(LINKS – extracts)– The June 3 proposals of Greece’s creditors have been put together in such a way as to make it impossible for the Greek government to agree to them, even as all Troika spokespersons chorus that they want to keep Greece in the Eurozone.
Two vital issues for the Greeks are debt restructuring and an investment program to revive the economy and create jobs.
Their proposed debt restructuring plan would shift Greece’s €27 billion debt with the ECB to the ESM, lengthening its maturity and making Greek financial institutions eligible for cheaper credit under ECB “quantitative easing”.
The investment program would be funded by the European Investment Bank. According to Varoufakis, “until we discuss these two options, all bets are off from us, we will not agree on anything”.
Neither of these issues are even mentioned in the creditors’ June 3 proposal, but Benoit Coeure, ECB executive board member, commented in a June 10 interview in French Catholic daily La Croix that “this question is not taboo, as the Greek debt has already been restructured for private banks….Should more be done? The answer will depend on the final terms of the agreement between the creditors and the Greek authorities.”
Such is the stock Troika answer to all Greek proposals and suggestions: everything can be discussed once there is surrender on the basics of “reforms”. As Varoufakis commented in a June 8 speech in Berlin on his suggestion to the Troika institutions that agreed reforms should be implemented straight away while negotiations continued:
-The answer I received was unequivocal: “No! You must not pass anything through parliament until and unless the complete review of the Greek Program is successfully completed. Any such legislation will be considered to be unilateral action and will jeopardise your relation with the institutions.”
Inevitably, the offensive of the Greece’s creditor institutions has been accompanied by a storm of spin in which the Greek victim is painted as the guilty party. The lead role in this game has fallen to Juncker, who liked to portray himself as the Greeks’ special friend in the Troika institutions.
However, at a June 9 meeting of EU commissioners he was reported as saying that Tsipras had backed away from a verbal agreement on primary surplus targets and that Athens “had lost the European Commission. They failed to see that the best friend of the small and medium-sized member states is the European Commission.”
At the same time, reinforcing the lie that the deadlock in negotiations is due to irrational Greek stubbornness, the social-democrat European Parliament speaker Martin Schultz told a popular German television chat show that “he is getting tired of Greece”, while Guy Verhofstadt, the president of the Alliance of Liberals and Democrats for Europe tweeted: “Keep Calm and Reform Greece.”
The necessary myths
As Greece’s creditors intensify their offensive against SYRIZA, they necessarily have to thicken the smokescreen of myths about Greece to cover up their aggression.
“If the Greek government can’t accept the fact that there are no easy solutions and that the difficult decisions just must be made, it is alone. We can’t help Greece if Greece doesn’t want to help itself,” Jeroen Dijsselbloem, the Dutch finance minister and chair of the Eurogroup of eurozone finance ministers, told Finnish daily Helsingin Sanomat on June 11.
In the last week, a media campaign led by tabloid press, like the German Bild, has emerged in the eurozone surplus countries, targeted against sending any more “good” Northern European money after “bad” in loans to Greece.
On June 7, French progressive web site Mediapart produced a “little guide against media bullshit” on Greece. It demolished a number of myths that are at the heart of this campaign.
The European taxpayer would have to pay for forgiven Greek debt?
No, at most the European taxpayer would forego the interest payment made by Greece on this debt, around €15 a year per person in France’s case.
All debts must be repaid?
No, excessive public debt has been restructured in many cases in Europe (Germany 1953, Poland 1991, Iceland 2011, Ireland 2103).
Greece has a bloated and inefficient public service, which needs radical surgery before any new loans can be approved?
No, while the Greek public sector needs modernising—as SYRIZA recognises—public servants account for only 8% of total employment, as opposed to 11% in Germany and 23% in France.
The Greeks have already received €320 billion in loans?
No, 77% of these “loans to Greeks” went to recapitalising Greek banks and paying private creditors.
Greece must agree to continue with Troika-imposed “reforms”—they are the only way to modernise the ramshackle Greek economy?
No, in the words of a June 5 open letter to the Financial Times signed, among others, by Nobel Prize winner Joseph Stiglitz, former Italian prime minister Massimo D’Alema and Thomas Picketty, author of Capital in the 21st Century, “austerity is undermining SYRIZA’s key reforms, on which EU leaders should surely have been collaborating with the Greek government: most notably to overcome tax evasion and corruption.” All proposals by the Greek government to uproot corruption and tax evasion have also been rejected by the institutions as “not specific enough.” Requests for help with technical support in these areas where the northern Europeans are supposed to be experts were turned down – or received the same answer as all other proposals : ”Sign up first and then we’ll see.”
Austerity is tough, but it ends up working?
Austerity has not only produced catastrophic social crisis in southern Europe and Ireland, it has also has not even achieved its goal of reducing public debt, which for the Eurozone has gone from 65% of GDP in 2008 to 94%, at the end of 2014.
In signing its February 20 agreement with its creditors Greece actually accepted troika conditions?
No, SYRIZA only agreed to postpone the introduction of some of its policies in exchange for continuing negotiations, including over the size of the Greek government’s primary surpluses.
The reaction in Greece, and within SYRIZA, to the creditors’ proposal was explosive. On June 5, Athens daily Ta Nea led with the deadline “Death Toll Required for an Agreement”, while SYRIZA deputy-speaker Alexis Mitropoulos commented:
“(Juncker) took on the dirty work and conveyed the most vulgar, most murderous, toughest plan when everyone hoped that the deal was closing. And that at a time when we were finally moving towards an agreement we all want because we rule out a rift leading to tragedy.”
Comment in the Greek media focused most on a proposed cut in a supplementary payment to the poorest pensioners and a 10% hike in consumption tax on electricity.
Even the conservative Greek financial press, in general hostile to SYRIZA, could recognise the validity of its debt-restructuring proposal. Financial web site Macropolis commented on June 11: “The scheme is fully compliant with [EU] treaties and the institutions regulations…The IMF has not only already accepted such an early repayment arrangement for Ireland and Portugal but managing director Christine Lagarde actually public praised Portugal. ‘It is with great joy that we consent to payment in advance, which shows that Portugal is doing much better,’ she said.”
Within SYRIZA, the reaction seems certain to strengthen the position of those opposed to any further payments to the creditors, a position that was narrowly lost 75-95 at the last meeting of the SYRIZA central committee. A motion proposing consideration of leaving the Eurozone was only lost 70-90..
On June 5, Tsipras denounced the June 3 Troika document in the Greek parliament, saying “the plan presented by the creditors cannot be the basis of an agreement”. The Greek government had already decided to roll over a payment of €300 million owed the IMF until late June, when it will, theoretically, be bundled with other repayments to the institution.
On June 13, defence minister and leader of junior government partner Independent Greeks party Panos Kammenos said on Mega TV that Greece “is no longer able to pay interest and repayments without receiving a single penny in return”. If there is no agreement by June 18 “we will not repay the IMF and the European Union. We will only pay our obligations inside the country”, he added.
But what if, as seems highly likely, no improvement in the Troika offer is forthcoming?
The alternatives are capitulation or confrontation. In the latter case, a default on debt repayments, which would challenge the ECB to turn off credit to the Greek banking system, would be unavoidable.
Is the EU establishment really prepared for that outcome?
Their plan may have all the time been, in the words of commentator John Weeks, to “force the Greek government to withdraw in circumstances that allow the Troika to deny culpability [and] to drain the Greek government of money until it must accept what the prime minister called ‘absurd’ demands or choose an increasingly costly exist from the Eurozone”.
However, have Merkel, Hollande, Juncker and co. properly reckoned the reaction of the Greek people—and their supporters in the rest of Europe— to such a scenario? Have they properly calculated the impact on the financial markets and the euro, the centrepiece of the German-dominated European project?