The
Fall of Greece: Yes, It Really is a Capitalist Plot
28 February 2010By Diana Johnstone
For Europe’s poorest countries, European Union
membership has long held out the promise of tranquil
prosperity. The current Greek financial crisis ought
to dispel some of their illusions.
There are two strikingly significant levels to the
current crisis. While primarily economic, the European
Economic Community also claims to be a community,
based on solidarity -- the sisterhood of nations and
brotherhood of peoples. However, the economic deficit
is nothing compared to the human deficit it exposes.
To put it simply, the Greek crisis shows what happens
when a weak member of this Union is in trouble. It is
the same as what happens on the world scale, where
there is no such morally pretentious union perpetually
congratulating itself on its devotion to human rights.
The economically strong protect their own interests at
the expense of the economically weak.
The crisis broke last autumn after George Papandreou’s
PASOK party won elections, took office and discovered
that the cupboard was bare. The Greek government had
cheated to get into the EU’s euro zone in 2001 by
cooking the books to cover deficits that would have
disqualified it from membership in the common
currency. The European Treaties capped the acceptable
budget deficit at 3 per cent and public debt at 60 per
cent of GDP respectively. In fact, this limit is being
widely transgressed, quite openly by France. But major
scandal arrived with revelations that Greece’s budget
deficit reached 12.7 per cent in 2009, with a gross
debt forecast for 2010 amounting to 125 per cent of
GDP.
Of course, European leaders got together to declare
solidarity. But their speeches were designed not so
much to reassure the increasingly angry and desperate
Greek people as to soothe “the markets” – the real
hidden almighty gods of the European Union. The
markets, like the ancient gods, have a great old time
tormenting mere mortals in trouble, so their response
to the Greek problem was naturally to rush to profit
from it. For instance, when Greece is obliged to issue
new bonds this year, the markets can blithely demand
that Greece double its interest rates, on grounds of
increased “risk” that Greece won’t pay, thus making it
that much harder for Greece to pay. Such is the logic
of the free market.
What the EU leaders meant by “solidarity” in their
appeal to the gods was not that they were going to
pour public money into Greece, as they poured it into
their troubled banks, but that they intended to
squeeze the money owed the banks out of the Greek
people.
The squeezing is to take the forms made familiar over
the past disastrous decades by the International
Monetary Fund: the Greek state is enjoined to cut
public expenses, which means firing public employees,
cutting their overall earnings, delaying retirement,
economizing on health care, raising taxes, and
incidentally probably raising the jobless rate from
9.6 per cent to around 16 per cent, all with the
glorious aim of bringing the deficit down to 8.7 per
cent this year and thus appeasing the invisible gods
of the market.
This just might propitiate both the gods and German
leaders, who above all want to maintain the value of
the euro. The financial markets will no doubt grab
their pound of flesh in the form of increased interest
rates, while the Greeks are bled by IMF-style “shock
treatment”.
And what about that great theater of human rights and
universal brotherhood, the European Parliament? In
that forum everyone gets to speak for a carefully
clocked 1, 2, or 3 minutes, but when it comes to the
most serious matter, the budget, the authoritative
voices are all German.
Thus the chairman of the EP’s special committee on the
economic and financial crisis, Wolf Klinz, has called
for sending a “high representative” of the EU to
Greece, an “economies commissar” to make sure the
Greeks carry out the austerity measures properly. The
Greek crisis can allow the EU to put into practice for
the first time its “Treaty instruments” concerning
“supervision of budgetary and economic policy”.
Interest rates may go up because of “risk”, but there
is to be no risk. The pound of flesh will be
delivered.
There was no such supervision of the financial
fiddling which caused this mess. The EU statistics
agency Eurostat recently discovered and revealed that
in 2001, Goldman Sachs secretly (“but legally”,
protest its executive officers) helped the right-wing
Greek government meet EU membership criteria by using
a complicated “currency swap” that masked the extent
of public deficit and national debt. [See Andrew
Cockburn and Marshall Auerback, on this site.] Who
understands how that worked? I think it is fair to
guess that not even Angela Merkel, who is trained as a
scientist, understands clearly what went on, much less
the incompetent Greek politicians who accepted the
Goldman Sachs trickery. It allowed them to create an
illusion of success – for a while. Success meant being
a “member of the club” of the rich, and it can be
argued that this notion of success has actually
favored bad government at the national level.
Belonging to the EU gave a false sense of security
that contributed to the irresponsibility of
incompetent political leaders.
Having euros to buy imported goods (notably from
Germany) pleased rich consumers, while the euro priced
Greek goods out of their previous markets. Now the
debt trap is closing. The traditional way out for
Greece would be to leave the euro and return to a
devaluated drachma, in order to cut imports and favor
exports. This way, the burden of necessary sacrifices
would not be borne solely by the working class. But
the embrace of EU “solidarity” is there to prevent
this from happening. German authorities are preparing
to lay down the law to the Greeks, after reducing the
income of their own working class in order to benefit
Germany’s export-oriented economy.
Austerity measures are the opposite of what is needed
in a time of looming depression. Rather, what is
needed are Keynesian measures to stimulate employment
and strengthen the domestic market. But Germany is
firmly attached to the export model, for itself and
everyone else (“globalization”). For a country like
Greece, which cannot compete successfully within the
EU, exports outside the EU are crippled by its use of
a strong currency, the euro. Bound to the euro, Greece
can neither stimulate its domestic market nor export
successfully. But it is not going to be allowed to
extricate itself from the debt trap and return to its
traditional currency, the drachma. Poverty appears to
be the only solution.
There is discontent within the German working class at
their country’s policies aimed at shrinking wages and
social benefits for the sake of selling abroad. In an
ideal “social Europe”, workers in Germany would come
to the aid of workers in Greece by demanding a radical
revision of economic policy, away from catering to the
international financial markets toward building a
solid social democracy. The reality is quite
different.
The Greek financial crisis exposes the absence of any
real community spirit in the EU. The “solidarity”
declared by the country’s EU partners is a solidarity
with their own investments. There is no popular
solidarity between peoples. The EU has established a
surrogate ideology of internationalism: rejection of
the nation-state as source of all evil, a pompous
pride in “Europe” as the center of human rights, giver
of moral lessons to the world, which happens to fit in
perfectly with its subservience to United States
imperial foreign policy in the Middle East and beyond.
The paradox is that European unification has coincided
with decreasing curiosity in the larger EU states
about what happens to their neighbors.
Despite a certain amount of specialized training
needed to create a Eurocrat class, the general
population of each EU member is only superficially
acquainted with the others. They see them as teams in
soccer matches. They go on holiday around the
Mediterranean, but this mostly involves meeting fellow
tourists, and study of foreign languages has declined,
except for English (omnipresent, if mangled). Mass
media news reports are turned inward, featuring
missing children and pedophiles ahead of even major
political events in other EU member states.
Northern European media portray Greece practically as
a Third World country, peripheral and picturesque,
where people speak an impossible language, dance in
circles on islands, and live beyond their means in
their carefree way. The crickets in the Aesop fable,
scorned by the assiduous ants.
Media in Germany and the Netherlands imply that IMF-style
shock treatment is almost too good for them. The
widening polarization between rich and poor, between
and within EU member states, is taken for granted.
The smaller indebted countries within the EU are
amiably designated by the English-speaking financial
priesthood as the PIGS – Portugal, Italy (perhaps
Ireland), Greece, Spain – an appropriate designation
for an animal farm where some are so much more equal
than others.
Diana Johnstone is author of Fools’ Crusade:
Yugoslavia, NATO and Western Delusions (Monthly Review
Press). She can be reached at diana.josto@yahoo.fr
©
EsinIslam.Com
Add Comments