Advocate PDF 2016

Pre 2012 Archives

Greeks Reject Austerity, EU Rejects Democracy

By Mike Andrew

“The Germans are trying to do with banks what they couldn’t do with tanks,” said Greek activist Christos Giovanopoulos at a June speaking event in Seattle’s Hillman City neighborhood.

Giovanopoulos, a member of SYRIZA, the party that won Greek elections on an anti-austerity platform in February, was in Seattle on a solidarity mission, trying to drum up support for his embattled country. Like many other Greeks, Giovanopoulos’s thoughts went back to Greece’s epic resistance to German occupation during World War II – an inevitable association considering that Greece’s principal antagonist is the German Finance Minister Wolfgang Schaeuble.

When Greece entered the Eurozone in 2001, most Greeks hoped the move would open up the country to foreign investment, create more jobs, and lead to a brighter future for what was still a relatively poor country. In fact, entering the Eurozone led to economic catastrophe. Instead of constructive investments, Greece was opened to predatory lending by European banks. When the global economy went into recession in 2008, the bottom fell out of the Greek economy, and the Greek government was no longer able to pay its debts to foreign bankers.

Then came the “bailout.” I put the word in quotes, because no one was bailed out, least of all the Greek people. In fact, all that happened was that the European Central Bank and the IMF (international Monetary Fund) bought up bad Greek loans from private banks and then engaged the European governments to force the Greeks to pay them back – at exorbitant interest rates.

After the “bailout” came austerity. While the “bailout” was no bailout at all, the austerity was all too real. The EU’s enforcers, the so-called Troika – the European Commission, the European Central Bank, and the IMF – insisted that Greece “reform” its economy to qualify for more “assistance.”

More quotes, because this “reform” made Greece go backwards and not forward to a genuine solution of its economic problems. The “assistance” only came in the form of more high-interest loans doled out in installments too small to make a real change in Greece’s economic situation.

The price of this “assistance,” the cuts in government spending demanded by the Troika, the layoffs of workers, reductions in wages, cuts in pensions, privatization of state assets – all the austerity measures made the situation worse, not better.

Today Greece’s economic situation is worse than that of the US in the grip of the Great Depression – 28 percent unemployment, 50 percent for workers under 25 years of age, retirement pensions down to 625 Euros ($684) per month, retirement ages rising to 70, and national debt rising to 200 percent of GDP.

Even the IMF has admitted that Greece is now trapped under an unsustainable mountain of debt.

The SYRIZA government was elected in February promising to end this crushing austerity program. But the EU ignored the vote of the Greek people, and insisted on new austerity measures. SYRIZA resisted, but it was trapped by political constraints not of its own making.

On July 5 almost 62 percent of Greek voters rejected an EU proposal that would have mandated even more budget-cutting in return for another round of loans. But by the same margin Greeks tell pollsters they want to stay in the Eurozone.

A “Grexit,” or Greek exit from the Eurozone, would allow the country to control its own currency, and use devaluation as a device to manipulate international exchange rates to its own benefit. Argentina did this when it cancelled its foreign debts and devalued its currency in 2005.

While many economists – Nobel laureates Paul Krugman and Joseph Stiglitz among them – believe a Grexit could ultimately benefit Greece, Greek voters seem to be more cautious. Under the circumstances, Greek Prime Minister and SYRIZA leader Alexis Tsipras had to promise that he would not take the massive NO vote in the July referendum as permission to drop the Euro.

The other problem facing SYRIZA was that German Finance Minister Schaeuble is just fine with a Grexit. According to former Greek Finance Minister Yanis Varoufakis, Schaeuble is using the EU’s negotiations with Greece to work his own political agenda. “Schaeuble has a plan,” Varoufakis told then-British Chancellor Norman Lamont in late May.

“He believes that the Eurozone is not sustainable as it is. He believes there has to be some fiscal transfers, some degree of political union. He believes that for that political union to work without federation [that is, without Germany sacrificing some of its national sovereignty], without the legitimacy that a properly elected federal parliament can render, can bestow upon an executive, it will have to be done in a very disciplinary way.

“And he said explicitly to me that a Grexit is going to equip him with sufficient bargaining, sufficient terrorizing power in order to impose upon the French that which Paris has been resisting. And what is that? A degree of transfer of budget-making powers from Paris to Brussels.” [My emphasis.]

In other words, while Greek negotiators were resisting pressure to submit to new austerity measures, Schaeuble didn’t really care about Greece at all. He was using the negotiations to undermine Germany’s principal EU rival, France, and preparing to invest a German-dominated EU with sovereign power.

In the scenario described by Varoufakis, the “fiscal waterboarding” of Greece, as he put it, was merely collateral damage in a much wider contest for economic and political control of Europe.

On July 6, while most Greeks were still celebrating the landslide anti-austerity vote in the July 5 referendum, Varoufakis resigned his office “at the request of the Prime Minister.” Observers saw it as a signal from Tsipras to the EU that he was prepared to cut a deal rather than risk being forced out of the Eurozone. Tsipras couldn’t get a deal, however, because Schaeuble wasn’t interested in a deal. He was only interested in using Greece as a negative example to bully the rest of Europe.

With banks running out of money and hospitals running out of medications, Greece was forced to take what the EU insisted on. “We have been forced to make a difficult compromise under urgent conditions,” Tsipras told the Greek parliament. “We were at the limits of our economy and our banking system, and at the limits of Europe – where conservative forces, obsessed with austerity, dominate.”

“Change Greece, change Europe,” SYRIZA said in their successful election campaign. But can Europe change, or will it be dominated permanently by bankers and their right-wing political allies?

Leave a Reply