A mass protest against so-called austerity policies in Athens, Greece, on May 29, 2011 (Kotsolis/Wikimedia Commons)

A mass protest against so-called “austerity” policies in Athens, Greece, on May 29, 2011 (Kotsolis/Wikimedia Commons)

Greece has now agreed with the EU creditor nations to a four month extension of the stability program with some amendments in commitments and processes. Whether the crisis is finally defused or not is unclear. There will be several milestones during the next four months which could rekindle scenarios of an impasse in Greece’s relations with the EU and the Eurozone. The media clamor now is focused on an analysis of whether the agreement to provide a four month interim for further discussion and negotiation is a victory for the new government or a climb down from campaign promises. Unfortunately such discussions amount to political narcissism. They miss the point. The appropriate focus should be on what it will take to achieve an economic rebound in the country.

There are two aspects of economic policy for Greece and the Eurozone that are crucial (quite probably necessary and sufficient) to an economic rebound. The first issue relates to the need for economic reforms within Greece. Greece has now committed to producing a detailed list of such reforms for scrutiny by the Eurogroup. We may well learn over the coming days that Greece and its partners have very different concepts of what reforms are needed. The new government may intend to focus primarily on issues of tax collection and containment of the grey economy and tax avoidance. Certainly such measures are worthwhile. But the broader question is what additional reforms are necessary. I have insisted for several years now that the more essential focus for reforms should be on tackling the problem of inefficiency and low productivity within the public sector. The fact is that Greece has a very expensive public sector and yet low levels of service quality. (You get what you pay for doesn’t seem to apply.)

There is a desperate need to reengineer all of the processes within the public sector. For example, some time ago I had to visit IKA, the Greek social security organization, to arrange a change to my profile on the system. Parts of their process have been automated, so the initial experience was favorable. I went to a service window where an employee entered the change on a computer screen and then printed out the application. I then was told to take the application to the office supervisor where I signed the application. But then when I returned to the service window the employee handed me an additional sheet, which required a signature from the supervisor. After visiting the supervisor this second time he said I needed to take the paper to the protocol department. This was a small room at the other end of the hall where a woman opened her large transaction book and entered the details of my request in long hand. She then signed my application as well. Then it was back to the supervisor for his signature and one last visit to the service window to complete the process.

Quaint you might say, but such bureaucratic problems are endemic to Greece’s public sector. The current Minister of the Economy, Mr. Varoufakis, often cites the example of public sector processes where one bureau asks for a confirmatory letter issued by another bureau. Surely they should be able to access such data themselves. But citizens are forced to spend unproductive hours visiting various offices in order to complete their dealings. Without doubt these anachronistic procedures weigh heavily on attempts to raise productivity within the Greek economy as a whole and not just the public sector. One hopes that such a project to reengineer public sector process will feature prominently on the government’s reform list. However, even if this is the case, the design and implementation of such a mammoth task will take years to complete.

Another perspective on low public sector productivity relates to the extended or periphery state sector. During the 80s, while Andreas Papandreou was PM, numerous private sector companies were nationalized. Most of them were on the verge of bankruptcy and were ‘saved.’ Since then those companies have been poorly managed by political appointees, but the companies have been kept afloat with consequent drain on public funds. In fact the amount of such drain on public funds from nationalized companies and various service organizations under public sector supervision remains poorly accounted for.

During the previous government’s tenure there was an admission that the state was not in position to determine how many staff were employed in the quasi-public sector, nor what salaries those staff were paid. Apparently the preference was not to resolve this lack of management information, but rather to maintain it so as to enable continuing political patronage. Proposals have been presented over the years to deal with this problem via privatization.

SYRIZA, the party leading the current government, has been opposed to privatizations. In one sense they have a point. The present conditions within Greece’s political economy will result in a fire sale of government owned assets. However, such political debates miss sight of the pressing economic reality. If the government owned assets are not for sale, it is still essential that measures be taken to stop the bleeding, which results in continuing drain on public funds.

A case in point is Olympic Airways. The airline was poorly managed for decades. The government was funneling money to the company to cover losses. That practice was under investigation by the EU for illegal subsidies. When the airline was finally privatized, however, staff that were not hired at the new airline were either granted early pensions or absorbed into the public sector. So, the bleeding never stops. Consequently the lack of productivity within the broader public sector continues to weigh heavily on the entire economy. And, of course, the barrage of surtaxes and property taxes introduced by the previous government are seen as unjust and ultimately ineffective in dealing with the true problem.

The second aspect of the crisis relates to EU and Eurozone policies. The crux of the matter is that the German export juggernaut has a huge trade surplus with the rest of the world and with other Eurozone states. The result is a flow of capital from other Eurozone countries to Germany. Obviously policies are needed to promote the reverse flow of capital in order to promote economic development in depressed areas. Prior to the financial crisis the mechanism for such recycling of capital was that German banks bought government bonds issued by peripheral countries. That practice was not sustainable, as we have learned (the hard way). In fact the previous mechanism proved detrimental to peripheral economic development.

As the Greek government was able to access almost limitless and cheap capital, they chose to expand public sector salaries by taking on additional debt. The result was no increase in productivity or competitive advantage. The question before us now is what to do next. The preferred solution of the Eurogroup has been to insist that states facing a debt crisis implement an austerity program in order to reduce expenses. But such measures do nothing to resolve the problem of capital flows.

In fact, since the onset of the debt crisis there has been a flight to quality, so that ever more capital is concentrated in the developed North. What is needed of course is a program to encourage private sector investment of capital in the South. There are of course EU programs that intermediate such flows, but these are woefully inadequate. Unfortunately, the debate over the Greek program failed to address this need. The debate focused instead on procedure as opposed to substance.

Now the counter argument of course is that with or without policies aiming to recycle capital little of the proceeds would end up in Greece due to political and economic instability, as well as to issues of productivity and tax burdens here, which we analyzed above. So, again a first priority for the new government must be to reengineer the rules of the economic playing field.

A related question in examining EU policies is whether the Union will be capable of introducing new policies aimed at pan European growth and capital recycling. We may well have seen a peak in such policies supporting cohesion and economic convergence. The trend today within the EU is more toward nationalism than toward deeper union. A telling example is that the EU provided funds for the recapitalization of Greek banks (which were bankrupt as a result of the haircut on GGBs held by the private sector). However, rather than take on the management of those banks themselves, as one might expect a new shareholder to do, they passed the funds through a national holding company, thus adding additional debt on to Greece’s already unserviceable debt level.

A further aspect of the question over EU policies is the continuing dearth of common Eurozone institutions. Pension systems across the EU continue to be national affairs. Greece is in an especially poor position, but other Eurozone economies also have hidden actuarial deficits. One of the first measures introduced during Greece’s austerity program was a cut in pensions. Yes, in the short term that measure provided some liquidity relief to the pension fund, but it also was a deflationary measure. All of Europe needs well-funded pension schemes, but most don’t have them.

It would seem to be an urgent need for all of Europe to run actuarial studies to determine the facts and subsequently to devise pan European policies to deal with the impending crisis before it happens. Here again there seems to be little desire to deal with the problem or even to analyze and publish findings. Without such Eurozone institutions, however, future crisis will prove impossible to confront.

David Hillstrom

Article source: http://www.foreignpolicyjournal.com/2015/02/28/directions-and-challenges-for-the-greek-economy/

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Mar
02

The Assassination of Greece

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Yánis Varoufákis and Aléxis Tsípras

The Greek government is currently locked in a life and death struggle with the elite which dominate the banks and political decision-making centers of the European Union. What are at stake are the livelihoods of 11 million Greek workers, employees and small business people and the viability of the European Union. If the ruling Syriza government capitulates to the demands of the EU bankers and agrees to continue the austerity programs, Greece will be condemned to decades of regression, destitution and colonial rule. If Greece decides to resist, and is forced to exit the EU, it will need to repudiate its 270 billion Euro foreign debts, sending the international financial markets crashing and causing the EU to collapse.

The leadership of the EU is counting on Syriza leaders abandoning their commitments to the Greek electorate, which as of early February 2015, is overwhelmingly (over 70%) in favor of ending austerity and debt payments and moving forward toward state investment in national economic and social development [1]. The choices are stark; the consequences have world-historical significance. The issues go far beyond local or even regional, time-bound, impacts. The entire global financial system will be affected [2].

The default will ripple to all creditors and debtors, far beyond Europe; investor confidence in the entire western financial empire will be shaken. First and foremost all western banks have direct and indirect ties to the Greek banks [3]. When the latter collapse, they will be profoundly affected beyond what their governments can sustain. Massive state intervention will be the order of the day. The Greek government will have no choice but to take over the entire financial system . . . the domino effect will first and foremost effect Southern Europe and spread to the ‘dominant regions’ in the North and then across to England and North America [4].

To understand the origins of this crises and alternatives facing Greece and the EU, it is necessary to briefly survey the political and economic developments of the past three decades. We will proceed by examining Greek and EU relations between 1980 – 2000 and then proceed to the current collapse and EU intervention in the Greek economy. In the final section we will discuss the rise and election of Syriza, and its growing submissiveness in the context of EU dominance, and intransigence, highlighting the need for a radical break with the past relationship of ‘lord and vassal’.

Ancient History: The Making of the European Empire

In 1980 Greece was admitted to the European Economic Council as a vassal state of the emerging Franco-German Empire. With the election of Andreas Papandreou, leader of the Pan-Hellenic Socialist Party, with an absolute majority in Parliament, hope arose that radical changes in domestic and foreign policy would ensue. [5] In particular, during the election campaign, Papandreou promised a break with NATO and the EEC, the revoking of the US military base agreement and an economy based on ‘social ownership’ of the means of production. After being elected, Papandreou immediately assured the EEC and Washington that his regime would remain within the EEC and NATO, and renewed the US military base agreement. Studies in the early 1980’s commissioned by the government which documented the medium and long-term adverse results of Greece remaining in the EEU, especially the loss of control of trade, budgets and markets, were ignored by Papandreou who chose to sacrifice political independence and economic autonomy in favor of large scale transfers of funds, loans and credit from the EEC. Papandreou spoke from the balcony to the masses of independence and social justice while retaining ties to the European bankers and Greek shipping and banking oligarchs. The European elite in Brussels and Greek oligarchs in Athens retained a stranglehold on the commanding heights of the Greek political and economic system.

Papandreou retained the clientelistic political practices put in place by the previous right-wing regimes – only replacing the rightist functionaries with PASOK party loyalists.

The EEC brushed off Papandreou’ phony radical rhetoric and focused on the the fact they were buying control and subservience of the Greek state by financing a corrupt, clientelistic regime which was deflecting funds for development projects to upgrade Greek economic competitiveness into building a patronage machine based on increased consumption.

The EEC elite ultimately knew that its financial stranglehold over the economy would enable it to dictate Greek policy and keep it within the boundaries of the emerging European empire.

Papandreou’s demagogic “third world” rhetoric notwithstanding, Greece was deeply ensconced in the EU and NATO. Between 1981-85, Papandreou discarded his socialist rhetoric in favor of increased social spending for welfare reforms, raising wages, pensions and health coverage, while refinancing bankrupt economic firms run into the ground by kleptocratic capitalists. As a result while living standards rose, Greece’s economic structure still resembled a vassal state heavily dependent on EEC finance, European tourists and a rentier economy based on real estate, finance and tourism.

Papandreou solidified Greece’s role as a vassal outpost of NATO; a military platform for US military intervention in the Middle East and the eastern Mediterranean; and market for German and northern European manufactured goods.

From October 1981 to July 1989 Greek consumption rose while productivity stagnated; Papandreou won elections in 1985 using EEC funds. Meanwhile Greek debt to Europe took off … EEC leaders chastised the misallocation of funds by Papandreou’s vast army of kleptocrats but not too loudly. Brussels recognized that Papandreou and PASOK were the most effective forces in muzzling the radical Greek electorate and keeping Greece under EEC tutelage and as a loyal vassal of NATO.

Lessons for Syriza: PASOK’s Short-term Reforms and Strategic Vassalage

Whether in government or out, PASOK followed in the footsteps of its rightwing adversary (New Democracy) by embracing the NATO-EEC strait-jacket. Greece continued to maintain the highest per capita military expenditure of any European NATO member. As a result, it received loans and credits to finance short-term social reforms and large scale, long-term corruption, while enlarging the party-state political apparatus.

With the ascent of the openly neoliberal Prime Minister Costas Simitis in 2002, the PASOK regime “cooked the books”, fabricated government data on its budget deficit, with the aid of Wall Street investment banks, and became a member of the European Monetary Union. By adopting the euro, Simitis furthered deepened Greece’s financial subordination to the non-elected European officials in Brussels, dominated by the German finance ministry and banks.

The oligarchs in Greece made room at the top for a new breed of PASOK kleptocratic elite, which skimmed millions of military purchases, committed bank frauds and engaged in massive tax evasion.

The Brussels elite allowed the Greek middle class to live their illusions of being ‘prosperous Europeans’ because they retained decisive leverage through loans and accumulating debts.

Large scale bank fraud involving three hundred million euros even reached ex-Prime Minister Papandreou’s office.

The clientele relations within Greece were matched by the clientele relations between Brussels and Athens.

Even prior to the crash of 2008 the EU creditors, private bankers and official lenders, set the parameters of Greek politics. The global crash revealed the fragile foundations of the Greek state – and led directly to the crude, direct interventions of the European Central Bank, the International Monetary Fund and the European Commission – the infamous “Troika”. The latter dictated the ‘austerity’ policies as a condition for the “bail-out” which devastated the economy, provoking a major depression; impoverishing over forty percent of the population, reducing incomes by 25% and resulting in 28% unemployment.

Greece: Captivity by Invitation

Greece as a political and economic captive of the EU had no political party response. Apart from the trade unions which launched thirty general strikes between 2009 – 2014, the two major parties, PASOK and New Democracy, invited the EU takeover. The degeneration of PASOK into an appendage of oligarchs and vassal collaborator of the EU emptied the ‘socialist’ rhetoric of any meaning. The right wing New Democracy Party reinforced and deepened the stranglehold of the EU over the Greek economy. The troika lent the Greek vassal state funds(“bail-out”) which was used to pay back German, French and English financial oligarchs and to buttress private Greek banks. The Greek population was ‘starved’ by ‘austerity’ policies to keep the debt payments flowing-outward and upward.

Europe: Union or Empire?

The European economic crash of 2008/09 resounded worst on its weakest links – Southern Europe and Ireland. The true nature of the European Union as a hierarchical empire, in which the powerful states – Germany and France – could openly and directly control investment, trade, monetary and financial policy was revealed. The much vaunted EU “bailout” of Greece was in fact the pretext for the imposition of deep structural changes. These included the denationalization and privatization of all strategic economic sectors; perpetual debt payments; foreign dictates of incomes and investment policy. Greece ceased to be an independent state: it was totally and absolutely colonized.

Greece’s Perpetual Crises: The End of the “European Illusion”

The Greek elite and, for at least 5 years, most of the electorate, believed that the regressive (“austerity”) measures adopted – the firings, the budget cuts, the privatizations etc. were short-term harsh medicine, that would soon lead to debt reduction, balanced budgets, new investments, growth and recovery. At least that is what they were told by the economic experts and leaders in Brussels.

In fact the debt increased, the downward economic spiral continued, unemployment multiplied, the depression deepened. ‘Austerity’ was a class based policy designed by Brussels to enrich overseas bankers and to plunder the Greek public sector.

The key to EU pillage and plunder was the loss of Greek sovereignty. The two major parties ,New Democracy and PASOK, were willing accomplices. Despite a 55% youth (16 – 30 years old) unemployment rate, the cut-off of electricity to 300,000 households and large scale out-migration (over 175,000), the EU (as was to be expected) refused to concede that the ‘austerity’ formula was a failure in recovering the Greek economy. The reason the EU dogmatically stuck to a ‘failed policy’ was because the EU benefited from the power, privilege and profits of pillage and imperial primacy.

Moreover, for the Brussels elite to acknowledge failure in Greece would likely result in the demand to recognize failure in the rest of Southern Europe and beyond, including in France Italy and other key members of the EU [6]. The ruling financial and business elites in Europe and the US prospered through the crises and depression, by imposing cuts in social budgets and wages and salaries. To concede failure in Greece, would reverberate throughout North America and Europe, calling into question their economic policies, ideology and the legitimacy of the ruling powers. The reason that all the EU regimes back the EU insistence that Greece must continue to abide by an obviously perverse and regressive ‘austerity’ policy and impose reactionary “structural reforms” is because these very same rulers have sacrificed the living standards of their own labor force during the economic crises [7].

The economic crises spanning 2008/9 to the present (2015), still requires harsh sacrifices to perpetuate ruling class profits and to finance state subsidies to the private banks. Every major financial institution – the European Central Bank, the European Commission and the IMF – toes the line: no dissent or deviation is allowed. Greece must accept EU dictates or face major financial reprisals. “Economic strangulation or perpetual debt peonage” is the lesson which Brussels tends to all member states of the EU. While ostensibly speaking to Greece – it is a message directed to all states, opposition movements and trade unions who call into question the dictates of the Brussels oligarchy and its Berlin overlords.

All the major media and leading economic pundits have served as megaphones for the Brussel oligarchs. The message, which is repeated countless times, by liberals, conservatives and social democrats to the victimized nations and downwardly mobile wage and salaried workers, and small businesspeople, is that they have no choice but to accept regressive measure, slashing living conditions (“reforms”) if they hope for ‘economic recovery’ – which, of course, has not happened after five years!

Greece has become the central target of the economic elites in Europe because, the Greek people have gone from inconsequential protests to political powers. The election of Syriza on a platform of recovering sovereignty, discarding austerity and redefining its relations with creditors to favor national development has set the stage for a possible continent-wide confrontation.

The Rise of Syriza: Dubious Legacies, Mass Struggles and Radical (Broken) Promises

The growth of Syriza from an alliance of small Marxist sects into a mass electoral party is largely because of the incorporation of millions of lower middle class public employees, pensioners and small businesspeople. Many previously supported PASOK. They voted Syriza in order to recover the living conditions and job security of the earlier period of “prosperity” (2000-2007) which they achieved within the EU. Their radical rejection of PASOK and New Democracy came after 5 years of acute suffering which might have provoked a revolution in some other country. Their radicalism began with protests, marches and strikes were attempts to pressure the rightwing regimes to alter the EU’s course, to end the austerity while retaining membership in the EU.

This sector of SYRIZA is ‘radical’ in what it opposes today and conformist with its nostalgia for the past. —the time of euro funded vacation trips to London and Paris, easy credit to purchase imported cars and foodstuffs, to ‘feel modern’ and ‘European’ and speak English!

The politics of Syriza reflects, in part, this ambiguous sector of its electorate. In contrast Syriza also secured the vote of the radical unemployed youth and workers who never were part of the consumer society and didn’t identify with “Europe”. Syriza has emerged as a mass electoral party in the course of less than five years and its supporters and leadership reflects a high degree of heterogeneity.

The most radical sector, ideologically, is drawn mostly from the Marxist groups which originally came together to form the party. The unemployed youth sector joined, following the anti-police riots, which resulted from the police assassination of a young activist during the early years of the crisis. The third wave is largely made up of thousands of public workers, who were fired, and retired employees who suffered big cuts in their pensions by order of the troika in 2012. The fourth wave is ex PASOK members who fled the sinking ship of a bankrupt party.

The Syriza Left is concentrated at the mass base and among local and middle level leaders of local movements. The top leaders of Syriza in power positions are academics, some from overseas. Many are recent members or are not even party members. Few have been involved in the mass struggles – and many have few ties with the rank and file militants. They are most eager to sign a “deal” selling out the impoverished Greeks

As Syriza moved toward electoral victory in 2015, it began to shed its original program of radical structural changes (socialism) and adopt measures aimed at accommodating Greek business interests. Tsipras talked about “negotiating an agreement” within the framework of the German dominated European Union. Tsipras and his Finance Minister proposed to re-negotiate the debt, the obligation to pay and 70% of the “reforms”! When an agreement was signed they totally capitulated!

For a brief time Syriza maintained a dual position of ‘opposing’ austerity and coming to agreement with its creditors. It’s “realist” policies reflected the positions of the new academic ministers, former PASOK members and downwardly mobile middle class. Syriza’s radical gestures and rhetoric reflected the pressure of the unemployed, the youth and the mass poor who stood to lose, if a deal to pay the creditors was negotiated.

EU – SYRIZA: Concessions before Struggle Led to Surrender and Defeat

The “Greek debt” is really not a debt of the Greek people. The institutional creditors and the Euro-banks knowingly lent money to high risk kleptocrats, oligarchs and bankers who siphoned most of the euros into overseas Swiss accounts, high end real estate in London and Paris, activity devoid of any capacity to generate income to pay back the debt. In other words, the debt, in large part, is illegitimate and was falsely foisted on the Greek people.

Syriza, from the beginning of ‘negotiations’, did not call into question the legitimacy of the debt nor identified the particular classes and enterprise who should pay it.

Secondly, while Syriza challenged “austerity” policies it did not question the Euro organizations and EU institutions who impose it.

From its beginning Syriza has accepted membership in the EU. In the name of “realism” the Syriza government accepted to pay the debt or a portion of it, as the basis of negotiation.

Structurally, Syriza has developed a highly centralized leadership in which all major decisions are taken by Alexis Tsipras. His personalistic leadership limits the influence of the radicalized rank and file. It facilitated “compromises” with the Brussels oligarchy which go contrary to the campaign promises and may lead to the perpetual dependence of Greece on EU centered policymakers and creditors.

Moreover, Tsipras has tightened party discipline in the aftermath of his election, ensuring that any dubious compromises will not lead to any public debate or extra-parliamentary revolt.

The Empire against Greece’s Democratic Outcome

The EU elite have, from the moment in which Syriza received a democratic mandate, followed the typical authoritarian course of all imperial rulers. It has demanded from Syriza

 (1) unconditional surrender

 (2) the continuation of the structures, policies and practices of the previous vassal coalition party-regimes (PASOK-New Democracy)

 (3) that Syriza shelve all social reforms, (raising the minimum wage, increasing pension, health, education and unemployment spending

 (4) that SYRIZA follow the strict economic directives and oversight formulated by the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund)

 (5) that SYRIZA retain the current primary budget surplus target of 4.5 percent of economic output in 2015-2017.

To enforce its strategy of strangulating the new government, Brussels threatened to abruptly cut off all present and future credit facilities, call in all debt payments, end access to emergency funds and refuse to back Greek bank bonds – that provide financial loans to local businesses.

Brussels presents Syriza with the fateful “choice”, of committing political suicide by accepting its dictates and alienating its electoral supporters. By betraying its mandate, Syriza will confront angry mass demonstrations. Rejecting Brussels’ dictates and proceeding to mobilize its mass base, Syriza could seek new sources of financing, imposing capital controls and moving toward a radical “emergency economy”.

Brussel has “stone-walled” and turned a deaf ear to the early concessions which Syriza offered. Instead Brussels sees concessions as ‘steps’ toward complete capitulation, instead of as efforts to reach a “compromise”.

Syriza has already dropped calls for large scale debt write-offs, in favor of extending the time frame for paying the debt. Syriza has agreed to continue debt payments, provided they are linked to the rate of economic growth. Syriza accepts European oversight, provided it is not conducted by the hated “troika”, which has poisonous connotations for most Greeks. However, semantic changes do not change the substance of “limited sovereignty”.

Syriza has already agreed to long and middle term structural dependency in order to secure time and leeway in financing its short-term popular impact programs. All that Syriza asks is minimum fiscal flexibility under supervision of the German finance minister-some “radicals”!

Syriza has temporarily suspended on-going privatization of key infrastructure (sea- ports and airport facilities) energy and telecommunication sectors. But is has not terminated them, nor revised the past privatization. But for Brussels “sell-off” of Greek lucrative strategic sectors is an essential part of its “structural reform” agenda.

Syriza’s moderate proposals and its effort to operate within the EU framework established by the previous vassal regimes was rebuffed by Germany and its 27 stooges in the EU.

The EU’s dogmatic affirmation of extremist, ultra neo-liberal policies, including the practice of dismantling Greece’s national economy and transferring the most lucrative sectors into the hands of imperial investors, is echoed in the pages of all the major print media. The Financial Times, Wall Street Journal, New York Times, Washington Post, Le Monde are propaganda arms of EU extremism. Faced with Brussel’s intransigence and confronting the ‘historic choice’ of capitulation or radicalization, Syriza tried persuasion of key regimes. Syriza held numerous meetings with EU ministers. Prime Minister Alexis Tsipras and Finance Minister Yánis Varoufákis traveled to Paris, London, Brussels, Berlin and Rome seeking a “compromise” agreement. This was to no avail. The Brussels elite repeatedly insisted:

Debts would have to be paid in full and on time.

Greece should restrict spending to accumulate a 4.5% surplus that would ensure payments to creditors, investors, speculators and kleptocrats.

The EU’s lack of any economic flexibility or willingness to accept even a minimum compromise is a political decision: to humble and destroy the credibility of SYRIZA as an anti-austerity government in the eyes of its domestic supporters and potential overseas imitators in Spain, Italy, Portugal and Ireland [8].

Conclusion

The strangulation of Syriza is part and parcel of the decade long process of the EU’s assassination of Greece. A savage response to a heroic attempt by an entire people, hurled into destitution, condemned to be ruled by kleptocratic conservatives and social democrats.

Empires do not surrender their colonies through reasonable arguments or by the bankruptcy of their regressive “reforms”.

Brussel’s attitude toward Greece is guided by the policy of “rule or ruin”. “Bail out” is a euphemism for recycling financing through Greece back to Euro-controlled banks, while Greek workers and employees are saddled with greater debt and continued dominance. Brussel’s “bail out” is an instrument for control by imperial institutions, whether they are called “troika” or something else.

Brussels and Germany do not want dissenting members; they may offer to make some minor concessions so that Finance Minister Vardoulakis may claim a ‘partial victory’ – a sham and hollow euphemism for a belly crawl

The “bail out” agreement will be described by Tsipras-Vardoulakis as ‘new’ and “different’ from the past or as a ‘temporary’ retreat. The Germans may ‘allow’ Greece to lower its primary budget surplus from 4.5 to 3.5 percent ‘next year’ – but it will still reduce the funds for economic stimulus and “postpone” raises in pensions, minimum wages etc.

Privatization and other regressive reforms will not be terminated, they will be “renegotiated”. The state will retain a minority “share”.

Plutocrats will be asked to pay some added taxes but not the billions of taxes evaded over the past decades.

Nor will the PASOK – New Democracy kleptocratic operatives be prosecuted for pillage and theft.

Syriza’s compromises demonstrate that the looney right’s (The Economist, Financial Times, NY Times, etc.) characterization of Syriza as the “hard left” or the ultra-left have no basis in reality. For the Greek electorate’s “hope for the future” could turn to anger in the present. Only mass pressure from below can reverse Syriza’s capitulation and Finance Minister Vardoulakis unsavory compromises. Since he lacks any mass base in the party, Tsipras can easily dismiss him, for signing off on “compromise” which sacrifices the basic interests of the people.

However, if in fact, EU dogmatism and intransigence forecloses even the most favorable deals, Tsipras and Syriza, (against their desires) may be forced to exit the Euro Empire and face the challenge of carving out a new truly radical policy and economy as a free and independent country.

A successful Greek exit from the German – Brussels empire would likely lead to the break-up of the EU, as other vassal states rebel and follow the Greek example. They may renounce not only austerity but their foreign debts and eternal interest payments. The entire financial empire – the so-called global financial system could be shaken . . . Greece could once again become the ‘cradle of democracy’.

Article source: http://www.voltairenet.org/article186806.html

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MICHAEL HUDSON, ECONOMICS PROF., UNIV. MISSOURI, KANSAS CITY: Thank you.

PERIES: So, Michael, these international banks represented by the finance ministers now in Brussels, when they were in crisis and we the public treasury bailed them out, they had no problem with that. Why are they now refusing to assist Greece at a time of need when in fact some politicians and even the troika is being more receptive to what Greece is saying?

HUDSON: Because what’s at issue really is a class war. It’s not so much Germany versus Greece, as the papers say. It’s really the war of the banks against labor. And it’s a continuation of Thatcherism and neoliberalism. The problem isn’’ simply that the troika wants Greece to balance the budget; it wants Greece to balance the budget by lowering wages and by imposing austerity on the labor force. Instead, the terms in which Varoufakis has suggested balancing the budget are to impose austerity on the financial class, on the tycoons and tax dodgers. He proposes that instead of lowering pensions for workers and retirees, instead of shrinking the domestic market, instead of pursuing a self-defeating austerity, we’re going to raise two and a half billion euros from the powerful Greek tycoons. We’re going to collect the back taxes they owe. We’re going to crack down on illegal smuggling of oil and the other networks and on the real estate owners that have been avoiding taxes, because the Greek upper classes have become notorious for tax dodging.

Tis has infuriated the banks. It turns out the finance ministers of Europe are not all in favor of balancing the budget if it has to be balanced by taxing the rich, because the banks know that whatever taxes the rich are able to avoid ends up being paid to themselves. So now the gloves are off and the class war is back.

Originally, Varoufakis thought he was negotiating with the troika, that is, with the IMF, the European Central Bank and the Euro Council. But instead they said, no, no, you’re negotiating with the finance ministers. And the finance ministers in Europe are very much like Tim Geithner in the United States. They’re lobbyists for the big banks. And the finance ministers said, how can we screw this up and make sure that we treat Greece as an object lesson, pretty much like America treated Cuba in 1960?

PERIES: Hold on for one second, Michael. Let’s explain that, because Yanis Varoufakis, the finance minister of Greece, is very well-briefed and very well-positioned to negotiate all of this. Now, why did he think he was negotiating with the troika when in fact he was negotiating with the finance ministers.

HUDSON: Because officially that’s who he’s negotiating with. He took them at their word. And then he found out–and yesterday, James Galbraith, who went with him to Europe, published in Fortune a description saying, wait a minute, the finance ministers are fighting with the troika. The troika and the finance ministers are fighting among themselves over what exactly is to be done. And to really throw a monkey wrench in, the German finance minister, Schäuble, said, wait a minute, we’ve got to bring in the Spanish government and the Portuguese government and the Finnish government, and they’ve got to agree.

Well, the position of Spain is to keep its Thatcherite neoliberal party in power. If Greece ends up not going along with austerity and saving its workers, then Spain’s Podemos Party is likely to win the next election and the ruling elite will be out of power. So Spain’s leaders are trying to make sure that Varoufakis and the SYRIZA Party is a failure, so that it can tell the working class, ”You see what happened to Greece? It got smashed, and so will you if you try to do what they do. If you try to tax the rich, if you try to take over the banks and prevent the kleptocracy, there’s going to be a disaster.”

So Spain and Portugal want to impose austerity on Greece. Even Ireland has chimed in and said, my God, what have we done? We have imposed austerity for a decade in order to bail out the banks. Even the IMF has criticized us for going along with Europe and bailing out the banks and imposing austerity. If SYRIZA wins in avoiding austerity in Greece, then all of our sacrifice of our population, all of the poverty that we’ve imposed, all of the Thatcherism that we’ve imposed has been needless and we didn’t have to do it.

So there’s a whole demonstration effect, which is why they’re treating Greece almost as a symbol for labor saying, wait a minute, we don’t have to impose austerity, we can collect taxes from the tax dodgers.

Remember a few years ago when Europe said, Greece owes 50 billion euros in foreign debt? Well, it turned out that the central bank had given to the Greek parties a list of tax dodger. It was called the Lagarde list (for Christine Lagarde, head of the IMF), featuring Greek tax dodgers who had Swiss bank accounts. These Swiss bank accounts added up to about 50 billion euros. So in a sense, Greece could pay off the debt that it’s borrowed simply by moving against the tax dodgers.

But this would be at the expense of the Swiss banks and the other banks. So in effect the banks would be paying themselves. And they don’t want to pay themselves. They want to squeeze income out of labor and let the tax dodgers and the Greek tycoons succeed in stealing from the government. So, in effect, the troika – not the troika really, as much as the finance ministers – are backing the tax dodgers and tycoons in Greece that SYRIZA is trying to move against. And the IMF is for once taking a softer position. Even President Obama has chimed in by apparently calling German Chancellor Merkel and saying, look, you can’t just push austerity beyond a point, because you’re going to push them out of the euro, and you’ll push them out of the euro on SYRIZA’s terms, where SYRIZA can then turn to the Greek population and say, we did what we promised here. We stopped the austerity. We didn’t withdraw from the euro; we were driven out as part of the class war.

PERIES: Michael, earlier you were also making an analogy between what’s going on in Greece and what happened to Cuba.

HUDSON: Cuba under Castro created an alternative social system. He wanted to spread the wealth around (it was a Marxist system in his way). He wanted to get rid of the crooks around Batista who were running the country, the rich who didn’t pay taxes, and he wanted a social revolution. So the American government worried that if Cuba succeeded, there was going to be a revolution all throughout Latin America. Latin Americans could realize that they can take over the American sugar companies, the American banana companies and make the rich pay the taxes and the corporations pay the taxes and the exporters pay the taxes, not simply labor. We can unionize labor, we can educate it – and if Cuba can educate labor, that would be a disaster for the neoliberal plan, because if labor’s educated and has a program, it will realize that there is an alternative to Thatcherism.

This is the problem that Varoufakis wrote about in an article earlier this month in The Guardian on how he came out of the Marxist movement. He said, the problem that we’re facing in Greece is that if we withdraw from the euro, if we’re forced out, there’s going to be an economic trauma. The left wing throughout Europe, as in America, doesn’t really have an economic program. It has a political program, but not really an economic program. So the only alternative to SYRIZA with an economic program are the New Dawn movement and the neo-Nazis. And what Varoufakis is worried about is that he’s not only contending with the European finance ministers on one front; he’s also contending on the Greek front with the right-wing parties that are the nationalist parties, like Marie Le Pen in France – the parties that are saying, yes, we have an alternative: withdraw from the euro.

But it’s not the kind of withdrawal and alternative that the left wing would have, because there really isn’t much of a left wing in Greece, apart from the small SYRIZA party, certainly not Papandreou’s socialist party, and certainly not the nominally socialist party in Spain, which is a Thatcherite party, and it’s certainly not the British Labour Party, which has gone the way of Tony Blair.

So the problem is that Varoufakis has about four months to educate the Greek public in the fact that, yes, there is alternative, here’s what it is. The alternative to neoliberalism doesn’t have to be right-wing nationalism. There is a socialist alternative, and we’re trying to work out as many arrangements we can, so if we’re driven out of the euro and if the banks go under, we have a fallback plan. He can’t come right out and say this is the plan right now, because it has to be made very clear that it’s the finance ministers of Germany, Spain, Portugal, Ireland, and Finland that are driving Greece out, not the IMF, not the European Central Bank, and not even centrist governments.

This is a transcript of Michael Hudson’s interview with Sharmini Peries on the Real News Network.  Thanks to counterpunch

Article source: http://www.globalresearch.ca/euro-banks-versus-greek-labor/5434236

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