There is no way to sugar coat it: The heroic struggle of the Greek people against a nation-killing austerity regime has failed, at least for now. After being diplomatically “waterboarded” (according to one European Union official) by the EU finance ministers – mainly German Finance Minister Wolfgang Schaeubel and Chancellor Angela Merkel – Greek Premier and Syriza party leader Alexis Tsipras conceded defeat in achieving their main objective. That objective was reducing the debt load crushing the country’s ability to grow out of its economic crisis.
Tsipras returns home with some additional loans, no reduction in debt load, and a nearly complete surrender of Greek sovereignty in exchange for immediate “aid.” Indeed, the deal Tsipras brings home is in many respects worse than the one Greeks voted down last week! Not only more austerity economic measures (see below), but additional punishment for the Greek people for: a) electing an anti-austerity government and b) having the impudence to put the German dictatorship over the EU to a democratic vote.
As reported in the Guardian, former Greek finance minister Yanis Varoufakis likened the deal to the 1919 Versailles treaty – widely seen as the harbinger of the Second World War. He called the deal “unviable.”
“This has nothing to do with economics. It has nothing to do with putting Greece back on the rails towards recovery,” Varoufakis told Australia’s public broadcaster. “This is a new Versailles treaty that is haunting Europe again, and the prime minister [Alexis Tsipras] knows it. He knows he’s damned if he does and he’s damned if he doesn’t.”
Paul Krugman, the Nobel prize-winning economist and prominent critic of austerity both here and in Greece, said the creditors’ demands on Greece “went beyond harsh into pure vindictiveness, [leading to the] complete destruction of national sovereignty [with] no hope of relief … .It’s a grotesque betrayal of everything the European project was supposed to stand for.”
What is austerity? For Greece, it means the following, on top of so-called previous “reforms” that have left Greece with huge reductions in pay AND 30 percent unemployment:
1. “Reforming the tax system” – in effect doubling the VAT tax (essentially a sales tax) from 12 percent to 23 percent.
2. Forcing the collection of taxes from workers — but not any Greek billionaires, the suppoed “job creators.” Merkel seems to have caught “foot in Mitt (Romney)” disease.
3. Cut promised pensions in half.
4. The International Monetary Fund will supervise every act of the Greek government, cutting off funds at any failure of the government to comply with draconian budget cuts in many areas.
5. 50 billion euros worth of Greek land, islands and historic sites will be given to EU creditors to pay them, and to recapitalize Greek banks. Note: EU – mainly German – creditors have acknowledged in the negotiations that they were aware the former right-wing Greek governments had lied about their economic statistics – yet still loaned them billions. Do they take any responsibility for their reckless 300 billion euro lending spree to a country they knew could not pay? No! Not a single euro forgiven, even though morally half the debt is their own responsibility.
Greece never recovered from the 2008 financial crisis. Now they will head even deeper into recession, and likely become another in a growing list of fragile or failed states.
One would think the implications of the Germans effectively dictating politics to Europe, in order to preserve a market environment nearly enslaved to Germany’s export-oriented economy, would cause grave concern. And it is. Fissures are widening.
Yet German finance capital must have the EU. German leaders think punishing Greece will enforce “fiscal discipline.” It’s a version of “the hungry dog hunts harder” philosophy of the Koch brothers, and their kennel of barking dogs running for president. Also reminiscent of a Bavarian corporal who became chancellor and drowned the world in blood. Starve those dogs too much and they will savage their masters! This is is not over!
Indeed – news alert – the IMF has just announced it will not support an agreement that does not include a substantial debt reduction for Greece, or at least a 30-year postponement in payments. It appears brother Tsipras may have been playing a deeper game than the press, including this development, presumably! Bravo!
What about Greece exiting the EU and the Eurozone – known by the shorthand “Grexit”?
Some, including on the left, think Greece should leave the EU, and abandon the euro currency altogether. The Greek people do not want that. In addition, the EU effectively shut down Greek banks and drained them of funds prior to last week’s referendum. That means conversion to a revived national currency – the drachma – would take place with nothing but current meager revenues. International trade for Greece – a big part of its economy before – would be cut to the bone for lack of any international credit. The drachma could start out being worth a tenth of the euro, if that. And they would still owe the debt, still in euros!
As it turns out, Grexit was the German preferred “solution” for Greece until France and Italy persuaded Merkel that it would result in a greater risk of the EU unraveling than the current “deal.”
There remain huge questions of whether the “deal” will pass the Greek parliament. Even If it does, political chaos will rise in Greece – and perhaps within Syria – and Syriza will probably lose the government. The “deal” threatens an inverse result in several northern European countries, who do not want to loan Greece any money at all, and also prefer Grexit.
There is a profound and important lesson for Americans, especially working people, in the Greek crisis. If you go to the billionaires and big banks for relief, you will need more than rational, even scientific, or humane arguments. You will need more than a popular vote in your support. You need the ability, power and authority to put them out of business, in jail, and confiscate their property before starting negotiations.
Here is an American parallel with which we are all too familiar: After the financial crash of 2008, when Jamie Dimon (CEO of JP Morgan), Lloyd Blankfein (Goldman Sachs), and Jeffrey Immelt (GE) approached then Treasury Secretary Henry Paulson (and incoming Treasury Secretary Timothy Geithner) for bailout relief following the Lehman Brothers collapse, they reportedly threatened to close their businesses if they were not protected against Lehman “counterparty” losses. Meaning, Lehman owed them money that would not be paid. Both Paulson and Geithner chose not to call their “bluff,” fearing 30% unemployment (like Greece) instead of the 12-15 percent we got.
The correct approach, by my lights, would go like this – although you have to have the political power to do it: Arrest all three; nationalize, at least temporarily, their firms; and then begin “negotiations.”
If Greece gets some breathing room, then the leadership may find the path to progress for all its people. Whether it stays in the European Union or leaves, larger forces than just Greece will decide the fate of the impoverishing austerity regimes advancing across the world since Reagan/Thatcher, and the wreckage of terror and failed states in their wake. But, like Prometheus of old, the Greek leadership and people are striving to take fire from the gods. We should find ways to spread that fire – and its light – across the world.
Photo: German Finance Minister Wolfgang Schaeuble, right, talks with European Commissioner for Economic and Financial Affairs Pierre Moscovici during a meeting of eurogroup finance ministers regarding Greece, at the EU Council building in Brussels on Monday, July 13, 2015. Geert Vanden Wijngaert/AP