Category Archives: austerity measures

this is the EU — so take it or leave it… #5. Greece and the tyranny of Brussels

“In the euro area, the countries in the periphery have nothing at all to offset austerity. They are simply being asked to cut total spending without any form of demand to compensate. I think that is a serious problem.

“I never imagined that we would ever again in an industrialised country have a depression deeper than the United States experienced in the 1930s and that’s what’s happened in Greece.

“It is appalling and it has happened almost as a deliberate act of policy which makes it even worse”. [Bold highlight added]

— Lord Mervyn King, former Governor of the Bank of England. 1

“The Greek people have been living through hell during the last six years, and unfortunately they trusted that Tsipras [PM] would put an end to the extreme austerity measures, which are combined with a total undemocratic regime. Unfortunately, instead of putting an end, he put his signature to a third memorandum, which is even worse than the previous two…

“People are back on the streets protesting for their rights and dignity because right now they’re being asked to pay taxes which amount to almost the totality of their revenue. They’re asked to give up their homes… They’re asked to surrender public property, which is privatized at very, very low prices. And, they’re also asked to give up democracy”

— Zoe Konstantopoulou, lawyer and former Speaker of Hellenic Parliament. 2

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On 13th July [2015], the democratic elected Greek government of Alexis Tsipras was brought to its knees by the European Union. The “agreement” of 13th of July is in fact a coup d’état. It was obtained by having the European Central Bank close down the Greek banks and threaten never to allow them to open up again, until the Greek government accepted a new version of a failed program. Why? Because official Europe could not stand the idea that a people suffering from its self-defeating austerity program dared elect a government determined to say “No!”.

So begins the call for “A plan B in Europe” put together by a group of prominent European left-leaning politicians from Parti de Gauche (France), Die Linke (Germany), Red Green Alliance (Denmark), Socialist Party (SP) (Ireland), Bloco de Esquerda (Portugal), and Syriza (Greece). Top of the bill is Yanis Varoufakis (a principle author, I imagine, given some of the polemical flourishes within this signed but otherwise uncredited page-long call to action).

The piece continues:

We must learn from this financial coup. The euro has become the tool of economic and governmental dominance in Europe by a European oligarchy hiding behind the German government, delighted to see Mrs Merkel doing all the « dirty work » other governments are incapable of undertaking. This Europe only generates violence within nations and between them: mass unemployment, fierce social dumping and insults against the European Periphery that are attributed to Germany’s leadership while parroted by all the “elites”, the Periphery’s not excluded. The European Union has thus become an agent of an extreme right wing ethos and a vehicle for annulling democratic control over production and distribution throughout Europe. 3

Click here to read the full statement.

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Now let us go back nine months – back to the eve of the Greek referendum during the dog days of last summer, and just before the extraordinary ‘oxi’ vote which momentarily reverberated across our western hemisphere.

Yanis Varoufakis [3:45 mins in]: Let me tell you something which is probably unknown. Ever since we declared the referendum and we incensed our European partners we had the most interesting proposals coming from Brussels. Perhaps this referendum and the impasse it represents concentrated several minds in Brussels and we’ve had some really good proposals – proposals we would sign on the dotted line for.

Paul Mason: You have a proposal you would sign on the dotted line for?

Varoufakis: Yes, we do.

Mason: Where is it?

Varoufakis: Well, I’m not going to tell you. It’s somewhere in this building. But the crucial part of the story is that before this proposal becomes a genuine negotiating document which we can sign off on Monday, the people have to empower us with a “no”.

From the Channel 4 news interview embedded above broadcast on July 3rd 2015 that is also available here.

You can find the same clip here on Varoufakis’ blog.

Shortly thereafter [July 5th] the people of Greece, perhaps in light of Varoufakis’ advice, went to the polls and voted overwhelming in favour of rejecting the Eurogroup deal with its demands for increasing doses of “austerity” and ‘Washington Consensus’-style ‘conditionalities’ — the enforced privatisation of public services and other forms of so-called ‘deregulation’. To which the response from Brussels was to immediately double down by issuing still harsher neoliberal demands. With this, the mask of European social democracy fell away completely.

Nobel laureate economist, Paul Krugman, was one who helped to promote the hashtag #ThisIsACoup when he wrote in the New York Times:

This Eurogroup list of demands is madness. The trending hashtag #ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for.

Left Unity (which has a loose alliance with political parties Syriza and Podemos) also sent a message of support to the Greeks:

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.

And the Greeks had indeed empowered their government with a resounding ‘no’, but instead of fighting on, Syriza under Tsipras’ leadership swiftly capitulated in what must be one of the fastest political U-turns of all time. In response, Varoufakis resigned, refusing to criticise his friend Tsipras, and also declining an invitation to join a small breakaway faction who hoped to restore the party’s anti-austerity ticket on which Tsipras and Syriza had stood little more than six months previously.

So there is a mystery here that remains. Varoufakis, who prides himself on openness, has simply never explained what actually happened during those most momentous days in early July. Specifically, what became of that proposal from Brussels he was so keen “to sign on the dotted line”. Surely he owes the Greek people a fuller explanation.

Moreover, while Varoufakis was quick to attribute blame for the Eurogroup failures on the inflexibility of Wolfgang Schäuble and fellow German Karl Lamers, he has to a large extent absolved other key players including, most notably, President of the ECB, Mario Draghi for their part in “the coup” (his words).

I have consistently defended Varoufakis and Tsipras and been scathing of others on the left for being too hurried in passing judgement and unduly hypercritical (as many earlier posts testify). Caught up in the drama, like others hoping Syriza’s election signified the beginning of truly revolutionary reforms, I confess that I became a cheerleader for both.

With the benefit of hindsight it is clear that Syriza and Varoufakis were both tremendously guilty of an over-reliance on the efficacy of “reasonableness” (more here), because ‘reasonableness’ only ever makes headway when it engages with opposition that is principled and reasoned. Against the irrational, it is blunt, and against the unscrupulous it becomes a danger to itself. Yet Syriza and Varoufakis seem incapable of learning this simple lesson. This is what Varoufakis wrote in the abstract to his “Confessions of an Erratic Marxist” [December 2013]:

Should we use this once-in-a-century capitalist crisis as an opportunity to campaign for the dismantling of the European Union, given the latter’s enthusiastic acquiescence to the neoliberal policies and creed? Or should we accept that the Left is not ready for radical change and campaign instead for stabilising European capitalism? This paper argues that, however unappetising the latter proposition may sound in the ears of the radical thinker, it is the Left’s historical duty, at this particular juncture, to stabilise capitalism; to save European capitalism from itself and from the inane handlers of the Eurozone’s inevitable crisis. 4

Throughout the crisis, he and the party he once represented at the Eurogroup meetings have been chewed up and spat out time and again and yet his response has been to remain unruffled and reasonable in his continued fight (hardly the right word) “to save European capitalism from itself”.

Today Varoufakis leads a parallel campaign Democracy In Europe 2025 made up of lecture tours and larger academic-style conferences making speculative calls for a Plan B in Europe. Beyond the well-meaning rhetoric, the movement is entirely bereft of strategy. And my immediate question to Varoufakis is actually this: why must we wait until 2025 to bring democracy (a gift of the ancient Greeks) back to Europe? After all he knows better than most that a week in politics is an exceedingly long time – so a decade might as well be an aeon.

Here then, to redress the balance of earlier posts (at the risk of angering readers and friends alike), I present the condemnatory appraisal courtesy of political commentator James Petras, who in March 2015 (a mere two months after Syriza were elected) wrote the following:

The vast majority of Greeks, who voted for Syriza, expected some immediate relief and reforms.  They are increasingly disenchanted.  They did not expect Tsipras to appoint Yanis Varoufakis, a former economic adviser to the corrupt neo-liberal PASOK leader George Papandreou, as Finance Minister. Nor did many voters abandon PASOK, en masse, over the past five years, only to find the same kleptocrats and unscrupulous opportunists occupying top positions in Syriza, thanks to Alexis Tsipras index finger.

Nor could the electorate expect any fight, resistance and willingness to break with the Troika from Tsipras’ appointments of ex-pat Anglo-Greek professors.  These armchair leftists (‘Marxist seminarians’) neither engaged in mass struggles nor suffered the consequences of the prolonged depression.

Syriza is a party led by affluent upwardly mobile professionals, academics and intellectuals.  They rule over (but in the name of) the impoverished working and salaried lower middle class, but in the interests of the Greek, and especially, German bankers.

They prioritize membership in the EU over an independent national economic policy.  They abide by NATO, by backing the Kiev junta in the Ukraine, EU sanctions on Russia, NATO intervention in Syria/Iraq and maintain a loud silence on US military threats to Venezuela! 5

[bold highlight added]

Click here to read the full article by James Petras.

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By latest estimates total Greek debt is 384 billion euros, or US$440 billion. That’s approaching nearly twice the size of Greece’s annual GDP.  A decade ago, in 2007-08 before the global crash, Greek debt was roughly half of what it is today, in terms of both total debt and as a percent of GDP.  Greek debt was actually less than a number of Eurozone economies.  So Greece’s debt has been primarily caused by the 2008-09 crash, Greece’s six year long economic depression [that] followed, the extreme austerity measures imposed on it by the Troika during this period which has been the primary cause of its long depression, and the Troika’s piling of debt on Greece to repay previously owed debt.

Contrary to European media spin, it’s not been rising Greek wages or excessive government spending that has caused the US$440 billion in Greek debt. Since 2009 Greek annual wages have fallen from 23,580 to less than 18,000 euros. Government spending has fallen from 118 billion euros to 82 billion.

writes Jack Rasmus in an extremely detailed overview of the state of the Greek crisis in light of the recent parliamentary vote (passed by a narrow margin of 153 to 145) to implement the latest demands of “the Troika” in order to ensure another tranche of unpayable loans. “Bailouts” that, as Rasmus explains at length, are then returned directly to the creditors:

As a recent in depth study by the European School of Management and Technology, ‘Where Did the Greek Bailout Money Go?, revealed in impeccably researched detail, Greek debt payments  ultimately go to Euro bankers. For example, of the 216 billion euros, or US$248 billion, in loans provided to Greece by the Troika in just the first two debt deals of May 2010 and March 2012, 64 percent (139 billion euros) was interest paid to banks on existing debt; 17 percent (37 billion euros) to Greek banks (to replace money being taken out by wealthy Greeks and businesses and sent to northern Europe banks), and 14 percent (29 billion euros) to pay off hedge funds and private bankers in the 2012 deal. Per the study, less than 5 percent of the 216 billion euros went to Greece to spend on its own economy. As the study’s authors concluded, “ the vast majority (more than 95 percent) went to existing creditors in the form of debt repayments and interest payments”.  And that’s just the 2010 and 2012 Troika deals. Last August’s third deal is no doubt adding more to the totals. 6

[bold highlight added]

Click here to read Jack Rasmus’ full article published in Counterpunch.

The cycles of debt-repayment might literally be never-ending, because Greece will never be able to fully repay all of its (odious) debts. It is a situation compounded because Greece’s already floundering economy is completely suffocated by the Troika’s imposed “austerity” regime.

But this disastrous situation is no accident. The trap in which Greece finds itself satisfies two neo-liberal objectives. Firstly, Greece becomes so impoverished that it is forced to sell state assets at rock-bottom prices. Secondly, the sustained wealth transfer from the pockets of the ordinary Greeks into the hands of the bankers helps to prop up a failed financial system.

Setting the bizarre academic justifications aside, and overlooking the deeper reasons Greece became so indebted in the first place, what we see is how the Troika – two thirds of which is the EU – has put the sanctity of debt repayment far above the sanctity of human well-being. So whenever Greece comes up gasping for air, the IMF and the EU repeatedly pushes it back under again:

The media persists in calling the looting of Greece a “bailout.”

To call the looting of a country and its people a “bailout” is Orwellian. The brainwashing is so successful that even the media and politicians of looted Greece call the financial imperialism that Greece is suffering a “bailout.”

writes former Assistant Secretary of the Treasury for Economic Policy and former Associate Editor of the Wall Street Journal, Paul Craig Roberts in a recent article entitled “We Have Entered The Looting Stage of Capitalism”. In the piece, Roberts explains the EU’s role and the IMF’s apparent policy shift as follows:

Having successfully used the EU to conquer the Greek people by turning the Greek “leftwing” government into a pawn of Germany’s banks, Germany now finds the IMF in the way of its plan to loot Greece into oblivion.

The IMF’s rules prevent the organization from lending to countries that cannot repay the loan. The IMF has concluded on the basis of facts and analysis that Greece cannot repay. Therefore, the IMF is unwilling to lend Greece the money with which to repay the private banks.

The IMF says that Greece’s creditors, many of whom are not creditors but simply bought up Greek debt at a cheap price in hopes of profiting, must write off some of the Greek debt in order to lower the debt to an amount that the Greek economy can service.

The banks don’t want Greece to be able to service its debt, because the banks intend to use Greece’s inability to service the debt in order to loot Greece of its assets and resources and in order to roll back the social safety net put in place during the 20th century. […]

The way Germany sees it, the IMF is supposed to lend Greece the money with which to repay the private German banks. Then the IMF is to be repaid by forcing Greece to reduce or abolish old age pensions, reduce public services and employment, and use the revenues saved to repay the IMF.

As these amounts will be insufficient, additional austerity measures are imposed that require Greece to sell its national assets, such as public water companies and ports and protected Greek islands to foreign investors, principally the banks themselves or their major clients. […]

In other words, Greece is being destroyed by the EU that it so foolishly joined and trusted. The same thing is happening to Portugal and is also underway in Spain and Italy. The looting has already devoured Ireland and Latvia (and a number of Latin American countries) and is underway in Ukraine.

The current newspaper headlines reporting an agreement being reached between the IMF and Germany about writing down the Greek debt to a level that could be serviced are false. No “creditor” has yet agreed to write off one cent of the debt. All that the IMF has been given by so-called “creditors” is unspecific “pledges” of an unspecified amount of debt writedown two years from now.

The newspaper headlines are nothing but fluff that provide cover for the IMF to succumb to pressure and violate its own rules. The cover lets the IMF say that a (future unspecified) debt writedown will enable Greece to service the remainder of its debt and, therefore, the IMF can lend Greece the money to pay the private banks. […]

We have entered the looting stage of capitalism. Desolation will be the result. 7

Click here to read Paul Craig Roberts’ full article.

The overarching agenda of the EU – a plan rarely mentioned above a murmur – is to fuse its member nations under unelected technocratic governance for the benefit of a few corporations and the oligarchs who own them. So the notion that sticking by the EU is some sense an act of European solidarity is extremely misguided. Having already sold many of its people down the river, however, we are rapidly approaching a critical and perilous moment.

The far-right is now on the rise in many parts of Europe – Greece being an example, although thankfully Golden Dawn remains very much a minority party. And this swing towards ring-wing extremism is a direct consequence of the EU’s savage economic policies combined with its abject failure to save refugees and resolve the so-called “migrant crisis” (more in a later piece). As this alarming political shift occurs, the EU does next to nothing to address it. No debt relief for Greece or the other struggling member states. No let up on enforced “austerity” or privatisation. Neo-liberalism to the bitter end. But then, after Greece was collectively punished for the insolence of its ‘oxi’ vote last summer, only the most dewy-eyed believers can remain in serious doubt of the EU’s callous indifference towards the plight of its poorest citizens.

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1 Quote taken from “Euro depression is ‘deliberate’ EU choice, says former Bank of England chief” written by Mehreen Khan, published in The Telegraph on March 1, 2016. http://www.telegraph.co.uk/business/2016/03/01/europes-depression-is-deliberate-eu-choice-says-former-bank-of-e/ 

2 Quote taken from an article entitled “The Ugly Truth Behind the Greek Bailout” written by Robert Hunziker, published by Counterpunch on May 10, 2016. http://www.counterpunch.org/2016/05/10/the-ugly-truth-behind-the-greek-bailout/ 

3 From a statement entitled “A plan B in Europe” from Plan B for Europe. https://www.euro-planb.eu/?page_id=96&lang=en. The statement continues:

It is a dangerous lie to assert that the euro and the EU serve Europeans and shield them from crisis. It is an illusion to believe that Europe’s interests can be protected within the iron cage of the Eurozone’s governance “rules” and within the current Treaties. President Hollande’s and Prime Minister Renzi’s method of behaving like a “model student”, or in fact a “model prisoner”, is a form of surrender that will not even result in clemency. The President of the European Commission, Jean-Claude Juncker, said it clearly: « there can be no democratic choice against the European treaties ». This is the neoliberal adaptation of the « limited sovereignty » doctrine invented by the Soviet leader Brezhnev in 1968. Then, the Soviets crushed the Prague Spring with their tanks. This summer, the EU crushed the Athens Spring with its banks.

We are determined to break with this “Europe”. It is the basic condition needed to rebuild cooperation between our peoples and our countries on a new basis. How can we enact policies of redistribution of wealth and of creation of decent jobs, especially for the young, ecological transition and the rebuilding of democracy within the constraints of this EU? We have to escape the inanity and inhumanity of the current European Treaties and remould them in order to shed the straightjacket of neoliberalism, to repeal the Fiscal Compact, and to oppose the TTIP.

We live in extraordinary times. We are facing an emergency. Member-states need to have policy space that allows their democracies to breathe and to put forward sensible policies at the member-state’s level, free of fear of a clamp down from an authoritarian Eurogroup dominated by the interests of the strongest among them and of big business, or from an ECB that is used as a steamroller that threatens to flatten an “uncooperative country”, as it happened with Cyprus or Greece.

4 From “Confessions of an Erratic Marxist in the Midst of a Repugnant European Crisis” written by Yanis Varoufakis, published on December 10, 2013. http://yanisvaroufakis.eu/2013/12/10/confessions-of-an-erratic-marxist-in-the-midst-of-a-repugnant-european-crisis/ 

5 From an article entitled “Lies and Deceptions on the Left: The Politics of Self Destruction” written by James Petras, published by Global Research on March 22, 2015. http://www.globalresearch.ca/lies-and-deceptions-on-the-left-the-politics-of-self-destruction/5438105

6 From an article entitled “Greek Debt Negotiations: Will the IMF Exit the Troika?” written by Jack Rasmus, published in Counterpunch on May 26, 2016. http://www.counterpunch.org/2016/05/26/greek-debt-negotiations-will-the-imf-exit-the-troika/ 

7 From an article entitled “We Have Entered The Looting Stage Of Capitalism” written by Paul Craig Roberts, published on May 25, 2016. http://www.paulcraigroberts.org/2016/05/25/we-have-entered-the-looting-stage-of-capitalism-paul-craig-roberts/ 

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#ThisIsACoup: Global Anger Erupts Over Germany’s Harsh Austerity Demands

A list of draconian new austerity demands handed to the Greek government in Brussels Sunday ignited a global backlash against Germany, German Prime Minister Angela Merkel and finance minister, Wolfgang Schaeuble.

#ThisIsACoup became the top trending hashtag on Twitter worldwide – and is #1 in Germany and Greece.

The tag was attached to tens of thousands of angry comments denouncing Germany’s aggressive demands that the Greek parliament pass new severe austerity laws within days to raise taxes, privatize public assets and cut back on pensions.

Paul Krugman, the Nobel laureate economist, helped promote the hashtag it on the New York Times website:

“This Eurogroup list of demands is madness. The trending hashtag #ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for. “

The weekend showdown came to a head on Sunday night as Eurozone leaders Angela Merkel and President François Hollande of France presented Greece’s prime minister, Alexis Tsipras, with a new ultimatum.

Here are the EU proposals that outraged many around the globe:

The hashtag originated Sunday evening from Sandro Maccarrone, who is a physics teacher in Barcelona, Spain. He tweeted: “The Eurogroup proposal is a covert coup d’etat against the Greek people. #ThisIsACoup.”

Within hours it had been used nearly 200,000 times.

From CommonDreams.org — read more here:

#ThisIsACoup: Global Anger Erupts Over Germany’s Harsh Austerity Demands.

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Filed under austerity measures, campaigns & events, Greece

what next for Greece? 3 big questions that can be boiled down to one

Since the Greek people registered their defiant “no to austerity” at last weekend’s plebiscite, like many, I have been struggling to understand what that vote really means and where this is now heading both for Greece and the rest of the Eurozone. In searching for answers I have found that three different questions are inclined to separate out; questions that involve one another in a vaguely hierarchical fashion a little like Russian dolls. I have therefore decided to try to address each of these nested questions in turn beginning with the outermost first.

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1. Whose fault? (and who should pay?)

“The Greeks have been living beyond their means for years,” said one man, visiting Berlin from Osnabrück, Lower Saxony.

“I used to play in a volleyball team in the 1970s and 80s and we traveled all over the world. I’ve been to Istanbul and I’ve been to Brasil and I’ve never seen a country like Greece.

“The people there simply don’t work enough. I’d see them crowding cafes at four o’clock in the morning.”

“I’m completely on the side of the CDU [Christian Democratic Union]. Where has all the money gone? We pay our taxes, they don’t.” 1

The quotes above were part of an article sent to me by a friend living in Germany – a friend who happens to spend the other half of his time living in Greece. The remarks, he says, perfectly exemplify the sorts of opinions he most frequently hears. The Greeks caused the crisis, they should pay what they owe, and follow the rules like the Germans would. It’s all exceedingly simple, and all extremely badly informed.

Like many ‘good Europeans’, the German people are being held hostage to two falsehoods. One is that the crisis came about primarily because of indolence, inefficiency and impropriety. Put baldly, that Greeks are a bunch of lazy tax cheats. The only part missing here is the word untermensch; the tinge of latent bigotry is unmistakeable.

I have argued against this nonsense many times and so it pains me to have to repeat myself at all. But the facts are there for anyone who cares to look. Figures that unequivocally prove that Greeks work extremely hard: harder on average in fact than Germans do. Their productivity is lower and so perhaps there is an issue over efficiency, and tax revenues are indeed harder to secure, but this is very much a problem that gets far worse as you climb the social ladder (as it does in every society).

In any case, none of this was the actual cause of the Greek “debt crisis” – an offshoot of the wider banking crisis – which in fact originated because corrupt government officials negotiated with corrupt EU officials (unless we believe it takes only one to tango), helped along by corrupt men at Goldman Sachs, when Greece signed on to the euro. None of this will come as news to those who have followed the story closely, even if it is suddenly back in the newspapers again:

Goldman Sachs faces the prospect of potential legal action from Greece over the complex financial deals in 2001 that many blame for its subsequent debt crisis.

A leading adviser to debt-riven countries has offered to help Athens recover some of the vast profits made by the investment bank.

The Independent has learnt that a former Goldman banker, who has advised indebted governments on recovering losses made from complex transactions with banks, has written to the Greek government to advise that it has a chance of clawing back some of the hundreds of millions of dollars it paid Goldman to secure its position in the single currency.

The development came as Greece edged towards a last-minute deal with its creditors which will keep it from crashing out of the single currency. 2

Click here to read the full article in yesterday’s [July 11th] Independent.

The second lie is that the Greek people have ever been bailed out at all:

Only a small fraction of the €240bn (£170bn) total bailout money Greece received in 2010 and 2012 found its way into the government’s coffers to soften the blow of the 2008 financial crash and fund reform programmes.

Most of the money went to the banks that lent Greece funds before the crash.

That comes from a Guardian article, which goes on to point out (as many others have previously done):

Less than 10% of the bailout money was left to be used by the government for reforming its economy and safeguarding weaker members of society.

Greek government debt is still about €320bn, 78% of it owed to the troika. As the Jubilee Debt Campaign says: “The bailouts have been for the European financial sector, while passing the debt from being owed to the private sector to the public sector.”3

Yes, more than 90% of the bailout money went straight back to the creditors – much of it German money to prop up German banks.

As Paulo Nogueira Batista, one of the Executive Directors of the IMF, has recently admitted:

“One of the major problems of the programmes that were proposed was that they [“the Troika”] put too much of a burden on Greece and not enough of a burden on Greece’s creditors. So for example, the first programme of 2010 was presented as a bailout of Greece, but in reality it was more of a bailout of the private creditors of Greece. Greece received enormous amounts of money but this money was used basically to allow the exit of, for example, French banks [and] German banks…”

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For a more complete analysis, I refer readers to a previous article based around two excellent documentary films made by Harald Schumann and Árpád Bondy. The second of these, On the Trail of the Troika, was first broadcast on March 9th 2015 on ARD (German Public TV) as Macht ohne Kontrolle – Die Troika and has since been uploaded on youtube with both English and Greek subtitles. It is embedded below:

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Parallel to this overarching question of who is responsible for the debt is the question of who should now repay it. To the (wo)man on the street – and especially those auf der Strasse – this tends to be treated as if it were the self-same question, but it isn’t, and for the simple reason that a debt that cannot be repaid will never be repaid. In ordinary life we know this is true, which is why in our private lives we are disinclined to lend money other than to those we most trust. After all, it is very much the responsibility of every creditor to lend their money wisely, and this applies to banks and global institutions no less than it applies to you and me. But there are also international laws determining the legitimacy of debts.

In the case of Greece (and the other Eurozone debtor nations including Spain and Portugal), it is well known that the debts cannot possibly be repaid (as the IMF has recently conceded – for more information see my update on the previous post). There are also grounds for arguing that much of the debt is odious, and so the Greek government is not only justified but legally sanctioned to repudiate all such illegitimate debt:

A committee convened by the Greek parliament has claimed much of the country’s debt of 320bn euros was illegally contracted and should not be paid.

Following an official parliamentary investigation, speaker Zoe Konstantopoulou described the debt as illegal, illegitimate and odious.

She told the BBC that Greek people “should fight for justice”. 4

Added to this, we also have the postwar precedent set by Greece and Spain amongst others when many nations agreed to the cancellation of German war debts thanks to the London Debt Agreement of 1953:

Needing a strong West Germany as a bulwark against communism, the country’s creditors came together in London and showed that they understood how you help a country that you want to recover from devastation. It showed they also understood that debt can never be seen as the responsibility of the debtor alone. Countries such as Greece willingly took part in a deal to help create a stable and prosperous western Europe, despite the war crimes that German occupiers had inflicted just a few years before.

The debt cancellation for Germany was swift, taking place in advance of an actual crisis. Germany was given large cancellation of 50% of its debt. The deal covered all debts, including those owed by the private sector and even individuals. It also covered all creditors. No one was allowed to “hold out” and extract greater profits than anyone else.

That comes from an excellent article written by Nick Dearden published in the Guardian. As Dearden points out, although this London deal helped pave the way for Germany’s “economic miracle”, the same remedy is entirely withheld from today’s debtor nations whether inside or outside the Eurozone:

The German debt deal was a key element of recovering from the devastation of the second world war. In Europe today, debt is tearing up the social fabric. Outside Europe, heavily indebted countries are still treated to a package of austerity and “restructuring” measures. Pakistan, the Philippines, El Salvador and Jamaica are all spending between 10 and 20% of export revenues on government foreign debt payments, and this doesn’t include debt payments by the private sector.

If we had no evidence of how to solve a debt crisis equitably, we could perhaps regard the policies of Europe’s leaders as misguided. But we have the positive example of Germany 60 years ago, and the devastating example of the Latin American debt crisis 30 years ago. The actions of Europe’s leaders are nothing short of criminal. 5

Unfortunately, today’s neo-liberal belief holds that debt is sacrosanct. So that whereas West Germany was only required to pay for debts out of its trade surplus, and thus its creditors had a vested interest in wishing to see economic growth, the creditors in the current crisis demand their pound of flesh irrespective not only of broader social consequences, but seemingly even of their debtors ability to keep up with repayments.

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2. To Grexit or not to Grexit?

The debate over whether Greece would be better inside or outside of the Eurozone has been ongoing for just as long as the crisis itself. And once again, we can break the argument down into component parts, of which one claim is that the Eurozone per se was an inherently flawed concept that remains utterly unworkable in its current form. This is very possibly the case, although not a subject I feel comfortable discussing – it is beyond my technical understanding. However, whether the Eurozone is ultimately workable or not, and regardless of whatever costs to democracy and national sovereignty might be needed to completely fix it, we can certainly see that this current crisis did not arise from the formation of the monetary union.

Rather, this so-called “debt crisis” began as a banking crisis, and one that can be easily traced back to the American subprime mortgage crisis, the origins of which again, in reality trace back to the financial deregulation begun under Thatcher and Reagan, and then continued by Clinton, Blair and Brown. The subprime mortgage/banking crisis of 2008 never truly ended, and the western financial system only limps on thanks to sporadic bailouts, unlimited QE and zero interest rates. Better understood, and as already discussed above, the so-called bailouts of Greece have been little more than a continuation of the earlier banker bailouts.

Leaving aside the more technical or purely political considerations, the decision facing the Greek government to stay or exit the Eurozone is rather more straightforward. It is a question of economic expediency – and for millions of people, this is quite literally a matter of life and death. So here is what I wrote more than three years ago (it reveals just how little in the debate has actually shifted):

Should the Greeks submit to further the “austerity measures” that have already destroyed their economy and social infrastructure as Angela Merkel and others are demanding, or should they drop out of the Euro and begin tackle their debt crisis by returning to a hugely devalued Drachma? These are the only available choices, as we are all, Greeks included, constantly reminded. […]

So what of the second option – the one that already has the stupid text-style name of Grexit? Should Greece abandon the Euro altogether? Well, firstly, the Greeks cannot be forced to drop out of the Eurozone – or at least there is no recognised mechanism for expelling any member nation. Secondly, it should be noted that the Greek people don’t want to leave the Eurozone. Like most of the peoples of Europe, these days they are broadly enthusiastic about the European project. Added to this, they also clearly recognise the serious risks of trying to suddenly go it alone in such perilous times. Once isolated, the Drachma would be mercilessly attacked by the same predatory banks and hedge funds that are currently threatening to bring down the Euro. The Drachma wouldn’t stand the ghost of a chance.

Which brings us to an impasse. Accept “austerity” or get out! Jump off a cliff or suffer slow death by a thousand cuts. Is there really no genuine alternative for the Greeks?

Yes, Greece could exit, following which it makes perfect sense, of course, to default, and in which case to default absolutely. With financial support offered from elsewhere (the new BRICS bank being the most likely source) they might revert back to the drachma, a move that would instantly improve competitiveness. Grexit would be a shock, but with genuine investment in productive activity and with exports suddenly buoyed by a devalued currency, Greece would survive and steadily grow. Or at least this is how the arguments in favour of Grexit go. And they sound like a pleasant dream. The passing storm, though intense, is quickly over. So if Grexit is so survivable, then what’s been the hold up…? Here is recently ousted Greek Finance Minister, Yanis Varoufakis, laying out the difficulties that would lie ahead:

The threat of Grexit has had a brief rollercoaster of a history. In 2010 it put the fear of God in financiers’ hearts and minds as their banks were replete with Greek debt. Even in 2012, when Germany’s finance minister, Wolfgang Schäuble, decided that Grexit’s costs were a worthwhile “investment” as a way of disciplining France et al, the prospect continued to scare the living daylights out of almost everyone else.

By the time Syriza won power last January, and as if to confirm our claim that the “bailouts” had nothing to do with rescuing Greece (and everything to do with ringfencing northern Europe), a large majority within the Eurogroup – under the tutelage of Schäuble – had adopted Grexit either as their preferred outcome or weapon of choice against our government.

Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available. 6

All of which supplies reasons enough to be cautious. However, the problem does not end with the reprinting of the drachma. Because by allowing Greece a comfortable ride, whether via any means of exit from the Eurozone or else through debt restructuring, a precedent will be set that those in the other debtor nations would be keen to emulate. Which means that Germany (as well as the EU Commission) have, as Varoufakis very candidly puts it, “an interest in breaking us”:

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.

One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors immense power over debtors – and power, as we know, corrupts even the finest. But it is the third which seems to me more pertinent and, indeed, more interesting.

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

Click here to read Yanis Varoufakis full article.

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3. How well are Varoufakis, Tsipras and Syriza playing their hand?

Because Finance Minister Varoufakis knows the economic field of game theory, lazy pundits have for months opined that he is playing “chicken” or “poker” or some other game. In Heraklion two weeks ago, Varoufakis denied this as he has done many times: “We’re not bluffing. We’re not even meta-bluffing.” Indeed there are no hidden cards. The Greek red lines – the points of principle on which this government refuses to budge – on labor rights, against cuts in poverty-level pensions and fire-sale privatizations – have been in plain view from day one. 7

From a fascinating breakdown of the “Nine Myths About the Greek Crisis” written by fellow economist James K. Galbraith.

As we await the decision of the Eurogroup, much of the mainstream media has been quick to draw attention to what it describes as the Greek government ‘climbdown’. So we hear how they have backed down on taxation, on pensions, on public spending and on privatisation. Following on from the dramatic “OXI” vote of last Sunday, it is quite easy to feel deflated by this. Indeed, the harshest critics of Tsipras (Varoufakis is out of range) – critics both from left and right – say that Syriza have managed to let a ‘no’ slip into a ‘yes’.

But then the voices that dominate the mainstream media have an axe to grind; the usual neo-liberal axe. So when they play up Syriza’s ‘climbdown’ we should look rather carefully into the details (I will offer further thoughts on this at the end). Meanwhile, the alternative voices who say that Greece ought to have followed Iceland’s example are missing a great many points of significant difference between the two nations: the size of populations, the make-up of their respective economies, and the rather important fact that Iceland were never part of the Eurozone or stuck in any kind of currency union.

Professor Steve Keen, who is Head of the School of Economics, History and Politics at Kingston University in London and author of Debunking Economics, put the whole matter into a useful context in an interview he gave on George Galloway’s RT show Sputnik [also July 10th]. Greece’s position is exceptionally weak and isolated, Keen says, so when it comes to Grexit:

“[Syriza] are afraid of the transition. And they are afraid of just how viable they are going to be once they are back on a floating exchange rate again. But I don’t think they’re going to have a choice.”

And as for how well Syriza have played their hand, Keen replies:

“Well, Yanis won’t mind me saying this now. He wrote to me saying they’re basically… we’re being subjected to a putsch. And he said, basically the attitude of the European Union was that they didn’t want Syriza to win, so let’s get rid of them. There was a political campaign right from the outset to break their backs and to either force them to become like the party they replaced [i.e., Pasok] or to drive them out of office. And in that sense the referendum was quite a surprise move – [the opponents of Syriza] weren’t expecting it – and now, of course, they’re treating it as though it didn’t happen… You did well. It’s a pity you voted the wrong way. But apart from that congratulations on winning. Now let’s go back and do exactly what we were doing last week.

But if, as Steve Keen, Yanis Varoufakis and many others fear, the talks do indeed fail, and if only because Germany (principally) refuses to budge, then those who have called for Syriza to look for alternatives sooner will feel vindicated. However, in response to this, it needs to be pointed out that although Syriza may fail to stall a Grexit, during the six months they have unquestionably strengthened their position politically. In Greece, rather than shrinking away, their popularity has grown, which is vitally important if you are keen to maintain your democratic mandate. Outside of Greece, Syriza has also been winning hearts and minds. By contrast, and in spite of whatever else happens next, the reputation of the EU has certainly been damaged. As Steve Keen says:

“They [Syriza] can survive being pushed out of the euro… one thing you can pick up from the Greek reaction to that election was that there’s a sense of pride come back. Because being put through an experience like that – people talk about they’re responsible for the situation [and so] they should pay the price (I’ve heard that amongst some of my Conservative friends recently). They don’t realise just how long the punishment has been. Just how severe and just how demoralising it is to have no sense of a future, which is why the suicide rate has increased by a factor of five or six in Greece since this whole thing began.”

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There is, however, an alternative argument against Alexis Tsipras and Syriza that is more incriminatory, and it is one that has followed both since long before the party had even been elected to power. In short, it is the opinion that Syriza itself is phoney, or if not Syriza as a whole, since this is a leftist coalition of different factions, then its leader Tsipras along with former Finance Minister Varoufakis – indeed, some go so far as to insinuate that both Tsipras and Varoufakis have been nothing less than saboteurs…

The World Socialist Web Site calls on Greek workers not to give any political support to Syriza. There is no party in this election that represents the interests of the working class.

That was the position of the International Committee of the Fourth International (ICFI) as outlined on their website wsws.org on the eve of the Greek elections.

Click here to read the full statement.

Having been ignored by the Greek people, the World Socialist Web Site, courtesy of International Committee of the Fourth International, then followed up with this:

It took just hours for the leftist pretensions of Syriza, (the Coalition of the Radical Left) to be exposed following its victory in Sunday’s Greek general election.

On Monday morning, Syriza leader Alexis Tsipras held talks lasting barely an hour with Panos Kammenos, leader of the right-wing, anti-immigrant Independent Greeks (ANEL). Following the talks, Kammenos announced that the Greek government would be a Syriza-Independent Greeks coalition.

Syriza had been caught red-handed, but it gets worse:

Syriza’s coalition with ANEL was prepared well in advance. In March 2013, Syriza entered into a “front” with ANEL based on efforts to save the Cypriot banks with aid from the European Union (EU).

Following Monday’s talks, the Protothema newspaper reported that “Syriza and ANEL have already reached an agreement on the issue of the Greek president and ANEL’s red lines on national issues will be respected by its leftist coalition partner.”

Was this true? Well, yes. In fact, my good friend from Germany who was then living in Naxos told me that people in Greece had been perfectly well aware of this alliance and that no-one was especially bothered. It is a marriage of convenience. But why believe me? This is what Stathis Kouvelakis, a prominent member of Syriza, said of the coalition with ANEL:

This alliance has been, I’m afraid, a forced and quite pragmatic type of choice, devoided of any grand strategic design. And since Syriza’s offer of an alliance with the other force of the radical left has been categorically rejected by the latter, this possibility has been explored since a while and was therefore easy to materialize once the election result was known.

Click here to read more at Richard Seymour’s popular blog Lenin’s Tomb.

Now everyone is perfectly entitled to their opinion about Syriza and Alexis Tsipras. If they believe that they are fakers then they should say so. But there is something deeply self-destructive about certain elements within the left. The reason is simple. For half a century and more as the left has been remorselessly beaten into submission by very powerful corporate and oligarchical interests, this sustained period of bruising defeats has created a feeling of resignation and a loser mentality, creating schisms that were so memorably lampooned by Monty Python’s Life of Brian.

But there’s also another point that desperately needs hammering out, which is the radical left’s obsession with intellectual legitimacy. Marxists, Trotskyists, and even Maoists (the madness of some on the far left simply knows no bounds!) who scrutinise and disparage one another over matters of conjectural doctrine, dismissing rival camps on grounds that alternative interpretations to their own are pseudo- and bourgeois. Meantime, the world moves on, and beyond the narrow confines of these inner party squabbles, there is no effect whatsoever on any practical advancement. The bigger joke being there are few preoccupations even half as petty-bourgeois as splitting hairs over Marx and Engels; one the son of a Jewish lawyer, the other the eldest son of a wealthy German cotton manufacturer.

For few in the proletariat care one jot for the ideological legitimacy of the left (or the right for that matter) – and why would they? They have more pressing concerns like putting food on the table and a roof over their head: a reliable income and fortnight’s holiday abroad are the main concerns of the ordinary Joe. Surely then, those on the left, especially the radical left, ought to strive to put programme above dogma. Since the masses, however miserable, will never be roused and politically animated by dry theory. And isn’t this where the revolution is expected to spring forth from?

For so long as the left keep bickering on about who is more properly socialist, then the right will easily steal in. Because the right, especially at its vilest extremes, is devoid of the same intellectual hang-ups, which is why, even when their closet intention is to coerce and oppress the poor and the workers by means of sectarian division, the right manages to gain so much traction amongst the ranks of the lower classes. The left needs to learn this lesson quickly; those self-aggrandising gangs of thugs like Golden Dawn are sharpening their knives and once Syriza are seen to have failed, the next act may be a diabolically familiar one.

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Additional: Playing the long game

Greece will hold a referendum on a new European Union aid package intended to resolve the country’s debt crisis, Prime Minister George Papandreou says.

That was November 2011 and the BBC news report continues:

Analysts say a referendum could derail the wider deal on the euro debt crisis.

Adding:

Opinion polls in Greece show that most people do not support the austerity deal. 8

Of course, this was a referendum that never actually happened. Instead, and after pressure was applied during the G20 meeting at Cannes, Papandreou quickly backed down:

Speaking after the G-20 meeting in Cannes, US President Barack Obama questioned Prime Minister George Papandreou’s proposal to hold a referendum on the country’s eurozone debt deal and applauded New Democracy leader Antonis Samaras for backing last week’s Brussels agreement.

“We came to Cannes to discuss with our European friends how they will move forward and build upon the plan they agreed to last week to resolve this crisis,” he said.

Obama said the “actions of Papandreou and the referendum issue got a lot of people nervous.” He added that the plan European leaders presented last week is “still the best recipe.” He commended Samaras for saying he would support the bailout after the referendum proposal was dropped.

Dutch Prime Minister Mark Rutte welcomed Papandreou’s decision to withdraw the referendum but warned that the eurozone might lose patience with Athens. “It was a bizarre proposal,” Rutte said. “We think it’s of great importance to the eurozone that we prevent Greece from going bankrupt. But in the end, the euro is more important than Greece’s membership of the eurozone.” 9

It was an episode that led to Papandreou’s resignation and the appointment of former Governor of the Bank of Greece and Vice President of the ECB, Lucas Papademos, as interim Prime Minister. Following which, the “austerity” went on, the “debt crisis” deepened, and still the Greeks were yet to have a real say in what was happening to their country.

Almost four years and multiple general strikes later and the new Syriza-led government finally gave the people of Greece the referendum previously denied them. Although the detailed choice was a complex one, it boiled down to more or less straightforward ‘yes’ or ‘no’ – and not ‘yes’ or ‘no’ to staying within the Eurozone as so many have disingenuously claimed, but a ‘yes’ or ‘no’ to the latest bailout deal and further “austerity”:

In fact, only the “No” can save Greece – and by saving Greece, save Europe. A “No” means that the Greek people will not bend, that their government will not fall, and that the creditors need, finally, to come to terms with the failures of European policy so far. Negotiations can then resume – or more correctly, proper negotiations can then start. This is vital, if Europe is to be saved. If there ever was a moment when the United States should speak for decency and democratic values – as well as our national interest – it is right now. 10

So wrote economist James K. Galbraith prior to last weekend’s momentous referendum. And what he says is correct. The Greeks have indeed voted to stay in Europe and the Eurozone, having never offered Syriza any mandate to leave. As it transpires, they may now be forced out, or at the very least, forced into another general election. Syriza may then be obliged to stand on a ‘we will leave the euro ticket’, which, and as popular as Syriza are, would mean an election that they would currently be unlikely to win.

But then, as my friend in Germany points out, leaving aside the Greek concessions for a moment, this weekend’s deal pivots upon massive debt restructuring/cancellation, which is why Syriza have felt compelled to offer Germany the chance to wrestle some kind of victory, whilst returning to Greece as winners too. If a deal can be struck, then certainly hardliners on both sides will come away disappointed, and this is one reason any deal may very likely fall through.

Discretion is sometimes the better part of valour, and there are many occasions when it is necessary to take a step or two backwards in order to regain your balance again. Perhaps the very best Syriza can achieve right now, given the intransigence and bullying of the anti-deal voices within the Eurogroup, is to play for time. Right now, the banks in Greece desperately need to reopen in order to restore normality. For ordinary life must go on. Meanwhile, agreeing terms on privatisation and so forth is one thing, whereas implementing such deals is another thing altogether, because as my friend in Germany reminded me “… it’s Greece after all.”

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1 From an article entitled “VOX POPS: Greeks ‘living beyond means’ published in The Local on July 10, 2015. http://www.thelocal.de/20150710/germany-has-shown-a-lot-of-patience

2 From an article entitled “Greek debt crisis: Goldman Sachs could be sued for helping hide debts when it joined euro” written by Jim Armitage and Ben Chu, published in The Independent on July 11, 2015. http://www.independent.co.uk/news/world/europe/greek-debt-crisis-goldman-sachs-could-be-sued-for-helping-country-hide-debts-when-it-joined-euro-10381926.html

3 From an article entitled “Where is the Greek bailout money go?” written by Phillip Inman, published in the Guardian on June 29, 2015. http://www.theguardian.com/world/2015/jun/29/where-did-the-greek-bailout-money-go

4 From a BBC news article entitled “Greek debt ‘illegal, illegitimate and odious’” published on June 18, 2015. www.bbc.co.uk/news/world-europe-33179593

5 From an article entitled “Greece and Spain  helped postwar Germany recover. Spot the difference” written by Nick Dearden, published in the Guardian on February 27, 2013. www.theguardian.com/commentisfree/2013/feb/27/greece-spain-helped-germany-recover

6 From an article entitled “Germany won’t spare Greek pain – it has an interest in breaking us” written by Yanis Varoufakis, published in the Guardian on July 10, 2015. http://www.theguardian.com/commentisfree/2015/jul/10/germany-greek-pain-debt-relief-grexit

7 From an article entitled “Nine Myths About the Greek Crisis” written by James K. Galbraith, published by Global Research on July 3, 2015. http://www.globalresearch.ca/nine-myths-about-the-greek-crisis/5460153

8 From an article entitled “Greek crisis: Papandreou promises referendum on EU deal” published by BBC news on November 1, 2011. http://www.bbc.co.uk/news/world-europe-15526719

9 From an article entitled “Leaders relieved referendum dropped, awaiting next steps” published by ekathimerini on November 5, 2011. http://www.ekathimerini.com/137088/article/ekathimerini/news/leaders-relieved-referendum-dropped-awaiting

10 From an article entitled “Nine Myths About the Greek Crisis” written by James K. Galbraith, published by Global Research on July 3, 2015. http://www.globalresearch.ca/nine-myths-about-the-greek-crisis/5460153

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Filed under analysis & opinion, austerity measures, debt cancellation, did you see?, Greece

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.

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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”

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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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As it happened – Yanis Varoufakis’ intervention during the 27th June 2015 Eurogroup Meeting

National briefing by Yanis Varoufakis, Minister of Finance of Greece, after the first session of the Extraordinary Eurogroup Meeting — Part in English — 27.06.2015 — Eurogroup/Council, Justus Lipsius building, Brussels is available on the video below:

[For some reason I can’t embed video here — so see my comment below instead]

More specifically, regarding “Grexit”, Varoufakis says:

To those who say that, effectively, this is a referendum on the euro, my answer is: You may very well say this but I shall not comment. This is your judgement, your opinion, your interpretation. Not ours! There is a logic to your view but only if there is an implicit threat that a No from the Greek people to the institutions’ proposal will be followed up by moves to eject Greece, illegally, out of the euro. Such a threat would not be consistent with basic principles of European democratic governance and European Law.

To those who instruct us to phrase the referendum question as a euro-drachma dilemma, my answer is crystal clear: European Treaties make provisions for an exit from the EU. They do not make any provisions for an exit from the Eurozone. With good reason, of course, as the indivisibility of our Monetary Union is part of its raison d’ etre. To ask us to phrase the referendum question as a choice involving exit from the Eurozone is to ask us to violate EU Treaties and EU Law. I suggest to anyone who wants us, or anyone else, to hold a referendum on EMU membership to recommend a change in the Treaties.

Yanis Varoufakis

The Eurogroup Meeting of 27th June 2015 will not go down as a proud moment in Europe’s history. Ministers turned down the Greek government’s request that the Greek people should be granted a single week during which to deliver a Yes or No answer to the institutions’ proposals – proposals crucial for Greece’s future in the Eurozone. The very idea that a government would consult its people on a problematic proposal put to it by the institutions was treated with incomprehension and often with disdain bordering on contempt. I was even asked: “How do you expect common people to understand such complex issues?”. Indeed, democracy did not have a good day in yesterday’s Eurogroup meeting! But nor did European institutions. After our request was rejected, the Eurogroup President broke with the convention of unanimity (issuing a statement without my consent) and even took the dubious decision to convene a follow up meeting without the Greek minister, ostensibly to…

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Greece’s Proposals to End the Crisis: My intervention at today’s Eurogroup

As the EU and the ECB back Greece into a corner yet again, Finance Minister Yanis Varoufakis has issued the following statement and a full copy of his presentation to the Eurogroup meeting.

If there is a default at the end of June followed by Grexit (meaning Grexpulsion), then no-one can seriously claim that Varoufakis and Syriza did not try in every way to prevent it. Indeed, one wonders if compromise was ever possible given how it now appears that the technocrats heading the ECB and the EU care nothing for Greece and surprisingly little for the future of the EU itself. But Syriza should also beware that they do not compromise too much; for that would be the worst defeat of all.

Yanis Varoufakis

The only antidote to propaganda and malicious ‘leaks’ is transparency. After so much disinformation on my presentation at the Eurogroup of the Greek government’s position, the only response is to post the precise words uttered within. Read them and judge for yourselves whether the Greek government’s proposals constitute a basis for agreement.

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Whoops austeritypocalypse! or why unbounded economic reasonableness runs into such trouble…

Q: At the onset of the crisis, the former Finance Minister Papaconstantinou likened the Greek economy to the “Titanic” heading straight for the iceberg. Do you also feel as if you are standing on the bridge of the “Titanic”?

A: No. The “Titanic” sank a while ago. We’re steering the lifeboat and throwing lifebelts to those drowning around us.

This was the response Greek Prime Minister, Alexis Tsipras, gave in an exclusive interview to German magazine Stern1

*

“austerity”, what is it good for…?

As the economies of the western world continue to flounder, with Germany too (Europe’s last remaining industrial powerhouse) reeling just a little from the greater crisis, debt reduction is still regarded as the key component to any recovery programme. To meet these ends, all our governments have been overseeing huge cuts in public services, welfare payments especially gouged, in concerted efforts to reduce their deficits. This death of our societies by a thousand cuts of “austerity” being the recommended cure which mainstream economists have called for, and though alternative voices have no less insistently pointed out that “austerity measures” are inherently counterproductive (since they reduce tax revenues), these dissenting voices continue to be marginalised.

A few years ago Thomas Herndon stepped forward. Herndon, a university student and thus less rigid in his outlook, caused quite a rumpus – as a consequence, he has since been rewarded with his own wikipedia entry. This sudden burst of fame coming after he inadvertently stumbled upon grievous errors in an influential paper entitled Growth in a Time of Debt (published 2010), authored by eminent Harvard professors, Carmen Reinhart and Ken Rogoff – Rogoff, a former chief economist at the IMF.

In their paper, Reinhart and Rogoff had purported to show that whenever national debt is in excess of 90% of GDP, growth is “roughly cut in half”. This correlation had subsequently been quoted by policy-makers across the world, as well as routinely served up as empirical proof that there was simply no viable alternative to our continuing “austerity” programmes. Most notably, perhaps, former EU Commissioner for Economic and Monetary Affairs, Olli Rehn, leant rather heavily on Reinhart and Rogoff’s work.

But then doubting Thomas Herndon decided to check their figures for himself. And, to his own astonishment, discovered that one of the most frequently cited justifications for the imposed “austerity” strategy actually rested upon a few careless mistakes on a spreadsheet!

[Herndon had] spotted a basic error in the spreadsheet. The Harvard professors had accidentally only included 15 of the 20 countries under analysis in their key calculation (of average GDP growth in countries with high public debt).

Australia, Austria, Belgium, Canada and Denmark were missing.

Oops.

Herndon and his professors found other issues with Growth in a Time of Debt, which had an even bigger impact on the famous result. The first was the fact that for some countries, some data was missing altogether. 2

Click here to read more in this BBC news article.

Taken aback by this unexpected challenge from a novice, Reinhart and Rogoff felt obliged to issue a response:

We are grateful to Herndon et al. for the careful attention to our original Growth in a Time of Debt AER paper and for pointing out an important correction to Figure 2 of that paper. It is sobering that such an error slipped into one of our papers despite our best efforts to be consistently careful. We will redouble our efforts to avoid such errors in the future.

Confessing to their blunder, but keen also to defend their professional reputation, they casually added:

We do not, however, believe this regrettable slip affects in any significant way the central message of the paper or that in our subsequent work.

There has since been no halt to the economic gouging and scourging of Europe. Despite the more immediate evidence coming out of Greece, Spain, Portugal, and every other place where such “measures” have been most strongly administered, that prove “austerity” isn’t working. And even when all other factors, social and human factors, are set aside, and success or failure is judged within the exceedingly narrow terms of its proponents, we see that the sovereign debt burdens in all these countries have continued to rise. 3

Given such a lack of success, the response is obviously to double-down. Apply more stringent “austerity”; if the original cuts have failed, then they needed to be deeper. In former times the doctors would just have ordered more leeches, or the priests would have demanded a tightening of the cilice. Tougher love. Just too bad if the supposed antidote is the worst of the poison, because orthodoxy asserts that, poison or not, it is the best and only remedy. The really important thing is to never let mere facts (especially incalculable costs like human misery) get in the way of a damned fine economic theory!

*

 whose debt is it anyway…?

But how did these sovereign debt burdens arise in the first place? Or put another way, the related question might be asked, to whom are the debts actually owed? This second question is rarely broached, but in 2013 award-winning business journalist, Harald Schumann, sought a direct answer to precisely this question. He journeyed across the stricken eurozone countries and poised the question to those working inside the so-called “Troika” (IMF, European Central Bank and EU Commission) as well as significant politicians, economists, lawyers, journalists and even the occasional central banker. The result, a brilliantly constructed documentary entitled The Secret Bank Bailout, is embedded below:

I highly recommend watching the documentary in full, but would also like to offer a brief overview.

Schumann asks which parties were actually rescued by the bailouts, and finds that contrary to what ordinary Germans were led to believe (this is a German documentary originally titled Staatsgeheimnis Bankenrettung) the people living in the poorer eurozone states received barely a penny of this apparent ‘foreign aid’ – our own media perpetuates the self-same falsehood.  Because rather than letting the creditors and the banks absorb their speculative losses, these financial institutions were deemed “too big too fail” and protected. So the bailouts were never used to support the governments, but always passed on to the creditors of major banks, especially ones in Germany and France, who had taken the unwise risks that caused the crisis – the original losses often due to property bubbles in places like Spain and Ireland. (The whole notion of “too big too fail” is, of course, a contravention of even the most basic tenets of free market capitalism.)

And who have been the ultimate recipients of all this bailout money? Well, that has remained a closely guarded secret. We ought to be asking why, of course, which Schumann’s documentary does. He also seeks to penetrate the secret itself.

In the next sections, I will present a further overview comprising highlights of Schumann’s discoveries, and following the same route (then a little beyond it) as he investigated country by country, across the blighted eurozone.

*

 Ireland

The Irish people have been forced to take on 70 billion euros of additional debt to pay off foreign creditors.

Stephen Donnelly, independent Irish MP, says that the ECB held the Irish government virtually at gunpoint:

“The suspicion is that European Central Bank said ‘You will continue to pay these bondholders [the mainly foreign creditors] to whom you owe nothing or we will pull the emergency funding out of your banking system, thereby collapsing your banking system, thereby collapsing your economy.’ To me that is gunboat diplomacy… [with a little prompting] or blackmail. It is a very, very serious threat for a central bank to have made in actually forcing a sovereign nation to surrender its sovereignty to bailout an independent group of investors. Was the ECB acting illegally?”

Brian Hayes, Irish Deputy Minister of Finance:

“Of course that was a position that was foisted on the Irish people as a result of the decisions taken… It was the majority view of the ECB that this money had to be paid back.”

And where did the Irish bailout money go? A full breakdown of the bondholders of Anglo Irish bank is available here. (The list was publicly released by blogger Guido Fawkes.)

Germany has the most with 15 of the bond holders. Who between them hold 5.3 trillion euros.

France is next with 10 bond holders.  Who have an estimated 4 trillion.

Britain is third with 9 who have around 3 trillion.

The Swiss have 6 but who have about 8.5 trillion.

America has only three and hold only a trillion.

Other nations include, Spain, Belgium, Portugal, Holland Finland, Norway, Sweden, Poland, South Africa and Italy.

The bondholders include some of the world’s largest banks: Deutsche, Soc Gen, Barclay’s, PNB Paribas, UniCredit (who don’t appear on the list but own Pioneer Investments) and Wells Fargo (also not on the list but who own European Credit Management). There is also Goldman Sachs and Rothschild Group4

As Harald Schumann says “It’s like a Who’s Who of the financial world.”

Back to Stephen Donnelly:

“No country on earth in history has ever paid that amount of money back without having its own monetary policies… you gradually bleed, year on year on year. And now you really do depend on Europe. There was a quote by Nelson Mandela where he said something like: ‘It is the greatest tragedy of the human condition that we must endure so much pain before arriving at a compromise that we always knew was going to be needed.’”

The first lesson, therefore, is that the solution – any practicable solution – has to include debt cancellation.

*

 Spain

The Spanish people have been forced to take on 40 billion euros of additional debt to pay off foreign creditors.

Harald Schumann confronted Luis De Guindos, Spanish Minister of Finance, with advice he was given Stephen Donnelly that they would be better to let (some of) the banks fail because “banks have to be allowed to fail”. But Luis De Guindos disagrees:

“I think that the Irish situation is totally different from the Spanish situation. As I have said before, the size of the balance-sheet of the Irish banks in comparative terms with the GDP of Ireland was three times larger than the case of Spain. So I think that while in the case of Ireland the cost of recapitalising the banks has been above 20% of the Irish GDP, in the case of Spain we are talking 4% of GDP. So it’s a totally different situation and it’s not comparable at all.”

But economist Juan Rallo disagrees with De Guindos, and beginning with the figures themselves: “The real figure is not 40 billion, but 80 or 90 billion…”

And who are the creditors of the Spanish banks (particularly Bankia)? When Schumann manages to get hold of a list (thanks to “friendly people that help me”) he discovers that Deutsche Bank again features prominently.

Juan Moreno is a lawyer working with the 15M protest movement, who filed the lawsuit for the closure of Bankia to save the Spanish taxpayers from a bailout. When asked if the system would have collapsed, Moreno says:

“If you were to drop Bankia it would probably lead to the collapse of other banks, but not the big banks like BBVA, Santander, La Caixa, [Banco] Sabadell, or [Banco] Popular.”

Back to Luis De Guindos:

“A money market economy with fiat money is unstable. And we have an example that we let the banks go down… it was the Great Depression. It was the worst depression we had over the last century.”

Juan Moreno’s response:

“It’s all scaremongering. I don’t want that, I want numbers. I want to know what would really happen if they were to go bankrupt… With what we know now we would say this bank is beyond saving. We can’t continue to pour billions of euros into it. The creditors must take losses…

“The trial uncovered that the bank figures were falsified by upper management, but now we discover that the same had happened at the lower management levels. So a banking culture developed where employees were rewarded with bonuses so that the upper level did not realise how bad things were at the local branch level… The judge said that there was indeed public control of the bank, but the government supervisors played along. Letting the fox guard the hens is good for nothing.

“They’re all criminals: those in charge of Bankia and the public supervisors. If they’d let the savings banks go bankrupt, we would have found out what the politicians did with the money. Much of the debt that cannot be repaid is money that went to political parties, to city administrations, for work in the autonomous southern regions to companies connected to the government. These revelations would have made the political class disappear.”

So what is Moreno’s advice to the Germany citizens who are paying to prop up this corrupt system…?

“Numbers. The balance-sheet. It’s simple. You have to know the facts and apply the laws.”

*

 Cyprus

Meanwhile, depositors in Cypriot banks (savers as opposed to taxpayers) had more than 6 billion euros seized overnight in a so-called bail-in to pay off foreign creditors. This has crippled many businesses and stifled economic growth in a different way.

Panicos Demetraides, Governor of the Central Bank of Cyprus:

“It’s a change from past bailouts that we have had to bail-in on this occasion [from] uninsured depositors in the two big Cypriot banks. The burden of this bail-in has been borne partly by non-residents, but also partly by residents, Cypriot companies and households. About two-thirds of the burden has been borne actually by non-residents and one-third by residents.”

But as German MP Gerhard Schick (Green Party) explains:

“The European Central Bank allowed the Cypriot Central Bank to give money to banks in Cyprus even though they were insolvent. That’s a real mistake because then non-functioning structures are upheld and taxpayers’ money – and that’s what we’re talking about with a central bank – is endangered. In this way the ECB slowed down the rescue programme and made it possible for many creditors to withdraw their money and invest it elsewhere… The ECB was a creditor acting in self-interest to protect its own money. This conflict of interest should never have been allowed to happen, but it did because central bank money was put into bad banks.”

Back to Panicos Demetraides:

“Certainly the delays offered more informed investors [the chance] to protect their own investments. And they put the less informed investors at a disadvantage.”

Does this mean the ECB allowed other European banks time to withdraw their money? That must be some sort of rumour, says Demetraides. It is a rumour that must persist until there is an independent investigation, but as Gerhard Schick points out:

“The problem is that the ECB is a closed shop, and neither the European Parliament nor national parliaments are really able to call it to account when it breaks the rules.”

Harris Georgiades, Cypriot Minister of Finance:

“For us it was a take it or leave it situation. A decision that we accepted under pressure, and with no time to negotiate extensively. Essentially both of our kneecaps have been broken, and now we are asked to run.”

*

 Greece

Greece entered the crisis with a debt-to-GDP ratio of 110% and with around 10% unemployment. It was then put through an “austerity programme” supposedly designed to tackle the debt. Five years and several thousand suicides later, unemployment currently stands at 30% and debt-to-GDP is at around 180%.

This tremendous spike in debt remains in spite of ‘haircuts’ known as the Greek “Private sector involvement” or PSI, the first announced in July 2011, and quickly followed by PSI Mk2 (after PSI Mk1 failed), which involved a impressive sounding 50% reduction in the face value of Greek government bonds (GGB). 5 But then, as Yanis Varoufakis, current Greek Finance Minister, but as then a lowly Professor of Economics, wrote soon after:

In short, and so as not to overlabour the point, PSI Mk2 is dead in the water. The shenanigans of the shadow banking sector (which, lest we forget, includes not only the hedge funds but also, remarkably, the ‘proper’ banks shady Special Vehicles) plus the predictable deterioration of the Greek economy have put paid to it. The negotiations may go on for a little while longer, the announcement of a brilliant agreement may be made but, in truth, the idea that the Greek haircut will put Greece’s debt-to-GDP ratio back on a course towards 120% has sunk without trace. And if you need hard evidence for this, the European Summit of 9th December provided it even before 2011 was seen off: Officially, Europe’s great and good announced the end of PSI as a policy of the new ESM; Europe’s future central, permanent bailout fund. It had all been a mistake, they seemed to confess. 6

Greece has never been bailed out, only the European banks (well over 90% of the bailout money returning to them), and likewise the ‘haircut’ actually caused more problems than it solved. In particular, it permitted the looting of social security and public pension funds that are mandated by law to invest in government bonds – the following is taken from a special report published by Reuters:

Greece’s pension funds – patchily run in the first place, say unionists and some politicians – have been savaged by austerity and the terms of the international bailout keeping the country afloat.

Workers and pensioners suffered losses of about 10 billion euros ($13 billion) just in the debt restructuring of March 2012, when the value of some Greek bonds was cut in half. That sum is equal to 4.6 percent of the country’s GDP in 2011.

Many savers blame the debacle on the Bank of Greece, the country’s central bank, which administers three-quarters of pension funds’ surplus cash. Pensioners and politicians accuse it of failing to foresee trouble looming, or even of investing pension fund money in government bonds that it knew to be at high risk of a ‘haircut’ – having their value reduced. 7

Click here to read the full Reuters report.

In June 2014, Yanis Varoufakis was interviewed by Harald Schumann. Excerpts would feature in another collaboration between Arpad Bondy and Schumann; their follow-up documentary The Trail Of The Troika (in German, Macht ohne Kontrolle – Die Troika), which plotted another route across the continent in order to show how “austerity measures” have utterly failed to rescue the eurozone economies, and how in the process “the Troika” has also flagrantly breached its own European treaty regulations. Unfortunately, an English version of this more recent documentary is at present unavailable on youtube or elsewhere (so far as I can ascertain – but I will certainly embed a version as and when I find one). Meanwhile, uploads of the various interviews filmed during its making are now freely available, and embedded below is Schumann’s unabridged interview with Varoufakis, of which I have again selectively transcribed some of the answers he gave last summer:

What was the bailout for? The bailout was not in order to bail Greece out. Greece was never bailed out. The bailout loan that was extended in May of 2010 had a very singular, simple purpose. It was to transfer banking losses from the asset books of banks, not only Greek ones, but also French ones and German ones, onto the shoulders of the taxpayers. Initially the Greek taxpayers – because they knew that these shoulders were too weak to bear those losses, eventually it was always part of the plan to transfer them onto the shoulders of the German, and the French, and the Dutch and the Finnish taxpayers. And “the Troika” is here supervising this sinister transfer. [5:45 mins]

Smart people in Brussels, especially in Frankfurt, and of course Berlin, knew in May 2010 that Greece would never be able to repay its debts. They knew that again in the Spring of 2012 when they extended the second loan. They know it again now. In their minds they have already written off a very large bulk of the billions and billions that was given to the Greek state to give to the Greek banks and to give to the rest of the banks. All other things being equal, of course, “the Troika” would much rather more money was repaid than less money. But all other things are not equal. At this very moment in time, as we speak, while the Greek banks have huge black holes that we all know, even though they are not being admitted to, something similar is happening in the rest of the eurozone. Deutsche Bank, Finanzbank, BNP Paribas are skating on thin ice. They will never admit to it. And part of the angst and of the anxiety of the powers in Brussels, in Frankfurt, in Berlin, is how not to admit to the German, to the French, to the Dutch, to the Finnish people, that their banking sector was never really put back on an even keel. 8 [7:15 mins]

In 2010, what they had done was this: they lied to the Greek people and to the German people. They said to the Greek people: We have avoided bankruptcy. And they said to the German people that the Greeks, they were waivered, now we are going to punish them with austerity. But we will lend them the money because European solidarity demands that. In reality, what they were doing was transferring banking losses from the bankers – the European bankers, all of them – onto the shoulders first of the Greek taxpayers and eventually onto the German taxpayers, because the Greek taxpayers could not shoulder all of this money.

So they had lied to the German taxpayers. They said: We are not going to haircut the Greek debt. They were always going to haircut the Greek debt. They knew it. What they did with first bailout loan was to shift that big bulk, a 110 billion, from the bankers’ loss book onto the shoulders of Europe’s taxpayers. And then, after that had been effected, of course then they had to haircut – to do what they said they were never going to do – and who did they haircut? They haircut the small bondholders and the pension funds… So the PSI, the second bailout, the haircut of the private sector, was part of the original process of shifting the burden of adjustment and the cost of the crisis from the shoulders of those who caused it, onto the shoulders of those who didn’t cause it in Greece and in Germany. And all that in the name of European solidarity. And then they wonder why right-wing parties of the extreme part of the spectrum are winning power – or, at least, winning seats in the European Parliament. [21:30 mins]

Asked whether he thought the 2008 crisis had been caused as a result of incompetence or due to a more deliberate act of conspiracy, Varoufakis replied:

It wasn’t a conspiracy. It was a very simple operation: How do we stay in power? Mr [Jean-Claude] Juncker said it. Once he admitted: we know what needs to be done, we just don’t know how to do it and remain in power. Now don’t forget that before 2008, 2010, all parties of government, whether they were Christian-Democratic, Social-Democratic, it doesn’t matter. They had developed this extremely close relationship with the financial sector. They had looked at the financial sector as the cow that would bear the milk from which they would feed all, not only their political parties and careers, but also the welfare state – from the point of view of the Social-Democrats.

There was a kind of Faustian bargain between our politicians and bankers. We will let you do what you want, and you pay us a small amount proportional in order to fund our states. So when the crisis hit – which was completely unexpected for them – they had neither the analytical power nor the moral authority to go to these bankers and say: You know what, you’re out. You’re bankrupt, we’re taking over the banks… 9 [24 mins]

Finally, here was what Yanis Varoufakis, the economist (and not yet Finance Minister) said when asked for “any realistic proposal [to] how the dire economic situation in Greece can be improved”:

Well, we have to stop doing what we are doing and do something quite diferent. And there are two levels at which you should see this, because let’s not forget that once we have a monetary union you can’t talk about the overcoming of the crisis in one part of it in isolation to the others. It would be like talking about how South Dakota would escape the Great Depression in 1933 without the rest of the United States going through the New Deal. So we need a New Deal for Europe… 10 [32:30 min]

But, I have to insist: The solution must be European, because the crisis is European. And there are things we can do within two weeks to end this euro-crisis without violating any of the European Union treaties as long as we have the political will to do it. 11 [34:30 min]

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there is a better alternative… (and always was)

Q: Your Finance Minister Varoufakis said that he is not afraid of an Armageddon.

A: He said in parliament: if you enter into negotiations, you are not seeking a breakup. But you have to keep a breakup in mind as a contingency. I share this view.

 

Q: So you have a Plan B in case Greece does decide to exit from the single currency?

A: We don’t need a contingency plan because we will stay in the eurozone. But we won’t achieve this objective at the expense of the weak – like our previous government.

 

– Alexis Tsipras in same interview published in Stern magazine.

On April 16th, Varoufakis was invited to speak at a press conference hosted by the Brookings Institute which is based in Washington. In answer to a question about being trapped in a position where the Greeks are left with little alternative but to default, Varoufakis replied:

I would willingly, eagerly and enthusiastically accept any terms offered to us if they made sense. I would have no problem with the Memorandum of Understanding if it was founded upon a reform programme that attacked the worse cases of rent-seeking in Greece, and made the reforms that were necessary in order to enhance efficiency and social justice. If it came for the planet Mars, if it came from Berlin, if it came from Brussels, if it came from Portugal, from Slovakia, I don’t care which, I would have embraced it. The problem we have with these conditions – you know, the take it or leave it conditions – is not so much the authoritarianism, it is that fact that we’ve tried that medicine and it hasn’t worked…

It is almost precisely three years ago since I wrote a post entitled ‘austerity’ or ‘Grexit’: is there really no better alternative for Greece? There have since been more than two and a half years of unrestrained “austerity” (prior to Syriza’s victory), a “take it or leave it” Hobson’s choice, which has deepened the crisis not only in Greece but across the entire eurozone. ‘Grexit’ has never been a realistic alternative, and as Syriza have maintained from the outset, they have no intention whatsoever of ditching the euro. So ‘Grexit’ becomes ‘Grexident’, in other words, an impossibility. Because any accidental Greek exit can only occur if it is accidentally on purpose, and that would mean ‘Grexpulsion’ – a term the mainstream has yet to adopt for obvious reasons.

In Washington, Varoufakis was once again unequivocal about Syriza’s position:

“Toying with ‘Grexit’, which is something we don’t do – we are refusing to discuss it, because as I have said before even worrying about it is like worrying about being hit by a comet in a universe in which comets are attracted to you if you are worried about them – toying with ‘Grexit’ and ideas of amputating Greece is profoundly anti-European because anybody who claims that they know what the effect of a ‘Grexit’ is, are deluded.” [52 mins]

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Which brings us to an impasse. Accept “austerity” or get out! Jump off a cliff or suffer slow death by a thousand cuts. Is there really no genuine alternative for the Greeks?

Well, the answer to that question actually depends upon what you value. If you think that all debts are sacrosanct, then it necessarily follows that the Greeks must go on paying the banks to their bitter end. That the debt is unpayable doesn’t matter. That the debt is the consequence of so much ineptitude and malfeasance within the banking system doesn’t matter either. The Greeks must cough up because otherwise the chaos will worsen (or so we are again constantly given to believe). But if you value human life above money, and recognise that debts that cannot be repaid will never be repaid, then you can begin to think more constructively. In fact, the alternative becomes immediately and blindingly apparent. Since a debt cancellation will inevitably come sooner or later, the only real question is how much longer must the Greeks be punished in the meantime.

A way-out of all this mess is entirely possible. It doesn’t involve “austerity” and does not necessarily require a Greek exit from the eurozone. What is needed is simply an end to the bottomless banker bailouts and then new money being made available for reconstruction projects and other productive enterprise within Greece, Spain and elsewhere. Such a ‘New Deal’ injection is unlikely to be offered by the IMF, and neither will it be supported by the likes of Angela Merkel. But it can be fought for by the Greek people themselves, and in this battle to stop the wanton destruction of their nation, as fellow Europeans we should stand with them, recognising that the same aggressive financial interests that have already eviscerated Greece, will be pillaging our own lands soon enough.

The paragraphs above are taken from the post I wrote three years ago – yet so little has significantly altered that it remains pertinent enough to repeat it.

Back to Varoufakis who puts flesh on those barest of bones regarding the ‘New Deal’ option for Europe (and presenting the way ahead without any recourse to deficit spending by governments – so heretical to the neo-liberals):

Europe as a whole, the eurozone as a whole, is typified not only by a mountain of great private and public debts, which we do have. But there is another mountain hiding behind it: a huge mountain of idle savings with nowhere to go. And it should be our joint project to energise, to motivate, those idle savings, to help them overcome their great fear that keeps them idle, and channel them into productive investments – not investments into assets, but investments into real productive capacity. Now, how do we do this? Well, we have the European Investment Bank [EIB] that could do this. And we have the European Central Bank which is embarking on quantitative easing. Well, why can’t the EIB fund a major ‘New Deal’ for Europe, that channels investment to the private sectors of the countries and regions within countries that have a major output gap? [44 mins]

The whole of Varoufakis speech at the Brookings Institute and the subsequent Q+A session is embedded below:

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last frenzy of reasonableness…?

Just days after Syriza were swept to election victory on January 26th, economist and former US Assistant Secretary of the Treasury for Economic Policy under Reagan, Paul Craig Roberts, published an article entitled “Is Democracy Dead In The West?” which began:

We will find out the answer to the question posed in the title in the outcome of the contest between the new Greek government, formed by the political party Syriza, and the ECB and the private banks, with whose interests the EU and Washington align against Greece.

Roberts, once known as the “Father of Reaganomics” but more recently a repentant neo-liberalist and outspoken opponent of the financial elites, continues:

The new [Syriza] government wants to moderate the agreements made by previous Greek governments that sold out the Greek people. The new government wants to stop giving away at bargain prices Greek public assets to clients of its creditors, and the new Greek government wants to raise the Greek minimum wage so that the Greek people have enough bread and water on which to live.

However, for the private bank creditors, for Merkel’s Germany that stands behind the banks, for Washington which could care less about the Greeks, for the Greek elites who see themselves as “part of Europe,” Syriza is something to be rid of.

Adding that:

A purpose of the “Greek financial crisis” is to establish that EU members are not sovereign countries and that banks that lend to these non-sovereign entities are not responsible for any losses with regard to the loans. The population of the indebted countries are the responsible parties. And these populations must accept the reduction of their living standards in order to ensure that the banks do not lose any money.

This is the “New Democracy.” It is a resurrection of the old feudal order. A few super-rich aristocrats and everyone else serfs obliged to support the ruling order. 12

Click here to read Paul Craig Robert’s full article.

The question is, who is actually right here? Certainly we ought to acknowledge that elements in Paul Craig Roberts’ more conspiratorial outlook are irrefutable, recognising that Goldman Sachs did indeed deliberately help to hide previous government debt in order to extend credit to Greece. The Greeks were set up; this has been established – details of Goldman Sachs involvement can be found in this previous post.

Varoufakis is diplomatic, arguably too diplomatic. But then, is Paul Craig Roberts unduly pessimistic when he says that Syriza can now do “very little”, and, in either case, is the very moderate and rather modest approach of Varoufakis a good one, pragmatically speaking? Extending a hand of friendship being unlikely to impress “the powerful rich interest groups that rule the West [who] could not care less about the people over whom they rule” (to quote Roberts again, who knows them well, of course). Yet it may be effective in another way, such relentless persuasion and his “frenzy of reasonableness” at least winning the more public battle for hearts and minds. My own view is that Varoufakis (and Syriza) have adopted a sensible stance, which is in fact evidenced by the harsh criticism they have received from both extreme flanks. Appearing too flexible has made him a target for derision from the more radical (and Communist) left-wing, whereas standing his ground irritates his more powerful opponents working within the establishment (who lash out publicly whenever Varoufakis is out of earshot).

Meanwhile, ‘Grexident’, German Finance Minister Wolfgang Schäuble’s own portmanteau neologism (I gather), is now trending on twitter – not literally, of course, because it doesn’t have a celebrity angle. But the hashtag certainly exists and the tweets that include it are mostly German and Greek, alternating like a stack of incomprehensible post-it-notes. And sadly, the word ‘Grexident’ isn’t the only eurozone nonsense currently trending:

Academic-turned-finance minister Varoufakis was called “a time-waster, a gambler and an amateur”, a source privy to the closed-door talks told the news service Bloomberg.

This is according to a Guardian article published on Friday [April 24th] and entitled “Time is running out for Greece, says Eurogroup chief”. The article continues:

Jeroen Dijsselbloem, head of the eurogroup of finance ministers, told reporters in Latvia it was a “highly critical” meeting as Greece had still not agreed a comprehensive and detailed list of reforms.

Although there were positive signs, there remained “wide differences to bridge on substance”, he said.

“We are all aware that time is running out … too much time has been lost.” […]

Dijsselbloem warned on Friday that after the lack of recent progress it would be very hard to consider a new programme for Greece to cover its funding needs beyond June. He ruled out giving Greece an early slice [of] bailout cash. […]

ECB president Mario Draghi also betrayed his exasperation and warned that central bank could impose tougher conditions in return for keeping Greek banks afloat.

Weeks ago, the Riga meeting had been pencilled in as the moment when the eurozone could sign off an aid payment for Greece, but in the event ministers vented their frustration with Varoufakis for Greece’s failure to bridge the gap with creditors.

Just to remind you, Mario Draghi is not only the former vice chairman of Goldman Sachs – directly implicated in bringing the crisis to Greece – but serves as a trustee of the Brookings Institute13

So watching Varoufakis descend into the belly of the beast that is the Brookings Institute and to receive such a warm welcome and nonjudgmental reception, I must confess that I was instantly reminded of the film, Goodfellas, Martin Scorsese’s gangster classic, and of one scene in particular:

“If you’re part of a crew, nobody ever tells you that they’re going to kill you. It doesn’t happen that way. There weren’t any arguments or curses like in the movies. So your murderers come with smiles. They come as your friends, the people who have cared for you all of your life, and they always seem to come at a time when you’re at your weakest and most in need of their help.”

But Varoufakis is not easily daunted, and so, as the Guardian piece describes:

Varoufakis said the talks [in Latvia] were “intense”, but remained confident that the two sides will resolve their differences in time.

“We agreed that an agreement will be difficult but it will happen and it will happen quickly because that is the only option we have,” he told a press conference.

Varoufakis later declared: “We want an agreement and we are willing to make compromises to achieve this … The cost of not having a solution would be huge for all of us, Greece and the eurozone”. 14

In saying so, he is quite correct. Not only the Greeks, but the Germans too, whose major banks are set to carry the heaviest losses in the event of default, ought to be aware of the extreme dangers of such brinksmanship. A basic instinct for self-preservation is what Varoufakis is relying on, but for so long as the banks and other financial institutions remain confident of receiving further bailouts, it is the German taxpayers who ought to worry – as should the rest of us – because so long as they remain “too big too fail” (i.e., untouchable) then bankers like Mario Draghi and co really have nothing at stake. For once the Greeks are unable to shoulder the debt burden, as Varoufakis reminded us last summer, it will be passed on to the shoulders of the Germans and the French.

Indeed, the people of Europe stand to lose enormously if this so-called ‘Grexident’ (in reality ‘Grexpulsion’) leads to ‘Grexit’ and then to ‘Grextagion’ as it will be doubtless be called; as idiotically named as it will have been idiotically contracted and spread. Because, if no compromise can be reached in spite of Varoufakis’ tireless efforts, then sooner then we imagine we may all be standing in the Greek people’s shoes.

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Update:

A weekend can be a very long time in politics…

Unbeknownst to me, on Sunday 26th [the day before I posted this article] Yanis Varoufakis had put out a tweet in which he quoted the words of Franklin D Roosevelt, who famously said “They are unanimous in their hate for me; and I welcome their hatred”, adding simply “A quotation close to my heart (& reality) these days”:

This would be one of his final acts as chief negotiator at the Eurogroup meetings:

Greece moved to inject fresh momentum into problem-plagued talks with creditors on Monday, reshuffling its negotiating team to try and defuse tensions over its outspoken finance minister. […]

In a bid to ease tensions with lenders, the Syriza party-led coalition said the minister of international financial relations, Euclid Tsakalotos, would take over the coordination of the new team. The appointment will see the economics professor, who was raised in the UK, assuming a more active role in face-to-face negotiations with creditors.

So writes Helena Smith in the Guardian [April 27th], her report released a mere two hours after I posted.

Varoufakis told us that before he took the job he had written a pre-prepared resignation letter to carry around with him at all times, just in case he ever found himself sounding too much like a politician. Hopefully this will not be needed, and news that he has been “removed” is perhaps a little exaggerated:

[However,] one well-placed Athens official insisted that Varoufakis’s role had been upgraded “in many ways”. The official added: “To make him resign would be to retreat and the government would never do that.”

Three months after his elevation to power, prime minister Alexis Tsipras has come under extraordinary pressure to remove Varoufakis. Yet last night Tsipras said that his finance minister “is an important asset for the government, and [with creditors] he speaks their language better then they do”. In a wide-ranging interview aired on Greek TV, Tsipras rejected suggestions that his government had any intention of sacrificing the politician. Now that negotiations with creditors were in the final straight, Greece had to reorganise its negotiating team, the PM said. […]

But insiders insisted that the politician still enjoyed Tsipras’ confidence, even if the young premier was now reaching out to the German chancellor Angela Merkel in an effort to reach a political solution.

With his high popularity ratings at home, Varoufakis is credited with internationalising the country’s debt problem and raising questions over austerity economics.

“They [creditors] couldn’t counter his economic arguments rationally so they went for him claiming he didn’t understand eurozone rules and regulations, that his reforms weren’t good enough,” said one official. “Tsipras knows this is not about Varoufakis, but his government, because it has dared to take on the system that is Europe’s neoliberal doctrine. He knows that if one goes the other goes too, which is why Varoufakis is here to stay.”

I very much encourage Tsipras to stick by Varoufakis, certainly in the capacity of his chief economic advisor, if not within government itself. We so very seldom see anyone of such intelligence, integrity and courage in public office. The world needs more politicians like Varoufakis, not less.

Please note that I corrected this update after mistakenly believing that Varoufakis had stepped down from his role as Greek Finance Minister. Apologies for posting the incorrect original version.

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1 From an interview published as “Give us six more months, and we will be another country”, written by A. Albes, F. Batzoglou, A. Petzold, published by Stern on February 18, 2015. http://www.stern.de/politik/ausland/interview-with-greek-primeminister-alexis-tsipras-give-us-six-more-months-and-we-will-be-another-country-2174273.html

2 From an article entitled “Reinhart, Rogoff… and Herndon: The student who caught out the profs” written by Ruth Alexander, published by BBC news on April 20, 2013. http://www.bbc.co.uk/news/magazine-22223190

3 Here are some interesting graphs taken from an wikipedia article entitled “European sovereign-debt crisis”, which show the rise in the levels of Greek, Spanish and Portuguese debt since 1999 as compared to the average of the eurozone:

 

 

 

All three graphs (and others including those for Ireland and Cyprus) show a marked turning point around 2007–8, providing further evidence not only that “austerity” hasn’t worked (even within its own terms of debt reduction), but that the western world is actually faced with a systemic banking crisis that flared up at that time. The debt-to-GDP ratios have flattened towards the end, but even so the downturn is mostly in the projected regions.

And this is from an article written by Tyler Durden and posted on zerohedge from February 18, 2013:

“Beleaguered Prime Minister Mariano Rajoy just broke another record. As if a plague of corruption scandals was not enough, Spain’s debt-to-GDP has now reached levels not seen in over 100 years. As El Pais reports, Spanish debt levels rose at an alarming EUR 400 million per day in 2012 making for the largest annual increase in debt in the nation’s history – all the while proclaiming austerity.”

And here’s another helpful graph that goes along with the article, showing once more that rather than reducing the nation’s debt, “austerity measures” are more closely correlated to the growth of that debt:

 

 

http://www.zerohedge.com/news/2013-02-18/chart-day-spanish-debt

4 These details of a summary of more detailed notes complied here: http://www.golemxiv.co.uk/2010/10/who-are-the-bond-holders-we-are-bailing-out/ 

5 Based on figures taken from an article entitled “Greece’s PSI is Dead on Arrival: An error in search of a rationale but also a failure that may prove a harbinger for the Modest Proposal” written by Yanis Varoufakis, published on January 11. 2012:

Back to the drawing board, our European leaders came up with a deeper haircut in October 2011. They called it PSI Mk2 and even had the foolish Greek PM fall on his sword, to be replaced by a hitherto loyal ECB functionary, so as to ensure that PSI Mk 2 would become Greece’s new light on the hill; a beacon of the last glimmer of hope for a desperate nation. PSI Mk 2 envisaged an impressive sounding 50% reduction in the GGBs’ face value which, in present value terms, would result in a haircut no less than 60% (since the interest rates charged on the new bonds, that would be swapped with the old ones, could not exceed the interest rates charged by the ECB and the EU for the original bailout funds). In other words, holders of GGBs would be hair-cut in two ways: a 50% reduction in face value and an interest rate less than 5% which would cut further into the present value of the old GGBs.

http://yanisvaroufakis.eu/2012/01/11/greeces-psi-is-dead-on-arrival-an-error-in-search-of-a-rationale-but-also-a-failure-that-may-prove-a-harbinger-for-the-modest-proposal/ 

6 Ibid.

7 From a special report entitled “Greeks rage against pension calamity” written by George Georgiopoulos & Lefteris Papadimas, published in Reuters on November 30, 2012. http://www.reuters.com/article/2012/11/30/us-greece-crisis-pensions-idUSBRE8AT0CV20121130

8 Varoufakis adds:

“The one thing if I were, I am not, but if I were the CEO of Deutsche Bank, I would be very wary of the dangers from “the Troika” in Athens that is casting a critical gaze into what is happening to Greek banks. Because if “the Troika” takes a keen interest, it will have to declare that the Greek banks are beyond salvation. And the only possible outcome of that would be nationalisation of these banks.”

9 Varoufakis  adds:

“There is no doubt that there was a great deal of incompetence. Our leaders, and I have to say most of my profession – speaking as an economist – had become steadily lobotomised since the late 1970s. We didn’t have leaders who understood macroeconomics… You just let the markets perform their triumphant trick and everything will be fine. Politicians were convinced of that, their careers went swimmingly, their cosy relation with the financial sector was working out for them beautifully. When the whole thing, this bubble, collapsed, they were found wanting analytically – they didn’t understand what happened – they believed their own rhetoric and when they started realising the truth, at that point they had already misled parliaments and electorates to such an extent that they would much rather die than confess to the sins of omission and commission.” [25:45 min]

10 Varoufakis offers the following example:

Regarding the Greek situation, the Greek debt, for instance. What we need to do is, we need, since the German government is going to find it politically very difficult to go to the parliament in Berlin and say: Well, it was all a mistake, we have to write off their debt. What you can do is you can create euphemisms – you can create what Keynes referred to as bisque bonds, GDP-related bonds. The Greek government could issue particular bonds that it exchanges for the debt that the ESF [European Social Fund] holds. And those bonds could specify that they can last 30 years let’s say. In 30 years they become extinct whether they have been repaid or not. And that the coupons, the repayments, on a year to year basis depend on the level of growth in Greece. So if growth is more than 3% then it specifies particular payment. That way Mr Schäuble will be able to look at his parliamentarians and say: We haven’t haircut it, but the extent to which the Greek debts will be repaid will be linked to our success in helping Greek growth. So you make them partners in Greek growth as opposed to bailiffs who come in and take your furniture away and throw you out on the street. [33:15 min]

11 The details go as follows:

Three things: The first thing we need to do is deal with the banking sector troubles throughout the eurozone. And the way I would do it – because we know we have declared this banking union which is really a term confirms there is no banking union – so what we should do about banks is this: Banks that are found out by the ECB in September (when the ECB assumes the role of the single supervisor of the banking system) to be wanting in terms of recapitalisation to have bad assets that have not been declared so far, they should accept money from the ESM – from the European stability mechanism – directly, not through the governments, directly. And the ESM should get shares, the shareholders should be wiped out and the ECB should appoint a new board of directors – hopefully not from within the country in which the bank is domiciled. This way you Europeanise these banks. In 6 months, 12 months, you resell them – you will resell them with a profit because those shares will be purchased by the ESM at very low prices. And then the ESM gets money back, the European taxpayers get their money back, TARP-like. And you do it step by step. You don’t Europeanise all 6,000 banks. The banks that are in trouble…

The second thing you do is to deal directly with the public debt, which is getting worse everywhere – except in Germany because of the low, low interest rates due to the fact that the crisis is proceeding. The European Central Bank should make a simple announcement tomorrow morning that will cost it nothing, zero. And the announcement is this: From now on, every time a government bond matures, the ECB will service, will pay, for the proportion of that bond that corresponds to the country’s Maastricht compliant legal debt. So in the case of Italy it will be half of it. So the European Central Bank will pay for this, not the Italian government. Now I said it won’t cost the European Central Bank anything, so how can that be if it pays half of it? The answer is the ECB issues its own bonds and sells them to the Chinese, to the Russians, to whoever wants to buy them at very, very low interest rates – because the ECB is such a sterling institution – and immediately opens a direct debit account for Italy. And says to Italy: Look, within ten years, this amount of money has to go in there in order to repay the Chinese. So in other words, what I’m suggesting is that the ECB should play a management role for public debt in Europe that costs nothing, that doesn’t require printing a single euro, and does not violate any treaty. Because ths is not a bailout…

And then we have the big problem of growth. Of investment. We have an amazing dearth of investment in Europe, both in the north and in the south. Even in Germany. So what we need is really a Roosevelt-like New Deal – a very large investment programme. I am not talking about a 100 million here and a 100 million there. We need something between 8 and 9% of eurozone GDP to be invested in productive activities… That would be what we need in order to avert deflation and in order to restart growth in Europe. Now we have the European investment Bank in Europe. The European Investment Bank is three times the size of the World Bank. It could very easily effect such a large scale investment-led recovery programme in Europe. The reason why it doesn’t do it, is because the convention is that 50% of every project is funded from a nation state. The nation state is bankrupt. Waive it. And what should we do instead? We should have either the ECB issuing more bonds in order to support the EIB bonds or something simpler than that. Everyone now, including Mr [Mario] Draghi and Mr [Jens] Weidmann [President of German Bundesbank], are speaking about the need for quantitative easing in Europe. Or at least they are considering it. Now we do not want American-style or British-style quantitative easing because this simply inflates bubbles… Mr Draghi’s worried about quantitative easing because he doesn’t know which assets to buy. German assets? Italian, you know, we are going to start arguing like children amongst ourselves, as to whose assets should be purchased. Bu the European Investment Bank issues European bonds, EIB-bonds. Why not have the EIB effect quantitative easing by purchasing EIB-bonds to such an extent that the EIB ca start a New Deal for Europe programme of 8–9% of eurozone GDP with the ECB buying only its bonds, which are European bonds?  And also they are triple-A bonds. Now that a combination of those three measures would deal with the banking sector crisis, it would create a rational way of managing the Maastricht compliant and legal part of the debt… and you have a massive investment-led recovery programme.

12 From an article entitled “Is Democracy Dead In The West?” written by Paul Craig Roberts, published on January 29, 2015. http://www.paulcraigroberts.org/2015/01/29/democracy-dead-west-paul-craig-roberts/ 

13 From Bloomberg Business (bold highlight added):

Mr. Mario Draghi has been the President of Executive Board and President of European Central Bank since November 2011. Mr. Draghi served as Governor of Banca d’Italia SpA since December 29, 2005 until November 01, 2011. He served as Managing Director of The Goldman Sachs Group, Inc. until January 2006. He served as Director-general of Italy’s treasury. He served as an Adviser to the Bank of Italy, an Executive Director of the World Bank and as a member of the Group of Seven deputies. He served as the Chairman of Financial Stability Board. He has been a Director at Bank For International Settlements since June 2012. He serves as a Trustee of The Brookings Institution. He has been Member Of Governing Council of European Central bank since January 16, 2006. He served as a Member of Governing Board at Banca d’Italia SpA and served as its Member of General Councils. He served as Member of Board of Governors – Italy of Asian Development Bank until November 2011. He served as Director of Bank For International Settlements from September 2011 to November 01, 2011. Mr. Draghi has a Doctorate in Economics from the Massachusetts Institute of Technology.

http://www.bloomberg.com/research/stocks/private/person.asp?personId=13154633&privcapId=5774394

14 From an article entitled “Time is running out for Greece, says Eurogroup chief” written by Graeme Wearden, published in the Guardian on April 24, 2015. http://www.theguardian.com/business/2015/apr/24/time-is-running-out-for-greece-says-eurogroup-chief-jeroen-dijsselbloem

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Filed under analysis & opinion, austerity measures, Cyprus, debt cancellation, did you see?, Germany, Greece, Ireland, neo-liberalism, Spain

Syriza must win and be seen to win: we need solidarity across Europe

In current discussions of what Greece might or might not get in the way of concessions from the Eurozone, there has so far been relatively little appreciation of one basic political reality: as far as the governments of Spain, Portugal, Ireland, probably Italy and perhaps even France are concerned, Syriza must fail and must be seen to fail.

So begins an article by neo-liberal economic guru Andrew Lilico in Wednesday’s Telegraph. Why? Well, because of the domino effect. Although no debt deal has been reached so far, if the other Eurozone finance ministers were to agree some kind of a compromise and bailout package with Syriza, then it is a near certainty that other European nations, starting with those suffering the worst of the “austerity”, would follow suit.

Here is Lilico to elucidate further:

The reasons differ slightly between countries. The easiest case to see is perhaps Spain. In Spain, the governing party is the centre-right Partido Popular led by Mariano Rajoy. It is currently facing pressure from a far-left party, Podemos, allied to Syriza. Indeed the Podemos leader Pablo Iglesias even campaigned in partnership with Syriza and, following Syriza’s victory, at his own party’s rally he proclaimed: “Syriza, Podemos – we will win [venceremos]!” Podemos is currently leading in the polls, ahead of an election later this year. The very last thing Rajoy can afford is for Syriza’s approach to be seen to succeed, emboldening and vindicating Podemos.

As for Portugal and Ireland, where the governments stuck to bailout conditions despite the domestic pain, how would they sell concessions to Syriza to their own voters? Suppose they go back and say: “We were suckers. We shouldn’t have made all those cuts. Instead, what we really should have done was to raise the minimum wage, hire back the public sector staff that had been fired, say we weren’t going to pay our debts to our eurozone partners, cosy up to the Russians and tell the Germans they didn’t feel nearly guilty enough about World War Two. Then everyone would have said we were ‘rock stars’ and and [sic] forgiven our debts.” Do you reckon that would go down well?

Lilico is horrified by all this, saying that he worries about “amateurish hard-left lunacy” which might somehow make, what he necessarily concedes is an already terrible situation, worse again. Not that Lilico is an impartial observer. He may write for the Guardian as well as The Telegraph, but that’s just how it works these days. The mainstream left and right merged long ago. So when he suddenly pops up to ward us away from Syriza, remember that he has his own interests to worry about. Potentially serious repercussions for his consultancy firm Europe Economics, which lists as its clients government departments, regulators, the European Commission and the European Parliament. With that in mind, here’s a little more of what he writes:

The best way for [Syriza] to fail would be for it to capitulate utterly and crawl back to Greece with its tail between its legs and a few cosmetic patronising “concessions” such as renaming the “Troika” the “Consultative Committee” (or, if it makes them feel better, the “Symvouleftiki Epitropi”). If it won’t do that — and there’s a good chance that if it did try to do that then the Greek government would collapse, anyway — then things get a bit more complicated. Because if it’s bad and dangerous for Syriza to succeed inside the euro, it would be disastrous for it to succeed outside the euro.

In short, Syriza must not be allowed to succeed under any circumstances, and although he may claim to speak “from the perspective of [the] eurozone governments”, it is more accurate to say that Lilico speaks here from the perspective of the bankers and the super-rich. For instance, in the hypothetic instance of Syriza’s success, Lilico predicts a calamity. This is what he foresees:

[Syriza] would nationalise the banks and many other industries, print money to cover public spending, overthrow property rights and impose wealth taxes in a desperate attempt to obtain revenue, and many other crazy things. 1

All these, at least to the mindset of Lilico and his powerful ilk, are “crazy things”. Thus, imposing every kind of tax on wealth becomes, ipso facto, a crazy thing. And as for “print[ing] money to cover public spending”, well printing money to bail out the banks is just fine, of course. That’s called Quantitative Easing which, combined with historically low interest rates (recently turned negative in some places), is all that’s keeping the ever more precarious Ponzi scheme afloat. So don’t be mistaken: what worries Lilico is not the unfettered overproduction of money ‘out of thin air’, but an awful dread that some significant part of this new money might be misdirected “to cover public spending”. Money for public expenditure instead of funnelled into the pockets the bankers (like almost all of the money from the previous ‘Greek bailouts’); to Lilico, this is unthinkable. As for “overthrow[ing] property rights”, well I’m really not sure what Lilico means, but I think the problem might lie in his inherent inability to see beyond a certain characterisation of Syriza. His own hard-right lunacy obscuring the fact that Syriza’s actual demands are both democratic and reasonable.

In the end it is the people who matter, and in Greece, the people are suddenly taking to the streets in droves. Not to shout down government injustices, but to add their own chorus of support. Yes, pro-government rallies without a can of tear gas in sight. Can you imagine? Lilico can’t.

However, the main trouble still facing the majority of us (the 99 percent) is that evangelists of loopy free-market, neo-liberal economics such as Andrew Lilico have been ruling the roost for decades. Intent only to smooth the way for business as normal, they are already the technocrats and they have a great deal to lose if the system were ever to be radically reformed. Unfortunately, these people are now embedded, and not only within ‘think tanks’ and ‘policy forums’, but also throughout academia, which in itself ensures any dissenting voice – anyone who does not fully subscribe to the current economic orthodoxy – is conveniently sidelined as a heretic.

Yanis Varoufakis is a perfect example of just such a heretic. A Professor of Economic Theory at the University of Athens, yet Lilico entirely brushes aside his alternative vision on the grounds that it is “amateurish”. For having cornered the market in supplying economic “expertise”, the likes of Lilico are very handsomely rewarded in their role as ‘consultants’: in reality, one of an increasing number of unelected and unaccountable architects of policy, who pocket a small fortune irrespective of results. Small wonder Lilico fears Syriza’s success.

Those wishing to see real political change should get behind Syriza. I suggest that we give those like Lilico good cause to keep on squealing.

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The following statement and call for action is taken from the Greece Solidarity Campaign website:

The European Central Bank is trying to force the new anti-austerity Greek government to its knees. Its actions provoked mass demonstrations in Athens last week in support of the government anti-austerity stance.  On Wednesday 11 February the Eurozone Finance Ministers have called an Emergency Meeting with Greece where Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis will present their plans.

The Greece Solidarity Campaign, Syriza London and other organisations are calling for a Mass Rally in support of the people of Greece on Sunday 15th February at 13.00 in Trafalgar Square. This is part of an international wave of rallies and protests in support of Greece taking place across Europe. Come along with friends and colleagues to show your support for the first anti-austerity government in Europe.

1 From an article entitled “Eurozone leaders believe Syriza must fail and be seen to fail”, written by Andrew Lilico, published in The Telegraph on February 11, 2015. http://www.telegraph.co.uk/finance/11406154/Eurozone-leaders-believe-Syriza-must-fail-and-be-seen-to-fail.html

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Filed under analysis & opinion, austerity measures, Britain, campaigns & events, debt cancellation, Greece, neo-liberalism, Spain

Syriza landslide as the Greeks say basta!

Victory for Syriza means the election of the first anti-austerity party in the western world. Our heartfelt congratulations and best wishes should go to everyone in Greece. The cradle of civilisation and birthplace of democracy have pointed the way forward once again.

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 be singled out and placed at the head of the queue for dose after dose of neo-liberal economic shock therapy. The so-called “Troika” of the IMF, ECB and EU being quick to impose a strict austerity programme, backed up with further ‘Washington Consensus’-style ‘conditionalities’ — the enforced privatisation of public services and other types of ‘deregulation’.

More than half a decade later, and instead of prosperity, “austerity” (i.e., savage cuts – I always apply apostrophes) has created a vicious spiral of debt, with mass unemployment and reduced incomes leading inexorably to reduced demand, stifled economic growth and, no less importantly, 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” provides a wonderful excuse for this theft and always did.

The main message to be taken from Sunday’s dramatic election result – a landslide victory for one of the newest parties in Europe – was perfectly loud and clear, though certainly not the one that the news media will want you to focus on. It is that ‘austerity’ simply does NOT work! (except for a tiny elite who, some twenty fours prior to the Greek election, were flying home to their mansions from that annual obscenity known as the World Economic Forum in Davos in about seven hundred separate private jets.)

Click here to see a full breakdown of the election results region by region.

Of course, and especially in light of the vapid insincerity of Barack Obama’s 2008 “Hope and Change” campaign, it is understandably difficult for many people to grasp that any kind of meaningful political change can be delivered through the ballot box (or achieved in any other way). Duped over and over again in election after election, we have all been conditioned to believe in our own helplessness. And Obama, more than perhaps anyone else, has been responsible for undermining hope, causing us to feel that to dream of a better future is forlorn and that whatever sociopolitical change comes, invariably turns out for the worst. But we must remind ourselves that Obama was an out-and-out phoney. An insider, Wall Street crony, who was astutely repackaged as a messianic saviour for a naive and race-divided American public. Alexis Tspiras and Syriza are a different kettle of fish altogether. They offer a genuine grassroots opposition which, unlike Obama, came into office despite the efforts of a hostile media, and still remain free from corporate strings. They also bring to the table a set of carefully deliberated economic and other policy demands – something else that was conspicuously absent from Obama’s intentionally vague “Hope and Change” campaign.

Whether or not Alexis Tsipras and Syriza will now deliver on all their promises we must wait and see. Meanwhile, the people of Greece and elsewhere might help if only by continuing to loudly voice support for those same demands. This is a time for everyone of goodwill to put aside lesser ideological differences – just as Syriza have already done by forming a coalition with a party of the right – to join the Greeks in solidarity, supporting their struggle for self-determination and basic democratic control against the oppressive outside forces of “the Troika”.

What the Greek people achieved on Sunday also presents us with a solid foundation for our own fight against “austerity”. They have opened up a window of opportunity (perhaps a narrow one) for establishing a movement that demands real change across the whole continent. For this victory was not about Syriza as such, but about a principle. That lives of ordinary people matter far more than a plethora of inanimate market indices and corporate balance sheets. The greater hope being that a spark from Syriza’s extraordinary election victory will be enough to ignite a chain reaction through Spain (with Podemos), Portugal, Italy and on and on, to ultimately force a total cessation of the callous insanity of the imposed “austerity” regime. And our hopes ought not to end with mere ‘change’ per se, which may of course be good or bad, but for a lasting improvement in our societies, beginning at the economic level, and bringing about a more prosperous future for all nations.

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Here in Britain, the closest group we have to Syriza is Left Unity, who have already formed a loose alliance with both Syriza and Podemos:

Somewhat belatedly (in my opinion), Left Unity recently launched their own election campaign. They are now asking for support:

Austerity has wrecked Britain. We are far worse off now than we were in 2010 – and all we are promised is more hard times. Today the richest 1% in Britain own as much wealth as the poorest half of the population put together.

The 2015 general election will be an opportunity for millions of people across the country to have their say over the austerity programme of the Con-Dem government. The propaganda machine has already sprung into action, with George Osborne claiming to be tackling the national debt and to have the economy back on track. In reality, real wages are falling, prices are soaring – and the deficit has actually grown under his austerity regime.

And yet the opposition from Labour has been appalling. They have given ground on almost every key issue. Labour has promised to keep to the Tory spending plans if they are elected in May. They won’t roll back any of the changes to education. They claim they will repeal the Health and Social Care Bill, but they won’t scrap PFI, which is bankrupting hospital trusts.

This is why we need Left Unity.

We will be standing candidates in different constituencies across the country. Our plan is not to stand hundreds of candidates, but to get organised in selected key seats to get Left Unity’s message out to potential voters.

We need your support now to help organise election campaigns on the ground. Left Unity’s national council has issued an appeal for £20,000 to fund this work.

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 Additional:

Yanis Varoufakis, who is professor of economic theory at the University of Athens, has been appointed as the new Greek Finance Minister. Here is an interview he gave that was broadcast on Russia Today’s “Boom Bust” back on January 12th (a fortnight prior to the election):

And this is Varoufakis speaking two years ago in an address that was presented to the founding assembly of the United Front Against Austerity (UFAA) on October 27, 2012 in New York City:

His writings can be found at http://yanisvaroufakis.edu

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Update:

On February 2nd, the Keiser Report was devoted to analysis of the Greece situation. Reminding us that Greece is insolvent in much the way the banks were and remain insolvent, Max Keiser and Stacy Herbert also highlighted the vital role that Goldman Sachs had played in an earlier deception to hide Greek debt. A scheme which enabled the Greek government of the time to meet the criteria necessary to join the Eurozone:

Click here to watch on the Russia Today website.

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The New Great Game: “Pax Americana” from Syria to Uzbekistan to the Ukraine

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Recent historical background

Embedded above is one of the most frequently cited (at least by alternative news outlets) political interviews of the past decade. Broadcast by Democracy Now! on March 2nd, 2007, it features Gen. Wesley Clark discussing US foreign policy in the post-9/11 era. The reason for its notoriety being the statement Clark makes during the opening three minutes, when he informs the world of how he learned about Pentagon plans to “take out seven countries in five years”:

About ten days after 9/11, I went through the Pentagon and I saw Secretary Rumsfeld and Deputy Secretary Wolfowitz. I went downstairs and just to say hello to some of the people on the Joint Staff who used to work for me, and one of the generals called me and he said, “Sir, you’ve gotta come in and talk to me a second.”

I said, “Well, you’re too busy.”

He said “No, we’ve made the decision we’re going to war with Iraq.” This was on or about the 20th of September.

I said, “We’re going to war with Iraq – why?”

He said, “I don’t know…” [audience laughs] He said, “I guess they don’t know what else to do.”

So I said, “Well did they find some information connecting Saddam to al-Qaeda?”

He said, “No, no, there’s nothing new that way. They just made the decision to go to war with Iraq.” He said, “I guess it’s like we don’t know what to do about terrorists, but we’ve got a good military and we can take down governments.” And he said, “I guess if the only tool you have is a hammer, every problem has to look like a nail.”

So I came back to see him a few weeks later, and by that time we were bombing in Afghanistan, and I said, “Are we still going to war with Iraq?”

He said, “Oh, it’s worse than that. He reached over on his desk and picked up a piece of paper, and he said, “I just got this down from upstairs from the Secretary of Defense’s office today” and he said, “This is a memo that describes how we’re going to take out seven countries in five years. Starting with Iraq, and then Syria, Lebanon, Libya, Somalia, Sudan and finishing off, Iran.”

Wesley Clark’s testimony is important because it is revealing, at the same time though, I find his professed surprise at the revelations coming from “upstairs” more than a little hard to believe. After all, both Donald Rumsfeld and Paul Wolfowitz, men who Clark says he had only just seen on the day in question (and ones he presumably met with on a quite regular basis), are both Signatories to Statement of Principles of the now notorious Project for the New American Century (PNAC) neo-con think tank. A statement of intent had been signed by them and other notables, including Dick Cheney, more than four years prior to the 9/11 attacks on June 3rd 1997. It begins:

As the 20th century draws to a close, the United States stands as the world’s pre-eminent power. Having led the West to victory in the Cold War, America faces an opportunity and a challenge: Does the United States have the vision to build upon the achievements of past decades? Does the United States have the resolve to shape a new century favorable to American principles and interests?

Unfortunately, the complete founding PNAC statement is hard to track down, but then we can no doubt judge the group’s geostrategic ambitions better from a few of its less public documents. For instance, a PNAC letter to President George W. Bush advocating “a determined effort to remove Saddam Hussein from power in Iraq.” It was received on September 20th, 2001 – so again at precisely the time when Clark was being privately briefed by that unnamed general at the Pentagon. This letter from PNAC co-founder William Kristol “& others” read:

We agree with Secretary of State Powell’s recent statement that Saddam Hussein “is one of the leading terrorists on the face of the Earth….” It may be that the Iraqi government provided assistance in some form to the recent attack on the United States. But even if evidence does not link Iraq directly to the attack, any strategy aiming at the eradication of terrorism and its sponsors must include a determined effort to remove Saddam Hussein from power in Iraq.

Click here to find the complete letter to Bush.

But most damning of all the PNAC documents is its notorious ninety-page report entitled Rebuilding America’s Defenses: Strategies, Forces, and Resources For a New Century. Released almost precisely one year prior to the 9/11 attacks, it calls for “a global Pax Americana” – which might be translated as ‘America uber alles’; for the betterment of all obviously – and looks forward to “some catastrophic and catalyzing event – like a new Pearl Harbor.” In part five of this report, entitled “Creating Tomorrow’s Dominant Force”, we discover their blueprint for “full spectrum dominance”. The details of “Transforming U.S. Conventional Forces” requiring (amongst other things):

The proliferation of ballistic and cruise missiles and long-range unmanned aerial vehicles (UAVs) will make it much easier to project military power around the globe. Munitions themselves will become increasingly accurate, while new methods of attack – electronic, “nonlethal,” biological – will be more widely available. […]

Although it may take several decades for the process of transformation to unfold, in time, the art of warfare on air, land, and sea will be vastly different than it is today, and “combat” likely will take place in new dimensions: in space, “cyber-space,” and perhaps the world of microbes. Air warfare may no longer be fought by pilots manning tactical fighter aircraft sweeping the skies of opposing fighters, but a regime dominated by long-range, stealthy unmanned craft. On land, the clash of massive, combined-arms armored forces may be replaced by the dashes of much lighter, stealthier and information-intensive forces, augmented by fleets of robots, some small enough to fit in soldiers’ pockets. Control of the sea could be largely determined not by fleets of surface combatants and aircraft carriers, but from land- and space-based systems, forcing navies to maneuver and fight underwater. Space itself will become a theater of war, as nations gain access to space capabilities and come to rely on them; further, the distinction between military and commercial space systems – combatants and noncombatants – will become blurred. Information systems will become an important focus of attack, particularly for U.S. enemies seeking to short-circuit sophisticated American forces. And advanced forms of biological warfare that can “target” specific genotypes may transform biological warfare from the realm of terror to a politically useful tool.

Click here to read the full PNAC document Rebuilding America’s Defenses.

The document reads like the wet dream of Dr Strangelove, but then the PNAC crowd (now officially disbanded) were all lunatics, of course. Like Strangelove, they were fascist madmen who suddenly had the ear of the US President. As a consequence, much of this brave new world of warfare was quickly established under Bush; the Obama administration then adhering to a similar doctrine. Expansionist wars by means of such high tech armaments as the “long-range, stealthy unmanned craft” as described by PNAC back in 2000, becoming so unexceptional that the public got into the habit of forgetting all about them.

Likewise, Obama has continued to press ahead with the same neo-con agenda of destabilisation which Wesley Clark warned about in 2007. The only really significant difference has been the rhetoric. Regime change in Libya justified as humanitarian from the get-go, as has been the ongoing campaign for the overthrow of Assad in Syria. But then, the White House can hardly be expected to publicly announce that it is covertly supporting al-Qaeda factions to those ends.

Almost six months has now passed since just such an unlikely shift in policy was on the verge of actually taking shape – it would take the crossing of Obama’s “red line”, but the US was very much poised to take up arms on the side of al-Qaeda (not that the White House were about to explain matters in such honest terms – the air strikes would only be aiding the good rebels). By then, US warships had been moved to the Eastern Mediterranean and were already on heightened alert. With the atrocity at Ghouta, John Kerry especially, was keen to seize on the opportunity, saying “We know a senior Syrian official discussed the attack and was afraid they’d be discovered”, before announcing to the world:

“This crime against conscience, this crime against humanity, this matters to us. It matter[s] to us and who we are. It matters to leadership and our credibility in the world. It matters if nothing is done – if the world speaks out in condemnation, and nothing happens.”1

But Kerry was lying about the intelligence, and, as Seymour Hersh has since explained at length, the US couldn’t possibly have known that either Assad had given the go-ahead, or even that those within the Syrian army had launched any attack, with or without his express permission. And more recent evidence further challenges those US allegations that had brought us so close to a major international conflagration:

[But] The authors of a report released Wednesday said that their study of the rocket’s design, its likely payload and its possible trajectories show that it would have been impossible for the rocket to have been fired from inside areas controlled by the government of Syrian President Bashar Assad.2

This was the verdict of a report entitled “Possible Implications of Faulty U.S. Technical Intelligence” produced by a team of security and arms experts who met last month in Washington, as reported by McClatchy in mid January.

Click here to read the full article.

Refusing to be sidetracked by a few inconvenient details, like Kerry, Obama was eager to respond. Responding, that is, in the only way US administrations appear able to respond these days – with every problem jutting up like a nail that is in need of a good hammering down. The aerial bombing of Damascus would doubtless have started within days except that something completely unexpected then occurred – British MPs voting down the government. Following which, we saw another extraordinarily rapid change of circumstances as Russia persuaded the Syrian regime to entirely surrender its chemical weapons arsenal. A deal brokered by Sergei Lavrov meant that Kerry and Obama could at least save face. Thus the tensions between Russia and the West, which had been on the verge of snapping, eased a little. There was one less arsenal of WMDs in the world, and though a horrible civil war continued, at least the people of Syrian wouldn’t be subjected to the kinds of “shock and awe” we saw first over Baghdad and more latterly Tripoli and at Sirte.

With the removal of Syria’s WMDs, Obama salvaged a little dignity, but his veil of being the peacemaker, already wearing thin, had suddenly been ripped off altogether. Here is what John Pilger wrote last September, less than a month after the gas attack on Ghouta:

Under the “weak” Obama, militarism has risen perhaps as never before. With not a single tank on the White House lawn, a military coup has taken place in Washington. In 2008, while his liberal devotees dried their eyes, Obama accepted the entire Pentagon of his predecessor, George Bush: its wars and war crimes. As the constitution is replaced by an emerging police state, those who destroyed Iraq with shock and awe, piled up the rubble in Afghanistan and reduced Libya to a Hobbesian nightmare, are ascendant across the US administration. Behind their beribboned facade, more former US soldiers are killing themselves than are dying on battlefields. Last year 6,500 veterans took their own lives. Put out more flags.

The historian Norman Pollack calls this “liberal fascism”: “For goose-steppers substitute the seemingly more innocuous militarisation of the total culture. And for the bombastic leader, we have the reformer manqué, blithely at work, planning and executing assassination, smiling all the while.” Every Tuesday the “humanitarian” Obama personally oversees a worldwide terror network of drones that “bugsplat” people, their rescuers and mourners. In the west’s comfort zones, the first black leader of the land of slavery still feels good, as if his very existence represents a social advance, regardless of his trail of blood. This obeisance to a symbol has all but destroyed the US anti-war movement – Obama’s singular achievement.3

Click here to read the full article at John Pilger’s own website.

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Syria

The civil war in Syria is three years old. Millions have been displaced, thousands are dying each week, and there appears little end in sight to the bloody stalemate. It is, as we are frequently reminded, a humanitarian crisis. During the first round of the Geneva II summit, John Kerry said:

Now, lost in the daily reports of violence is the fact that this revolution did not begin as an armed resistance. This started peacefully. It was started by schoolboys in Daraa who are armed only with graffiti cans, citizens who were peacefully and legitimately calling for change. And they were met almost immediately with violence. When their parents came out to protest the arrest of the children, 120 people died. That was the beginning.

And tragically, the Assad regime answered peaceful demonstration after peaceful demonstration with ever-increasing force. In the three years since then, this conflict has now left more than 130,000 dead, and it’s hard to count accurately. We all know that. The fact is that these people have been killed by guns, by tanks, by artillery, by gas, by barrel bombs, by Scud missiles.

They’ve been killed by weapons almost exclusively of the magnitude not possessed by the opposition. Starvation has been used as a weapon of war. And most recently, we have seen horrific reports of systematic torture and execution of thousands of prisoners. This is an appalling assault, not only on human lives, but on human dignity and on every standard by which the international community tries to organize itself, recognizing the horrors of the humanitarian catastrophe that has unfolded, the destabilization of neighboring countries, and the endless exile of refugees.4

In short, Bashar Assad and the incumbent Syrian regime are solely responsible, Kerry says, whether directly or indirectly, for every death and all of the horror of the past three years. But how can this be true when a civil war is raging that involves at least three opposing sides? So Kerry’s version of events plays down the many atrocities carried out by a plethora ‘al-Qaeda affiliated’ factions. War crimes such as forced ‘suicide bombings’, throwing people from buildings, and very possibly including gas attacks like the one at Ras al-Ayn in the northern province of al-Hasakah that appear to have been launched by “rebel forces”.5 This is what Pulitzer Prize-winning investigative journalist Seymour Hersh wrote last December in the opening paragraph of an article entitled “Whose sarin?”:

Barack Obama did not tell the whole story this autumn when he tried to make the case that Bashar al-Assad was responsible for the chemical weapons attack near Damascus on 21 August. In some instances, he omitted important intelligence, and in others he presented assumptions as facts. Most significant, he failed to acknowledge something known to the US intelligence community: that the Syrian army is not the only party in the country’s civil war with access to sarin, the nerve agent that a UN study concluded – without assessing responsibility – had been used in the rocket attack. In the months before the attack, the American intelligence agencies produced a series of highly classified reports, culminating in a formal Operations Order – a planning document that precedes a ground invasion – citing evidence that the al-Nusra Front, a jihadi group affiliated with al-Qaida, had mastered the mechanics of creating sarin and was capable of manufacturing it in quantity. When the attack occurred al-Nusra should have been a suspect, but the administration cherry-picked intelligence to justify a strike against Assad.6

Click here to read Seymour Hersh’s full report.

Roaming across Syria there are gangs of fundamentalists who proudly upload footage of their own bloodlust including public beheadings and acts of cannibalism. But Kerry has nothing of note to say about this either. Not even when those same factions are known to be fighting against and murdering one another. Is the Syrian government also responsible when one arm of al-Qaeda is killing the other?

Nor does Kerry make any comment about al-Qaeda’s immediate backers at home in Qatar and Saudi Arabia, nor level some of the blame at Turkey who have been providing assistance by allowing many of these Jihadists to slip across into Syria in the first place. Instead, he blames Assad and the Syrian government for the very acts of terrorism they are fighting against, saying:

So just as there could be no place for the perpetrator of this violence, there could also be no place for the thousands of violent extremists who spread their hateful ideology and worsen the suffering of the Syrian people. And as we hear talk about terrorism today, make no mistake: It is the presence of the current intransigence within the existing government that makes this problem worse. That is creating a magnet for terrorists. And until a transition takes place, there is no prayer of reducing the increase of terrorism.

Kerry’s concern is entirely one-dimensional. He wants regime change. And he stresses this demand without any evident concern for what will very likely fill the power vacuum left behind. A catastrophe of the kind that followed in the wake of other instances of regime change, such as in Iraq (after the fall of the brutal dictatorship of Saddam Hussein) and Libya (with dictator Gaddafi ousted). Like Bush and the rest of the neo-con ramble, he also shows a casual disregard for international law which was set up, in part, to protect the sovereign right of nations. Immediate decapitation, Kerry says, is the only permissible solution:

Mutual consent, which is what has brought us here, for a transition government means that that government cannot be formed with someone that is objected to by one side or the other. That means that Bashar Assad will not be part of that transition government. There is no way – no way possible in the imagination – that the man who has led the brutal response to his own people could regain the legitimacy to govern.

Mark Twain famously remarked that “history doesn’t repeat, but it rhymes” and the recent history of US-backed regime change shows just how regular and tight the pattern of rhyming has now become. The governments of Afghanistan, Iraq and Libya were all dictatorships, of course, and all had extremely poor human rights records, but regime change did not bring salvation in the form of freedom and democracy, it instead unleashed perpetual war.

Syria is yet another dictatorship with its own extremely poor human rights record. Not that this comes as news to Washington. Back when Assad had been in favour, his government, just like Gaddafi’s, had usefully provided facilities for the torture of America’s own prisoners under the secret programme of “extraordinary rendition”:

Iran’s proxy Syria did torture on behalf of the United States. The most famous case involves Maher Arar, a Canadian citizen snatched in 2002 by the U.S. at John F. Kennedy International Airport before the CIA sent him to Syria under the mistaken impression he was a terrorist. In Syrian custody, Arar was “imprisoned for more than ten months in a tiny grave-like cell, beaten with cables, and threatened with electric shocks by the Syrian government,” [chief Open Society Foundation investigator, Amrit] Singh writes.

But it wasn’t just Arar. At least seven others were rendered to Syria. Among their destinations: a prison in west Damascus called the Palestine Branch, which features an area called “the Grave,” comprised of “individual cells that were roughly the size of coffins.” Syrian intelligence reportedly uses something called a “German Chair” to “stretch the spine.”7

America’s “black sites” are still open and the “extraordinary rendition” flights continued under Obama and, so far as we know, continue today. As for appeals to human rights, these reassurances are only for a public increasingly unwilling to go to war. In the ranks of the policymakers the discussion has been more strictly along these lines:

The Syrian rebels would be immeasurably weaker today without al-Qaeda in their ranks. By and large, Free Syrian Army (FSA) battalions are tired, divided, chaotic, and ineffective. Feeling abandoned by the West, rebel forces are increasingly demoralized as they square off with the Assad regime’s superior weaponry and professional army. Al-Qaeda fighters, however, may help improve morale. The influx of jihadis brings discipline, religious fervor, battle experience from Iraq, funding from Sunni sympathizers in the Gulf, and most importantly, deadly results. In short, the FSA needs al-Qaeda now.8

Taken from an article published by the Council on Foreign Relations back in August 2012.

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Uzbekistan

To put all of this into a bigger perspective, I think it is helpful to go back again to the story of Craig Murray. Today, Craig Murray is recognised as one of the foremost political bloggers and is a well-known human rights activist in Britain. A decade ago, however, he was battling against serious illness and also on the verge of being sacked as British ambassador to Uzbekistan. The story of how he came to finally lose his job in October 2004 is long on details but can be summed up in just a few paragraphs.

Murray was, by his own account “a reluctant whistleblower”. At first he tried to alert his superiors at the Foreign and Commonwealth Office (FCO) by sending confidential diplomatic telegrams (Americans call these ‘cables’) advising them that the Uzbek regime was involved in the widespread use of (what he later described as) “the most horrible forms of torture imaginable” against its opponents and including the torture of children in front of their parents.9

In the first telegram sent on 16th September 2002, Murray had written:

President Karimov has admitted to 100 executions a year but human rights groups believe there are more. Added to this, all opposition parties remain banned (the President got a 98% vote) and the Internet is strictly controlled. All Internet providers must go through a single government server and access is barred to many sites including all dissident and opposition sites and much international media (including, ironically, waronterrorism.com). This is in essence still a totalitarian state: there is far less freedom than still prevails, for example, in Mugabe’s Zimbabwe. A Movement for Democratic Change or any judicial independence would be impossible here.

Murray was also keen to bring to the attention of the Foreign and Commonwealth Office the dangers of trusting Uzbek “intelligence”, which he knew to be wholly unreliable. But, a month later, to his surprise, there was still no reply or even any acknowledgment from the FCO. Murray then decided to deliver a speech to a human rights conference hosted by US-based NGO Freedom House in Tashkent (the capital of Uzbekistan) in which he asserted that “Uzbekistan is not a functioning democracy”. To support this claim, he drew attention to the boiling to death of Muzafar Avazov, which he said was “not an isolated incident” (The horrific method of Avazov’s murder had been independently verified by a leading pathologist who examined the photographic evidence).

He then sent a second telegram on March 18th 2003, in which he repeated his earlier concerns:

Democracy and human rights are, despite their protestations to the contrary, in practice a long way down the US agenda here. Aid this year will be slightly less, but there is no intention to introduce any meaningful conditionality. Nobody can believe this level of aid – more than US aid to all of West Africa – is related to comparative developmental need as opposed to political support for Karimov. While the US makes token and low-level references to human rights to appease domestic opinion, they view Karimov’s vicious regime as a bastion against fundamentalism. He – and they – are in fact creating fundamentalism. When the US gives this much support to a regime that tortures people to death for having a beard or praying five times a day, is it any surprise that Muslims come to hate the West?

Again, Murray says that he received no written reply. In the third and most damning of these telegrams which is dated July 4th, Murray wrote:

In the period December 2002 to March 2003 I raised several times the issue of intelligence material from the Uzbek security services which was obtained under torture and passed to us via the CIA. I queried the legality, efficacy and morality of the practice.

I was summoned to the UK for a meeting on 8 March 2003. Michael Wood gave his legal opinion that it was not illegal to obtain and to use intelligence acquired by torture. He said the only legal limitation on its use was that it could not be used in legal proceedings, under Article 15 of the UN Convention on Torture. […]

The torture record of the Uzbek security services could hardly be more widely known. Plainly there are, at the very least, reasonable grounds for believing the material is obtained under torture. There is helpful guidance at Article 3 of the UN Convention;

“The competent authorities shall take into account all relevant considerations including, where applicable, the existence in the state concerned of a consistent pattern of gross, flagrant or mass violations of human rights.” While this article forbids extradition or deportation to Uzbekistan, it is the right test for the present question also.

On the usefulness of the material obtained, this is irrelevant. Article 2 of the Convention, to which we are a party, could not be plainer: “No exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political instability or any other public emergency, may be invoked as a justification of torture.”

Nonetheless, I repeat that this material is useless – we are selling our souls for dross. It is in fact positively harmful. It is designed to give the message the Uzbeks want the West to hear. It exaggerates the role, size, organisation and activity of the IMU and its links with Al Qaida. The aim is to convince the West that the Uzbeks are a vital cog against a common foe, that they should keep the assistance, especially military assistance, coming, and that they should mute the international criticism on human rights and economic reform.

Click here to read full versions of Craig Murray’s leaked diplomatic telegrams to FCO.

Murray says he was worried by the reliance of both the CIA and MI6 on Uzbek “intelligence”. He would later argue that both agencies were not only complicit in receiving confessions based on torture, but, in consequence, had been willingly misled when it came to assessing real levels of al-Qaeda terrorism in the country. He says that it came as a tremendous shock when he slowly realised that neither the civil service nor senior British politicians such as then-Foreign Secretary Jack Straw had any interest in these documented allegations against the Karimov regime, and so it was only in the last resort that he had decided to publicly release the cables onto the internet.

On the basis of largely cooked-up accusations of inappropriate personal behaviour, Murray was then summarily dismissed. But, a little less than five years later, on April 28th 2009, Murray was at last allowed to present evidence of UK complicity in torture before the Parliamentary Joint Committee on Human Rights. He wrote on his blog:

As I prepare for my evidence session before the Parliamentary Joint Committee on Human Rights on 28 April, I was looking back for the evidence I gave to the European Parliament on extraordinary rendition. Unfortunately it seems that no transcript was made of the committee questioning me (unless anyone who knows the system there better than I can come up with one) but rather a kind of precis made of my evidence as a “working document”.

http://www.europarl.europa.eu/comparl/tempcom/tdip/working_docs/pe374341_en.pdf

It also helpfully published the supporting documentation I gave.

What still surprises me is that, after I gave my evidence, I was mobbed by media, gave numerous television interviews, and was headline news all over Europe. Except in the UK where there was no mention of it at all. I was pondering this over the weekend as I read a very large number of commentary pieces, in every serious newspaper, on the apparent complicity in torture and what enquiries into it may find.

I have been answering the question of the moment – was there a policy of torture – for the last five years, with eye-witness testimony backed up with documentary proof. Yet I appear not to exist to the media. Will my testimony to the JCHR also be simply ignored?

Click here to read Murray’s full post from March 31st 2009.

Now, fast-forward to just two years ago when on March 12th 2012, Murray posted another short article with embedded videos showing a speech entitled “Realism or Hypocrisy? – Western Diplomacy and Freedom of Expression” given to the Institute of Cultural Diplomacy in Berlin. Murray writing that:

It proved useful in forcing me to pull together an overview of my current thoughts on events of the last year or so.

Intrigued, I tried to play the videos, but instead this notice popped up: “this video has been removed by the user”. Naturally, my intrigue was piqued a little more.

Two days on, and Craig Murray has posted yet another short article entitled “Beyond Irony”. It reads as follows:

The videos of both my speech and my interview at the Berlin Freedom of Expression Forum have been taken down. This is not an accident. All the other speeches and all the other interviews are still there. Both series have been renumbered to hide the fact that something has been removed.

Given that my talk was about censorship and exclusion of whistleblowers, and the lack of genuine freedom in western societies to explain an alternative policy narrative, it is hard for words adequately to describe the apparent behaviour here. The full title of the event was “Censorship and Freedom in Traditional and New Media: The Revolution of Media as a Tool of Freedom of Expression”.

I have written to the organisers to ask what is happening. It is conceivable there is an innocent explanation, though the removal from different places of both the speech and the interview seems hard to explain. Once I hear back from the Institute for Cultural Diplomacy I will let you know. I do not intend to let this lie.

The video then reappeared and it is available here (and also embedded below). If you’re looking for an inside perspective on how diplomacy actually works in ‘the real world’ then you’d be hard pressed to find much better. I can’t help noticing, however, that one part of the presentation has been snipped. Has Murray’s full statement been censored? Here is the video as it now appears:

There are a number of statements in Murray’s presentation that remain very pertinent to the situation we find almost two years later, and so in efforts to highlight these points, I have made my own transcript of the relevant parts. Clarification of his own reasons for becoming a whistleblower are available in a footnote10 and below you can read selected passages that convey his frustration at the abysmal cynicism of western realpolitik:

Western governments actually don’t really care about this human rights stuff. They pretend they care about the human rights stuff because there’s a constituency at home that cares about the human rights stuff. If you have somebody like me who tries to take them at their word in promoting human rights in a country of which they have other interests, that person becomes a threat to the state and has to be removed, as a threat in any way.

Bahrain: we have this extraordinary situation where western support for the Arab Spring evaporates when it comes to Bahrain and the Saudi invasion of Bahrain. I had a friend in a diplomatic mission at the United Nations in New York. You may recall that the Americans were pretending in public to be against the bombing of Libya right up until the last moment – a lot of propaganda was put out saying the American military were against it that they were not prepared – all the time that propaganda was put out they were moving military assets into place to do it. I had a friend in New York who phoned me before either the UNSCR 19791973, while those resolutions were under discussion at the United Nations, and before the invasion of [Libya]… This friend of mine at the United Nations phoned me and he said that the Americans are cutting a deal whereby they will okay the Saudis to invade Bahrain in exchange for an Arab League call for Nato to go into Libya. That’s how cynical realpolitik is. [from 25:30 mins]

Western policy is driven by very hard financial interests. The interests of a very elite bunch of people, who control a great deal, and indirectly control the media narrative that surrounds the explanation the public is given as to why these wars [and] these attacks on human rights happen. To go back to that intelligence in Uzbekistan, there has to be a reason why you’re supporting the Uzbek dictatorship with a lot of money and training for their armed forces. This is one of the worst dictatorships in the world. How do you justify giving that dictatorship support? Well, you justify it as part of a war on terror and that you are backing them against al-Qaeda. Except that there is no al-Qaeda in Uzbekistan. There’s virtually no al-Qaeda presence in Central Asia – there’s certainly none in Uzbekistan. [from 31:55 mins]

I’m afraid to say that in both the United States and the United Kingdom, the analysis of intelligence – which is something that I have spent quite a lot of my career doing (and which I feel I was very good) – had ceased to be a genuine intellectual exercise in determining the facts, and had become instead, a process of providing lies to government. That government wanted to publish. Making the world as it was. The government wanted to support Karimov for reasons of oil and gas and the war in Afghanistan. There needed to be a reason for supporting him, therefore, there needed to be al-Qaeda activity in Central Asia, where it did not in fact exist. And the media is complicit in this building of lies. [from 38:30 mins]

A decade has passed since Murray blew the whistle on Karimov, yet he remains both President of Uzbekistan and an American ally. His record in office during the intervening period speaks volumes. In May 2005, his authorities blocked all the exits from Babur Square, kettling the crowd before snipers and police opened fire on thousands of protesters. It is estimated that between 400–500 people were killed in cold blood. Ikrom Yakubov, a former major in the Uzbek National Security Service (SNB), said that Karimov had personally ordered massacres. He also accused the Karimov regime of “pursuing a policy of ‘false flag’ terrorism by orchestrating attacks and then blaming them on Islamist militants in an effort to demonize the opposition and win foreign support”, as well as “engineering a plane crash in 2004 that killed United Nations official Richard Conroy.”11

Nevertheless, in September 2011 Obama phoned Karimov to congratulate him on Uzbekistan’s twenty years of independence (Karimov is the nation’s first and only president) “and the two leaders pledged to continue working to build broad cooperation between our two countries.”12

Click here to read the full article about Ikrom Yakubov on Radio Free Europe/Radio Liberty website.

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Back to Syria

On the eve of the Geneva II talks, a report (which Kerry alluded to) was released establishing “compelling evidence of the systematic murder of some 11,000 detainees through starvation, beatings and torture, including the gouging of eyes and electrocution – and all that in just one part of Syria, with the strong suspicion that more such killing will have taken place elsewhere.” Here is part of Jonathan Freedland’s assessment of the evidence published writing for the Guardian on the same day [Jan 21st]:

The source of this evidence is hard to fault: a former photographer for the Syrian regime who has since defected [a source known only by the codename Caesar]. The report’s authors, who interviewed the source for three days, have no obvious axe to grind and are eminently credible: they served as prosecutors at the criminal tribunals on Sierra Leone [&] the former Yugoslavia. Those facts will surely offset any misgivings over the report’s origins: it was commissioned and funded by the government of Qatar, a player in the Syrian conflict on the anti-government side. The evidence is too overwhelming, and the reputations of those who have assessed it too strong, for this report to be dismissed as Qatari propaganda (though some will try).13

Others, however, were more questioning. Here, for instance, is veteran Middle East correspondent Robert Fisk writing in The Independent also on Jan 21st:

The pictures are horrific, the torture details revolting, the numbers terrifying. And the integrity of the three former prosecutors who have effectively accused the Syrian government of war crimes, are without blemish. Shrivelled, blood-spattered corpses provide unstoppable evidence of regime cruelty – just as the videotapes of Syrian rebel executions tell us what kind of Syria may soon exist if the insurrection against Bashar al-Assad succeeds. […]

But we should be asking a lot more questions than we have been asking about this portrait gallery of pain, unleashed only hours before an international conference in Switzerland in which we in the West – but perhaps not Qatar – hope to end the civil war in Syria.

How long, for example, have the Qatari authorities been in possession of this terrible eye-witness material? A couple of weeks, just enough time to rustle up the lawyers for the prosecution? Or a couple of months? Or six months? And, more to the point, why now? For it would be difficult to imagine a better way for Qatar – whose royal family viscerally hates Bashar al-Assad – to destroy his hopes of a future role in Syria, even in a ‘transitional’ Syrian government, than by releasing these snapshots of terror just before the Swiss talks.

Fisk’s article is subtitled “One is reminded of Nazi Germany”, but not for reasons that are immediately apparent. He continues:

Indeed, one is reminded – in terms of political purpose rather than historical parallel, of course — of Nazi Germany’s disclosure of the mass graves of 22,000 Polish officers and civilians murdered by the Soviet secret police in 1940 at Katyn, in that part of Russia newly occupied by German troops. The Nazis claimed the Soviets were responsible – in the hope that this would divide Stalin’s alliance with America and Britain. The Allies denounced the Nazis for the massacre – although it was indeed committed by the Soviets. Does Qatar now hope to divide Syria’s alliance with Russia and Iran with similar evidence of Syrian government mass murder?14

Such a strategy is unlikely to work, of course, since Iran and Russia have their own interests to defend – I will touch on this later. But Fisk is concerned not only by the involvement of Qatar as backers of the report, he is also worried about the role of solicitors Carter Ruck “– may their name be praised”. He was not alone. Here is Craig Murray writing again on his own blog:

I do not doubt at all that atrocities have been committed and are being committed by the Assad regime. It is a very unpleasant regime indeed. The fact that atrocities are also being committed by various rebel groups does not make Syrian government atrocities any better.

But whether 11,000 people really were murdered in a single detainee camp I am unsure. What I do know is that the BBC presentation of today’s report has been a disgrace. The report was commissioned by the government of Qatar who commissioned Carter Ruck to do it. Both those organisations are infamous suppressors of free speech. What is reprehensible is that the BBC are presenting the report as though it were produced by neutral experts, whereas the opposite is the case. It is produced not by anti torture campaigners or by human rights activists, but by lawyers who are doing it purely and simply because they are being paid to do it.

The BBC are showing enormous deference to Sir Desmond De Silva, who is introduced as a former UN war crimes prosecutor. He is indeed that, but it is not the capacity in which he is now acting. He is acting as a barrister in private practice. Before he was a UN prosecutor, he was for decades a criminal defence lawyer and has defended many murderers. He has since acted to suppress the truth being published about many celebrities, including John Terry.

If the Assad regime and not the government of Qatar had instructed him and paid him, he would now be on our screens arguing the opposite case to that he is putting. That is his job. He probably regards that as not reprehensible. What is reprehensible is that the BBC do not make it plain, but introduce him as a UN war crimes prosecutor as though he were acting in that capacity or out of concern for human rights. I can find no evidence of his having an especial love for human rights in the abstract, when he is not being paid for it. He produced an official UK government report into the murder of Pat Finucane, a murder organised by British authorities, which Pat Finucane’s widow described as a “sham”. He was also put in charge of quietly sweeping the Israeli murders on the Gaza flotilla under the carpet at the UN.

The question any decent journalist should be asking him is “Sir Desmond De Silva, how much did the government of Qatar pay you for your part in preparing this report? How much did it pay the other experts? Does your fee from the Government of Qatar include this TV interview, or are you charging separately for your time in giving this interview? In short how much are you being paid to say this?”

Click here to read Craig Murray’s complete article.

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George Soros and the “colour revolutions”

Little more than a decade ago there were a series of “colour revolutions” within the former Soviet Union and across its former Eastern Bloc satellites. The ‘Bulldozer Revolution’ in 2000 had already led to the overthrow of Slobodan Milošević in Yugoslavia, and soon afterwards the Rose Revolution of Georgia (Nov 2003), would force the overthrow of Eduard Shevardnadze, whilst the less remembered Tulip Revolution (also sometimes called the “Pink Revolution” of Spring 2005) led to the downfall of President Askar Akayev in Kyrgyzstan. Then, in Belarus, the following Spring (March 2006), President Alexander Lukashenko clung on to power after the failed Jeans Revolution – denim jeans having been adopted as a symbol of freedom (the reason for this, if not already apparent, will become so after the next paragraph).

During the same period we also witnessed what became perhaps the best-known of all these post-Soviet era uprisings, the Orange Revolution in Ukraine, which started with allegations of vote rigging in the second round of the 2004 Ukrainian presidential election. A peaceful campaign of strikes and civil disobedience followed helping to force a reelection.

At the time of the Orange Revolution, Ian Traynor reported in the Guardian as follows:

With their websites and stickers, their pranks and slogans aimed at banishing widespread fear of a corrupt regime, the democracy guerrillas of the Ukrainian Pora youth movement have already notched up a famous victory – whatever the outcome of the dangerous stand-off in Kiev.

Ukraine, traditionally passive in its politics, has been mobilised by the young democracy activists and will never be the same again.

The outcome in fact was that leader of the opposition Viktor Yushchenko was declared President, defeating the man who now holds the office Viktor Yanukovych. But what is striking about the Guardian article is not only how candid Traynor is when it comes who was really backing the Ukrainian protests but his discovery that all of the “colour revolutions” had been similarly orchestrated:

But while the gains of the orange-bedecked “chestnut revolution” are Ukraine’s, the campaign is an American creation, a sophisticated and brilliantly conceived exercise in western branding and mass marketing that, in four countries in four years, has been used to try to salvage rigged elections and topple unsavoury regimes.

Funded and organised by the US government, deploying US consultancies, pollsters, diplomats, the two big American parties and US non-government organisations, the campaign was first used in Europe in Belgrade in 2000 to beat Slobodan Milosevic at the ballot box.

Richard Miles, the US ambassador in Belgrade, played a key role. And by last year, as US ambassador in Tbilisi, he repeated the trick in Georgia, coaching Mikhail Saakashvili in how to bring down Eduard Shevardnadze.

Ten months after the success in Belgrade, the US ambassador in Minsk, Michael Kozak, a veteran of similar operations in central America, notably in Nicaragua, organised a near identical campaign to try to defeat the Belarus hardman, Alexander Lukashenko.

That one failed. “There will be no Kostunica in Belarus,” the Belarus president declared, referring to the victory in Belgrade.

And who more precisely was behind it all? Ian Traynor’s article even provides a list of credits:

The Democratic party’s National Democratic Institute, the Republican party’s International Republican Institute, the US state department and USAid are the main agencies involved in these grassroots campaigns as well as the Freedom House NGO and billionaire George Soros’s open society institute.15

Click here to read the full Guardian article entitled “US campaign behind turmoil in Kiev”.

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Ukraine

On January 30th, Democracy Now! featured a debate about the latest “Euromaidan” uprising in Ukraine, posing the question: “Is Ukraine’s Opposition a Democratic Movement or a Force of Right-Wing Extremism?” To answer this question they invited two guests: Stephen Cohen, professor emeritus of Russian studies and politics at New York University and Princeton University; and Anton Shekhovtsov, a Ukrainian citizen and University College London researcher. Here is a sample of what Cohen and Shekhovtsov had to say to each other:

Anton Shekhovtsov: I wrote the piece to highlight a very dangerous trend, in my opinion, is that many people in the West buy into Russian propaganda which is saying that Euromaidan is infiltrated by the neo-Nazis and anti-Semites. And this is completely untrue. There is a far-right element in the Euromaidan protests, but it is a minor element. And Euromaidan protest is basically a multicultural, democratic movement which is trying to build a new Ukraine, a democratic Ukraine. And sometimes, by the name “far right,” there goes Ukrainian nationalism, and Ukrainian nationalism has—its main thrust is building of a truly independent Ukraine, a Ukraine which would be a national democratic state and not a colony of Russia, as Ukrainian nationalists think Ukraine is.

Stephen Cohen: Well, it’s not what Anton said. Where to begin? Can we begin at the beginning? What’s happening in Ukraine, what’s been unfolding since November in the streets, is probably the single most important international story underway today. It may impact for a very long time the geopolitics of Europe, Russia, American-Russian relations, and a lot more. At the same time, media coverage of this story, particularly in the United States, has been exceedingly misleading, very close to what Anton just told you. I would characterize Anton’s characterization, to be as polite as I can, as half-true. But a half-truth is an untruth.

The realities are, there is no “the Ukraine.” All this talk about Ukraine is on the front line of democracy—there are at least two Ukraines. One tilts toward Poland and Lithuania, the West, the European Union; the other toward Russia. This is not my notion. This is what every public opinion poll has told us since this crisis unfolded, that about 40 percent of Ukrainians want to go west, 40 percent want to stay with Russia, and, as usually true in these polls, 20 percent just don’t know or they’re not sure.

Who precipitated this crisis? It was the European Union, in this sense. It gave the Ukrainian government, which, by the way, is a democratically elected government—if you overthrow this government, just like they overthrew Morsi in Egypt, you’re dealing a serious blow to democracy. So if the crowd manages to essentially carry out a coup d’état from the streets, that’s what democracy is not about. But here’s what the European Union did back in November. It told the government of Ukraine, “If you want to sign an economic relationship with us, you cannot sign one with Russia.” Why not? Putin has said, “Why don’t the three of us have an arrangement? We’ll help Ukraine. The West will help Ukraine.” The chancellor of Germany, Merkel, at first thought that was a good idea, but she backed down for various political reasons. So, essentially, Ukraine was given an ultimatum: sign the EU economic agreement or else.

Now, what was that agreement? It would have been an economic catastrophe for Ukraine. I’m not talking about the intellectuals or the people who are well placed, about ordinary Ukrainians. The Ukrainian economy is on the brink of a meltdown. It needed billions of dollars. What did the European Union offer them? The same austerity policies that are ravaging Europe, and nothing more—$600 million. It needed billions and billions.

There’s one other thing. If you read the protocols of the European offer to Ukraine, which has been interpreted in the West as just about civilizational change, escaping Russia, economics, democracy, there is a big clause on military cooperation. In effect, by signing this, Ukraine would have had to abide by NATO’s military policies. What would that mean? That would mean drawing a new Cold War line, which used to be in Berlin, right through the heart of Slavic civilization, on Russia’s borders. So that’s where we’re at to now.

One other point: These right-wing people, whom Anton thinks are not significant, all reports—and I don’t know when he was in Ukraine, maybe it was long ago and things have gone—but the reports that are coming out of Ukraine are the following. One, the moderates—that’s the former heavyweight champion boxer, Vitali Klitschko, and others—have lost control of the street. They’ve asked the people who have been attacking the police with Molotov cocktails, and to vacate the buildings they’ve occupied, to stop. And the street will not stop, partly because—I’d say largely because—the street in Kiev is now controlled by these right-wing extremists. And that extremism has spread to western Ukraine, where these people are occupying government buildings. So, in fact, you have a political civil war underway.

What is the face of these people, this right wing? A, they hate Europe as much as they hate Russia. Their official statement is: Europe is homosexuals, Jews and the decay of the Ukrainian state. They want nothing to do with Europe. They want nothing to do with Russia. I’m talking about this—it’s not a fringe, but this very right-wing thing. What does their political activity include? It includes writing on buildings in western Ukraine, “Jews live here.” That’s exactly what the Nazis wrote on the homes of Jews when they occupied Ukraine. A priest who represents part of the political movement in western Ukraine—Putin quoted this, but it doesn’t make it false. It doesn’t make it false; it’s been verified. A western Ukrainian priest said, “We, Ukraine, will not be governed by Negroes, Jews or Russians.” So, these people have now come to the fore.

Anton Shekhovtsov: Yes. So, this is basically what I said, as I called as a distortion in the Western media. I don’t know if Professor Cohen have been in Ukraine. I’ve been to Ukraine just a few days ago. I haven’t seen that the right-wingers have taken control of the streets. The streets are controlled by Euromaidan, which is ideologically very different. There is a right-wing element, but this is the element which is only a minor component of Euromaidan. And if you remember the Solidarity movement in the ’80s in Poland, it also comprised some right-wing elements, but in the end they built a democratic national—national democratic Poland.

As for the neo-Nazis and anti-Semites in western Ukraine, there are some, but at the same time, if you talk to them, if you interview them, and if you read their demands, you will not find any discrimination laws among their demands. What they demand is the national democratic state, independent from Russia. Even if they say that they are against the European Union, they at the same time support the pro-European protests. And this is partly what Euromaidan is about.

And then, again, there are many false reports about the beatings of representatives of national minorities in Ukraine. And mostly these reports are all false. They are being spread by Russian-backed propagandists, like Viktor Medvedchuk, leader of the pro-Eurasian, pro-Russian party, Ukrainski Vybir, Ukrainian Choice. So, these people, they’re trying to distort the image of Euromaidan and picture it as something very violent, as something very right-wing, although the right-wing element, as I said, is a minor element at Euromaidan.

Stephen Cohen: Well, that’s Anton’s position. I mean, Anton represents—at least his description of the situation—the mainstream American media political view of what’s going on in Ukraine. And when I say “mainstream,” I mean it extends from the right wing in America to MSNBC, to the so-called liberals and progressives, to Bill Maher, who did this on his show the other night. There’s no alternative voice in America, except what I’m trying to say to you today. It’s wrong—it’s wrong factually, it’s wrong in terms of policy—for [John] McCain to go, as he’s done in other countries. He once said, “We’re all Georgians.” Now he’s saying, “We’re all Ukrainians.” If he understands the situation in Ukraine—and he may not—then he’s being reckless.

But a true understanding of Ukraine begins with the fact that there are at least two Ukraines, two legitimate Ukraines, culturally, politically, ethnically, economically, culturally. This isn’t Putin’s fault. This isn’t Yanukovych, the president of Ukraine’s fault. It’s either God’s fault, or it’s history’s fault. This is what came down through the centuries. The situation has been explosive since the end of the Soviet Union 22 years ago. When Western politicians go there, they’re playing with fire, metaphorically, and now they have real fire. […]

I think that the vilification of Putin in this country, demonization, is the worst press coverage by the American media of Russia that I’ve seen in my 40 years of studying Russia and contributing to the media. It’s simply almost insane. This idea that he’s a thug and that explains everything, passes for analysis in America today.

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

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Zbigniew Brzezinski’s “Grand Chessboard”

Ukraine is, as Stephen Cohen says, a very divided nation. The western half, which is Ukrainian speaking, looks towards Europe; the Eastern half speaks Russian and prefers to keep its distance from the West. The opposition has been mostly portrayed as pro-EU (even when much of the sentiment is actually anti-Russia) and thus pro-democracy, which is a deliberate and calculated over-simplification.

Unfortunately for the people of Ukraine, the location of their homeland is key to winning what Arthur Conolly, an intelligence officer and captain of the British East India Company’s Sixth Bengal Light Cavalry, once called “The Great Game”, and what Zbigniew Brzezinski nearly two centuries later alluded to as “The Grand Chessboard”. Brzezinski helpfully subtitling his 1998 book of the same name, “American Primacy and Its Geostrategic Imperatives”. In other words, the very same neo-con “Pax Americana” but by another name, with Brzezinski’s preferred approach more cloak-and-dagger than the full frontal assault of the PNAC crazies.

The major strategy of this updated quest for global hegemony (“The New Great Game” as some have called it), is again little different than during the days of Arthur Conolly: to seize control of Eurasia. And just as ‘the game’ itself hasn’t significantly altered in two centuries nor have the main competitors changed much either. Back in Conolly’s time, it was Britain in one corner against Russia in the other; nowadays America sits in for the UK.

In this pursuit of global dominion, the Ukraine is a vital stronghold. Firstly, it is located approximately at the hub of the Eurasian landmass. But additionally, Ukraine currently provides Russia with access to the Black Sea; the principal base of Russia’s Black Sea Fleet being at Sevastopol – likewise, in Syria, the Russian fleet has its naval base at Tartus ensuring access to the Eastern Mediterranean. So capturing Ukraine weakens Russia militarily too, and would help in another way, therefore, to edge the world closer to Brzezinski’s stated goal of “American primacy”.

It is not by chance that Sevastopol, the second largest port in Ukraine, is located on one of the most well-known peninsulas in the world; that of the Crimea. A tongue of land jutting into the Black Sea and, like the rock of Gibraltar, of huge strategic importance. And no accident that the Crimea shares its name with an even more famous war. A war against the Russians between the years 1853–56 that is remembered, in part, for the real humanitarian courage of nurses like Florence Nightingale, but mostly because of gung-ho military campaigns such as the Battle of Balaclava (October 25th 1854) which featured that suicidally reckless charge of the Light Brigade. Old-time military madmen commanding the six hundred to ride “into the valley of Death.”16

Conolly didn’t live to hear about the shambolic pawn sacrifice at Balaklava; part of a failed attempt to capture the port and fortress of Sevastopol, which was already Russia’s principal naval base on the Black Sea. Identified as a British agent, he had been executed a decade before – beheaded in a square in Bukhara, Uzbekistan. So Conolly was himself a victim of the Great Game, just as were more innocent and forgotten thousands, losing their lives in campaign after campaign, of which the Crimean War was one brief episode. And the scars of this centuries long face-off between empires have never healed, instead the wounds are routinely reopened. Indeed, that earlier age of imperialism never ended but has skilfully reinvented itself: the significant difference between old imperialism and more swanky neo-imperialism being one of image. In the modern world running up your flag above a defeated territory is no way to win respect or curry favour whether at home or abroad.

Incidentally, Brzezinski was one of the attendees at the recent 50th Munich Security Conference (January 31st –February 2nd). Other guests included John McCain, James Clapper, Henry Kissinger, the godfather of the neo-cons, and Tony Blair (what rogues gallery would be complete without him). One of the newcomers to this annual meeting was Vitali Klitschko, another was Arseniy Yatsenyuk. Here is a report about what they were discussing:

The government has gone against what Ukrainians want, Klitschko said before the Munich Security Conference, adding: “There is no victory without a fight [and] we are going to fight.”

The former world boxing champion turned opposition politician also said government threats would not intimidate his side, which has Western backing. “Democratic powers won’t let themselves be frightened,” he said.

Klitschko called for a return to the country’s 2004 constitution, which would sharply curtail the president’s power, while also demanding the government release critics and hold elections as soon as possible.

Opposition leader Arseniy Yatsenyuk also addressed the conference on Saturday, accusing the Ukraine government of preparing for a state of emergency by readying its military. “A military intervention is an option for this government,” Yatsenyuk said.

Also at the gathering was John Kerry. This is what Kerry had to say about the Ukrainian protests:

Earlier on Saturday, US Secretary of State John Kerry reaffirmed Western backing for the Ukrainian opposition.

“Nowhere is the fight for a democratic, European future more important today than in Ukraine,” he said. “The United States and EU stand with the people of Ukraine.”

So does this mean that the US are banking on Klitschko becoming President of the Ukraine? Or would they prefer Yatsenyuk? Well, they say that a week is a long time in geopolitics…

In a leaked conversation posted on YouTube, the state department official Victoria Nuland revealed the White House’s frustrations at Europe‘s hesitant policy towards pro-democracy protests in Ukraine, which erupted late last year. Nuland was talking to the US ambassador to Ukraine, Geoffrey Pyatt.

So begins an article in Friday’s [Feb 7th] Guardian, which continues:

In the tapes, Nuland and Pyatt discuss the upheavals in Ukraine, and Yanukovych’s offer last month to make the opposition leader Arseniy Yatsenyuk the new prime minister and Vitali Klitschko deputy prime minister. Both men turned the offer down.

Nuland, who in December went to Independence Square in Kiev in a sign of support for the demonstrators, adds that she has also been told that the UN chief, Ban Ki-moon, is about to appoint a former Dutch ambassador to Kiev, Robert Serry, as his representative to Ukraine.

“That would be great I think to help glue this thing and have the UN glue it and you know, fuck the EU,” she says, in an apparent reference to differences over their policies.

“We’ve got to do something to make it stick together, because you can be pretty sure that if it does start to gain altitude the Russians will be working behind the scenes to try to torpedo it,” Pyatt replies.

In the phone call, Nuland suggests that Klitschko, the former world champion boxer, is not yet suited to take a major government role, in contrast to Yatsenyuk.

“I don’t think Klitsch should go into the government,” she apparently said.

“I think Yats is the guy who’s got the economic experience, he’s got the governing experience,” she adds.17 [bold emphasis added]

Which is how it really works (behind closed doors). Those in Washington busily trying to reorder the world into their own version of what they will then sell to us as a “Pax Americana”. Under the new imperialism, the duty falling on state department officials like Victoria Nuland to carry the white man’s burden. Making the big decisions on who should be appointed to govern the overseas dependencies.

*

And back once more to Syria

All of the post-9/11 wars have brought chaos and greater despair, but sadly this repeated failure provides little disincentive to the movers and shakers: those like Brzezinski and Kissinger (with Soros generally somewhere in the background), and a little lower in the pecking order, those like McCain and Kerry. Because their constant objective is really only to expand the American empire, or if that cannot be achieved, then to undermine the position of their main rivals – historically, Russia has always been the major opposing power, and remains so today, so Russian interests are a primary target.

The wars in any case satisfy two more immediate objectives, which are racketeering and piracy. Racketeering, since there are huge profits from insider deals on armaments and military accessories – again, nothing new in this, as Gen. Smedley Butler eloquently detailed in his 1935 pamphlet “War is a Racket”; and piracy, since the goal of each new adventure is to seize resources – first and foremost the energy resources, but happy to grab whatever other valuable assets and resources are available too.

In Syria, as in Afghanistan, Iraq and in Libya already, the gravest danger is that another war without end between sects and gangs has been unleashed. Warlords stealing territories and then battling against neighbouring warlords. The country torn to shreds by factional infighting. And the unspeakable truth is that the neo-imperialist agenda is more often helped by such schisms. Divide and conquer always the preferred way to rule, and failed states are the end product of our ongoing wars, in part, because failed states are so much riper for plundering.

In his last Geneva II speech, Kerry went straight for the emotional jugular. The civil war is terrible, Assad is to blame, he must go and then everything will be better again. But if and when Assad is run to ground and the fanatics of al-Qaeda are victorious, they will never sit down peacefully with the pro-democracy moderates. These “rebels” didn’t join the fight just for a share in Syria’s democratic future. They came on a holy mission of transforming Syria into one emirate of a greater caliphate ruled under hardline Sharia law. And Syria is now overrun by Jihadists, which means, unless Kerry is truly a fool, that he perfectly well understands the probable outcome of what he unflinchingly demands. Instead, real diplomacy with concessions made by all sides (al-Qaeda excluded) is the only hope left for Syria. As Geneva II begins a second round of talks, this hope rests with Kerry consenting to a more flexible and conciliatory way ahead.

*

Additional: Back to Ukraine

Flanked by street-sized poster adverts for Exxon Mobil and Chevron, Victoria Nuland spoke late last year [Dec 13th] to the “US-Ukraine Foundation” calling on the Ukraine to accept what she described as the “necessary” IMF reforms:

“The reforms that the IMF insists on are necessary for the long term economic health of the country. A new deal with the IMF would also send a positive signal to private markets, and would increase foreign direct investment that is so urgently needed in Ukraine. Signing the Association Agreement with the EU would also put the Ukraine on a path to strengthening the sort of stable and predictable business environment that investors require. There is no other path that would bring Ukraine back to long term political stability and economic growth.” [from 5 mins]

In other words, welcome to the EU club – and get in line behind Greece, Spain, Portugal, Ireland and Italy for a strong dose of IMF shock therapy.

Nuland also proudly announced that the United States had spent “over five billion dollars to assist” the country:

Since Ukraine’s independence in 1991, the United States has supported Ukrainians as they build democratic skills and institutions, as the promote civic participation and good governance, all of which are preconditions for Ukraine to achieve its European aspirations. We’ve invested over five billion dollars to assist Ukraine in these and other goals that will ensure a secure and prosperous and democratic Ukraine. [from 7:30 mins]

Not that the US have been alone in lavishing their money on Ukraine. The Chinese have also been investing heavily since the financial crisis began, buying into everything from agriculture to railways, and of course, back in mid-December, the Russians were busy brokering their own bailout deal:

Russia lavished Ukraine with a bailout package worth at least $20 billion Tuesday [Dec 17th], trumping the West in a Cold War-tinged struggle that keeps the former Soviet republic in Moscow’s orbit.

Announced after talks in the Kremlin between Russian President Vladimir Putin and his Ukrainian counterpart Viktor Yanukovych on Tuesday, the deal gives Ukraine loans and cheaper natural-gas supplies.

It appears to be substantially larger and the terms less restrictive than the aid the West had been offering to entice Ukraine to sign the EU’s trade-and-political accord. Russian officials said the first $3 billion in credits could be released within days.

“Ukraine’s trade with Russia makes it impossible for us to act in any other way,” Mr. Yanukovych said, referring to the deep economic links between the two countries. “There is no alternative to this.”

Hardly surprisingly, the pro-EU (and anti-Russia) protesters disagreed. The same Wall Street Journal article reminding us:

Those demonstrators—and Ukraine’s opposition—were livid at the news of the deal with Moscow on Tuesday.

“He has given up Ukraine’s national interests, given up independence and prospects for a better life for every Ukrainian,” an opposition leader, Vitali Klitschko, told crowds on Kiev’s Independence Square.

Possibly true, however, the alternative is to give up independence to the IMF and the EU (which along with close associates the ECB make up the rightly hated Troika). Giving up sovereignty to “the Troika” will mean the imposition of savage “austerity measures”.

Here’s what John McCain said in a speech at the Atlantic Council just a week after Nuland on December 19th:

“Fifth, if Ukraine’s political crisis persists or deepens, which is a real possibility, we must support creative Ukrainian efforts to resolve it. Senator Murphy and I heard a few such ideas last weekend – from holding early elections, as the opposition is now demanding, to the institution of a technocratic government with a mandate to make the difficult reforms required for Ukraine’s long-term economic health and sustainable development.” [my bold highlight added]

The people of Italy and Greece are already rather familiar with “the institution of a technocratic government”, both nations having suffered under the appointments of Goldman Sachs usurpers Mario Monti and Lucas Papademos respectively. McCain is recommending that the opposition in Ukraine should be prepared to opt for similar conditions of economic dictatorship and their own hefty dose of shock therapy. Is this what revolution in Ukraine might bring?

Click here to read McCain’s full statement.

Returning Victoria Nuland’s presentation at the “US-Ukraine Foundation”, and how do those apparent sponsors Chevron and Exxon Mobil fit into the bigger picture?

This is from Reuters on November 5th:

Ukraine signed a $10 billion shale gas production-sharing agreement with U.S. Chevron (CVX.N) on Tuesday [Nov 5th], another step in a drive for more energy independence from Russia. [my bold highlight]

Ukraine Energy Minister Eduart Stavytsky, who signed the deal with Chevron executive Derek Magness, set it in the context of a high price Ukraine pays Russia for its gas.

“This is one more step towards achieving full energy independence for the state. This will bring cheaper gas prices and the sort of just prices which exist (elsewhere) in the world,” he said.

Yes, Chevron are in it for the frack… and as for Exxon Mobil, they get ample rewards too. Another article from Bloomberg on the same day reporting that:

Ukraine announced natural gas deals with Chevron Corp (CVX) and Exxon Mobil Corp (XOM) in a push to cut costs by two-thirds and reduce its dependence on Russia.

The Ukrainian government signed a production-sharing agreement with Chevron for extraction of shale gas in the Oleske field, Energy Minister Eduard Stavytskyi said today at a press conference in Kiev. Another production-sharing agreement with an Exxon-led group for exploring the Skifska field in the Black Sea may follow by the end of the month, he said.

Victoria Nuland speaks of building “democratic skills and institutions” and promoting “civic participation and good governance”, but this contest over Ukraine really has nothing at all to do with freedom and democracy – and those large corporate adverts say it all. This is actually about money and fossil fuels. It’s the geostrategic interests, stupid!

*

1 From an article entitled “Syria Ghouta Gas Attack: Assad a Thug and Murderer, Says US Secretary of State John Kerry” written by Gianluca Mezzofiore, published by International Business Times on August 30, 2013. http://www.ibtimes.co.uk/syria-assad-thug-murderer-john-kerry-502675

2 From an article entitled “New analysis of rocket used in Syria chemical attack undercuts U.S. claims” written by Matthew Schofield, published by McClatchy on January 15, 2014. http://www.mcclatchydc.com/2014/01/15/214656/new-analysis-of-rocket-used-in.html

3 From an article entitled “The silent military coup that took over Washington: This time it’s Syria, last time it was Iraq. Obama chose to accept the entire Pentagon of the Bush era: its wars and its war crimes” written by John Pilger, published in the Guardian on September 10, 2013. http://www.theguardian.com/commentisfree/2013/sep/10/silent-military-coup-took-over-washington

4 From a transcript of John Kerry’s statement at Geneva II conference on January 22, 2014. Published by the Washington Post. http://www.washingtonpost.com/world/transcript-john-kerrys-remarks-at-geneva-ii-conference-on-syria-on-jan-22/2014/01/22/f2ec3a56-83b8-11e3-bbe5-6a2a3141e3a9_story.html

6 From an article entitled “Whose Sarin?” written by Seymour Hersh, published by the London Review of Books on December 19, 2013. http://www.lrb.co.uk/v35/n24/seymour-m-hersh/whose-sarin

7 From an article entitled “More Than 50 Countries Helped the CIA Outsource Torture” written by Spencer Ackerman, published by Wired magazine on February 5, 2013. http://www.wired.com/dangerroom/2013/02/54-countries-rendition/

8 From an article entitled “Al-Qaeda’s specter in Syria”, written by Ed Husain, published by the Council on Foreign Relations on August 6, 2012. http://www.cfr.org/syria/al-qaedas-specter-syria/p28782

9 The quote taken from Craig Murray’s testimony given to the Parliamentary Joint Committee on Human Rights on April 28, 2009. His remarks are made 6:15 mins into the video embedded below:

Murray has also provided more detailed accounts of the kinds of torture involved, including the torture of children in front of their parents, on other occasions. For instance, you can hear his account from in the speech entitled “Realism or Hypocrisy? – Western Diplomacy and Freedom of Expression” on freedom of expression given at the Institute of Cultural Diplomacy in Berlin in March 2012 and already embedded above [from approx 34–36 mins].

10

“I am a reluctant whistleblower, as you’ll see from those telegrams going around [copies had been passed out to the audience]. I was attempting internally, using classification in secret, to stop the policy of obtaining intelligence from torture. And I did think that I would be able to stop it. I had no idea that government ministers throughout the civilised so-called world had decided that we should use torture as an instrument of policy. I thought that this must be something the security services were doing without the knowledge of politicians and that I would be able to stop it. That’s why I sent those telegrams. In fact, sadly, the West had moved to a policy of advocating torture.” [from 23:50 mins]

11 From an article entitled “Former Uzbek Spy Accuses Government Of Massacres, Seeks Asylum” written by Jeffrey Donovan, published by Radio Free Europe/Radio Liberty on September 1, 2008. http://www.rferl.org/content/Former_Uzbek_Spy_Seeks_Asylum/1195372.html

12 According to a White House press release dated September 28, 2011 which reads:

“President Obama spoke with President Islam Karimov of Uzbekistan earlier today by phone. President Obama congratulated President Karimov on Uzbekistan’s 20 years of independence, and the two leaders pledged to continue working to build broad cooperation between our two countries.  The President and President Karimov discussed their shared desire to develop a multi-dimensional relationship between the United States and Uzbekistan, including by strengthening the contacts between American and Uzbek civil societies and private sector.  President Obama expressed our view that a more prosperous and secure Uzbekistan benefits both countries, and that advancing democracy supports that goal.  The two presidents also discussed their shared interests in supporting a stable, secure, and prosperous Afghanistan and discussed the efforts we are undertaking together to further that goal.”

http://www.whitehouse.gov/the-press-office/2011/09/28/readout-president-s-call-president-karimov-uzbekistan

13 From an article entitled “Can evidence of mass killings in Syria end the inertia? Only with Putin’s help” written by Jonathan Freedland, published in the Guardian on January 21, 2014. http://www.theguardian.com/commentisfree/2014/jan/21/evidence-mass-murder-syria-end-inertia-putin?CMP=twt_gu&commentpage=1

14 From an article entitled “Syria report: One is reminded of Nazi Germany” written by Robert Fisk, published by The Independent on January 21, 2014. http://www.independent.co.uk/voices/comment/syria-report-one-is-reminded-of-nazi-germany-9075743.html?origin=internalSearch

15 From an article entitled “US campaign behind turmoil in Kiev” written by Ian Traynor, published in the Guardian on November 26, 2004. http://www.theguardian.com/world/2004/nov/26/ukraine.usa

16 As then- poet laureate Alfred, Lord Tennyson famously commemorated the incident in a narrative poem of the same title.

17 From an article entitled “Angela Merkel: Victoria Nuland’s remarks on EU are unacceptable” written by Ed Pilkington, Luke Harding “and agencies”, published in the Guardian on February 7, 2014. http://www.theguardian.com/world/2014/feb/07/angela-merkel-victoria-nuland-eu-unacceptable

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Filed under al-Qaeda & DAESH / ISIS / ISIL, austerity measures, Bahrain, Craig Murray, drones, fracking (shale & coal seam gas), Iran, John Pilger, Qatar, Russia, Seymour Hersh, Syria, Ukraine, USA, Uzbekistan