With Greece and the eurozone committing to reforms and a bailout that’s still unsustainable, it’s the people of Greece who are left to suffer, not knowing “what will come tomorrow. They don’t know if they’ll have their jobs or if they’ll have money to live,” a Greek expat tells MintPress.
WASHINGTON — All the news coming out of Greece is bad, says Giannis Nitodas, who left his home in Chios, Greece, amid the mounting pressures of austerity measures that continue to crush the Greek economy.
“I was paid €900 [$990] per month,” Nitodas told MintPress News from his home in Toronto, Ontario. “But we didn’t know what would happen tomorrow.”
In addition to his unstable work situation, he couldn’t find renters for their considerably low-priced apartments in Athens.
“If I got fired, then we couldn’t do anything. We only had money for the month, and five days before the end of the month we would only have 10 euros for the pocket,” he said, reflecting concerns faced by many in Greece, where household disposable income has dropped 31 percent since 2009.
So, in mid-2013, Nitodas, his wife, who has Canadian citizenship, and their two children packed up and left it all behind. They were “okay” compared to other families, he says, but still, “If you have a family it’s too insecure.”
A new round of austerity
The crisis Giannis Nitodas and his family fled continues to unfold in debt-laden Greece. And the hardships of further austerity measures still loom on the horizon, even despite efforts made by the majority of the populace to support the left-wing Syriza government earlier this year, which campaigned on an anti-austerity platform and pledged to renegotiate the terms of the country’s debt with the so-called “troika” — the European Commission, the European Central Bank, and the International Monetary Fund.
On Thursday, the Greek parliament approved a second wave of austerity-implementing reforms to save the country from bankruptcy and possible ejection from the eurozone.
This second bill is a little less controversial than the first, which was approved on July 15. Even Yanis Varoufakis, a member of parliament and Syriza’s former finance minister, who resigned on July 6, voted in favor of it, saying he believes the reforms are necessary.
Following the vote, Greece’s finance ministry announced that troika representatives would be flying to the Mediterranean country to negotiate terms for a new bailout.
A lesson for the European left
While disastrous for the people who have to live through the so-called “reforms,” Greece’s current debacle with the forces of austerity in Europe, namely Germany, should also be seen as instructional for the broader left in Europe. The situation should be treated as a guide for how to negotiate with the European bloc’s monetary leaders in the future.
Greece is being punished for electing Syriza because the party projected a sense of hope for a progressive alternative to austerity policies in Europe, according to Costas Panayotakis, author of “Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy” and professor of sociology at the New York City College of Technology at City University of New York.
“They [the troika] wanted to squash that because they were also seeing that anti-austerity forces of the left were rising in other countries like Spain,” Panayotakis said, explaining that punitive measures heaped upon Greece send a message to the left across Europe: If you dare elect a government that goes against the austerity orthodoxy, things will get very bad.
However, he argues, this also creates clarity for the left in Europe.
“It also shows that any leftist government in the future that gets elected should not have any illusion of who it is they’re dealing with,” he said, referencing Germany and its allies, who control monetary policy on the continent.
“I think that was part of the problem with Syriza,” he added.
Panayotakis says Syriza’s leadership took the rhetoric about the European project being based on democracy at face value, which it should not have done.
“Any sort of progressive leftist government in the future would have to realize that basically when it tries to negotiate with the Europeans for a change in the policies being pursued, the resistance and the pressure they face will be ruthless,” he said.
“The other side will be out to squash them, humiliate them, destroy them, and they have to be ready, they have to have an alternative plan, which it’s not clear that Syriza had.”
The Europeans negotiated rationally while Syriza bluffed
Perry Anderson, a member of the editorial board of the journal New Left Review, argued in Jacobin magazine that Syriza did not have any bargaining tools with which to influence the troika.
Writing for the radically left magazine published in New York, Anderson argues Syriza never had any intention of leaving the eurozone. In fact, he argues, the party has done whatever it takes to stay within Europe’s economic zone.
“Had Syriza put in place, as soon as it was elected, contingency plans for a managed default — preparing the capital controls, alternative currency issue, and other transitional measures that would need to be imposed overnight, if disorder was not to ensue — and threatened the EU with one, it would have had a bargaining weapon in its hand,” Anderson wrote in a piece published Thursday.
“Had it also made clear that in event of a showdown, it could pull Greece out of NATO, even Berlin would have thought twice about a third austerity package, in the face of American fright at any such prospect. But for the Candides of Syriza, that was naturally even more taboo than thought of a Grexit. So, confronted with a petitioner alternatively beseeching and abusing them, without a card in its hand, why should the assembled European powers have made any concessions, knowing in advance that whatever they decided would be accepted? By their lights, they behaved quite rationally.”
This proved largely true. But not only did the troika play a better hand than Greece, it punished the country for daring to question the orthodoxy of the continent’s austerity policies, according to Joseph Stiglitz, a Nobel laureate in economics and University Professor at Columbia University.
“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,” Stiglitz wrote last month for Project Syndicate, a website that publishes and syndicates material related to global affairs, economics, finance, and development.
“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.”
The US position and an eventual ‘Grexit’
Indeed, even the United States did not wish such punitive measures to be meted out upon Greece, according to Mark Weisbrot, co-director of the Center for Economic and Policy Research in Washington.
Speaking to MintPress, Weisbrot says the only concerns voiced by the U.S. throughout the entire process involve keeping Greece inside the Eurozone, while Germany and its allies are trying to change Europe into a different society.
Joschka Fischer, Germany’s former foreign minister and vice chancellor from 1998-2005, put it succinctly in “The Return of the Ugly German,” a piece for Project Syndicate published Thursday. He wrote:
“For the first time, Germany didn’t want more Europe; it wanted less. Germany’s stance on the night of July 12-13 announced its desire to transform the eurozone from a European project into a kind of sphere of influence.”
To be clear, Weisbrot does not believe the U.S. supports debt relief for any empathetic reasons related to the burdens of austerity. In a June 12 opinion piece for Al-Jazeera America, he explained:
“The politics of empire are much more important than any economic concerns here. For the same reasons that the United States intervened in Greece’s civil war (1946 to ’49) and supported the brutal military dictatorship (1967 to ’74) — with all the murder, torture and repression that these involved — Washington does not want to have an independent government in Greece.”
The U.S. made its positioning on Greece known through the IMF, which answers to the U.S. Treasury Department, just three days before the country’s July 5 referendum on austerity. The IMF’s analysis of the situation asserted that Greek debt was “unsustainable.”
“Germany and its allies wanted to postpone [the IMF’s assessment] until after the referendum because they thought it could help Syriza, which it did,” Weisbrot told MintPress.
The IMF furthered its analysis of the situation on July 14, stating that Greece’s debt was “highly unsustainable.” The organization then demanded that the troika grant debt relief as a condition for a bailout.
The Fund’s analysis update concluded: “Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far.”
However, even if Europe decides to grant debt relief as a condition for the next bailout, Weisbrot doesn’t foresee an improvement in the situation. He forecast renewed talks about exiting the eurozone over the next three years, as both sides have committed to a plan that isn’t sustainable.
“In the past, it was all a bluff,” Weisbrot said. “The eurozone authorities didn’t want them out of the euro, the Germans didn’t want them out of the euro, the Syriza leadership didn’t want them out of the euro, and the U.S. didn’t want them out of the euro.”
“Now that’s changed. Now you see divisions within the left in Greece. Now you see more serious divisions within Germany, and now you have a commitment to a program that is not possible, which will lead to further conflict.”
Meanwhile, back in Toronto, Giannis Nitodas laments the hope Syriza brought to Greeks not only back home but also all over the world.
“We had a lot of expectations, I think too many expectations from our prime minister,” Nitodas said, adding: “I was saying the same thing a year and a half ago. People are scared; they’re insecure. The bad thing in that situation is that you don’t know what will come tomorrow. They don’t know if they’ll have their jobs or if they’ll have money to live.”