Debts, promises and coups

Schäuble tyrannus

Master and servant

“In Greece the realisation that something has to change, and dramatically, still has to take place among many,” said Schäuble yesterday.

This gem of wisdom, comes from someone who supposedly is in charge of the Greek experiment, the chief of the German economy. I'm not sure how he forms an opinion on what is occurring in Greece, the effects his austerity programmes have on society and the population as a whole, nor do I understand what sort of people advise him on the mindset of the Greek population as a whole. But this didactic tone, coming from someone who obviously, from the effects of the policy he supervises, has not the faintest clue of either the society, or the economy he is helping to demolish and on which he is imposing a developing humanitarian disaster, is colonial in its contempt for the natives.

The Irish Times article linked to in the quotation above, describes Schäuble as one of the negotiators of Germany’s unification treaty, a process which he apparently considers a success and a model for Greece. I leave aside the astonishing idea that the Greek economy is anything like the East German economy was and how terrifying it is that the man running Greece, for all practical purposes, considers it to be a similar project in any meaningful way. I have no first-hand opinion on the matter of course, but it does strike me as odd that the net result is a region which seems to overwhelmingly prefer life under one of the most repressive, intrusive and harsh dictatorships in the Eastern Block, to what Schäuble achieved. So that is what the man calls success: creating mass yearning for dictatorship. I have no doubt that the corrupt and inefficient Third Greek Democracy, ending now, will be remembered with similar nostalgia should current plans persist.

The German leaders' uninformed, yet unabashed shows of contempt, bordering on the racist against Greece and the southerners are, most likely, political theater aimed to please the unthinking Bild readership,vile in its arrogance, but with a broader political aim of enforcing austerity and destroying social Europe as we know it well beyond the Greek borders. Yet one wonders: can they be as cynical as all that? Might the need to make a moralizing argument make them blind and selective as to the sort of "news" and ideas they have about what is happening in the south? I'm not sure... Could it be that it's not just that this is a policy aimed primarily at consolidating the Bild readership, but also a policy informed by Bild?

Meaningless promises burn meaningfully

I have chronicled as best as I could the trials and tribulations of Greek society and its economy, both at Histologion and the European Tribune over the past two disastrous years, and noted the disconnect of the persons in charge of "fixing" the Greek economy with its reality. This whole disaster is turning into a disgusting farce, a farce with real human casualties, but a farce nonetheless. "Greece" is being blamed for failing to meet the programme goals and "lying" to the EU officials. The programme itself cannot be at fault (although it is failing everywhere) so it must be it's lax implementation. This is something that apparently is sold as a fact to northern Europeans, along with the idea that this new package is mainly about "reform" and not about abolishing collective bargaining in Greece, forcefully decreasing private sector salaries to well under official poverty levels and reducing labor law to Burmese levels of worker protection - along with the fire sale of important infrastructure such as the Athens and Thessaloniki water companies and valuable assets such as the state lottery and football pools.

The list of "complaints" about Greece's "broken promises" is impressively ridiculous:

Taxes go uncollected, deficit targets are routinely missed, job cuts from the state payroll are postponed, privatisations have barely begun and pharmacies still shut in the middle of the day. Nearly two years into Greece's bailout, so many promises have been broken that international lenders have largely lost faith in the country's will to reform itself and are torn between imposing stricter outside control and cutting Athens loose.

Let's see how valid the complaints mentioned are:

• Taxes go uncollected:  This is a ridiculous statement. Taxes - flat taxes, and consumption taxes almost all of them- weighed heavily on the poorer and middle class segments of society, have been vastly increased at a time of total economic implosion. You can't collect taxes now, because the capacity of citizens and most businesses is either diminished or non-existent. As household incomes have fallen by ~50% over the past few months, paying last year's taxes for most households becomes an unbearable weight, and for most small businesses an impossibility. The new tax on property including residences, which was supposed to be paid through the electricity bill (or have your electricity cut-off, I kid you not) - has been met with widespread resentment and refusal of payment from an apparently huge percentage of the population, most of which cannot afford to pay the tax, either because they don't have the money (six out of ten households can't afford to even pay the utility bills, much less the extra tax ), or they're not sure that they won't need the money for pressing and basic needs in a climate of total work insecurity, or because they refuse to be blackmailed by an extortionist state. As even the Telegraph rightly notes:

  Greece’s tax revenue from VAT collapsed by 18.7pc in January from a year earlier.
  Nobody can seriously blame tax evasion for this. It has happened because 60,000 small firms and family businesses have gone bankrupt since the summer.
  The VAT rate for food and drink rose from 13pc to 23pc in September to comply with EU-IMF Troika demands. The revenue effect has been overwhelmed by the contraction of the economy.
  Overall tax receipts fell 7pc year-on-year.
  This is a damning indictment of the EU-imposed strategy. Greece is chasing its tail. The budget deficit is stuck near 8pc to 9pc of GDP because the economic base is shrinking so fast.

•  Deficit targets are routinely missed: They are. Of course. The targets are unrealistic to begin with, they are imposed based on political aims and not on some plan for the Greek economy, and then the austerity prescribed causes a much greater slump than originally calculated, which makes meeting the deficit target impossible without further cuts, which then cause a deeper recession which cause even greater divergences from the set goal, and so on in an infinite vicious circle... This forecasting error is not limited to Greece alone, but rather a feature of all IMF analyses, which are tools of political coercion and not objective technocratic estimates:

  The fact is that the optimistic 2012 forecasts presented in September 2011 whenever realistic. It was quite clear that the fiscal austerity being imposed upon the Eurozone was always going to result in sharp contractions in real growth.
  The IMF has a history of providing overly optimistic growth forecasts at a time when it is bullying national governments to impose fiscal austerity. The opposite is also the case, their growth estimates that typically conservative when governments are introducing fiscal stimulus packages

  Thus deficit targets are routinely missed, because they are set up that way, in an imploding economy that has lost 15% of GDP in 18 months...

• Job cuts form the state payroll are postponed: This is hogwash. There is a constitutional ban on firing public sector workers so this can't be done legally as easily as the troika pretends it can. A loophole has been invented in that they can be fired if the position they occupy is canceled. Since 2009, the number of public employees has declined from ~700 thousand to ~500.000. Is this bloated? Well no not even in 2008 it wasn't, according to the OECD:

  Greece has one of the lowest rates of public employment among OECD countries, with general government employing just 7.9% of the total labour force in 2008. This is a slight increase from 2000, when the rate was 6.8%.

  The situation remains significantly unchanged as far as the irrelevance of the size of the public sector employment in Greece to its problems is concerned, even if one adds the broader public sector - quasi-privatized, most of it - which is immediately affected by the troika decisions even though it has no immediate budgetary impact. Now this already low number is to be reduced a further 25%, with promises of firing an extra 150 thousand public employees by 2015. This has literally dissolved the public sector, increased corruption, demotivated the public sector workers and has caused all sort of problems, not least of which is the harm inflicted on the health system, corrupt and inefficient to begin with, which now produces higher mortality rates and superbugs.

•  privatisations have barely begun: This is true. The reason is that interest in privatized enterprises is close to zero, and the goals set were way too ambitious and unrealistic even last year... Now that the Greek economy has tanked they bring diminishing returns. This is aside of any discussion of the social and long-term economic sense and effects of selling-off things such as the water companies. Demanding immediate privatizations now is a demand for allowing the plunder of public resources. That the privatisation plans were not realistic, was noted very early on by many commentators...
• pharmacies still shut in the middle of the day: This doesn't merit a response. The reason Greece is in an unprecedented depression is certainly not the traditional arrangements on the work schedule of pharmacies. If they mean the liberalization of professions, it is now in effect in Greece in such a drastic and idiotic way in most cases, that it has destroyed the livelyhoods of thousands of people while creating practically no jobs for anybody else.

This is the sort of propaganda that promotes that idea that the reason for this whole Greek disaster, is not the actual policies imposed by the troika, which came to Greece with general blueprints and no idea about the reality of Greece's economy, vindicating Joseph Stiglitz's views on the IMF missions to various part of the world - but now with a local, ECB flavor of ineptitude:

When the IMF decides to assist a country, it dispatches a "mission" of economists. These economists frequently lack extensive experience in the country; they are more likely to have firsthand knowledge of its five-star hotels than of the villages that dot its countryside. They work hard, poring over numbers deep into the night. But their task is impossible. In a period of days or, at most, weeks, they are charged with developing a coherent program sensitive to the needs of the country. Needless to say, a little number-crunching rarely provides adequate insights into the development strategy for an entire nation. Even worse, the number-crunching isn't always that good. The mathematical models the IMF uses are frequently flawed or out-of-date. Critics accuse the institution of taking a cookie-cutter approach to economics, and they're right. Country teams have been known to compose draft reports before visiting. I heard stories of one unfortunate incident when team members copied large parts of the text for one country's report and transferred them wholesale to another. They might have gotten away with it, except the "search and replace" function on the word processor didn't work properly, leaving the original country's name in a few places. Oops.

There is no doubt, in short, that the Greek government, a most obedient group of creditors' overseers, lacks credibility. First and foremost it lacks credibility among its population. All polls show, and Sunday's demos proved, that this is a government that has lost all real political legitimacy, and the two parties that support it are in free fall. But the reason it lacks this legitimacy, the reason that they are ineffective tools for the implementation of the IMF/ECB programme is exactly because they are trying to implement a political project of mass pauperization and destruction of the minimal social state that existed in Greece before the arrival of the troika. This is not only an unjust and violent plan, but also a plan fraught with contradictions, misdiagnoses, and ideological fixations that apart from destructive also make it unworkable. It is, I admit, a display of evil political genius, that this impossibility is used to reinforce its brutality, at least as far as the other suckers in this mass bank bailout that is sold under the guise of Greece's bankruptcy, are concerned, namely the taxpayers of the loaning countries. Money given to "Greece" in fact will end up a. feeding Greek banks, already bailed out lavishly on taxpayer money, though their ownership structure will be preserved, with sums that are two orders of magnitude larger than their current market evaluation b. To the PSI participants c. To pay of already existing debt. There is no d. It bodes ill for the future of Greece that the memorandum (which parliament approved in a few hours, in a draft version that had blanks on actual sums of money involved, to be filled after its approval!) is a straight jacket that in practice commandeers the Greek economy for the benefit of bankers and other creditors, to the detriment of its population. That is why the Greek government lacks credibility even to lenders: a democratically  illegitimate government facing elections soon, is not credible because it is not stable. Which brings us to recent developments

An EU coup?

The severity of the measures and the blatant breach of any sort of national sovereignty by the new loan deal, coupled with the growing strength of the actual left in Greece, has created a climate of insecurity for the powers that be in the EU - powers, I should add that are already seen as enemies by much of the Greek population. Thus the German Finance Minister and the EPP axis of austerity around him are apparently considering an ultimatum, or is it blackmail? call it what you will:

There were signs a group of triple A-rated governments, including Germany, Finland and the Netherlands, were hardening their stance towards Athens. During a conference call among eurozone finance minsters, the three countries suggested they may want additional letters from other smaller Greek parties and openly discussed the possibility of postponing Greek elections.
Ahead of the call, Wolfgang Schäuble, the German finance minister, said in a radio interview Greece might delay its polls and install a technocratic government that does not include politicians like Mr Venizelos and Mr Samaras, similar to the model currently in place in Italy.

So elections should be put off, according to the debtors wishes, despite the fact that Samaras has guaranteed elections will be held in April and that it is blatantly obvious that the current government is totally at odds with the popular sentiment, as is the parliament. This is not a democratic union anymore. This is a tyranny where political leaders are extorted into signing letters of submission and adherence to a dead-end policy, that has failed in multiple parts of the world. This is the neoliberal cancellation of democracy, the emergence of the European Central Bank as an instrument of transformation of the European Project to some sort of market-driven dystopia. This is not tolerable, and it's not just about Greece anymore.

It seems that the Greek debacle, the realisation of the extent to which European elites are ready to use the debt crisis as an instrument for the neoliberal transformation of the EU has stirred popular forces around the world. From England, to France, to Spain, , Belgium, Italy, even as far away as San Francisco, a lot of people realize that the fight in Greece is more than about fiscal rectitude and balancing budgets, it is the first in a series of battles that will decide the way the debt crises will unfold in Europe and beyond, whether the EU will become another labor wasteland and whether Social Europe as we have known it will continue to exist and develop.

That is the battle we're fighting here, not just for our own skins, although we're trying to avert a descent to a humanitarian disaster, but also the first battle in a world-wide social war over the debt, over who controls the economy and whom it should benefit...
[A briefer and more focused version of this story can be found at the European Tribune]