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this is the EU — so take it or leave it… #7. Ukraine and Euromaidan

A fortnight after the violent overthrow of Viktor Yanukovych, Europe Editor for Channel 4 news, Matt Frei, interviewed Dmytro Yarosh, the leader of Ukraine’s Pravy Sektor [Right Sector] militia, who Frei introduces as “the hard men of the barricades, the masters of the Molotov cocktails, and now they’ve earned their place at the table of power” [1:45 mins]:

Behind closed curtains and surrounded by armed guards, Frei timidly asks whether it is right to “describ[e] people like you as neo-Nazis, as fascists, as anti-semites” adding “this is the pretext that [Russia] are using to occupy your country.” [from 2:10 mins]

Now you would be hard-pressed to think up a more softball question; “pretext” after all implies, by definition, that such allegations are evidently false and unfounded. Whereas these allegations are very evidently the case. Because Yarosh isn’t just any old fascist; he is the founder and leader of an undisguised and boastful neo-Nazi organisation. And Matt Frei and Channel 4 news know all this, but play dumb.

They gloss over the ugly truth because, after all, the official story is about a Euromaidan – “a revolution” inspired by dreams of EU membership that will bring “democracy and freedom” to Ukraine. A story built around obfuscation, denial and outright lies… 1

*

On the very same day as Matt Frei’s interview, March 5th 2014, a phone call between the EU Foreign Affairs Chief, Catherine Ashton, and Estonian Foreign Minister, Urmas Paet, was leaked:

In the call, Paet, having just returned from a trip to Kiev, tells Ashton [from 8:20 mins in]:

“And what was quite disturbing, this same Olga [Bogomolets, the main doctor of the Maidan mobile clinic] told as well that all the evidence shows that the people who were killed by snipers from both sides, among policemen and then people from the streets, that they were the same snipers killing people from both sides”

Ashton replies: “Well, yeah…that’s, that’s terrible.”

Paet then continues:

“So that she then also showed me some photos she said that as a medical doctor, she can say that it is the same handwriting, the same type of bullets, and it’s really disturbing that now the new coalition, that they don’t want to investigate what exactly happened. So that there is now a stronger and stronger understanding that behind the snipers, it was not Yanukovych, but it was somebody from the new coalition.

Ashton’s response to this revelation is muted and muffled. She begins: “I think they do want to investigate” But then hesitates and finishes: “I mean I didn’t pick that up… Gosh.”

Paet then repeats the opinion that the incident is “disturbing” and concludes that “it already discredits from the very beginning this new coalition”.

However, Ashton and Brussels were not about to be sidetracked in their determination to press ahead with negotiating an EU-Ukraine Association Agreement with the new powers in Kiev. Although, unsubstantiated rumours that Yanukovich was behind the massacre were the strong grounds to run him out of the country, these alternative if better substantiated allegations that “it was somebody from the new coalition” were less welcome. For Brussels, it was a lot more convenient simply to ignore them.

Indeed, on this very same day, March 5th 2014, the European Commission released a memo in support of the new Ukrainian government in which it offered financial assistance to the tune of “at least €11 billion over the coming years from the EU budget and EU based international financial institutions (IFIs) in addition to the significant funding being provided by the IMF and World Bank.” 2

The memo continues:

“All these measures should be seen as the Commission’s contribution to a European and international effort at providing a sustainable way out of Ukraine’s difficult economic situation and to support its economic and political transition.”

Then, only a few weeks later on March 26th, the European Council issued a press release following the EU-US Summit in Brussels which begins:

Recent events in Ukraine have confirmed that strong cooperation between the European Union and the United States on peace and security is of critical importance.

Under the heading “Economy and global challenges” the press release then continues as follows:

Reinforcing economic growth and job creation remains central on both sides of the Atlantic. The EU and the United States have taken important steps to stabilise financial conditions and overcome the crisis. The EU remains committed to building a deep and genuine economic and monetary union, including a banking union. […]

The EU and US leaders renewed their commitment to a strong Transatlantic Trade and Investment Partnership (TTIP). this should go beyond a free trade agreement and reaffirm Europe and the United States’ shared values of democracy, individual freedom, the rule of law and human rights, and a common commitment to open societies and economies.

[Bold highlights maintained from original source]

*

In fact, Kiev began negotiating an agreement to extend Europe’s free trade zone in early 2012, although there never was an invitation for Ukraine to join as a member state. Full integration has probably never been on the table, although to encourage those gathered in the so-called Euromaidan protests, there was certainly a deliberate misrepresentation of this key fact.

On March 3rd of this year, President of the European Commission, Jean Claude Juncker, in a (failed) effort to urge the Dutch to vote ‘yes’ in their recent referendum on the Association Agreement with Ukraine (the Netherlands remains the only EU state still to ratify), made the situation quite plain:

I have not come to the Netherlands to say: listen here; you should do this and that. This is not how things are done, most certainly not in the Netherlands.

It is no laughing matter, however. If the Dutch vote ‘no’, Europe will have a problem. That problem is destabilisation. We need to bear this in mind, because Ukraine expects Europe to stick to what was agreed. We should not fall into the trap of thinking that this is about Ukraine joining the EU. Many Dutch people I talk to in Brussels – ordinary people, not Commission officials – make that mistake. In reality, it is about trade and trade agreements. I can hardly imagine an old, successful trading nation like the Netherlands rejecting a trade agreement with a country, like Ukraine, that is so important for European stability. So let me repeat: we need to explain to people that it is not about EU accession. Ukraine will not join the EU during my term of office. In any case, I have said – rather bluntly – that there will be no new members over the next five years, because I do not believe any of the countries in waiting will fulfil the conditions in that time frame.

Then reiterating and upping the ante, presumably to assuage any lingering doubts:

We have rushed things in the past when it comes to enlargement. I am also guilty, because I thought it was an historic event and that we had to reunite European history and geography. Hence the accession of the ‘new’ Member States (in 2004). In some cases, though, we jumped the gun, and we will not make the same mistake again. Ukraine will certainly not join the EU in the next 20 to 25 years. Nor will it join NATO, Secretary-General. I actually wanted to talk about the Dutch referendum, not lecture the Ukrainians, but I know many Dutch people are very worried that this will be the first step to Ukraine joining the EU. But we can definitely say that is not the case. [bold highlights added] 3

Note: you can read more about the Netherland’s April 6th referendum in the addendum.

In other words, the EU doesn’t want Ukraine to join our club – not now and not in the foreseeable future. What it unquestionably does want, however, is to secure access to its plentiful energy resources and to the richest agricultural land anywhere on earth. And the signing of TTIP alone will open the way for major western corporations to profit from unfettered access to both. However, in light of the Dutch vote on April 6th, it is a deal that remains on hold. Perhaps the Ukrainians might consider themselves lucky (at least in this).

Click here to read more about how US corporations and the European Union are hoping to exploit Ukrainian resources in an earlier post entitled “never let a good Ukrainian crisis go to waste”.

Two years after the Euromaidan, the government in power is no more popular or less corrupt than the one it replaced. Still on the brink of outright economic ruin, today’s Ukraine is a country fractured by civil war, where human rights abuses are an everyday reality and where the extreme right is stronger than ever before. But you won’t see very many reports about this on Channel 4 news or elsewhere in the western media, because (as detailed here) today’s Ukraine is too much of a political embarrassment.

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Addendum: Dutch vote on Ukraine, April 6th

Dutch voters forced a referendum on the ratification of the Association Agreement between the EU and Ukraine after a successful campaign led by GeenPeil, which managed to collect more than 425,000 signatures demanding a vote. The treaty was rejected by 61% to 38%.

In the run up to the vote, unsubstantiated claims were made that Russia was funding the ‘no’ campaign. On the other hand, George Soros’ Open Society Foundations, had announced to the Nederlandse Omroep Stichting, NOS [trans: Dutch Broadcast Foundation] that it would spend €200,000 on the ‘yes’ campaign:

A Russia banned non-profit organization of billionaire George Soros is co-sponsor of the Dutch campaign for a ‘yes’ in the referendum Ukraine in April. The Stem voor Nederland [trans: Vote for the Netherlands] campaign will receive 200,000 euros from the Open Society Foundations. […]

On April 6, the Dutch population must decide in a referendum on the Dutch support an EU association treaty with Ukraine. Russia is fiercely opposed to the treaty. “Russia will see this as confirmation of what it believes anyway: that George Soros has political motives in this referendum,” said David Jan Godfroid, NOS correspondent in Russia.

The same article published by NOS continues:

A British newspaper recently reported that Russia may have interfered with the referendum. GeenPeil, the driving force behind the referendum, denies this. “If only it were so!” says Thierry Baudet of Forum voor Democratie [trans: Forum for Democracy], one of the initiators, smiling. “We have never seen a penny,” he says. “This nonsense is coming out of thin air,” says Bart Nijman of GeenPeil. “I have no idea where this came from.”

Incidentally Baudet wonders how serious it would be if other countries money was funding the campaign. “It is absolutely normal practice for countries such as Israel, the United States and Germany to provide funds,” said Baudet. “Very strange that there is so much attention to the fictional Russian support.”

The EU Citizens’ Committee is another group campaigning for a ‘no’. We “have not received a ruble” from Russia, says Pepin van Houwelingen. “That’s a real fantasy story. We rely on donations,” he says. 4

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1 Nor is it the case that Matt Frei was simply too afraid to confront Yarosh squarely – although given the extreme circumstances of the interview, he had every reason to fearful. However, the tone of the whole piece is the giveaway. Skilfully contrived to distract the viewer from the truth, he goes out of the way to divert attention from the glaring fact that the Maidan had been spearheaded by fascist brigades. Channel 4 news and the rest of the corporate media simply chose to look away. You can find the same video unloaded on the Channel 4 news website:

http://www.channel4.com/news/pravy-sektor-far-right-in-new-ukraine-government-video

2 http://europa.eu/rapid/press-release_MEMO-14-159_en.htm

3 From the official transcript of the 14th Norbert Schmelzer lecture entitled “The European Union – a source of stability in a time of crisis” delivered by Jean-Claude Juncker at The Hague, Netherlands on March 3, 2016. http://europa.eu/rapid/press-release_SPEECH-16-583_en.htm

4 From a translation of an article published by Nederlandse Omroep Stichting, NOS [trans: Dutch Broadcast Foundation] on January 22, 2016. http://nos.nl/artikel/2082091-amerikaanse-miljardair-sponsort-ja-campagne-oekraine-referendum.html

The original article reads:

Een in Rusland verboden non-profit-organisatie van miljardair George Soros is medefinancier van de Nederlandse campagne voor een ‘ja’ bij het Oekraïne-referendum in april. Stem voor Nederland krijgt voor die campagne 200.000 euro van de Open Society Foundations. Dat bevestigt de organisatie aan de NOS. Wie in Rusland zaken doet met OSF kan zes jaar celstraf krijgen.

Op 6 april moet de Nederlandse bevolking zich in een referendum uitspreken over de Nederlandse steun aan een Europees associatieverdrag met Oekraïne. Rusland is fel tegenstander van dat verdrag. “Rusland zal dit zien als bevestiging van wat het toch al denkt: dat George Soros politieke motieven heeft bij dit referendum”, zegt David Jan Godfroid, NOS-correspondent in Rusland. […]

Russische bemoeienis

Onlangs meldde een Britse krant dat Rusland zich mogelijk heeft bemoeid met het referendum. GeenPeil, de drijvende kracht achter het referendum, ontkent dat. “Was het maar zo!”, zegt Thierry Baudet van Forum voor Democratie, een van de initiatiefnemers, lachend. “We hebben nooit een cent gezien”, stelt hij. “Uit de lucht gegrepen onzin”, zegt ook Bart Nijman van GeenPeil. “Geen idee waar dit vandaan komt.”

Overigens vraagt Baudet zich af hoe ernstig het zou zijn als andere landen geld steken in een campagne. “Het is volstrekt normale praktijk dat landen als Israël, de Verenigde Staten en Duitsland fondsen aanbieden”, aldus Baudet. “Heel vreemd dat er nu zo veel aandacht is voor de verzonnen Russische steun.”

Ook het Burgercomité EU, dat campagne gaat voeren voor een ‘nee’, heeft “geen roebel” gehad uit Rusland, zegt Pepijn van Houwelingen. “Dat is echt een fantasieverhaal. We leunen op donaties”, zegt hij. Volgens de tegenstanders van het verdrag is het een eerste stap naar toetreding van Oekraïne tot de Europese Unie, en leidt het tot miljarden aan subsidies voor dat land.

Zowel GeenPeil, Forum voor Democratie, Stem voor Nederland als het Burgercomité heeft 50.000 euro subsidie aangevraagd bij de Nederlandse overheid om een campagne te kunnen voeren.

http://nos.nl/artikel/2082091-amerikaanse-miljardair-sponsort-ja-campagne-oekraine-referendum.html

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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.

*

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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Filed under analysis & opinion, austerity measures, Germany, Greece, neo-liberalism

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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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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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!

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 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]

*

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]

*

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.

*

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.

*

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

one month after Ukraine’s revolution: reviewing the hype, the hypocrisy and the hysteria

During the last month or so, filtering out the lies, the half-truths and the outright nonsense in search of any semblance of truth about what’s happening in Ukraine has been an exceptionally tricky business. Propaganda has been flooding in from all sides (certainly if we were prepared to look from all sides) and the bias in the coverage has been as unstinting as it remains deliberately bamboozling.

So what can we now say with any guaranteed certainty about the situation in Ukraine? Well, firstly, and most obviously, there has been a revolution, although in saying this we should remember that this was an uprising – an insurrection – which ended in a bloodbath.

The only other uncontested facts are really these: that when the democratically elected though hugely corrupt government in Kiev was overthrown and replaced by a self-elected transitional government, Viktor Yanukovych, the former President of Ukraine immediately fled to Moscow and declared the new authorities illegitimate. Following this, Putin then deployed forces in the Crimea to “restore law and order”. A military offensive that has been widely interpreted as an act of extreme aggression, even a declaration of war, and a further indication of Russia’s return to Soviet-style expansionism.

The hype

Before continuing, I would like to recommend a different article – one published by antiwar.com entitled “What Color is Ukraine’s ‘Color Revolution’?” Here are just a few extracts drawn from the beginning, middle and end:

As the real nature of Ukraine’s “democratic” and allegedly “pro-Western” opposition becomes all too apparent, the pushback from the regime-change crowd borders on the comic. The War Party is stumbling all over itself in a frantic effort to cover up and deny the frightening provenance of the neo-fascist gang they’ve helped to seize power in Kiev. […]

Outside the “we are all Ukrainians now” bubble, however, people are sitting up and taking notice. A Reuters piece spotlights the general uneasiness about the exact color of this latest US-sponsored “color revolution”:

“When protest leaders in Ukraine helped oust a president widely seen as corrupt, they became heroes of the barricades. But as they take places in the country’s new government, some are facing uncomfortable questions about their own values and associations, not least alleged links to neo-fascist extremists.” […]

I don’t know which is more alarming: the entrance into government of a party that traces its origins back to a fighting battalion affiliated with Hitler’s SS, or the sight of US officials whitewashing it. They’re flying the Confederate flag and the Celtic cross in Kiev, and the first African American President is hailing them as liberators. That’s one for the history books!1

Click here to read the full article.

Key to separating a little of the wheat from the chaff requires a clearer picture of the following: i) What were the people in the square protesting about? ii) What kind of protest was taking place? iii) Who were the leaders?

So let’s take each of these points in order:

i) Demands of the Maidan

I touched on this in an earlier extended post, but to recap relatively briefly here: the protesters were united primarily because of their strong opposition to the ruinous and kleptocratic presidency of Yanukovych. The majority also appear to have been demanding closer ties with the EU and so we saw quite a number of tattered EU flags fluttering above the square.

Scratch the surface just a little, however, and we learn that the protesters were most angered by the Ukrainian government’s acceptance of a Russian bailout package worth $15 billion. On paper at least, the Russian deal was far better than the EU’s alternative, but many Ukrainians who are fearful of Russia (justifiably so), were quick to point out that “the only place you find free cheese is in a mousetrap”. In other words, they wanted to know where the Kremlin wished the strings to be attached.

Yanukovych was not the Russian puppet he has been often been portrayed as, but a man desperately struggling to get out off a hole of his own making and seeking help wherever he could find it (East or West). With his downfall, the new transitional government is now led by the former banker Arseniy Yatseniuk. “Yats” was, if you recall, the man preferred by Washington as Victoria Nuland’s leaked phone call so embarrassingly revealed. It is also worth pointing out that Yatseniuk is a co-founder of the Open Ukraine Arseniy Yatseniuk Foundation, “a nonpartisan international philanthropic foundation” (according to wikipedia), which has partners including Chatham House, The United States Department of State, and Nato. Strange bedfellows for a philanthropic foundation, one might think.

And here is what Yatseniuk told the press soon after his appointment as Ukraine’s interim Prime Minister:

“We are to undertake extremely unpopular steps as the previous government and previous president were so corrupted that the country is in a desperate financial plight,” Mr Yatsenyuk told BBC Ukrainian.

“We are on the brink of a disaster and this is the government of political suiciders! So welcome to hell,” he added.2

The kamikaze mission Yatsenyuk has in mind will involve Greek-style austerity measures, served up very much to the satisfaction of the IMF and EU. So welcome to hell indeed!

For further details on the Russia and EU deals, as well as Victoria Nuland’s support for Yatseniuk, I refer you again to related sections in the post linked above.

ii) The protests

The protests in Independence Square were far from peaceful. Evidently, amongst the crowds there were many peaceful individuals and so whenever the BBC and Channel 4 reported from the square they were keener to draw attention to this non-violent contingent. It was even possible to make lazy comparisons to earlier pro-democracy demonstrations. We saw the tents, the soup kitchens, the banners and, occasionally, the poets! Here was Occupy Kiev, although rapidly spreading as it won over hearts and minds across the country to eventually become Occupy Ukraine. And according to the early accounts, every reasonable Ukrainian was chipping in to help the Maidan. These were our first impressions.

Amongst the ordinary protesters, however, there were others who appeared more sinister. Dressed for battle in WWII-style army helmets, and often marching in columns, like an army. The police locking shields like Roman legions in vain attempts to fend off a furious bombardment of sticks, rocks and petrol bombs. Well, Occupy Ukraine is more heavy duty, but that’s okay we were gently reassured. And the same news reports that implied that it was fine to rip up cobblestones, smash them up on a makeshift revolutionary production line, and catapult them at the police lines, also showed Kiev ablaze with barricades of burning tyres and looted government buildings.

During Channel 4‘s coverage on the eve of the main battle, Wednesday [Feb 19th], their Europe Correspondent Matt Frei revealed that some of the protesters were filling up hundreds of plastic bottles with petrol and polystyrene fragments which, he then explained, would cause the Molotov Cocktails to stick like napalm. So arson too was presented as not only an acceptable form of civil disobedience but a tactic requiring impressive levels of commitment and hard work – which it does – but let’s face it, if a similar situation was unfolding in London, with rivers of fire and the streets engulfed by clouds of acrid smoke, the protesters would be have been called “rioters”. Instead, we were constantly given to understand that the Maidan occupied the moral high-ground, even when evidence indicating the contrary was being simultaneously shown to us.

And then we must come to the vitally important question of who ordered snipers to open fire on the protesters. The western media has always been very clear about this (at least to begin with) – it was the Berkut who carried out government orders to shoot the protesters. But, there is an alternative version of events. When first reported upon, it was rather quickly sidelined as “a conspiracy theory”. Here, for example, is a Guardian report from March 5th:

A leaked phone call between the EU foreign affairs chief Catherine Ashton and Estonian foreign minister Urmas Paet has revealed that the two discussed a conspiracy theory that blamed the killing of civilian protesters in the Ukrainian capital, Kiev, on the opposition rather than the ousted government.

Embedded below is a recording of that intercepted phone conversation although I should warn you that there are also extremely graphic images overlaid. The controversy surrounds what Paet says to Ashton about 8 mins into the call – it is also transcribed by the Guardian in the same article that continues beneath the video:

The 11-minute conversation was posted on YouTube – it is the second time in a month that telephone calls between western diplomats discussing Ukraine have been bugged.

During the conversation, Paet quoted a woman named Olga – who the Russian media identified her as Olga Bogomolets, a doctor – blaming snipers from the opposition shooting the protesters.

“What was quite disturbing, this same Olga told that, well, all the evidence shows that people who were killed by snipers from both sides, among policemen and people from the streets, that they were the same snipers killing people from both sides,” Paet said.

“So she also showed me some photos, she said that as medical doctor, she can say it is the same handwriting, the same type of bullets, and it’s really disturbing that now the new coalition, that they don’t want to investigate what exactly happened.”

“So there is a stronger and stronger understanding that behind snipers it was not Yanukovych, it was somebody from the new coalition,” Paet says.

Ashton replies: “I think we do want to investigate. I didn’t pick that up, that’s interesting. Gosh,” Ashton says.3

This opinion expressed by Paet is not quite as extraordinary as the Guardian report would have us believe. Snipers have been used to provoke revolutionary fervour on past occasions, the best known example happening during the Miraflores confrontation in Caracas, Venezuela during a violent uprising and failed attempt to oust Hugo Chavez in April 2002. You can read more on this in another earlier post.

So I would beg to differ with the Guardian‘s rather easy dismissal of Paet’s claims. “False flag attacks” are irrefutably a part of history.

You can click here to read their full report.

More recently [Sat 8th], Associated Press released an article backing up claims that the sniper attacks had been a provocation. It begins:

On Wednesday Paet confirmed the recording was authentic, and told reporters in Tallinn that he was merely repeating what Bogomolets had told him. He said he had no way of verifying the claims, though he called Bogomolets “clearly a person with authority.”

Bogomolets couldn’t be immediately reached by the AP for comment. She did not answer repeated calls to her cellphone or respond to text messages.

In an interview earlier this week with a correspondent from British newspaper The Telegraph, Bogomolets said she didn’t know if police and protesters were killed by the same bullets, and called for a thorough investigation.

“No one who just sees the wounds when treating the victims can make a determination about the type of weapons,” she was quoted as saying. “I hope international experts and Ukrainian investigators will make a determination of what type of weapons, who was involved in the killings and how it was done. I have no data to prove anything.”

However, according to the same report, support for the “conspiracy theory” appears to be growing in Kiev, although, in admitting the claims of Paet, members of the transitional government point not to factions within the Ukrainian opposition (and why would they?) but to Russia instead:

Ukrainian authorities are investigating the Feb. 18-20 bloodbath, and they have shifted their focus from ousted President Viktor Yanukovych’s government to Vladimir Putin’s Russia — pursuing the theory that the Kremlin was intent on sowing mayhem as a pretext for military incursion. Russia suggests that the snipers were organized by opposition leaders trying to whip up local and international outrage against the government. […]

“I think it wasn’t just a part of the old regime that (plotted the provocation), but it was also the work of Russian special forces who served and maintained the ideology of the (old) regime,” [Ukrainian] Health Minister Oleh Musiy said. […]

On Tuesday, Interior Minister Arsen Avakov signaled that investigators may be turning their attention away from Ukrainian responsibility.

“I can say only one thing: the key factor in this uprising, that spilled blood in Kiev and that turned the country upside down and shocked it, was a third force,” Avakov was quoted as saying by Interfax. “And this force was not Ukrainian.”4

Click here to read the full Associated Press report.

So we might ask ourselves, whether Russia would be likely to send snipers in order to destabilise an already dangerous situation in the hope of covertly toppling Yanukovych, so that it might later seize on the chaos in order to annex the Crimea – “the Kremlin was intent on sowing mayhem as a pretext for military incursion”, as the Associated Press article suggests.

If so, then why has the West not drawn our fuller attention back to the leaked phone call? Indeed, why were the claims made by Estonian Foreign Minister Urmas Paet, first publicised by Russia Today, and then either ignored or dismissed as a “conspiracy theory” by western media? Was all this somehow a part of the same Kremlin plot?

iii) The leaders of the Maidan

Embedded below is a promotional video for a faction of the Maidan known as the “Right Sector”:

Right Sector have all the hallmarks of an extreme-right group because they are one. And disturbingly, in Ukraine, Right Sector are not alone – though they appear to be the most hardline of Ukraine’s neo-Nazi groups. As you can see from the video above, they were also a big part of the paramilitary wing of the Maidan protests.

A BBC news report (released soon after the dust had settled) calls attention to the fact that with the removal of Yanukovych, Right Sector became one of the biggest winners from the crisis:

The 42-year-old [Dmytro Yarosh, who is head of the fascist Stepan Bandera All-Ukrainian Organization or “Tryzub”] leads the paramilitary movement known as Right Sector, which was involved in violent clashes with the police in Kiev and considers the far-right party Svoboda “too liberal”. [I will come to Svobado next]

Advocating a “national revolution”, he dismissed the Yanukovych administration as an “internal occupation regime” and wants to ban both the former ruling party and its ally, the Communist Party.

There is pressure from the Maidan demonstrators to give him a security-related post in the new government, possibly as Mr Parubiy’s deputy.5

Click here to read the full BBC news report entitled “Ukraine crisis: Key Players”.

Another BBC news report from the previous day told us a little more:

Ukraine’s new interim government has been presented at Kiev’s main protest camp, the Maidan, following last week’s ousting of President Viktor Yanukovych.

The Maidan council named Arseniy Yatsenyuk to become prime minister. The cabinet – to be voted on by MPs on Thursday – includes leading activists. […]

Overall Maidan commander Andriy Parubiy – who commands huge respect among the protesters – was named candidate for secretary of the National Security and Defence Council

Andriy Parubiy is a neo-Nazi too, but we can deal with him in a second. The same article goes on:

However, some of the nominations – including that of Mr Avakov – prompted loud booing from the crowd, who said those candidates were not worthy of government posts.

People also chanted “Yarosh! Yarosh!”, demanding that the leader of the Right Sector, Dmytro Yarosh, be given a post. [the bold emphasis is added]6

Click here to read the full BBC news article.

But then, on the eve of the bloodiest night of the protest, at the end of Thursday evening’s Channel 4 news broadcast on Feb 20th, Matt Frei had already more casually let the cat out of the bag. Standing next to him was Yuriy Levchenko, captioned as spokesmen of “the far-right party Svoboda”, and Matt Frei was there to interview him in the politest possible way. What Frei might have asked, but didn’t, was why did his ultra-nationalist party with a name that now translates as “freedom” change from being “the Social-National Party” when it was founded in 1991. Back then they had also identified themselves with a symbol called the Wolfsangel, which looks like this:

The similarity to the swastika is not accidental, as this report from Der Spiegel published last month explains:

The Svoboda party also has excellent ties to Europe, but they are different from the ones that Klischko might prefer. It is allied with France’s right-wing Front National and with the Italian neo-fascist group Fiamma Tricolore. […]

In a 2012 debate over the Ukrainian-born American actress Mila Kunis, he said that she wasn’t Ukrainian, rather she was a “Jewess.” Indeed, anti-Semitism is part of the extremist party’s platform; until 2004, they called themselves the Social-National Party of Ukraine in an intentional reference to Adolf Hitler’s National Socialist party. Just last summer, a prominent leader of party youth was distributing texts from Nazi propaganda head Joseph Goebbels translated into Ukrainian.7

Click here to read the full article from Der Spiegel International.

And embedded below you can watch Yuriy Levchenko as Svoboda candidate complaining to France 24 following his defeat in the October 2012 parliamentary elections. Please judge for yourself whether Levchenko appears to be a neo-Nazi:

But in fairness to Matt Frei, he wasn’t the first to rub shoulders with the far-right extremists in this latest Ukrainian uprising. Back in December, neo-con Senator John McCain was very happy to join Oleh Tyahnybok, leader of the Svoboda party, and already a member of the Ukrainian parliament – indeed, one of thirty-eight Svoboda candidates who won seats in the last election – on the stage in Independence Square during a mass rally:

It was Oleh Tyahnybok along with Andriy Parubiy (remember him? – the recently appointed Secretary of the National Security and Defence Council of Ukraine) who in 1995 had jointly founded the Social-National Party of Ukraine (SNPU), which has since been rebranded as Svoboda. And Dmytro Yarosh (leader of the even more odious Right Sector who the crowds were chanting for – at least according to that BBC news article) has indeed since been appointed as Parubiy’s deputy.

So are there fascists in the new government? Yes. Are they in positions of influence? Well, aside from Parubiy and Yarosh who now jointly oversee national security, and Oleh Tyahnybok, of course, there is also:

The new Deputy Prime Minister Oleksandr Sych is a member of the far-right Svoboda party, which the World Jewish Congress called on the EU to consider banning last year along with Greece’s Golden Dawn.

The party, which has long called for a “national revolution” in Ukraine, has endured a long march from relative obscurity in the early 90s. Their declaration that Ukraine is controlled by a “Muscovite-Jewish mafia” has raised fears for the safety of the country’s Jewish population.

Svoboda now controls the ecology and agricultural ministry with Andriy Mokhnyk, the deputy head of Svoboda, running ecology and Ihor Shvaika as agriculture minister.

That’s taken from a Channel 4 piece also catching up with events a little late in the day (again from March 5th) and continuing:

The most important office seized by Svoboda is that of deputy prime minister, now occupied by Oleksandr Sych, whose position on abortion rights and comments about rape provoked an international outcry.

He has been criticised for declaring: “Women should lead the kind of lifestyle to avoid the risk of rape, including one from drinking alcohol and being in controversial company”.

Svoboda member Oleh Makhnitsky is now acting prosecutor general.

The initial actions of the interim government have included forcing making Ukrainian the only official language of the nation and making moves to remove a law which forbids “excusing the crimes of fascism”.8

In total, there are eight Svoboda neo-Nazis now occupying positions in Ukraine’s transitional government – fascist representatives making policy in every sector.

So why did the BBC and Channel 4 wait until after the revolution (or coup) was over before they started shedding this light on the far-right leadership at the heart of the Maidan movement, and why isn’t news of these worrying fascist gains in an Eastern European state being featured more prominently in their regular broadcasts today?

Click here to read the full article entitled “How the far-right took top posts in Ukraine’s power vacuum”

The hypocrisy

This is how veteran investigative reporter John Pilger chose to begin his latest article [from March 16th]:

Washington’s role in the fascist putsch against an elected government in Ukraine will surprise only those who watch the news and ignore the historical record. Since 1945, dozens of governments, many of them democracies, have met a similar fate, usually with bloodshed.

Nicaragua is one of the poorest countries on earth with fewer people than Wales, yet under the reformist Sandinistas in the 1980s it was regarded in Washington as a “strategic threat”. The logic was simple; if the weakest slipped the leash, setting an example, who else would try their luck?

The great game of dominance offers no immunity for even the most loyal US “ally”. This is demonstrated by perhaps the least known of Washington’s coups – in Australia. The story of this forgotten coup is a salutary lesson for those governments that believe a “Ukraine” or a “Chile” could never happen to them.9

Click here to read John Pilger’s full article.

Pilger’s point, in brief, is that the United States, more often than not by the clandestine hand of the CIA, has a long record of overthrowing governments including those in power in democratic countries and sometimes even those of its own western allies. He then implies – without providing any supporting evidence – that Washington played a central role in the fall of Yanukovych. So is Pilger correct?

Well, we certainly know that both John McCain and Victoria Nuland made pre-revolutionary visits to Kiev in support of the Maidan. We also know that America has been spending large sums of money to “build democratic skills and institutions” and to “promote civic participation and good governance, all of which are preconditions for Ukraine to achieve its European aspirations.” Nuland talked of over $5 billion in ‘aid’ of this kind, although she failed to say more precisely how any of that money was spent. (So we may wonder, for instance, if any went into the coffers of the “Open Ukraine Arseniy Yatseniuk Foundation”.)

We also have the very clear and recent historical precedents in the form of those “colour revolutions” of the last decade, including, of course, the “Orange Revolution” in Ukraine. All of which, it was later revealed, had been orchestrated by Washington and manufactured by means of NGOs, most especially those of George Soros’ Open Society Foundations.

Soros remains proud of the part his own networks played in those earlier and much more peaceful uprisings. Unsurprisingly, therefore, some see the hand of Soros assisting in this latest upheaval in Ukraine, but is there direct evidence?

Here is what George Soros himself wrote on February 26th:

Following a crescendo of terrifying violence, the Ukrainian uprising has had a surprisingly positive outcome. Contrary to all rational expectations, a group of citizens armed with not much more than sticks and shields made of cardboard boxes and metal garbage-can lids overwhelmed a police force firing live ammunition. There were many casualties, but the citizens prevailed. This was one of those historic moments that leave a lasting imprint on a society’s collective memory.

No mention of any fascist elements there – but did Soros’ funding play any role in this latest revolution? The answer he gives is almost tantalising:

I established the Renaissance Foundation in Ukraine in 1990 – before the country achieved independence. The foundation did not participate in the recent uprising, but it did serve as a defender of those targeted by official repression.

So what does this mean? “Serve as a defender” – defending by what means? And who were “those targeted by official repression”? Well, one of the groups that Soros’ International Renaissance Foundation (IRF) helped in ‘defending’ were Spilna Sprava (which translates as “The Right Deed” but are also known as “Common Cause”). And so here is another BBC news report worthy of closer inspection (and bear in mind it is was published as far back as February 1st):

Together with the Right Sector, Common Cause is also at the extreme end of the Ukrainian protest movement, though it does not appear as yet to share the former’s relish for street fighting.

It is best known for capturing several key government offices in Kiev, such as the ministries of justice, agriculture, and energy.

The group has called for early parliamentary and presidential elections, and describes any opposition leaders who may urge protesters to disperse before the early polls “either idiots or provocateurs”.

“If we don’t force the authorities to go today, we’ll regret it tomorrow,” says the group’s website.10

You will find the organisation Spilna Sprava registered in the IRF annual report for 2009 at the bottom of page 189 where it is described as a “Charitable Foundation”.

Click here to read the full BBC news report.

However, for full-blown hypocrisy it’s hard to beat John Kerry censuring Russia and Putin after sending forces into the Crimea, saying “you just don’t invade another country on phoney pretext in order to assert your interests” [about 2:30 mins into clip]:

Not that Kerry is wrong in his assessment. Russia is most certainly “asserting its interests” but then are we really supposed to understand that in comparable circumstances America would do otherwise? When under Obama, America already daily flexes its military might in faraway Afghanistan, over Yemen, and even in Iraq (where a strong US presence still remains). Remembering that Nato’s “kinetic action” against Libya became a flagrant violation of the humanitarian bounds of UN Security Council Resolution “to protect civilians and civilian populated areas under threat of attack”. And that just six months earlier, Kerry and Obama were about to go ahead with massive air strikes against Syria without UN backing of any kind.

If there were a real crisis on the American doorstep would the US shrink from military engagement on the grounds that it ought not “assert its interests”? Would they even wait for a crisis – for are we also supposed to forget about the US invasion of the tiny island of Grenada in 1983? Or protecting its strategic interests in Panama in 1989? Or meddling in El Salvador, in Nicaragua and the notorious Iran-Contra scandal? Or US involvement in the Venezuelan coup in 2002, or for that matter their evident backing of the violent uprising taking place in Venezuela today? In fact, are we to forget about US interference in almost every country in Latin America throughout the entire postwar era – it really wasn’t so very long ago when White House officials openly referred to the continent as “America’s backyard”.

Former New York Times correspondent and investigative reporter, Stephen Kinzer, recently wrote a piece for The Boston Globe entitled “US a full partner in Ukraine debacle” in which he provides a more detailed historical perspective on the latest crisis. His article begins:

From the moment the Soviet Union collapsed in 1991, the United States has relentlessly pursued a strategy of encircling Russia, just as it has with other perceived enemies like China and Iran. It has brought 12 countries in central Europe, all of them formerly allied with Moscow, into the NATO alliance. US military power is now directly on Russia’s borders.

“I think it is the beginning of a new cold war,” warned George Kennan, the renowned diplomat and Russia-watcher, as NATO began expanding eastward. “I think the Russians will gradually react quite adversely, and it will affect their policies.”

Russia’s dispatch of troops in recent days to Crimea — a verdant peninsula on the Black Sea that is part of Ukraine but, partly as a result of Stalin-era ethnic cleansing, has a mainly Russian population — was the latest fulfillment of Kennan’s prediction.

Kinzer continues:

Putin’s decision to deploy troops reflects his loss of control over Ukrainian politics. US officials recognize this, and are pressing their anti-Russia campaign. Last week President Obama received the prime minister of Georgia. The prime minister of Moldova is due this week. These meetings are aimed at honing a strategy for further isolating Russia; it is called “Western integration.”

Much has been made of the fact that Ukraine is deeply divided between its pro-Europe western provinces and the pro-Russian east, of which Crimea is a part. A “velvet divorce” dividing Ukraine into two countries might be the best solution, but border changes, even when they seem sensible from far away, are always difficult to engineer.

If Ukrainians cannot agree to divide their country, Russia may do it for them. It already occupies part of Moldova and part of Georgia. For it to keep an army in Ukraine would anger the United States — and many Ukrainians — but it would be nothing new. Military occupation is, in fact, one of the few weapons Russia has to oppose the “Western integration” of neighboring countries.11

Click here to read Stephen Kinzer’s full article.

To read more on George Soros’ backing of previous “colour revolutions” as well as Victoria Nuland’s remarks on more recent American largesse, I refer readers again to my previous post.

The hysteria

It is even harder to know where to start when we get to the matter of hysteria over what Kinzer rightly describes as the Ukraine debacle. For convenience, however, we might begin again with John Kerry and that interview on Meet the Press! already embedded above:

“This is an act of aggression that is completely trumped up in terms of its pretext. It’s really Nineteenth Century behaviour in the Twenty-First Century. And there is no way to start with, that if Russia persists in this, that the G8 countries are going to assemble in Sochi. That’s a starter. But, there’s much more than that – Russia has major investment and trade needs and desires. I think there’s a unified view by all of the foreign ministers I talked with yesterday – all of the G8 and more – that they’re simply going to isolate Russia.”

So the aim now appears to be to isolate Russia… but is that even possible? Here is a little more of Kerry’s latest blustering:

“There could even ultimately be asset freezes, visa bans, there could be certainly disruption of any of the normal trade routine. There could be business drawback on investment in the country.”

But could it be that Kerry and the US are actually the ones in danger of becoming isolated? After all, how can Germany start imposing sanctions when it depends on a Russian gas supply. And as for those asset seizures, can Kerry really imagine that the dirty money Russian oligarchs prefer to launder by taking advantage of the uncommon laxity of our own financial centres will no longer be welcomed? Here are the thoughts of Ben Judah writing in the New York Times on “London’s Laundry Business” and the unlikelihood of such tough sanctions on Russian oligarchs [from Friday March 7th]:

The White House has imposed visa restrictions on some Russian officials, and President Obama has issued an executive order enabling further sanctions. But Britain has already undermined any unified action by putting profit first.

It boils down to this: Britain is ready to betray the United States to protect the City of London’s hold on dirty Russian money. And forget about Ukraine.

Britain, open for business, no longer has a “mission.” Any moralizing remnant of the British Empire is gone; it has turned back to the pirate England of Sir Walter Raleigh. Britain’s ruling class has decayed to the point where its first priority is protecting its cut of Russian money — even as Russian armored personnel carriers rumble around the streets of Sevastopol. But the establishment understands that, in the 21st century, what matters are banks, not tanks.

The Russians also understand this. They know that London is a center of Russian corruption, that their loot plunges into Britain’s empire of tax havens — from Gibraltar to Jersey, from the Cayman Islands to the British Virgin Islands — on which the sun never sets.12

Overall, the tone of the rhetoric coming from Washington is alarming. Economic sanctions have historically been a precursor to war. That cracks within the Nato alliance are already showing is therefore good news. Any ratcheting up of tension between the two opposing superpowers being in no one’s best interests (other than defence contractors of course) and the dangers of backing Russia into a corner are all-too obvious:

Both John Kerry’s threats to expel Russia from the G8 and the Ukrainian government’s plea for Nato aid mark a dangerous escalation of a crisis that can easily be contained if cool heads prevail. Hysteria seems to be the mood in Washington and Kiev, with the new Ukrainian prime minister claiming, “We are on the brink of disaster” as he calls up army reserves in response to Russian military movements in Crimea.

Were he talking about the country’s economic plight he would have a point. Instead, along with much of the US and European media, he was over-dramatising developments in the east, where Russian speakers are understandably alarmed after the new Kiev authorities scrapped a law allowing Russian as an official language in their areas. They see it as proof that the anti-Russian ultra-nationalists from western Ukraine who were the dominant force in last month’s insurrection still control it. Eastern Ukrainians fear similar tactics of storming public buildings could be used against their elected officials.

So begins an excellent piece by Jonathan Steele writing in the Guardian. Steele is another journalist who has managed to sidestep all of the hysteria and remain level-headed about this latest escalation of the Ukrainian crisis.

His article continues:

Kerry’s rush to punish Russia and Nato’s decision to respond to Kiev’s call by holding a meeting of member states’ ambassadors in Brussels today were mistakes. Ukraine is not part of the alliance, so none of the obligations of common defence come into play. Nato should refrain from interfering in Ukraine by word or deed. The fact that it insists on getting engaged reveals the elephant in the room: underlying the crisis in Crimea and Russia’s fierce resistance to potential changes is Nato’s undisguised ambition to continue two decades of expansion into what used to be called “post-Soviet space”, led by Bill Clinton and taken up by successive administrations in Washington. At the back of Pentagon minds, no doubt, is the dream that a US navy will one day replace the Russian Black Sea fleet in the Crimean ports of Sevastopol and Balaclava.

Russia’s movement into Crimea was certainly an invasion – of sorts – and marked the beginning of a dangerous new phase in the present Ukrainian crisis. Although Russia are entitled to keep troops at bases within Crimea, and though the number of troops appear to have remained below those permitted under treaty, by moving Russian troops into the streets, Putin has been acting outside of International law. That said, this invasion is no way comparable to the types of “shock and awe” assault we are accustomed to seeing the US and Nato engage in. What Kerry called an “incredible act of aggression” resulted in no casualties (other than the unfortunate victims of more recent sniper attacks), in part because the majority in Crimea are not hostile to the Russian forces. Indeed, it was not the elected parliament of Crimea but the self-appointed parliament in Kiev which many Crimeans fear and oppose (and do not regard as legitimate), who declared the Russian troop movements “an act of war”.

Here is more from Jonathan Steele who closes his article considering the legality or otherwise of Russia’s annexation of Crimea13 as well as his hopes of a diplomatic resolution:

It is not too late to show some wisdom now. Vladimir Putin’s troop movements in Crimea, which are supported by most Russians, are of questionable legality under the terms of the peace and friendship treaty that Russia signed with Ukraine in 1997. But their illegality is considerably less clear-cut than that of the US-led invasion of Iraq, or of Afghanistan, where the UN security council only authorised the intervention several weeks after it had happened. And Russia’s troop movements can be reversed if the crisis abates. That would require the restoration of the language law in eastern Ukraine and firm action to prevent armed groups of anti-Russian nationalists threatening public buildings there.

The Russian-speaking majority in the region is as angry with elite corruption, unemployment and economic inequality as people in western Ukraine. But it also feels beleaguered and provoked, with its cultural heritage under existential threat. Responsibility for eliminating those concerns lies not in Washington, Brussels or Moscow, but solely in Kiev.14

The article, which is entitled “John Kerry and Nato must calm down and back off”, offers a perspective which very few mainstream journalists (Stephen Kinzer and Liam Halligan being two others along with Stephen Cohen – see previous article) have so far been prepared to offer. His call for an end to the hysteria is surely the wisest call anyone can make right now.

*

Additional:

Following the referendum in Crimea, on Monday [March 17th] Democracy Now! featured a discussion about the vote and the likely diplomatic, economic and military repercussions following Crimea’s secession from Ukraine. The three guests were Oliver Bullough, Caucasus editor for the Institute for War and Peace Reporting; Nicholas Clayton, a freelance journalist who has been reporting from Crimea and covering the South Caucasus since 2009; and Dmitri Trenin, director of the Carnegie Moscow Center. Here is a snapshot of what each had to say:

Oliver Bullough: Well, the first thing about the vote is the result. The result was never in any doubt. The only option, essentially, on the ballot paper was either—well, you has a choice: to leave Ukraine or to join Russia. There was no “no” option. So, there was never any question that this would go one way. And it did indeed go that way. It went that way overwhelmingly, though, personally, I think possibly the results given are a little bit inflated. I can’t believe that the turnout was as high as 83 percent, certainly considering the fact that all the Ukrainians who live in Crimea and all the Crimean Tatars, who together make up, you know, more than 30 percent of the population, boycotted the polls. […]

Well, you know, it was—people were turning up for the polling stations. People were casting their votes in a fairly orderly manner. But it got increasingly jolly as the day wore on and it became obvious which way the vote was going to go. And people gathered on the central Lenin Square underneath the big towering statue of the founder of the Bolshevik state. And there was a rock concert, and people gathered, waved Russian flags, chanted “Russia! Russia! Russia!” as if they were at a football match. It occurred to me about halfway through that it was like a combination of Russia winning the World Cup and the Nuremberg rally. It was a very peculiar atmosphere of sort of a degree of celebration and also as a strange and slightly disquieting sense of triumphalism that I, as a non-Russian, found a little bit weird.

Dmitri Trenin: Well, I would say that the Russians have become used to people essentially using various standards for their own behavior and for other people’s behavior. Basically, President Putin in his press conference recently intimated that he was doing the things that basically the United States was doing. He was—he was placing the legitimate above the legal. If you need something and you need it badly, you go for it. It may not be legal, but if it’s your—if it’s in your national interest, then you go for it—except that the cases of Libya or Kosovo or Iraq, arguably, were less important for the United States’ national security interests than the issue of Crimea and Ukraine is, or was, for Mr. Putin and the Kremlin.

Nicholas Clayton: Well, the new leadership, it appears that they’re still very much in crisis mode, attempting to hold the country together. Many of them were not in the government before the Yanukovych regime fell. One of the more controversial things that has happened recently and one of the firmer gestures that the new government has made is saying that those advocating secession in other Ukrainian territories will be apprehended. And on one hand, this is a bit of an escalation of the rhetoric within Ukraine; however, it also represents very much the crisis mentality of the new government. As you mentioned before, there have been increasing protests in the cities of Kharkiv, Donetsk and Lugansk, where pro-Russia and pro-Ukraine protesters have clashed, and three people have died so far. There’s been accusations traded, but Kiev has claimed that a large portion, if not the majority, of these pro-Russian protesters are indeed Russian citizens that have come—been bused in from Russia, and they’re also tightening the border. It appears that they’re trying very hard to avoid any other province in Ukraine from getting the Crimea treatment at this point. […]

And as we’ve discussed already this hour, I do think that many in the West underestimated how strategic Ukraine, and particularly Crimea, is to Russia. The port of Sevastopol has been the base of the Russian Black Sea Fleet since imperial days, since the 18th century, and it actually is probably the best harbor in the Black Sea for a large fleet and one of the only ones that could safely hold a large fleet. It has a deep harbor, it’s very large, and it’s protected on both sides by hills, which means the wind is not a factor. If Russia were to be booted from there, it would have to drastically reduce the size of its fleet and spend billions of dollars attempting to build up facilities in one of its other ports in order to hold it. And the Russian Black Sea Fleet is the portion of the Russian navy that it uses to project naval force into not only the Black Sea, where it has significant interests, but also the Mediterranean Sea and through the Sinai and the Indian Ocean, and therefore, it’s an important portion of their Middle East strategy and their foreign policy in those regions.

And so, this really is a—what the Russians call a steel interest, something that is certainly a red line and certainly something that if Russia had to retreat from, would be very—would very much hurt their foreign policy and their ability to project power in the world. And we saw—this is partially why Russia moved so quickly in the upper house, was that many figures in the new government in Kiev did make statements saying that they wanted to basically cancel the lease that Russia has for the use of the base in Sevastopol. The current lease gives Russia the right to use that port until 2042, but there—in the past, previous governments have also tried to push Russia out, and it has been a major factor in Russia’s relationship with Ukraine since the end of the Soviet Union and very much—very much has been a huge card in the East-West battle over Ukraine, as well.

For once I would also recommend the latest outing of BBC’s political magazine programme This Week, which featured analysis from the Telegraph‘s Liam Halligan.

*

1 From an article entitled “What Color is Ukraine’s ‘Color Revolution’?” written by Justin Raimondo, published by antiwar.com on March 12, 2014. http://original.antiwar.com/justin/2014/03/11/what-color-is-ukraines-color-revolution/

2 From an article entitled “Ukraine crisis: Yatsenyuk is PM-designate, Kiev Maidan told” published by BBC news on February 26, 2014. http://www.bbc.co.uk/news/world-europe-26359150

3 From an article entitled “Ukraine crisis: bugged call reveals conspiracy theory about Kiev snipers” written by Ewen MacAskill, published by the Guardian on March 5, 2014. http://www.theguardian.com/world/2014/mar/05/ukraine-bugged-call-catherine-ashton-urmas-paet

4 From an article entitled “Russia, Ukraine feud over sniper carnage” written by Mike Eckel, published by the Washington Post on March 7, 2014. http://www.washingtonpost.com/world/europe/russia-ukraine-feud-over-sniper-carnage/2014/03/07/12ed2364-a638-11e3-b865-38b254d92063_story.html

5 From an article entitled “Ukraine crisis: Key players” published by BBC news on February 27, 2014. http://www.bbc.co.uk/news/world-europe-25910834

6 From an article entitled “Ukraine crisis: Yatsenyuk is PM-designate, Kiev Maidan told” published by BBC news on February 26, 2014. http://www.bbc.co.uk/news/world-europe-26359150

7 From an article entitled “’Prepared to Die’: The Right Wing’s Role in Ukrainian Protests” published by Der Spiegel on January 27, 2014. http://www.spiegel.de/international/europe/ukraine-sliding-towards-civil-war-in-wake-of-tough-new-laws-a-945742.html

8 From an article entitled “How the far-right took top posts in Ukraine’s power vacuum”, published by Channel 4 news on March 5, 2014. http://www.channel4.com/news/svoboda-ministers-ukraine-new-government-far-right

9 From an article entitled “The forgotten coup – and how the godfather rules from Canberra to Kiev” written by John Pilger, published on March 16, 2014. http://johnpilger.com/articles/the-forgotten-coup-and-how-the-godfather-rules-from-canberra-to-kiev

10 From an article entitled “Groups at the sharp end of Ukraine unrest” published by BBC news on February 1, 2014. http://www.bbc.co.uk/news/world-europe-26001710

11 From an article entitled “US a full partner in Ukraine debacle” written by Stephen Kinzer, published in The Boston Globe on March 3, 2014. http://www.bostonglobe.com/opinion/columns/2014/03/03/cold-war-over-russia-isn-zero-sum/Df9VSHeJFpKUz3tRKDjUXJ/story.html

12 From an article called “London’s Laundry Business” written by Ben Judah, published in The New York Times on March 7, 2014. http://www.nytimes.com/2014/03/08/opinion/londons-laundry-business.html?_r=0

13 ‘annexation’ is a provocative term. Many Russians including those in Crimea see it as a ‘reunification’. Mikhail Gorbachev said:

Earlier Crimea was merged with Ukraine under Soviet laws, to be more exact by the [Communist] party’s laws, without asking the people, and now the people have decided to correct that mistake. This should be welcomed instead of declaring sanctions.” He said: “To declare sanctions you need very serious reasons. And they must be upheld by the UN.” Adding: “The will of the people of the Crimea and the Crimea’s possible unification with Russia as a constituent region do not constitute such a reason.”

http://rt.com/news/mistake-fixed-crimea-gorbachev-422/

14 From an article entitled “The Ukraine crisis: John Kerry and Nato must calm down and back off” written by Jonathan Steele, published in the Guardian on March 2, 2014. http://www.theguardian.com/commentisfree/2014/mar/02/not-too-late-for-ukraine-nato-should-back-off

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Greg Palast on the other “Summers memo” and the decriminalisation of rogue banking

‘Dirty’ Industries: Just between you and me, shouldn’t the World Bank be encouraging MORE migration of the dirty industries to the LDCs [Less Developed Countries]?

wrote Larry Summers when he was Chief Economist at the World Bank. The words are contained in a memo to Brazil’s then-Secretary of the Environment Jose Lutzenberger on December 12th 1991 that became known as the “Summers memo”.

This memo (which was apparently ghost-written by Lant Pritchett who worked under Summers, and signed by Summers himself) then went on to suggest three reasons why dumping toxic waste in the poorest regions of the world is a great idea; reasons that are summarised below:

1) “…a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages… I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”

2) “I’ve always thought that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City.”

3) “The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity… Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable.”

Summers adding that:

The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc.) could be turned around and used more or less effectively against every Bank proposal for liberalization.

You can read more about the “Summers memo” here.

Lutzenberger later wrote a response to Summers as follows (although I believe that his reply came after the memo itself had been leaked):

“Your reasoning is perfectly logical but totally insane… Your thoughts [provide] a concrete example of the unbelievable alienation, reductionist thinking, social ruthlessness and the arrogant ignorance of many conventional ‘economists’ concerning the nature of the world we live in… If the World Bank keeps you as vice president it will lose all credibility. To me it would confirm what I often said… the best thing that could happen would be for the Bank to disappear.”

You can read this alongside the Summers memo at the satirical website whirledbank.org

If this first leaked memo was, well let’s just say more than a little embarrassing for the World Bank and Larry Summers, then what turned up recently looks altogether more incriminating again. This second memo – a document that fell into the hands of investigative reporter Greg Palast and who says he expended great efforts to affirm its authenticity – “confirmed”, as Palast put it in his recent article for Vice Magazine, “every conspiracy freak’s fantasy: that in the late 1990s, the top US Treasury officials secretly conspired with a small cabal of banker big-shots to rip apart financial regulation across the planet.”

When a little birdie dropped the End Game memo through my window, its content was so explosive, so sick and plain evil, I just couldn’t believe it. […]

The Treasury official playing the bankers’ secret End Game was Larry Summers. Today, Summers is Barack Obama’s leading choice for Chairman of the US Federal Reserve, the world’s central bank. If the confidential memo is authentic, then Summers shouldn’t be serving on the Fed, he should be serving hard time in some dungeon reserved for the criminally insane of the finance world.

Since Palast wrote his piece, it transpires that Summers will not be replacing Ben Bernanke as Fed Chairman, but instead the job looks likely to go to Timothy Geithner1 – Geithner being the author of this latest memo, which (to quote Palast again) “begins with Summers’ flunky, Timothy Geithner, reminding his boss to call the then most powerful CEOs on the planet and get them to order their lobbyist armies to march”:

“As we enter the end-game of the WTO financial services negotiations, I believe it would be a good idea for you to touch base with the CEOs….”

So just what was this “end-game” that Tim Geithner is referring to in his memo sent in late November 1997? Well, it’s complicated but here’s Palast again picking up the story:

It’s not the little cabal of confabs held by Summers and the banksters that’s so troubling. The horror is in the purpose of the “end game” itself.

Let me explain:

The year was 1997. US Treasury Secretary Robert Rubin was pushing hard to de-regulate banks. That required, first, repeal of the Glass-Steagall Act to dismantle the barrier between commercial banks and investment banks. It was like replacing bank vaults with roulette wheels.

Second, the banks wanted the right to play a new high-risk game: “derivatives trading.” JP Morgan alone would soon carry $88 trillion of these pseudo-securities on its books as “assets.”

Deputy Treasury Secretary Summers (soon to replace Rubin as Secretary) body-blocked any attempt to control derivatives.

But what was the use of turning US banks into derivatives casinos if money would flee to nations with safer banking laws?

The answer conceived by the Big Bank Five: eliminate controls on banks in every nation on the planet in one single move. It was as brilliant as it was insanely dangerous.

How could they pull off this mad caper? The bankers’ and Summers’ game was to use the Financial Services Agreement, an abstruse and benign addendum to the international trade agreements policed by the World Trade Organization.

Until the bankers began their play, the WTO agreements dealt simply with trade in goods–that is, my cars for your bananas. The new rules ginned-up by Summers and the banks would force all nations to accept trade in “bads” – toxic assets like financial derivatives.

Until the bankers’ re-draft of the FSA, each nation controlled and chartered the banks within their own borders. The new rules of the game would force every nation to open their markets to Citibank, JP Morgan and their derivatives “products.”

And all 156 nations in the WTO would have to smash down their own Glass-Steagall divisions between commercial savings banks and the investment banks that gamble with derivatives.

The job of turning the FSA into the bankers’ battering ram was given to Geithner, who was named Ambassador to the World Trade Organization.

After further background surrounding the nature of the “WTO financial services negotiations” Geithner is alluding to in his memo to Summers, Palast then adds:

Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate. 2

Click here to read Greg Palast’s full article entitled “Larry Summers and the secret ‘End-Game’ Memo”, which was published on August 22nd 2013.

You can also watch an interview with Palast on Tuesday’s [Sept 17th] Keiser Report in which he talks more about the “End-Game” memo:

Going back to the original “Summers memo” and we discover that in their defence both Lant Pritchett (the self-confessed author) and Summers himself said later that their suggestion for dumping toxic waste in third world countries was just meant sarcastically – so in other words just a great big insider joke, ha, ha, ha… stop me because my sides are splitting!

Presumably then, this more recently discovered “End-Game” memo will turn out to be just another example of the boys at the US Treasury, the WTO and the heads of the major banks larking around. Playing at being mobsters with a wink and a nudge – you know, like Bugsy Malone or something. Destroying the global economy with toxic derivative “products”, ha, ha, ha… like that could ever happen!

1 From an article entitled “Federal Reserve:Who will replace Ben Bernanke?” published by BBC news on September 16, 2013:

“There are three candidates being discussed as possible replacements to Ben Bernanke, chairman of the Federal Reserve, the US central bank. They are vice-chair of the Federal Reserve Janet Yellen, previous vice-chair Donald Kohn and former Treasury Secretary Timothy Geithner.” […]

The 52-year-old was heralded by watchers of the Fed as the man to replace Ben Bernanke. He is a confidante of Mr Obama, and a White House favourite. But he has ruled himself out of the race.

Chris Orndorrf, senior portfolio manager at Western Asset Management, told the BBC he thought Mr Obama would try to persuade Mr Geithner to take the job.

“He [Mr Geithner] said he doesn’t want it but stranger things have happened in Washington. I would say maybe a 25% chance,” Mr Orndorrf said.

There is no doubt that Mr Summers had been Mr Obama’s preferred choice to lead the post. ”

http://www.bbc.co.uk/news/business-24105985

2 From an article entitled “Larry Summers and the Secret ‘End-Game’ Memo” written by Greg Palast, published by Vice Magazine on August 22, 2013. http://www.vice.com/en_uk/read/larry-summers-and-the-secret-end-game-memo

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Filed under financial derivatives, Greg Palast, Max Keiser

independence for Catalonia?

An introductory note:

The following is the translation of an article written by journalist and political activist Esther Vivas after the recent September 11th demonstrations for Catalan independence.

The Catalan independence issue is a complex one, and so I also sent the original article to a Catalan friend who has helpfully explained some of the more technical terms. I have since re-edited the original version and added my friend’s remarks in the form of footnotes (with links) to provide a little guidance for those of us less familiar with politics of the region.

What is perhaps especially interesting to outsiders is the birth of a new political movement. The movement, which is known as Procés Constituent – approximately translates to mean “constitutional process” – was started by a nun by the name of Sister Teresa Forcades and a fellow activist called Arcadi Oliveres.

*

Catalonia: independence from Spain, independence from capitalism

Esther Vivas

Hundreds of thousands turned out last September 11 to demand independence for Catalonia. Some decided to surround the Caixa, form a human chain around the largest bank in Catalonia and third largest in Spain, to demand not only independence from Spain, but from capitalism.

Some in that crowd will say that independence comes first, and then we’ll see. That independence itself will end unemployment, poverty, and hunger. As if independence were a divine manna. This, however, is falsehood. Just ask people in Greece, Portugal, Ireland, Cyprus and all of us now living in Spain. Instead, gaining real independence must mean that we escape from, well, the grip of the Troika*, since it is the European financial powers which now stand in the way of real freedom for the people. After all, there can be no real independence under the burden of debt, the blackmail of the risk premium and the “markets” .

Others in the crowd will claim “Madrid robs us ”, and so if we say “Farewell to Spain”, then our problems are solved. But nothing is further from reality… Where are we going with a country in the hands of just 400 families1 forever? Moving towards real independence, involves asking: independence for what and for whom.

The open debate in Catalonia today is an opportunity to rethink the foundations for a new model of society. It may be independent, yes, but it must be open to a ‘constitutional process’2 that allows us to decide together what kind of country we want… Always remembering that it has been the banks which are most responsible for this crisis, with La Caixa being the largest bank in Catalonia. And that to save these financial institutions we have been sunk into absolute misery. So we will never be free nor independent, if we are still subject to policies that only serve to prop up the banks.

It is also common knowledge that La Caixa does not want a referendum on independence. “Social peace” [or “let’s not rock the boat”]3 being the final guarantor of its sustained profits, and with the Spanish State always its biggest source of business…. Its true loyalties evident from the scandal involving the royal family… La Caixa ensuring a golden retirement for the Infanta Cristina in Switzerland4, as head of the International Department of the La Caixa Fundación, her salary increasing to 320,000 euros per year…

So which country will we have after independence if our largest bank still evicts families and rips us off through ‘preferred shares’5? What will our independence amount to if we are still in the hands of thieves…?

* This is an extract from an article published by Esther Vivas in Spanish in Publico.es, 12/11/2013.

Originally translated by http://revolting-europe.com.

+info: http://esthervivas.com/

*

Footnotes:

* The following is a previous article published by Esther Vivas at Publico.es, June 1, 2013:

United against the Troika
Esther Vivas

Who is the Troika? A year ago few knew the answer to this question. We knew it by reference, to its stay in Greece, and it wasn’t good. The Troika was synonymous with austerity, adjustment and cuts, hardship, hunger and unemployment.

But it was not until the arrival in Spain of the much denied rescue, in June 2012, that the “men in black” and “Troika” became a household name. Today, a year later, people, sick and tired, are coming out into the streets to say loud and clear: “Troika, go home”.

History repeats itself. And just as many countries of the South in the 1990s and 2000s saw mass demonstrations against the International Monetary Fund and the World Bank, whom the people accused of reducing them to misery, now people here speak out against the Troika: the International Monetary Fund, the European Commission and the European Central Bank. The bank is different. But the logic is more of the same.

Centre-periphery relations at a global level are now repeated in the European Union. And the countries of the periphery of the Continent, we have become the new colonies, markets or sources of financial capital. Where once, in the South, structural adjustment plans were applied, in order, it was said, to make debt more sustainable, as if the misery and poverty to which they could be subjected was sustainable. Now they speak to us of “aid” and “bailouts “… and they reduce us all to misery.

Debt remains the yoke imposed on the poor. A mechanism of control and subjugation of peoples. An infallible instrument to transfer resources, or to be more precise, of plunder, from South to North, either global or at a European scale. And an argument for reducing the rights of the majority and generate more profits to capital, cutting and privatizing public services covertly. The debt imposed on us, which, incidentally, is not ours, is the perfect excuse to implement what is a long plan. Thus, the scam is called the crisis, the theft is the debt.

We have quickly learned the meaning of the Troika, but also that of other concepts such as anger, rebellion and disobedience. And today we rise in more than 100 cities across Europe as the “peoples united against Troika”. Because we can.

* Article published at Publico.es, June 1st, 2013.
** Translated by http://revolting-europe.com.

1400 families”: I don’t know exactly when this phrase was coined, but it has been current in the media in recent years to refer to the Catalan ruling elite, whose members are often descended from the industrial bourgeoisie of the past. The phrase became popular in 2009 when Fèlix Millet, a well-connected businessman from this particular class, confessed to embezzling large amounts of money from the Palau de la Música foundation. He has also been accused of conniving in the illegal funding of Convergència Democràtica de Catalunya, the political party in power in the autonomous government, many of whose leaders happen to belong to the “400 families”. But despite his confession and the public outrage that followed, the court case keeps being delayed and Millet has only spent a few days in prison so far.

According to La Vanguardia, in an interview he referred to himself as belonging to a group of 400 influential Catalans, some related to each other and others not, “who meet everywhere and are always the same” (sorry, I haven’t found a link in English:

http://www.lavanguardia.com/politica/noticias/20090924/53791233174/uno-de-los-nuestros-felix-millet-orfeo-catala-omnium-cultural-montserrat-estado-liceu-joan-anton-mar.html).

2constitutional process”: this refers to the writing of a socially progressive Catalan constitution in the future, which is advocated by a group called “Procés Constituent” started by Teresa Forcades (the nun who became famous on Youtube exposing the pharmaceutical industry in connection with the swine flu vaccine) and a fellow Christian activist called Arcadi Oliveres.

This group is not a political party and both founders have said from the start that they are not going to stand in elections. Their aim is allegedly to set up a movement that will eventually lead to a “constituent assembly” for the new Catalan state. The group organized the alternative human chain around la Caixa that is mentioned in the article, to signal their differences with the independentist “Via Catalana” chain.

They are pro-independence but believe that a Catalan republic will be pointless unless it’s built on radically different principles, so for example in their manifesto they advocate, among other things, nationalising banks, refusing to pay “odious debt” and extending the welfare state (which is the reason Vivas supports them; I also signed my support when they first published their manifesto, which felt pretty odd given my feelings about Catholics –Forcades and Oliveres seem well-meaning, though). So when Vivas refers to the “constituent process”, I think she’s referring to the idea that social rights should be written into the future Catalan constitution.

To read more about Sister Teresa Forcades and her movement, “Procés Constituent”, I recommend a BBC news article entitled “ Sister Teresa Forcades: Europe’s most radical nun”, written by Matt Wells, published on September 14, 2013. The article outlines her 10-point programme, drawn up with economist Arcadi Oliveres, as follows:

• A government takeover of all banks and measures to curb financial speculation

• An end to job cuts, fairer wages and pensions, shorter working hours and payments to parents who stay at home

• Genuine “participatory democracy” and steps to curb political corruption

• Decent housing for all, and an end to all foreclosures

• A reversal of public spending cuts, and renationalisation of all public services• An individual’s right to control their own body, including a woman’s right to decide over abortion

• “Green” economic policies and the nationalisation of energy companies

• An end to xenophobia and repeal of immigration laws

• Placing public media under democratic control, including the internet

• International “solidarity”, leaving Nato, and the abolition of armed forces in a future free Catalonia

http://www.bbc.co.uk/news/magazine-24079227

3Social peace”: this is a direct translation of a euphemism that is often used here by politicians, bankers and businessmen alike, so when there’s a demonstration or a strike or any kind of protest by the people, those in power will say that this is undesirable because it disrupts “social peace”, by which they mean that the protests threaten to disrupt the status quo.

4ensuring a golden retirement for the Infanta…”: this refers to a financial scandal involving the Infanta, her husband, the king and various Partido Popular politicians and regional governments. It’s a long soap opera so I’ll spare you the details. The latest thing is that after being let off the hook by the corrupt justice system, the Infanta has been given a cosy and highly lucrative job in Switzerland by La Caixa, the bank mentioned in the article.

5preferred shares”: this is a complex, high-risk ‘financial product’ that a few years ago was fraudulently sold by Spanish banks to thousands of unwitting citizens, mostly elderly and uneducated, who didn’t have a clue what they were buying. When the crisis set in, the buyers lost everything (in fact I know someone whose elderly mother lost her savings this way). The victims are still fighting to get their money back. If you want to read more about this, you can have a look here: http://www.arabtimesonline.com/NewsDetails/tabid/96/smid/414/ArticleID/194380/reftab/96/Default.aspx

I would like to thank Esther Vivas for allowing me to reproduce these articles.

Not all of the views expressed are necessarily views shared by ‘wall of controversy’.

*

Update:

The following is a subsequent article on progress of the ‘Constituent Process’ published on October 27th 2013:

Catalonia: a Constituent Process to decide everything
Esther Vivas

Nobody said that it would be easy, but it is necessary to try. And this is precisely what is being done through the Constituent Process in Catalonia, led by the Benedictine nun Teresa Forcades and the economist Arcadi Oliveres, along with many other people. To create social consciousness, to mobilize, to promote civil disobedience and to raise a political alternative that defies those who monopolize power.

Its objective is to construct a new politico-social instrument, based on popular self-organization, loyal to those of at the bottom and able to contribute, in diversity, to the social and political left as a whole. On the horizon, if things work out, it expresses the will to compete in the next elections to the Catalan Parliament, with a broad candidacy, the result of the necessary confluence of many people, some currently inside and others outside the Process, that aspires to transform social discontent into a political majority and to establish the bases to promote a constituent process, that allows us to collectively equip ourselves with a new political framework in the service of the majority.

Some will say that this is utopian, but it is more utopian, from my point of view, to think that those who have led to us to the present situation of crisis, from which, by the way, they obtain substantial benefits, will get us out of it. Breaking with scepticism, apathy and fear is the challenge that we have ahead. Knowledge that “we can” is the first step to obtaining concrete victories.

Ever since the Constituent Process went public last April, the support received has been wide The Process has connected with broad sectors of society who perceive, in the present context of crisis, the urgent necessity of changing things. Many people without too much political or organizational experience have identified with a discourse that appeals to something as essential as can be: justice.

Other social activists have seen in the Process an instrument to go beyond social mobilization per se and to consider a political-organizational perspective of change. Two years after the emergency of 15M, many perceive that no matter how much we occupy banks, empty houses, supermarkets, hospitals… those in power continue applying a series of measures that sink us into absolute misery. Resting on the essential struggle on the street, without which there is no possible change, the Constituent Process raises, at the same time, a challenge to the political-economic regime, as well as in the institutions. And to change the system by “occupying” these instances and giving them back to the social majority via a constituent process.

For sure there are no magical formulas but experiences like the constituent processes in Latin America (Ecuador, Bolivia, or Venezuela) or, closer to home, Iceland, in spite of their debatable evolutions, are experiences to consider deeply, not to imitate but to learn from their successes and errors. In Catalonia, the debate on the national question and independence opens an opportunity, as we could never have imagined, to be able to decide… and to decide on everything.

High participation

The high participation in public presentations of the Constituent Process, some led by Teresa Forcades and others by Arcadi Oliveres, with an average of between 400 to 700 people in municipalities like Vic, Sabadell, Santa Coloma de Gramenet, Lleida, Girona, Vilanova i la Geltrú, Balaguer, Figueres, Blanes, Granollers, Terrassa, or even small municipalities like Santa Fe del Penedès or Fals, shows the capacity of attraction of this initiative, which has, in a few months, made more than one hundred presentations across the Catalan territory.

And more importantly, the interest of those who approach the Process does not reside only in listening to its two main promoters but in participating actively in the construction of this politico-social instrument. In this way, more than 80 local assemblies have already been set up across Catalonia. Also specific assemblies around such issues as education, health, feminism and immigration have started up. All of them are coordinated in a general assembly known as the Promotional Group, which meets monthly.

The forms of action of the Constituent Process also reflect this “other politics”. At most public events makeshift money boxes are passed around to collect what it costs to rent the PA apparatus, photocopies and so on. The presentations serve also to attract those present to attending local meetings and assemblies. The groups in the territory are organized according to their own priorities and are coordinated nationally. The Constituent Process still has some way to go, but it shows the potential of a political initiative able to connect with major social unrest. Although obviously there is still much to be done, perhaps the most difficult part: to consolidate the process and improve the coordination of the assemblies. This is a work in progress.

From bottom to top

The confidence generated by its principal promoters, Teresa Forcades and Arcadi Oliveres, is key to its success. But we know that this is an initiative that will only succeed if it is built from the bottom up. I was told the day both presented the proposal: “We two alone cannot do much”. Correct. Today, the Constituent Process has more than 44,000 people attached and multiple local and sector meetings. Teresa Forcades and Arcadi Oliveres, as has been said many times, do not want to be leaders of anything, but agree to put their credibility at the service of a just cause.

Criticisms of the Christian profile of both have been made, despite the secular nature of the Process. Which in part is not surprising. The social mobilization of the left, both in Catalonia and in the Spanish state, would not be understood, in part, without the contribution of ordinary Christians. Without going any further, one of the founders of the Field Workers Union was none other than the priest of the poor, Diamantino Garcia. Denying this reality means ignoring this part of our collective history. And both Teresa Forcades and Arcadi Oliveres have spoken repeatedly and at length before the Constituent Process, against the ecclesiastical hierarchy, for the separation of church and state and in defence of the right of women to decide on their bodies. Which, incidentally, has earned them widespread criticism by reactionary sectors of the church and its hierarchy.

Last October 13, the main event of the Constituent Process was being held in Barcelona, just six months after its introduction. I still remember how before the proposal someone commented: “Why go ahead with such a project. This is going to fail”. A colleague said: “Failure would be not to try.” How right she was.

*Translated by International View Point.

+info: http://esthervivas.com/english

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the Latin American Spring they never mention

On February 27th 1989, the Venezuelan army, under orders from President Carlos Andrés Pérez, put down a mass uprising against the imposition of IMF led “austerity measures”; a protest which became known as the Caracazo (“the big one in Caracas”). According to official government reports “only” 276 people were killed in their attempts to “restore order”, however estimates for the actual number of casualties range between 500 to more than 3000.

Just a few years on, in 1993, and having narrowly survived two failed coups attempts, Carlos Andrés Pérez (otherwise known simply as CAP) was suddenly forced out of office when the Supreme Court found him guilty of embezzlement. With the impeachment of CAP, the next directly elected President was Rafael Antonio Caldera Rodríguez, and it was Rafael Caldera who, during his second term in office, had pardoned the leader of the original coup against CAP, a then little known military officer by the name of Lt. Colonel Hugo Chavez Frías.

Back in the 1990s news stories from Venezuela rarely if ever made our headlines, and unless you happen to be Venezuelan, there is a good chance you have never heard of either Carlos Andrés Pérez or Rafael Caldera. But this is not the case for the man who succeeded Caldera following the 1998 elections. For whatever else might be said of the late Hugo Chavez, there is no dispute that his political leadership during the last fourteen years – Chavez having been voted into office on four separate occasions in free elections – has put Venezuela altogether more firmly on the political map. So when Chavez died on Tuesday, it was an event that reverberated across the world. The debate over what his lasting legacy will be, and what happens next for Venezuela, buzzing in newsrooms and all over the internet.

Hugo Chavez was a social reformer, outspoken and with unashamedly revolutionary intent; his frequently stated ambition being nothing less than to inspire the downtrodden and oppressed of Latin America and beyond with his own brand of Bolivarian “participatory socialism”. To those ends, Chavez had immediately set about nationalising the Venezuelan oil industry, and then redirecting the huge profits to fund social projects both at home and abroad. Poverty levels in Venezuela were soon halved, and extreme poverty reduced by more than two thirds. Chavez also opened up education for the poorest in society and brought in a system of universal free healthcare.

That his programme of reforms has gradually improved the standard of living for the vast majority of Venezuelans is now acknowledged even by his fiercest critics, and so during last year’s election campaign, which he again won comfortably, the main opposition parties did not even challenge his social programme – their criticisms being reserved for his failures in other ways. That his policies have not allowed the Venezuelan economy to flourish as it should have (which seems odd given that Venezuela has actually maintained growth even throughout these troubled economic times), that inflation levels are unacceptably high (which is perhaps true although inflation is only a little higher now than during the period immediately prior to his presidency), and that Venezuela is suffering from a breakdown in law and order. This last charge is perhaps the most warranted, with Chavez unquestionably paying too little attention to the vital issue of ensuring law and order, but even here his supporters will fairly claim that the escalation in violent crime is to some extent a direct consequence of drug trafficking from neighbouring Colombia.

Incidentally, you can find a useful breakdown of all the statistics here.

Of course, the most serious charge levelled against Chavez is that his government has systematically turned a blind-eye or actually encouraged the violation of the human rights of his opponents. Human rights abuses that mostly seem to have come in the form of threats and intimidation, but which also include use of blacklists, other forms of exclusion, and in a few cases, even false imprisonment. This is obviously not acceptable. That said, it is sadly the truth that nearly every government on earth can also be charged with comparable abuses and more often than not with tactics that are very much more brutal again.

In Venezuela, unlike in America and the fifty and more states (including the UK) that have helped them out with “extraordinary rendition”1, torture and kidnapping are not sanctioned. In Venezuela, there is no equivalent to Guantánamo or the many “black sites” where inmates are indefinitely detained without charge. And if you still imagine that America, to return once more to the self-proclaimed home of freedom, has no political prisoners of its own then you evidently fail to take into account what has recently happened to John Kiriakou and Bradley Manning. In reminding readers of all this, it is not my intention to make excuses for Chavez and his government, but simply to put the charges against him into a more honest context.

Overall, it is surely fair to say that Chavez not only fundamentally altered the course of his home nation, with a dramatic shift away from the imposed neo-liberalism of his predecessors and the new emphasis placed on social justice, but alongside the popular success of those policies, he also more directly helped to establish other socialistic leaders across the whole of Latin America. In other words, it was Chavez above all others who spearheaded the Latin American Spring (not that it is ever called this of course) – the beginnings of a social and economic revolution that has been sweeping an entire continent for more than a decade, bringing with it a desperately needed power shift away from the oligarchs and the interests of their neo-imperialist associates. An upheaval, which being against the interests of the ruling establishment in the West (their own puppets having been vanquished), and by virtue of remaining fundamentally peaceful, has been consistently overlooked and misrepresented.

In short then, Chavez steadily won the political debate in South America, and not only in the barrios of Caracas, but also more widely, and this is the reason why millions to have taken to the streets to mourn his loss. A devout Catholic, Chavez was not a saint and he certainly was not infallible, but neither was he a tyrant or a dictator. He was a shrewd politician and more rarely and importantly, an uncommonly reliable one – a politician who actually abided by his own manifesto promises. A national leader who encouraged the previously disenfranchised to become actively involved in the democratic process of change and someone who engendered real hope in a people trying to transform their own future for the better.

*

Also last Tuesday, a trial began in Argentina that is set to reveal new details about how six Latin American countries coordinated with each other in the 1970s and 1980s to eliminate political dissidents. The campaign known as Operation Condor had involved military dictatorships in Argentina, Bolivia, Brazil, Chile, Paraguay, Peru and Uruguay. It was launched by the Chilean dictator Augusto Pinochet, but evidence shows how both the CIA and former Secretary of State Henry Kissinger were complicit from its outset. The objective of Operation Condor has a familiar ring: it was to track down, kidnap and kill people they labelled as subversives and terrorists — leftist activists, union leaders, students, priests, journalists, guerrilla fighters and their families.

On Thursday [March 7th] Democracy Now! spoke with John Dinges, a professor at the Columbia School of Journalism and the author of “The Condor Years: How Pinochet and his Allies Brought Terrorism to Three Continents”, who explained the significance of the latest hearings:

Well, there have been several trials, and this goes back to when Pinochet was arrested in London in 1998. That unleashed an avalanche of evidence that went across Europe and led to trials in many places—Rome, Paris, Argentina, Chile—but all of them much smaller than this one. This one has 25 people accused. Unfortunately—or fortunately, who knows?—many of the people who were involved in this have already died, they’re getting old, of the top leaders. But this is 25 Argentinians and one Uruguayan, all of whom were in military positions, all of whom were involved directly with the actions of Operation Condor.

This is historic in the sense that we’re going to hear from 500 witnesses. And really, in the Latin American legal system, it’s unusual. It’s really only coming to the fore now that you hear witnesses, as opposed to just seeing them give their testimony to judges in a closed room, and then later on people like me might go and read those testimonies, but really it doesn’t become public. This is all public. And apparently, a lot of it is being videotaped. So this is—this is the first time that the general public is going to hear the details of this horrible, horrible list of atrocities that killed so many people.

The United States, in this period, the 1970s, was a major sponsor of the military dictatorships that had overthrown some democracies, some faltering civilian governments, [and] whatever it was, the result [of the overthrow] was governments, like Videla, like Pinochet, like Banzer in Bolivia, who were killing their citizens with impunity. The United States knew about the mass killing. We had this kind of schizophrenic, Machiavellian attitude toward it. We really don’t want these communists to be taking over governments, and we fear that democracy is leading to communist governments. Indeed, a leftist government led by Salvador Allende installed a democratically elected, civilian and revolutionary government in Chile, and that’s why—and Pinochet overthrew that government. The United States was deathly fearful that this would spread in Latin America, and so supported the coming of dictatorships.

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

In April 2002, Chavez had himself narrowly survived an American-backed coup, and a 2003 documentary entitled The Revolution Will Not Be Televised (Spanish: La revolución no será transmitida) provides a fascinating insight and behind the scenes account of the attempted overthrow. Irish filmmakers Kim Bartley and Donnacha Ó Briain, who had been given direct access to Chavez with the intention only of making a fly-on-the-wall biography, suddenly finding themselves trapped in the midst of quite extraordinary political turmoil. Three days which changed the course of Venezuelan history:

*

Chávez: Inside the Coup (as the documentary is also known) first aired on RTÉ1 on 18th February 2003, as an installment of the Irish channel’s True Lives documentary series. It was later broadcast on BBC2 on 16th October 2003, as part of the channel’s Storyville documentary strand, and repeated on BBC4 on 18th November 2003.

The October broadcast by the BBC had caused considerable furore, the corporation receiving 4,000 e-mails demanding that Storyville‘s commissioning editor, Nick Fraser, should be sacked. And these attacks could hardly have come at a worse time. Already under the spotlight of the Hutton Inquiry, which had been set up ostensibly to investigate the circumstances surrounding the death of David Kelly, although as it turned out Lord Hutton was actually more intent on censuring the BBC. Blaming the messenger for accurately leaking the truth about the “sexed up” intelligence dossiers used justify the invasion of Iraq, rather than the government and security services who had conspired to fabricate those lies. For the BBC to re-screen Bartley and Ó Briain’s film just a month later must therefore have taken considerable courage.

Meanwhile, the claims made by those critical of the film were taken up by Ofcom, who eventually ruled in September 2006 that it had not upheld the complaints. A subsequent appeal in November was also dismissed by Ofcom, validating the BBC’s original decision to air the documentary.

*

Additional:

In an article from March 5th for Vice Magazine and also posted up on his own website, Greg Palast asks:

Despite Bush’s providing intelligence, funds and even a note of congratulations to the crew who kidnapped Chavez (we’ll get there), Hugo remained in office, reelected and wildly popular.

But why the Bush regime’s hate, hate, HATE of the President of Venezuela?

The answer, of course, is the obvious one:

Reverend Pat [Robertson] wasn’t coy about the answer: It’s the oil.

“This is a dangerous enemy to our South controlling a huge pool of oil.”

A really BIG pool of oil. Indeed, according to Guy Caruso, former chief of oil intelligence for the CIA, Venezuela hold a recoverable reserve of 1.36 trillion barrels, that is, a whole lot more than Saudi Arabia.

If we didn’t kill Chavez, we’d have to do an “Iraq” on his nation. So the Reverend suggests,

“We don’t need another $200 billion war… It’s a whole lot easier to have some of the covert operatives do the job and then get it over with.”

A short (about 25 mins) made for BBC television film based on Palast’s own encounters with Chavez, his kidnappers and his would-be assassins is also available as a FREE download.

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1A groundbreaking document published by the Open Society Foundation, on Tuesday shows that 54 countries, a quarter of the world’s nations, cooperated with the CIA’s extraordinary rendition programme.” Taken from an article entitled “Extraordinary Rendition: Israel, Russia and France ‘Surprisingly’ Not on List” written by Jessica Elgot, published by Huffington Post (UK) on February 5, 2013. http://www.huffingtonpost.co.uk/2013/02/05/extraordinary-rendition_n_2622079.html

A full list of all 54 countries is published beneath the same article.

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Catastroika: the other price of austerity

A little over a year ago, Greek journalists Katerina Kitidi and Aris Hadjistefanou released an important documentary film called Debtocracy. Their film showed how the financial catastrophe now taking place in Greece and elsewhere in Europe is nothing new, and, drawing parallels with earlier austerity offensives in places like Argentina and Ecuador, also presented a way out of the current debt crisis on the basis of previously established precedents – most importantly the precedent for the cancellation of odious debts. It is available to watch online for free, with the option of English, Spanish, Portuguese and French subtitles.

Click here to read an earlier review and also to watch a version with English subtitles.

The same film-makers have now released what is in effect a sequel to Debtocracy. Entitled Catastroika for reasons that quickly become apparent, this latest documentary looks more closely at the other side of the story, revealing how the emergency fire sale of Greek public assets is also nothing new.

Beginning in Russia in the early 1990s, the film shows the devastating consequences of Boris Yeltsin’s programme of IMF and the World Bank backed ‘liberalisation’ and ‘reform’. Resistance to these measures had been strong and so ultimately, following a wave of mass protests, Yeltsin took the extraordinary decision to storm his own parliament with a direct military assault, killing hundreds of his opponents who were trapped inside.

Catastroika also looks into the effects of deregulation of public services in other places around the world. The sell-off and the deliberate destruction of Eastern competitors following German reunification, and in Britain, the Major government’s disastrous privatisation of our rail network. The film details how Railtrack‘s poor safety record and spiralling costs eventually led to the collapse of the company and its de facto renationalisation; the longer term consequence being increased prices and larger state subsidies than when the whole rail system had been publicly maintained and operated.

The film then moves to Paris and investigates Jacques Chirac’s sale of the Parisian water supply into the monopoly hands of Veolia and Suez in spite of giving no economic justification and against huge public opposition. Lastly, it looks into the deregulation of the electricity industry in California, and how this was very cleverly exploited by Enron and other companies who deliberately caused blackouts in order to hike prices.

Drawing upon expert support from academics and other informed opponents to such privatisation initiatives, the film also includes more general analysis from Naomi Klein, Greg Palast and Ken Loach.

Click here to watch the full documentary with English subtitles.

To visit the official website for Catastroika click here.

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Update:

Since I wrote this review, several versions of Catastroika have been uploaded on youtube with English subtitles. The one embedded below seems to be a good one:

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