Eurozone – the hardliner Merkel and the German banks – were determined to enforce their own principles of ordoliberalism on a compliant European economy, and thought they had the muscle to do so. It is only now when they fear that Tsipras’ latest move means they have lost control of the negotiations that they are hinting in the background that there could after all be a further compromise. Their reason of course is not concern about Greece which has suffered a 25% shrinkage of the economy comparable only to the Great Depression in the US in the 1930s, but rather about the future of their pet project, the Euro, which is the basis of German hegemony in Europe because in the long term no other country in the Eurozone can match German productivity, yet is precluded from regaining equilibrium via interest rate and exchange rate changes.

If the long-term unviable Euro is to survive, it must respect democracy equally, or more than, market power and in the immediate short-term re-open negotiations on the essential condition of a partial write-down of Greek debt (which currently at 180% of GDP even the IMF has pronounced is unmanageable) to a level consistent with economic growth (120% of GDP or below).

Wages, profits & investment In Greece

Greek Crisis, based on photo by Dave HoggThe IMF has placed a road-block in the way of a deal with the Greek government and it remains unclear whether any agreement can be reached. The prior agreement which the IMF rejected was itself already very onerous. But the IMF wants to shift the burden of paying for the crisis away from taxes on business and the better-paid towards more cuts in social protection. This is an insupportable burden as net median household incomes are already below €8,000 a year. Many multi-member households without work subsist solely on state and public sector pensions. Continue reading →

Austerity has failed Greece and its people – just as it is failing people here

Austerity is failingIn our country austerity is imposed by an elected government. In Greece, however, a government was elected to try a different way out of the crisis. But the will of the people is being thwarted by a troika of largely unelected institutions: the IMF, The European Council and the European Bank.Austerity is endangering the social fabric in Greece and it is not working to reduce the deficit because the actual debt has increased from 120% of the GDP to 180%.

Most gravely, Greek unemployment has reached 28% (60% for young people), and average income decreased by 40%. These levels are unsustainable which are unsustainable  will mean that even with the best will, the debt levels which their government has to deal with cannot be resolved. Continue reading →

Greek myths retold: confronting the ideologues of austerity

Merkel as Medusa - photo montage by Left Futures with apologies to CaravaggioThe world economy is not strong and the President of the United States is sufficiently concerned about new shocks to it that he recently met the Greek Finance Minister to urge ‘flexibility on all sides’ in the negotiations between the Syriza-led government and its creditors. US concern is fully justified.

In any attempt to reach agreement it is important both to have an objective assessment of the situation and to understand the perspective of those on the opposite side of the table. In Mythology that blocks progress in Greece Martin Wolf, the chief economics commentator for the Financial Times argues that negotiations to date are dominated by myths. He demolishes some of these key myths in turn: that a Greek exit would make the Eurozone stronger, that it would make Greece stronger, that Greece caused the crisis driven by private sector lending, that there has been no effort by Greeks to repay these debts, that Greece has the capacity to repay them, and that defaulting on the debts necessarily entails leaving the Eurozone. Continue reading →

What’s driving Germany’s hardline stance on Greece?

greek colonyBy Juan Torres López* and translated from the original Spanish by Tom Gill

The media and the centres of economic and political power in Europe try to make us believe that the difficulties in reaching agreement with Greece come from the demands and bad practices in this country and that it is the position of the new Greek government which justifies the intransigent treatment by its European partners, with Germany leading the way.

The truth is, however, that Greece has fulfilled to the letter the dictates of the troika but they have proven to be a complete failure in the recovery of the economy, reducing debt and improving the lives of people. The failed Troika policies justifies starting again in a different fashion. Continue reading →