New Internationalist

Greeks decry bailout madness

Anyone listening to the news from Greece about Monday’s Eurogroup could be forgiven for thinking that the streets of Athens will soon be lined with gold – or Euros, at least. The propaganda mechanism seems to be the only thing spared by the crisis, portraying the deal about the new Greek loan through a distorting and deceitful lens.

‘We are saved!’ cried out exhilarated TV anchors. ‘Each Greek citizen just received a present of €10,000!’ wrote a ship-owner/media mogul on his twitter account. ‘Those who didn’t support the memorandum don’t have the right to rejoice,’ declared a government minister on TV. After Monday’s Eurogroup, the effort to create an artificial feeling of euphoria for Greece’s new loan was clear.

The atmosphere on the streets, however, remained as gloomy as always. With record austerity measures plunging the country further into recession, how could one be happy about a deal that turns Greece into nothing more than a European fiefdom? The devil hides in the details of the decision to grant Greece a €130 billion ($170 billion) loan, only to come clear when the deliberations for a 53.5 per cent ‘haircut’ are concluded with the country’s private bondholders.  

First of all, the government agreed to set up a special account to service the debt, which will be financed by the loans and by domestic resources. The Constitution must change, in order to prioritize loan payments in comparison to other government expenses. On a practical level, this means that, if the government doesn’t have enough money to service the debt, it will have to implement deeper cuts in pensions, salaries and social spending. It means that the question of default is no longer ‘external’ (ie towards foreign lenders), but ‘internal’ (ie towards the population). This decision also proves that the so-called ‘Greek bailout’ doesn’t rescue the population, but the lenders.

In order to secure its money, the Commission will set up a permanent monitoring group in Greece, hugely reinforcing the Task Force that it already keeps in the country under Horst Reichenbach. Such heavy international supervision renders ‘outdated’ the notion of independent policy-making in Greece. Given the aforementioned dictates for constitutional changes, as well as the European leaders’ expressed concern vis-à-vis the prospect of elections, one realizes that sovereignty has also become a thing of the past for the country. ‘Greece is living in a post-neocolonial situation,’ Costas Douzinas, director of the Birkbeck Institute for the Humanities, told me.

A part of the population would justify such measures, if they were to alleviate the country’s financial burdens. In fact, Eurogroup’s promise is that by 2020, Greek debt will reach the ‘sustainable’ level of 120.5 per cent of GDP through the haircut; through lower interest rates for the Greek loans; and thanks to the fact that the European Central Bank has agreed to give up its profits from the Greek bonds. Nevertheless, a confidential report of the Troika which was leaked to the public just before Monday’s Eurogroup, recognizes that the programme is highly ‘accident-prone’ and that the more pessimistic scenario expects that debt will rise to 160 per cent of GDP by 2020. It is obvious that the spectre of a third ‘bailout’ and a new haircut is still alive and kicking, threatening the population with even harsher austerity measures.

Besides, it is not given that the Greek people will in practice accept even the current list of requirements in order to conclude the deal. Protests, in the form of strikes and marches, are organized almost daily against its harsh conditions. One should note that, even though Greece is repeatedly presented as ‘rescued’ by the IMF and the EU, Greek GDP will in the next financial year probably fall to even lower levels than the GDP of Argentina when it had defaulted! Greek people understand this, so it is not surprising that, according to a recent poll, 59.4 per cent reject the new loan deal, while 78.2 per cent think that the danger of default is not yet eliminated.

Last but not least, one should note that Monday’s Eurogroup deal doesn’t specify any measures to stimulate growth and help the country escape from stagnation, given that the austerity measures will deepen recession without actually increasing Greek competitiveness. The Greek drama is far from over, while Portugal is already waiting its turn to be ‘saved’.

Photo by fdecomite under a CC Licence

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