Wednesday, 1 July 2015

EU attack on Greece



Europe’s Attack On Greek Democracy


Joseph Stiglitz, Greek Democracy
Joseph Stiglitz
The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.
Of course, the economics behind the program that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.
It is startling that the troika has refused to accept responsibility for any of this or admit how bad its forecasts and models have been. But what is even more surprising is that Europe’s leaders have not even learned. The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.
Economists around the world have condemned that target as punitive, because aiming for it will inevitably result in a deeper downturn. Indeed, even if Greece’s debt is restructured beyond anything imaginable, the country will remain in depression if voters there commit to the troika’s target in the snap referendum to be held this weekend.
In terms of transforming a large primary deficit into a surplus, few countries have accomplished anything like what the Greeks have achieved in the last five years. And, though the cost in terms of human suffering has been extremely high, the Greek government’s recent proposals went a long way toward meeting its creditors’ demands.
We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems. The IMF and the other “official” creditors do not need the money that is being demanded. Under a business-as-usual scenario, the money received would most likely just be lent out again to Greece.
But, again, it’s not about the money. It’s about using “deadlines” to force Greece to knuckle under, and to accept the unacceptable – not only austerity measures, but other regressive and punitive policies.
But why would Europe do this? Why are European Union leaders resisting the referendum and refusing even to extend by a few days the June 30 deadline for Greece’s next payment to the IMF? Isn’t Europe all about democracy?
In January, Greece’s citizens voted for a government committed to ending austerity. If the government were simply fulfilling its campaign promises, it would already have rejected the proposal. But it wanted to give Greeks a chance to weigh in on this issue, so critical for their country’s future wellbeing.
That concern for popular legitimacy is incompatible with the politics of the eurozone, which was never a very democratic project. Most of its members’ governments did not seek their people’s approval to turn over their monetary sovereignty to the ECB. When Sweden’s did, Swedes said no. They understood that unemployment would rise if the country’s monetary policy were set by a central bank that focused single-mindedly on inflation (and also that there would be insufficient attention to financial stability). The economy would suffer, because the economic model underlying the eurozone was predicated on power relationships that disadvantaged workers.
And, sure enough, what we are seeing now, 16 years after the eurozone institutionalized those relationships, is the antithesis of democracy: Many European leaders want to see the end of Prime Minister Alexis Tsipras’s leftist government. After all, it is extremely inconvenient to have in Greece a government that is so opposed to the types of policies that have done so much to increase inequality in so many advanced countries, and that is so committed to curbing the unbridled power of wealth. They seem to believe that they can eventually bring down the Greek government by bullying it into accepting an agreement that contravenes its mandate.
It is hard to advise Greeks how to vote on July 5. Neither alternative – approval or rejection of the troika’s terms – will be easy, and both carry huge risks. A yes vote would mean depression almost without end. Perhaps a depleted country – one that has sold off all of its assets, and whose bright young people have emigrated – might finally get debt forgiveness; perhaps, having shriveled into a middle-income economy, Greece might finally be able to get assistance from the World Bank. All of this might happen in the next decade, or perhaps in the decade after that.
By contrast, a no vote would at least open the possibility that Greece, with its strong democratic tradition, might grasp its destiny in its own hands. Greeks might gain the opportunity to shape a future that, though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present.
I know how I would vote.

14 comments:

  1. I'm so glad our country is independent and doesn't have an outside agency dictating how we run our economy. Greece is in a no win situation, but I think they'd be better off outside the EU.

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    1. When the EU was first formed it was known as the EC and it's codes of practice were very different to what it is now. I was in the early days pro EC, as I saw a great deal of benefit in european countries all working together for the benefit and protection of their people.The EU policies have now changed to become a benefit society for the Billionaires and Bankers.
      You may well be right that Greece would be better off outside of the EU.

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  2. Very well put! An excellent article, Mel. Thanks for sharing this!

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    1. Good to hear from you Val. I found this to be a very informative article, which I realised just had to be shared, especially with all of the media hype and misinformation that is being bandied about.

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  3. I think, after reading your commentary on the situation, I might well be behind you in the queue.

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    1. Hello Pat the author is Prof. by Joseph Stiglitz , not me I read it very early this morning and found his words ringing true.

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  4. Reminds you of Ireland, does it not? Not Ireland in the EU, who suffered and then rose like a phoenix, but the Ireland my great grandparents left. I think we all know how Greece should vote, and I am confident the EU will not abandon Greeks.

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    1. Well Joanne I don't think everyone here benefitted from the EU. During this latest financial recession well over half a million Irish people, many of them between the ages 18 to 28, have migrated to other countries. People have lost their homes - over 5,000 this year - because they are unable to pay their mortgages and breakfast clubs (to feed hungry pupils) have existed in schools here now for several years. Social benefits have been cut massively which affects many of the most vulnerable in our country. Ireland may not have the poverty that was prevalent many years ago but it still has a long way to go yet.

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  5. Excellent post sir, I also know which way I'd vote.

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  6. Hello John!
    Am sure your vote and mine, if we had one. Then each of us would vote for the same ideal :)

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  7. Great stuff Mel, It has to be NO! it'll be tough but has to be worth it..

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  8. You do know that it would probably not have come this if Germany had been honest and paid WW2 reparation to Greece, a figure which stands now at roughly 300 billion Euros!
    What you have said Jonny is I believe correct - thank you for your comment.

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  9. Hello Mel, as I write this morning the Greeks have done the right thing and voted No. This is a great article and has set the case out quite neatly. I would like to think that our Government might take a warning that people are fed up with austerity but unfortunately they are so concerned with lining the rich pockets that they will not listen until the 76% that didn't vote for them start really making their protests heard. I wish the Greek people well and I hope that the No vote kicks some common sense in to the EC leaders.

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    1. Thank you Fran.
      You are quite correct in what you have said about politicians and I often think it is they who are the enemy within.

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