another landslide victory as the Greeks say OXI!

everywhere is OXI! all say NEIN!

Following the financial crisis (which was actually a banking crisis, as I have pointed out many times before), it was Greece that was unfortunate enough to have been singled out and placed at the head of the queue for dose after dose of neo-liberal economic shock therapy. The financial group formerly known as “the Troika” — the IMF, ECB and EU — were exceedingly quick when it came to imposing their strict austerity programme, backed up with further ‘Washington Consensus’-style ‘conditionalities’ — the enforced privatisation of public services and other forms of so-called ‘deregulation’.

More than half a decade on, and rather than prosperity, “austerity” (i.e., savage cuts – I always apply apostrophes) has created a vicious debt spiral, with mass unemployment and reduced incomes leading inexorably to reduced demand, stifled economic growth and, as a direct and consequence, lost tax revenues that would otherwise have been available for government investment. Along the way, money has been deliberately siphoned from the poorest in society to the wealthiest. But then “austerity” automatically provides a wonderful excuse for this sort of wealth redistribution.

Six months ago, the Greeks voted in the anti-austerity government Syriza. Their message then was already clear: “austerity” simply does NOT work! They had had enough. Now with today’s dramatic referendum result they have said ‘enough’ a second time – in effect this was a landslide vote calling for a complete end to “austerity” and even more loud and clear than when Syriza were first elected.

What happens next is uncertain. The real fight for the future of their country is perhaps only just beginning. But the vote shows both the strength of support for the Syriza government as well as the tremendous courage of the Greek people to continue to take a stand against the Eurogarchs. To win by such a margin was a remarkable victory.

What the Greek people achieved today provides yet another boost in our own fight against “austerity”.

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greek solidarity march

 Left Unity, who have a loose alliance with both Syriza and Podemos, tonight issued the following message and call for support:

The people of Greece have resisted every threat, every piece of establishment propaganda telling them a No vote would mean ruin, and asserted their democratic rights. This will be a No heard around the world.

Now is the time to celebrate – and to step up our solidarity ahead of the Troika’s next move. Come along to what will now be a victory rally at the TUC’s Congress House, organised by Greece Solidarity Campaign.

*

Update:

Here is a very short report on Monday’s [July 7th] Democracy Now! featuring Costas Panayotakis, professor of sociology at NYC College of Technology at City University of New York, and author of Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.

Panayotakis says:

Yeah, I think it surprised everybody, including the government. All the polls before the vote suggested that it was very close. So, I think that was a great victory for democracy in Greece. People were under immense psychological pressure from the media, that were threatening them with nightmare scenarios; from workplaces, where many business owners were threatening their workers that if a “no” prevailed, they would lose their jobs; and from the European partners, who basically were saying that a “no” vote would mean exit from the eurozone. So, it’s a very important result. It’s a hopeful development. It will not end the austerity, even if there is an agreement, but it creates a better environment for anti-austerity forces to keep fighting. […]

Well, the situation in Greece is still very difficult. It is urgent, because the banks are closed, so the normality in the banking system has to be restored. As long as it is not restored, it basically will have a bad effect on the economy. And this creates lots of pressure, of course, on the Greek government, and it is consistent with a strategy of economic strangulation of—that the Europeans have used ever since the election of this new anti-austerity government.

With regards to the resignation of Yanis Varoufakis, the former Greek Finance Minister, Costas Panayotakis points out:

He’s not a sort of long-term politician. So he doesn’t want to just—he didn’t want to just achieve an agreement that would last a few months and would continue this kind of pattern of agreements that are made and have to be reconsidered and revisited a few months later. So that made him very, very unpopular with his partners, who are the more traditional politicians. Perhaps it was partly a stylistic issue, as well. You know, he wasn’t—you know, finance ministers in the eurozone are usually very sort of gray, sort of technocratic figures, so perhaps his style was commented on. But I think there was substantial differences, and he basically held for his position, which was substantially right.

Click here to read the full transcript or to watch the debate on the Democracy Now! website.

Meanwhile, Ambrose Evans-Pritchard, International Business Editor for The Telegraph, provides an excellent overview of available options the Greek government can choose from in the event that the ECB decides to continue denying the banks “emergency liquidity assistance (ELA)”, i.e., euros:

Top Syriza officials say they are considering drastic steps to boost liquidity and shore up the banking system, should the ECB refuse to give the country enough breathing room for a fresh talks.

“If necessary, we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it a week ago,” said Yanis Varoufakis, the finance minister.

Alternatively (and bearing in mind that Varoufakis has stepped down):

Syriza sources say the Greek ministry of finance is examining options to take direct control of the banking system if need be rather than accept a draconian seizure of depositor savings – reportedly a ‘bail-in’ above a threshhold of €8,000 – and to prevent any banks being shut down on the orders of the ECB.

Government officials recognize that this would lead to an unprecedented rift with the EU authorities. But Syriza’s attitude at this stage is that their only defence against a hegemonic power is to fight guerrilla warfare.

Hardliners within the party – though not Mr Varoufakis – are demanding the head of governor Stournaras, a holdover appointee from the past conservative government.

They want a new team installed, one that is willing to draw on the central bank’s secret reserves, and to take the provocative step in extremis of creating euros.

“The first thing we must do is take away the keys to his office. We have to restore stability to the system, with or without the help of the ECB. We have the capacity to print €20 notes,” said one.

Such action would require invoking national emergency powers – by decree – and “requisitioning” the Bank of Greece for several months. Officials say these steps would have to be accompanied by an appeal to the European Court: both to assert legality under crisis provisions of the Lisbon Treaty, and to sue the ECB for alleged “dereliction” of its treaty duty to maintain financial stability.

Click here to read Ambrose Evans-Pritchard’s full report entitled, “Defiant Greeks reject EU demand as Syriza readies IOU currency”

*

On Tuesday [July 7th], Democracy Now! ran a rather more extended report on the Greek crisis in the light of their defiant rejection of “austerity”. They spoke with Richard Wolff, author of several books, including, most recently, Democracy at Work: A Cure for Capitalism, and emeritus professor of economics at University of Massachusetts, Amherst, as well as Channel 4 News skittish economics editor, Paul Mason.

Richard Wolff says:

I think the real importance of what is happening in Greece is that fundamentally a poor corner of Europe has said it will no longer absorb the disproportionate burden of this crisis and of the bailouts that have been used to cope with it. Basically, what is going on here is that the richer countries of Europe, led by Germany, are shifting the burden of all these crises—that they are responsible for—onto people in Greece. They never imagined that in trying to do that they would generate their worst nightmare: a left-wing political organization that goes from 4 percent of the vote a few years ago to an ability to call out a referendum and get 60 percent of the people to support them. So, they have generated a response, and that struggle, of which this is only one step, is what’s being played out here. And that’s why it’s relevant to the rest of Europe and to the United States, everywhere where there is mounting evidence of people saying, “No, we will not continue to absorb the costs of a system that works in this dysfunctional way.”

Regarding Germany’s part in the crisis, Wolff says:

The irony here, the historical irony, is something I think we need to understand. Back in 1953, the Germans, with a very crushed economy—in that case, because of the Great Depression and the fact that they lost World War II—went to the United States, France and Britain and said, “We can’t join you as a bulwark against the Soviet Union unless you relieve us of our enormous debts, which are hampering our ability to grow.” Across 1953, they had meetings in London. When those meetings concluded, with the so-called London Agreement, here’s what Germany got from the United States, France and Britain: 50 percent of their outstanding debt, which was very high, was erased, and the other 50 percent of their debt was stretched out over 30 years. In effect, Germany got the relief of all of its basic indebtedness, based on two world wars that they were held accountable for, and that enabled them to have the so-called Wirtschaftswunder, the economic miracle that happened. They now refuse to give to Greece what they got. They refuse to allow Greece to have the chance to solve its economic problems just the way Germany asked for and got. And this discrepancy between these two countries is producing a stress inside Europe that is, what Paul Mason correctly points to, fundamentally dangerous to the whole project of a United States of Europe.

Adding a little later:

The Germans are victims of their own propaganda. They converted an economic crisis into a nationalist, we-versus-them mentality—we, Germans who work hard, against the Greeks, who don’t. Reminded me of nothing so much as Mr. Romney’s unfortunate remark in the last campaign where he divided Americans into the 47 percent moochers and the 53 percent who work hard, trying to get the 53 percent to believe they were carrying the other 47. That’s what the Germans have done. “We Germans work very hard, and we’re carrying these lazy Greeks.” This—put aside the questionable issue of whether the Germans ought to play such a nationalist card, given their history, but this is a way of solidifying opposition to what’s going on, and this is a very, very dangerous track. But she may be trapped by it. She has done it now. So, as Paul said, her own people wouldn’t support making a deal. She’s made that impossible for herself.

And finishing:

There’s no question in my mind, from the evidence we have, that the American government is more interested with a stable Europe than with provoking this kind of a split inside Europe, partly because of the ramifications here in this country, where the same anti-austerity is building. That’s one of the causes for the support for Bernie Sanders, for example. But he’s also concerned that the Germans are making a classic political error, going way too far, and that this will disturb global markets. The economic recovery in this country is very weak and very fragile, and that doesn’t want disturbance to come from a powerhouse like Europe.

Click here to read the full transcript or to watch the debate on the Democracy Now! website.

*

The eleventh hour intercession by the IMF was intriguing. Why decide to put out its “Debt Sustainability Analysis” draft report which confirms that Greek debt repayment is unsustainable whilst announcing Greece’s need for large-scale debt relief to create “a breathing space” on the very eve of such a crucial vote? A statement that came as grist to the mill for the “no” campaign, was cited by Alexis Tsipras in his televised appeal to voters, and, hardly surprising, was frowned upon by other Eurozone countries that tried to block its release. Yet, seemingly at the behest of Washington and in defiance of Berlin, the IMF went ahead anyway.

At Zerohedge, Tyler Durden offered up this somewhat unsatisfactory answer:

Perhaps after all is said and done, the powers that be need chaos, need instability, need panic in order to ensure the public gratefully accept the all-in QE-fest that they want.

On the other hand, Paul Craig Roberts suggests a rather more persuasive, if still highly speculative, geostrategic reason:

If the inflexible Germans were to have Greece booted from the EU, Greece’s turn to Russia and financial rescue would put the same idea in the heads of Italy and Spain and perhaps ultimately France. NATO would unravel as Southern Europe became members of Russia’s Eurasian trade bloc, and American power would unravel with NATO.

This is simply unacceptable to Washington.

If reports are correct, Victoria Nuland has already paid a visit to the Greek prime minister and explained to him that he is neither to leave the EU or cozy up to the Russians or there will be consequences, polite language for overthrow or assassination. Indeed, the Greek prime minister probably knows this without need of a visit.

I conclude that the “Greek debt crisis” is now contained. The IMF has already adopted the Greek government’s position with the release of the IMF report that it was a mistake from the beginning to impose austerity on Greece. Pressured by this report and by Washington, the EU Commission and European Central Bank will now work with the Greek government to come up with a plan acceptable to Greece.

This means that Italy, Spain, and Portugal can also expect more lenient treatment.

The losers are the looters who intended to use austerity measures to force these countries to transfer national assets into private hands. I am not implying that they are completely deterred, only that the extent of the plunder has been reduced.

Time will tell if Roberts is right.

Click here to read Paul Craig Roberts’ full article.

Finally, on Friday [July 10th], Democracy Now! spoke with Mark Weisbrot, co-director of the Center for Economic and Policy Research and author of forthcoming book, Failed: What the Experts Got Wrong About the Global Economy. As part of his response to a question about why Yanis Varoufakis resigned, Weisbrot offered an alternative explanation for the IMF/Washington intervention:

Well, I don’t know why—I mean, I don’t know why the finance minister quit. Obviously, you know, the European—the other finance ministers and European authorities wanted him out, and they said it was his negotiating style and things like that. I don’t know that that makes much difference.

You know, the main thing, again, is whether they can get a deal that allows for an economic recovery. You know, this is the ironic thing about it, is that the European authorities have made this mess. The reason they need all this debt relief is because the economy has shrunk by more than 25 percent and greatly reduced their ability to pay. And now, the IMF is already saying—or the IMF has already acknowledged that the debt is unsustainable.

And some of that is U.S. influence. You know, you have a difference between the U.S. and the European Union, or the European authorities, I should say, because the U.S. is only concerned with keeping Greece in the euro, whereas the others have this project. They want to transform Europe into a place that has a smaller social safety net, a reduced state, cuts in pensions and healthcare. This isn’t just Greece. Greece is the obstacle in their way of transforming Europe. So they have these whole set of other interests that they’re fighting for, and that’s why they’re being so brutal and stubborn about this.

So, again, you know, we don’t really know what’s going to happen yet. We don’t know whether they’re going to grant sufficient debt relief to allow for an economic recovery. So I think this fight is going to go on for a while.

In other words, Washington and Berlin have somewhat divergent interests — interests that, as Paul Craig Roberts indicates, may hinge on Washington’s grander and more lunatic geostrategic objectives.

Click here to read the full transcript or to watch the debate on the Democracy Now! website.

 

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2 Comments

Filed under analysis & opinion, austerity measures, Britain, campaigns & events, Greece

2 responses to “another landslide victory as the Greeks say OXI!

  1. Steve Fotios

    What is Oxi?

    Like

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