The Greek crisis is still there. European
officials and the IMF have issued a new ultimatum to Alexis Tsipras.
He has three weeks to present new austerity measures. Exhausted, the
country is on the verge of financial, economic and moral collapse.
Syriza officials are talking about getting out of the euro.
by Martine Orange
After rejecting the idea for more than two years, Syriza seems ready to think the unthinkable: to leave the eurozone. Even if government officials do not talk about it openly, eminent figures from the left-wing party publicly talk about the hypothesis. For the former European affairs minister of Syriza, Nikos Xydakis, the issue of the exit from euro, in any case, should no longer be considered "taboo". "There must be no taboo when we talk about the destiny of the nation. We have reached the point where the people are at the end of their endurance. I think we need an in-depth national political discussion. And this discussion, of course, needs to start in parliament," he said recently.
Since then, the observers are lost in conjectures. Is
this a personal test ball of the former minister? Is this
intervention intended to loosen the grip of the Syriza government, at
the moment when it finds itself again in a dead end against its
creditors? Or is the assumption of an exit from the euro really a
scenario discussed by the government, exhausted from finding no
support and no solution?
The Greek crisis has disappeared from the radar screens
since the third rescue plan, torn off after the Syriza surrender in
July 2015. Everything has even been implemented to carefully bury the
subject, so as not to reopen European divisions, with the hope that
time would eventually make Greece forget. European officials do not
want to bring the subject back to the forefront, while the
Netherlands, France and Germany are called to vote this year.
This attempted mute almost worked. But the Greek crisis
is still there. More than ever: the third plan of rescue, as feared,
brought no solution, no respite in Athens. And the Greek case could
be re-invoked very quickly throughout the European debate, if events
continue at this rate.
Each disbursement of additional appropriations provided
for in the plan, the creditors are always show more demanding. The
last meeting of the Eurogroup, which was held on 26 January in the
presence of officials of the IMF, has not escaped the rule. While
Athens expects a release of European appropriations to help refinance
about 6 billion of debt in July, the discussion has given rise to the
usual mantras, where there is no question in the Newspeak dear to
responsible that "to keep the commitments, to implement the
reforms, to reduce the deficits, to find a sustainable growth, etc.".
It is completed by a new humiliation for Greece.
A new ultimatum has just been launched in Athens. Greek
Prime Minister Alexis Tsipras has three weeks to reach an agreement
with the country's creditors. At the European meeting on 22 February,
everything must be done. Until then, a full draft of the plan
proposed by Athens is to be presented in Brussels on 6 February. "Let
us say that the window of opportunity is a window that is still open,
but that will soon close because there are electoral deadlines"
in the Netherlands, France and Germany, recalled the French Minister
of Finance, Michel Sapin, following the meeting of European finance
ministers. As if to remind Greece that she can not invite herself in
the European elections, and that thereafter, she risks finding
"European partners" less disposed towards her.
The dispute carries as usual on these famous financial
ratios which take the place of policy for the European officials and
the IMF. While the Greek government managed to achieve a budgetary
surplus (before payment of debt and financial expenses) by 1.5% in
2016, in a superhuman budgetary effort, European officials
conditioned their new aid in July to a Primary budget surplus of 3.5%
from 2018 and for at least 20 years!
Until then, the IMF argued that such a level of
budgetary surplus was unrealistic or counterproductive. But in recent
weeks, the IMF has completely changed its position. Not only does
support the 3.5% surplus target but it also requires guarantees. The
international organization bases its support for the rescue plan on
the preventive adoption by the Greek government of additional
austerity measures, in addition to those already provided for in the
rescue package. These should be automatically implemented at the
least budget overrun.
While the Syriza government has already raised the VAT
to 24%, decreased by 40% pensions, increased taxes, especially land,
decided new taxes on cars, telecommunications, televisions, gasoline,
cigarettes, Coffee, beer, announced new cuts of 5.6 billion on public
wages, it refuses to adopt these preventive laws that would impose
further declines in public wages and pensions and further tax
increases. In the name of the last shreds of national sovereignty
that remains to Greece. "Asking for such measures while
government revenues are better than expected is not only extreme but
absurd. No nation can consent to such arrangements," said
the Greek Finance Minister Euclid Tsakalotos, stressing the
anti-democratic nature of the measures required.
He found no support from his European counterparts.
Germany making the IMF's presence on the Greek bailout a prerequisite
for its own participation, Berlin is ready to accept the conditions
imposed by the international institution. Especially since they do
not seem exorbitant. All Europeans have aligned themselves with the
German position.
This does not prevent disputes between the IMF and the
Europeans. This weekend, the international institution has leaked new
documents on the financial situation of Greece. As it had already
said in 2013, 2014, 2015, 2016, it reaffirms that the Greek debt is
"explosive". According to its latest calculations, it would
amount to 260% of GDP in 2060. "Greece can not repel its debt
problem. Athens needs substantial debt relief from its European
partners to regain an acceptable level of indebtedness," it
says.
Should we really expect the IMF calculations until 2060
to say that the Greek debt is unsustainable? It has been there for a
very long time. While Greece's debt level was 120% of GDP in 2010, it
now reaches 180% of GDP. Almost twice the annual production of
national wealth. For years, many economists, whatever their beliefs,
argue for a deep restructuring or even a complete cancellation of
Greece's debt. The only condition, in their eyes, is to put the
country back on an economic track.
But the European officials do not stop. At the January
26 meeting, they again denied the problem to IMF officials. "There
is no reason to make such alarming remarks about the Greek debt
situation," said the European Stability Mechanism, which is
responsible for managing European credits to Greece. Given the lower
rates and longer maturities granted to Greece, worry, according to
the European officials, is not appropriate, let alone the slightest
relief for Athens. The only thing the Greek government should do,
they repeat, is to "implement two-thirds of the reforms"
that it has not yet implemented.
The vacuity of all this austerity policy determined by
certain financial ratios is obvious. European officials may argue
that their bailout is working, they welcome the recovery of Greece
and the budget surpluses, but the situation is quite different:
passively we are witnessing the low-noise collapse of a whole
country.
While forecasts foresee a rebound of the Greek economy
in 2016, with growth of at least 2.6%, these risks once again prove
to be false. If a slight start was recorded at the beginning of the
year, it continued to slacken. In the last few months, the engine
seems to have stalled. According to Markit figures published on
February 1st, manufacturing activity recorded its largest decline in
15 months. "The decline is related to both the decline in
production and new orders. While rising import prices have
accelerated to their highest level in 70 months, companies
nevertheless lower their selling prices," explains the
economic and financial institute, pointing to the fall in consumption
and the lack of outlets.
In seven years Greece's GDP decreased by a third.
Unemployment affects 25% of the population and 40% of young people
between 15 and 25 years. One third of companies have disappeared in
five years. Successive cuts imposed everywhere in the name of
austerity now bite in all regions. There are no more trains, no more
buses in whole parts of the country. No more schools, sometimes. Many
secondary schools had to close in the most remote corners because of
lack of funding. Per capita spending on health has declined by a
third since 2009, according to the OECD. More than 25,000 doctors
were dismissed. Hospitals lack personnel, medicines, everything.
The human and social cost of this austerity policy is
not included in the Excel tables of the Eurogroup. But it is paid
cash by the population. One fifth of the population lives without
heating or telephone. 15% of the population has now fallen into
extreme poverty compared to 2% in 2009.
The Bank of Greece, which cannot be suspected of
complacency, has drawn up a report on the health of the Greek
population, published in June 2016. The figures it gives are
overwhelming: 13% of the population are excluded medical care; 11.5%
cannot buy prescription drugs; People with chronic health problems
are up to 24.2%. Suicides, depression, mental illness show
exponential increases. Worse: while the birth rate has fallen by 22%
since the beginning of the crisis, the infant mortality rate almost
doubled in a few years to reach 3.75% in 2014.
After seven years of crisis, austerity and European
plans, the country is exhausted, financially, economically and
physically. "The situation is getting worse. What we need
most now is food. This shows that the problems relate to the
essential and not the quality of life. It's about subsistence,"
says Ekavi Valleras, head of the NGO Desmos. And it is to this
country that Europe asks moreover to assume alone or almost the
reception of the refugees coming to Europe.
Initially, observers analyzed the repeated intransigence
of European officials as a political coup against Syriza. After two
years of government, after the turn about the July 2015 referendum
and the new rescue plan, the government of Alexis Tsipras is at the
lowest level in public opinion. To demand new austerity measures, to
put him back on the wall and to force him to call a new election was
analyzed as a final maneuver to defeat him politically, to make him
pay one last time his insult of 2015 and to replace it with a new one
much more acceptable.
This political scenario seems a little short for other
economists. For them, it is the addition of European management of
the Greek crisis that will soon be presented. The German Finance
Minister, Wolfgang Schäuble, who has never hidden his desire to get
Greece out of the euro but had seen his line beaten in July 2015, is
gaining the notice of observers. Gradually, the European leaders,
tired of this problem that defies their solutions, align themselves
with his thesis. The IMF, which is also trying to get out of the
Greek quagmire, also advocates a Grexit, the only solution that,
according to it, could give monetary oxygen back to the country.
The trouble is that nobody wants to assume the historic
responsibility of this rupture and its consequences. Because to
exclude a country of the euro area is to say that the single currency
is more intangible, as has been said during its creation. Other,
voluntarily or not, could follow the example. Already, the financial
statements are on the lookout. The Deputy Journalist at the New
Factory, the World, and the Tribune. Several books: Vivendi: a French
affair; These gentlemen from Lazard, Rothschild, a bank in power.
Participation in the collective works: the secret history of the V
Republic, the secret history of the employers, The happy days,
informing is not a Greek offense is again subjected to intense
speculation, raising its rates to over 7%. Beyond that, the entire
European bond market is under tension, pushing Italian, Spanish and
French rates up, despite the interventions of the ECB.
The attitude of the European leaders and the IMF in
recent weeks is staggering, as it is part of a historical setback.
Pushing Greece out instead of granting it the necessary restructuring
of its debt, at a time when geopolitical tensions have never been so
strong, where Donald Trump explicitly attacks the construction of
Europe and bets on its breakup, seems incomprehensible. As history
knocks on the door, they answer only as shopkeepers. As always, since
the beginning of the Greek crisis.
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Sad indeed to see yet another European nation undergo massive population migration, infrastructure destruction both human and otherwise and mass misery due to neoliberal policies.
ReplyDeleteIt makes one wonder if the ongoing torture of the entire Greek nation was one of the prices demanded by Turkey in order to further American neocon/Qatari sheikdom dreams in Syria.
Neoliberal ! What ????
DeleteIt was the Socialism they voted for decades that led to it !!!!
"Never before had so many people been hired by the state, with such salaries, pensions and benefits—to the point where the average government job paid almost three times the salary of the average private-sector job. An egregious but not isolated example was the national railroad company, which had annual revenues of €100 million against an annual wage bill of €400 million, on top of €300 million in other expenses. This is how the average state railroad employee came to earn €65,000 a year."
https://www.amazon.com/Modern-Greece-Everyone-Needs-Know%C2%AE/dp/0199948798
More extortion by the IMF
ReplyDeleteGoldman Sachs...
ReplyDeleteGreece is a test case for the EU and the IMF. Somewhere, sometime, the ugly truth of a global debt repudiation being a (somehow) just cause must be brought to light, and where better to demonstrate it than the "cradle of democracy" and home of western philosophy, all wrapped up in an economy that is really too small to care much about? It is rather like Puerto Rico for the US. We will use Puerto Rico as a laboratory to see how far we can push people before they vountarily give up their claims to contracted payments. Once that point is identified, all the ret of the bankrupt states can sell a similar program to their peasantry, er, Imean citizens.
ReplyDeleteThis will not end well, or as planned.
Greece has two problems that are interconnected;
ReplyDelete- It needs euros to buy fuel, these euros have to be borrowed from non-Greek banks.
- The use of the fuel does not offer any returns: the only way to retire maturing loans is to borrow more in ever greater amounts. Because Greece' is credit- constrained it can only retire loans with extreme difficulty and cannot buy much in the way of fuel.
The solution is also two-fold:
- The Greek government must issue 'greenback' euros allowing the repayment of loans as they mature. Doing so would require a repeal of the Statute of the Bank of Greek: the banking law that authorized a Greek central bank.
- The Greek government must mandate stringent energy conservation, so funds do not flow out of Greece.
The alternative to Greece is more of the same: Conservation by Other Means, whereby the Greek economy collapses and energy use falls to zero.
Here: http://www.economic-undertow.com/2015/07/15/it-all-falls-apart/
And here: http://www.economic-undertow.com/2016/02/29/ben-franklins-revenge/