“[T]he United Nations has been transformed since we last met here in Davos. The Organization has undergone a complete overhaul that I have described as a ‘quiet revolution.” . . . A fundamental shift has occurred. The United Nations once dealt only with governments. By now we know that peace and prosperity cannot be achieved without partnerships involving governments, international organizations, the business community and civil society. . . . The business of the United Nations involves the businesses of the world.”
— UN Secretary General Kofi Annan speaking to the World Economic Forum in 1998†
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Anyone who has read John Perkins bestselling mea culpa “Confessions of an Economic Hitman” is already familiar with the modus operandi of global vulture capitalism. Employed by an engineering consultancy firm, Perkins tells us that his actual job was to persuade the leaders of poor countries to take on enormous loans for prestigious development projects from global financial institutions including the World Bank and other multilateral development banks (MDBs).
Once saddled with debts – and the word ‘saddled’ aptly characterises what it means to be heavily indebted – the countries would then be compelled to acquiesce to US pressure on a whole host of issues including, centrally, the adoption of neoliberal policies which require the privatisation of state assets and a vast transfer of wealth to enrich a handful of Western financial elites.
As Perkins tells us right at the top of the preface to his book:
Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign “aid” organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet’s natural resources. Their tools included fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization.
I should know; I was an EHM.
Of course, what Perkins describes is old school neo-imperialism. This was how late-twentieth century imperialists captured foreign nations and controlled them without too much need of direct military intervention or “boots on the ground” because mechanisms of financialisation are sufficient means for the usurpation of governments and exploitation of resources. However, as the world moves forward and new opportunities for exploitation recede, methods of plunder and ways of disguising it are swiftly being upgraded. These days when everything is going ‘green’, neo-imperialism is no exception:
Today, MDBs are used as “instruments of power” that utilize debt to force developing nations to implement policies that benefit foreign interests rather than their own national interests. If GFANZ gets its way [see below], the MDBs of tomorrow will be used to essentially eliminate national sovereignty, privatize the “natural assets” (e.g., ecosystems, ecological processes) of the developing world, and force increasingly technocratic policies designed by global governance institutions and think tanks on ever more disenfranchised populations.
The warning above is taken from a recent article by independent journalist Whitney Webb entitled “UN-Backed Banker Alliance Announces ‘Green’ Plan to Transform the Global Financial System”.
GFANZ, short for the Glasgow Financial Alliance for Net Zero, as Webb explains, is an “industry-led and UN-convened” initiative. It was launched last April by John Kerry, US Special Presidential Envoy for Climate; Janet Yellen, US Secretary of the Treasury; Mark Carney, former chair of the Bank of England and now UN Special Envoy for Climate Action; who co-chairs the GFANZ alliance with US billionaire and former mayor of New York City, Michael Bloomberg.
According to their blurb (follow the link above):
GFANZ will work to mobilise the trillions of dollars necessary to build a global zero emissions economy and deliver the goals of the Paris Agreement. GFANZ will provide a forum for strategic coordination among the leadership of finance institutions from across the finance sector to accelerate the transition to a net zero economy.
Whitney Webb then follows the money:
GFANZ is composed of several “subsector alliances,” including the Net Zero Asset Managers Initiative (NZAM), the Net Zero Asset Owner Alliance (NZAOA), and the Net Zero Banking Alliance (NZBA). Together, they command a formidable part of global private banking and finance interests, with the NZBA alone currently representing 43 percent of all global banking assets. However, the “largest financial players” who dominate GFANZ include the CEOs of BlackRock, Citi, Bank of America, Banco Santander, and HSBC, as well as David Schwimmer, CEO of the London Stock Exchange Group and Nili Gilbert, chair of the Investment Committee of the David Rockefeller Fund.
Notably, another Rockefeller-connected entity, the Rockefeller Foundation, recently played a pivotal role in the creation of Natural Asset Corporations (NACs) in September. These NACs seek to create a new asset class that would put the natural world, as well as the ecological processes that underpin all life, up for sale under the guise of “protecting” them.
Continuing:
Details of GFANZ’s plan to deploy trillions of member investments into emerging markets and developing countries was published in the alliance’s inaugural “Progress Report,” the release of which was timed to coincide with the COP26 conference. The report details the alliance’s “near-term work plan and ambitions,” which the alliance succinctly summarizes as a “program of work to transform the financial system.” […]
In addition to the creation of “corporatist” “country platforms” that focus on specific areas and/or issues in the developing world, GFANZ aims to also further “corporatize” multilateral development banks (MDBs) and development finance institutions (DFIs) in order to better fulfill the investment goals of alliance members. Per the alliance, this is described as increasing “MDB-private sector collaboration.” The GFANZ report notes that “MDBs play a critical role in helping to grow investment flows” in the developing world. MDBs, like the World Bank, have long been criticized for accomplishing this task by trapping developing nations in debt and then using that debt to force those nations to deregulate markets (specifically financial markets), privatize state assets and implement unpopular austerity policies. The GFANZ report makes it clear that the alliance now seeks to use these same, controversial tactics of MDBs by forcing even greater deregulation on developing countries to facilitate “green” investments from alliance members.
The quote by Kofi Annan is also taken from Whitney Webb’s excellent article (which I firmly encourage you to read in full). It represents the final piece that completes the picture of the new neo-imperialist jigsaw. As she writes:
With the UN now essentially a vehicle for the promotion of stakeholder capitalism, it is only fitting that it would “convene” and support the efforts of a group like GFANZ to extend that stakeholder capitalist model to other institutions involved in global governance, specifically global financial governance. Allowing GFANZ members, that is, many of the largest private banks and financial institutions in the world, to fuse with MDBs, remake the “global financial governance system,” and gain increased control over political decisions in the emerging world is a banker’s dream come true. To get this far, all they have needed to do was to convince enough of the world’s population that such shifts are necessary due to the perceived urgency of climate change and the need to rapidly decarbonize the economy. Yet, if put into practice, what will result is hardly a “greener” world but a world dominated by a small financial and technocratic elite who are free to profit and pillage from both “natural capital” and “human capital.”
Click here to read Whitney Webb’s full article published on her official Unlimited Hangout website on November 5th.
On November 19th, Whitney Webb was interviewed by RJ Eskow on his show The Zero Hour where they discussed the issues raised in the article:
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† Extracts from the text of Secretary-General Kofi Annan’s address, entitled “Markets for a Better World”, delivered on January 31, 1998 at the World Economic Forum, Davos, Switzerland. https://www.un.org/press/en/1998/19980130.SGSM6448.html
On the eve of Wikileaks publisher Julian Assange’s extradition proceedings, which are set to recommence tomorrow [Wed 27th Oct] in London’s High Court, and in light of the extraordinary recent revelations of a CIA plot to kidnap and assassinate Assange while he sought political asylum inside the Ecuadorian Embassy in London, last Friday [Oct 22nd] the Progressive Internationalconvened for the first physical Belmarsh Tribunal to put the case against Assange and the US ‘War on Terror’ on trial:
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Speakers included:
Former President of Ecuador, Rafael Correa;
Labour MPs, Apsana Begum, Richard Burgon & John McDonnell;
Former Labour leader and independent MP, Jeremy Corbyn;
British Israeli architect, Eyal Weizman, who is the director of the research agency Forensic Architecture at Goldsmiths, University of London.
The event was chaired by Croatian philosopher, author and political activist, Srećko Horvat and was streamed live by Novara Media. The partial transcript provided below is courtesy of yesterday’s Democracy Now! broadcast which can also be read and watched here in full.
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StellaMoris [partner of Julian Assange – from 1:55:50 min]:
We’re meeting five days before Julian’s — before the U.S. appeal at the High Court here in London. And I want to remind everyone that Julian won the case on January 4th, and the Trump administration, two days before leaving office, lodged the appeal. And Julian’s bail application was refused, so he’s been in prison, in Belmarsh prison, for over two-and-a-half years. …
In the last few weeks, the mask has fallen in relation to the case against Julian. It’s fallen because there was an article — well, it’s been progressively falling over the years. There is no case, as others have said. This is just a naked political persecution. But there was an article published by Yahoo News just a few weeks ago, a 7,500-word investigation with over 30 sources, named and unnamed, high-level sources from current and past U.S. administrations, from the National Security Council, from the CIA, and that story revealed that the extrajudicial assassination of Julian in London was discussed at the highest levels of the U.S. government, that the seventh floor of the CIA in Langley, which is the director’s office, requested sketches and options for how to kill Julian inside the Embassy of Ecuador. They talked about kidnapping him, too, about rendition, rendition, extraordinary rendition, which is what the CIA developed to kidnap people and take them across jurisdictions to disappear them and then put them in a black site somewhere. And the embassy was essentially a black site towards the end. I felt that anything could happen there.
Julian’s lawyers were targeted by name, not just incidentally spied on. There are emails telling the security company to target Gareth Pierce, to target Aitor Martínez, to target Julian’s legal team, and their documents were stolen. And Baltasar Garzón’s office was broken into, just as the CIA was planning to murder Julian. And our 6-month-old baby’s nappy was instructed to be stolen so that they could use that, analyze the DNA to check whether Julian was the father.
This is flagrant criminality. We’re dealing with criminals who have instrumentalized the law, instrumentalized the extradition arrangements with this country and their good relationships with this country to politically persecute an innocent man, a journalist for doing his job.
Ewen MacAskill [Pulitzer-winning journalist – from 1:08:30 min]:
Another whistleblower that I owe much to is Edward Snowden. I went to Hong Kong in 2013 with Glenn Greenwald and Laura Poitras and spent over a week holed up with Snowden in our hotel room in Hong Kong.
Whistleblowers are essential to good journalism. They allow reporters to get behind the walls of secrecy, the walls of secrecy built up by officials and press officers. The whistleblowers reveal abuses and wrongdoing within governments, companies, the military, intelligence agencies. These whistleblowers should be rewarded for their courage; instead, too often they end up facing prosecution or jail.
There’s been a war being waged against journalism and free speech that’s been going on since at least 9/11. It’s not a general war. It’s specific to national security and the intelligence agencies. The intelligence agencies are waging it to try and dissuade future leakers within the agencies, and try and dissuade the journalists covering the national security beat. And this is what Assange has been caught up in.
What Assange has been accused of is fundamentally no different from the normal interaction between whistleblowers and journalists on the national security beat. There’s no fundamental difference between what Julian Assange was doing and what I was doing. And when I was in Hong Kong with Snowden, I spent a week with him discussing the ins and outs of his work at the National Security Agency. I spent a week going through tens of thousands of secret documents. And he passed me a memory stick with tens of thousands of secret documents on it. I mean, how is that fundamentally different from the relationship between the whistleblower Chelsea Manning and the publisher Julian Assange? …
If Julian is to be prosecuted, then there’s a equally good case for the editor and journalists in The Guardian or New York Times, Der Spiegel, El País, La República and all the other organizations involved in this coverage being prosecuted, too.
Obama, in spite of his liberal background, failed to stand up to the pressure from the intelligence agencies, and he used the draconian 1917 Espionage Act and other laws against whistleblowers and journalists. In fact, Obama was responsible for more prosecutions and action against journalists and whistleblowers than all the other presidents in the U.S. combined.
Tariq Ali [from 8:00 min]:
Julian exposed another set of wars. Basically, he exposed the so-called war on terror, which began after 9/11, has lasted 20 years, has led to six wars, millions killed, trillions wasted. That is the only balance sheet of that war. Nowhere has it redeemed itself or done any good, as we’ve seen most recently in Afghanistan.
So, what do you say to people like Chelsea Manning and Julian, who’s the principal target of the legal and judicial brutalities taking place, when they reveal stuff, which everyone knows it’s true, since some of it is on video — Americans bombing Iraqi families, totally innocent — totally innocent — laughing about it and are recorded killing them? That’s a big joke. Well, it isn’t a big joke for the millions who have died in the Arab world since these 20 years of war began. And Julian, far from being indicted, should actually be a hero. He’s not the first. And if they think that punishing him in this vindictive and punitive way is going to change people’s attitudes to coming out and telling the truth, they’re wrong. …
Julian is unfortunate to be captured by this particular state and its different apparatuses in order to appease the United States of America. He should never have been kept in prison for bail. He should not be in prison now awaiting a trial for extradition. He should be released. And I hope that acts like the Belmarsh Tribunal will help to bring that nearer.
SelayGhaffar [Solidarity Party of Afghanistan – from 14:30 min]:
Dear comrades and friends, I am thrilled and honored to join you on this historical tribunal. All Afghans, particularly the families of the war victims, expect the Belmarsh Tribunal to heal their wounds by holding the United States accountable for the thousands of innocent Afghans’ lives they destroyed and the future they stole. And I salute the Progressive International for this remarkable initiative.
In the wake of the U.S. humiliating withdrawal from Afghanistan, everybody asks this question: How did the two decades of the U.S. military occupation of Afghanistan, under the pretext of fighting terrorism, ended with the Taliban terrorists gaining a swift and easy victory in Afghanistan?
Well, so far, in my opinion, only one person, by the name Julian Assange, possibly had the answer to this mystery. In 2011, he unmasked the truth through a set of documents called the Afghan War Diary, where he exposed the tyrannical U.S. policy in Afghanistan and said that one of the goals behind sustaining the war was to wash money out of the tax bases of the U.S. and Europe through Afghanistan and back into the hands of the transnational security elite.
Two decades of U.S. occupation brought us nothing but ruin and loss of lives. And while the mainstream media tried to portray a rosy picture of Afghanistan, the leaks by Assange, in contrary, revealed bloody atrocities committed by the U.S. and NATO occupying forces. For instance, in 2007, the U.S. Special Forces dropped six 2,000-pound bombs on a compound where they believed a high-value individual was hiding; however, locals reported that up to 300 civilians had been killed in this raid. None of the media reported that incident.
According to reliable sources, about 241,000 Afghans have been killed by crossfire between the U.S. forces and the Taliban, of whom 48,000 civilians have been killed by U.S. occupation forces in a number of unknown incidents. But in my belief, the real number is much, much higher, as many incidents are not reported and not documented.
Well, the U.S. occupation has also inflicted invisible wounds. In 2009, the former Afghan Ministry of Public Health reported that fully two-thirds of Afghans suffer from mental health problems. The war has exacerbated the effects of poverty, malnutrition, poor sanitation, a lack of access to healthcare, and environmental degradation on Afghans’ health. Therefore, U.S. and NATO allies are responsible and accountable for all the past 20 years’ misery of our tormented people, particularly our ill-fated women.
Thank you again for giving me the opportunity to be among you all today in this tribunal. And I hope Julian Assange will be free soon. Thank you.
Jeremy Corbyn [from 18:25 min]:
Julian Assange has paid a very, very, very high price for his lifelong determination to expose the truth. Why? Is it because he has some idea that he can make himself famous by exposing the truth? Or is it something much stronger and much more moral than that, the belief that by exposing the truth, you can save lives, you can stop wars, and you can make sure that democracies function properly by holding all public officials, elected or unelected, to public account?
And that’s why the role of Julian Assange in all of this is so important. His information exposed the dishonesty surrounding the claims on Iraq. His information exposed the dishonesty of the continuing reporting of Iraq after 2003 with hidden information about the numbers of people that had died from “friendly fire” in Iraq, but also the dangers to all journalists, to everyone who believes in free speech, of the concept of the embedded journalist, embedded on an aircraft carrier, sent into a barracks or whatever else, to produce reports that are to the liking of the military.
So, those of us who want to live in a peaceful world and do not believe that a repeat of Iraq will do anything other than bring about even worse consequences than the Iraq War did are here because we want to support Julian Assange in the bravery that he’s shown and the price that he’s already paid for that bravery of ensuring that the whole world knows the truth about it.
Yanis Varoufakis [economist & Greek MP – from 49:20 min]:
A young man in Australia, a long, long time ago, well before we ever knew about WikiLeaks, had an idea: the idea of using Big Brother’s technology to create a large digital kind of mirror to turn to the face of Big Brother so as to enable us to be able to watch him watching us — a bit like turning the mirror to the face of the Medusa. WikiLeaks is based on that idea.
I remember spending a very long night with Julian in the Ecuadorian Embassy in Knightsbridge, when he called upon me to help him decipher and transcribe a conversation between officials of the International Monetary Fund. Having spent, in the previous year, a very long time negotiating with them, listening to them on that tape that Julian had procured, through WikiLeaks, through this blind, digital post box, was such a splendid experience. It was so liberating, because I could suddenly hear with my own ears the very same officials effectively agreeing with everything that the good people of Greece were saying, that we were saying, that I had been saying to them.
Now, of course, WikiLeaks has done far more important work than simply revealing that the International Monetary Fund knew that they were committing crimes against the Greek people and other peoples, in Latin America and so on, while perpetrating them. WikiLeaks and Julian, as we know, have been persecuted for revealing to the world, especially to liberals, Democrats, Tories, social democrats — revealing to them the crimes against humanity perpetrated by our own elected leaders, in our name, behind our backs. This is why they are now killing Julian Assange.
So, our message as the Belmarsh Tribunal must not simply be one of support for Julian or a call to have him released. No, we are a tribunal. We are trying the criminals that are killing Julian, as we speak, for crimes against humanity, not just for the crime of slowly murdering Julian Assange. You are criminals, and we are going to pursue you to the end of the Earth and back for the crimes you are committing all over the world against humanity while also murdering slowly Julian Assange and other whistleblowers who are revealing your crimes.
Edward Snowden [from 2:09:15 min]:
It’s difficult to be here. I struggle to understand how we can be here, after so many years there has been. There have been so many stories told. There’s been so much criticism. There has been so much deception. And where has it brought us? Has this been constructive? Is this a victory for us, for the state, for humanity, for our rights?
When I came forward in 2013, I said the reason that I came forward was that we have a right to know that which is done to us and that which is done in our name by our governments. That was already under threat. And when you look at the world since, it seems that that trend is accelerating. Do we still have that right? Do we have any rights if we don’t defend them? Well, today we see someone who has stood up to defend that right, who has aggressively championed that right, at an extreme cost. And it’s time for us to defend his rights.
What we are witnessing is a murder that passes without comment. And I want to say that it is difficult for me to comprehend the spectacle of the press of a nation, the “developed world,” aiding and abetting, with full knowledge, a crime not only against this man, but against our public interest. However, at this moment that we are, we all see this. We all feel it. It’s no less familiar than the shoes on my feet.
Everywhere we look, from Afghanistan to economics, from pandemic to pervasive surveillance, the obvious has been made unspeakable. And it has become unspeakable because the truth of our circumstances could be taken as evidence in the defense of the actions of the out of favor. And in the eyes of the American state, few represent this class, a greater object of hatred, than the person of Julian Assange. He has been charged as a political criminal — something that I understand quite well, but he has been charged as the purest sort of political criminal, for having committed the transgression of choosing the wrong side.
The charges, which are — they are absolutely an unadorned legal fiction. We are told to believe that the state has these powers over what can be said and what can’t be said, the things that can and cannot be said. But what happens if we permit that? Where does that lead? What are we? Can we be said to be free, if even our power to express ourselves, to understand the facts of our world, can be fenced off from us, and we look beyond, through the gauze, through the veil, at what could be the facts of the world, but we’re not permitted to acquire them?
Julian Assange did not accept that. And the charges against him reduce to an allegation to commit the crime of journalism in the first degree, which is to say, when we look at it applied elsewhere, the same sort of publication of classified material that we see in The New York Times or The Washington Post, aggravated by a conspiracy to accomplish the same, which is simply uncovering an uncomfortable truth. But something distinguishes Julian Assange from the greatest newspapers of our day, and that is his independence. Julian Assange is not a person who will be told no lightly.
I remember, in the case of 2013, when I came forward and revealed evidence of mass surveillance, which the government of my country had constructed the apparatus of mass surveillance, an entire scheme that spanned the globe, with the participation of Australia, New Zealand, Canada and, of course, the United Kingdom. And when the newspapers of all of these countries began publishing these things, one of the papers who held the archived material originally included The Guardian, who was headquartered in the United Kingdom, still is. And I remember reading a story — of course, I wasn’t there for it personally; I’m getting this secondhand — who knows what we can rely on, the state of journalism as it is today? But they were approached by the British state, who said, “OK, OK, you’ve had your fun. You’ve done enough. Now it’s time to stop.” And they had to send their archival material away to the United States, to a partner publication, because they no longer believed that they were safe to continue publishing. And they were right. Agents in the British state went to The Guardian. They destroyed their laptop computers. They’ve got it all on film, the putting angle grinders to computer chips, trying to erase any trace that these stories had been written from within the confines of the newsroom.
Now, Julian was not deterred by that, and he never would be. When you perform the level of surveillance against a person that has clearly been performed, and is being performed even today, certainly in prison, against Julian Assange, you understand at least something about their character. You understand what the breaking point is. You know what it will take to make them bend. And he didn’t bend. He will break before he does. He has consistently and continuously dared to speak the unspeakable, in the face of opposition, in the face of power. And that is a remarkable and rare thing. That is the reason that Julian Assange sits in prison today.
If you love the truth, as I think everyone here does — you wouldn’t be listening to this, you wouldn’t be watching this, you wouldn’t be participating in this, you wouldn’t care about this, unless something in you told you that something important was happening here. And if you do care, as I think you do, you are a criminal of the same category as Julian Assange. In the eyes of the state, what differentiates you, what divides you from him, that is only the degree. We share the same guilt. Each of us share in the crime. And we are unindicted co-conspirators in his quest to raise a lantern in the halls of power.
In April 2018 former Brazilian President Lula da Silva (of the Workers’ Party or PT) was convicted on charges of money laundering and corruption and sentenced to serve 12 years following the largest investigation into corruption in the country’s history; this was so-called Operation Car Wash.
Although Lula’s sentence was upheld at appeal, he has always vigorously denied all the charges and consistently claimed the case against him was politically motivated: Lula’s conviction immediately opening the way for Jair Bolsonaro to be elected with his main challenger now eliminated from the race. As if to settle the matter, Judge Sérgio Moro, who had presided over the case, was shortly afterward appointed as Bolsonaro’s Minister of Justice:
In a transaction that even anti-Lula crusaders found highly distasteful, the judge who found Lula guilty and cleared the path for Bolsonaro’s ascension to the presidency — Judge Moro — thereafter accepted a position in Bolsonaro’s government that has been described as a “Super Justice Minister”: a newly designed position consolidating powers under Moro that had previously been dispersed among various agencies. It rendered Judge Moro — less than a year after putting Lula in prison and thus removing Bolsonaro’s key obstacle — one of the most powerful men in Brazil.
From an article written by Glenn Greenwald based around an interview he conducted with Lula while he was still in prison. In the same piece, Greenwald explains in more detail how Lula’s conviction paved the way for Bolsonaro’s accession:
Lula’s criminal conviction on corruption charges last year came under highly suspicious circumstances. All year long, polls showed him as the clear front-runner for the 2018 presidential race. After anti-PT forces finally succeeded with [former President] Dilma [Rousseff]’s impeachment in doing what they spent 16 years trying with futility to accomplish at the ballot box — removing PT from power — it seemed that Lula’s 2018 return to presidency was virtually inevitable and that only one instrument existed for preventing it: quickly convicting him of a felony which, under Brazilian law, would render him ineligible to run as a candidate. And that’s precisely what happened. 1
Lula was finally released in November 2019 after serving 580 days in prison. This followed revelations also published by Glenn Greenwald in The Intercept based on:
[G]roup chats between Car Wash prosecutors and conversations between task force coordinator Deltan Dallagnol and Moro, showing that the then-judge and the prosecutors were unethically and inappropriately collaborating in secret. Despite repeatedly insisting in public that they were acting ethically and impartially, the chats revealed that the judge was passing on advice, investigative leads, and inside information to the prosecutors — who were themselves plotting to prevent Lula’s Workers’ Party from winning last year’s election. 2
Click here to find the full “Secret Brazil Archive” published by The Intercept (The quote above is from Part 4 of the 14 part series).
On his release, Lula spoke to supporters saying, “They did not imprison a man. They tried to kill an idea.”
Adding that under Bolsonaro, “Brazil did not improve, Brazil got worse. The people are going hungry. The people are unemployed. The people do not have formal jobs. People are working for Uber – they’re riding bikes to deliver pizzas.” 3
Click here to read an earlier post about the coup against Dilma Rousseff entitled “‘Brazil’: now more than ever, a satire for our age”.
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On Saturday, RT’s Going Underground devoted its show to an extended interview with Lula da Silva, which is embedded below. He told host Afshin Rattansi:
In Brazil some important things took place that the world needs to know about. For the first time in its history, during my government, Brazil became an international player. Brazil had created UNASUL [the Union of South American Nations] demonstrating a beautiful relationship within South America. Brazil had developed a relationship between South America and Africa; between South America and the Arab countries. Brazil had taken part in the creation of the BRICS. Brazil had created IBAS [or IBAS initiative (India, Brazil and South Africa), also called the G-3]. That is, Brazil was becoming an international player and that is something that the Americans never allowed.
Now Brazil is returning to the colonial period. After the coup on President Dilma, they would never want to have Lula back as the President of the Republic to continue our domestic social inclusion policy and our international protagonism policy. They want Brazil to continue to be a colony.
So they conjured this lie called the Car Wash Operation against me. They invented a lie during the procedure. They condemned me without any evidence. I’ve proved my innocence and I am waiting for them to prove any guilt on my part. I have challenged the Federal Prosecutor and the Judge who headed my trial. But I am much more concerned with Brazil at this moment. [from 4:55 mins]
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Continuing:
We had eliminated hunger in Brazil and hunger has returned. We were in a process of raising education in this country and now we have a great setback in education as well as in science and technology.
We have major setbacks in the environmental legislation, in deforestation and in the preservation of our forests and out water resources. Obviously Brazil would be better off if I had been allowed to be a candidate [during the last Presidential elections]. They withdrew my candidacy for presidency with a legal procedure because they knew that if I ran in the elections I would have won in the first round.
And here in Brazil, a part of the country’s elite cannot stand to see poor people eating in restaurants, or travelling by plane, or buying cars. They cannot stand to see poor people ascending, which is what we achieved through hundreds of public policies to improve the lives of the poor people in this country.
I am proud that the President of the United Nations acknowledged that Brazil had eliminated hunger. I am proud that in 2010, Brazil was the country with the highest level of hope in the world – with the happiest people in the world – because we had so many expectations; so many dreams. And Brazil was about to become the fifth global economy.
Now we see Brazil experiencing a rise in poverty. People are hungry in Sao Paolo, in Rio de Janeiro and all over the country people have gone back to the streets. Wages dropped drastically and unemployment has risen. This is the country of the fascists who rule it.
I want a democratic country, a sovereign country, a country where people are happy and proud to say they are Brazilian. [from 6:25 mins]
When asked whether leaving the oligarchs in power to falsely prosecute him and afterwards to remove Dilma from office in a de facto coup, Lula replies:
I won an election; I did not start a revolution. I do not believe that a metalworker, like myself, could have become President of the Republic if it had not been for democracy; and if it had not been, most of all for democracy and for the Brazilian people’s comprehension and maturity when they voted.
I confess that I ruled for all. I doubt that there was any moment in Brazil’s history when everyone benefited so much. It is true that businesses won. It is true that bankers won. It is true that big landowners won. But it is also true that the poor workers won too.
We had the greatest pay rise for the poor during my government; the greatest rise in education. We are already known in history as the government that built the greatest number of universities and technical schools; invested the most in science and technology; and for sure we must have made mistakes, or else there would have been no coup against President Dilma.
The coup was the beginning of a new attitude in Brazil. In my opinion it was organised by the US Department of Justice with the participation of the CIA. We have video recordings. The Intercept has publicly exposed all the scams of the Federal Prosecutor and Judge Moro – and the participation of the US DOJ in destroying the construction and engineering sector in Brazil; the gas industry in Brazil; and the country’s politics. Because the US never accepted the fact that Brazil would become an international player.
You must remember that the US and Europe had a hard time dealing with Iran, because they could not reach an agreement with regards to uranium enrichment. Ambassador Celso Amorim and I went to Iran with the President of Turkey, and we were successful in convincing Iran to accept an agreement which was better than this deal that was signed by the Americans and the European Union.
Regretfully, when we proposed the agreement I expected that the US and the EU would thanks Brazil and Turkey; instead they applied more sanctions against Iran in a clear demonstration that they were telling us that Brazil is a small third world country that cannot meddle with major countries’ affairs. [from 8:50 mins]
In 2008, Lula had also negotiated with French President Nicolas Sarkozy to win a contract with naval supplier DCNS [renamed Naval Group] for the sale of five submarines. This deal permitted a transfer of technology enabling Brazil to assemble four conventional submarines and one submarine with nuclear capability. During Operation Car Wash in 2016, DCNS was investigated over concerns of “corruption of foreign officials”. Asked about this part of the scandal, Lula says:
I am certain that the Americans did not agree that we should settle an agreement with France to build the nuclear submarine. I am certain that they did not appreciate it when I created the South American Defence Secretariat because as soon as we discovered the pre-salt oil, which was the major oil discovery of the twenty-first century – one thousand meters deep in the Atlantic Ocean – the Americans announced that they would reactivate their Fourth (maritime) Fleet in the Atlantic Ocean, which had ceased to operate after World War II.
Petrobras, the Brazilian state-run energy giant, had discovered the Tupi oilfield, which is located in the Santos Basin’s subsalt layer and estimated to hold recoverable reserves of between 5 billion and 8 billion barrels of oil, back in November 2007. It began pumping in May 2009. 4
Our oil is on the maritime border with international waters. So I believe that the US truly is interested in taking over our oil, just as they grabbed so much oil in so many countries around the world.
As you know Afshin, all political confusions around the world occur because of oil and the Americans do not want Petrobras, or the Brazilian people, to keep all that oil. [from 15:15 mins]
Lula also spoke about the assistance gave to his friend Hugo Chavez in Venezuela:
I had a fantastic relationship with President Chavez for many years, and I created a group of “Friends of Venezuela” to prevent any American intervention. And we were very successful during the Bush administration and later in the Obama administration with the following phrase: The people of Venezuela take care of democracy in Venezuela.
An American citizen who wins elections based on fake news like Trump has no moral authority to talk about democracy – likewise Bolsonaro in Brazil. Certainly I may have been naive, as well as Dilma, in believing in democracy; in believing in the conduct of the Brazilian elite, and we are paying the price for that. But nevertheless, I think that the solution is a democratic one. It involves democracy; freedom of the press; freedom of labour unions; freedom of association; respect for human rights. This is what motivates me and this is what I will fight for because it is only with democracy that we will be able to improve the quality of life of the poor; of the workers; and of the excluded people in our country. [from 17:00 mins]
Regarding the current political situation in Brazil, Lula says he thinks his former prosecutor Sérgio Moro will not run for President in 2022:
Moro will never become president. Moro was fabricated by Globo TV. Moro is an invention of the media and without the media, he is nothing. Moro is a citizen who I believe seems to be a coward because I have challenged him to debate with me. Now that he’s no longer a judge he could debate with me, but he won’t. And I do not think Globo will have the guts to support him. But if he is it is not a problem at all. [from 21:50 mins]
While at another point Lula says:
I am sure that Moro and [lead prosecutor of Op. Car Wash, Deltan] Dallagnol must take very heavy drugs to sleep because their conscience is not calm. They know that they lied about me. Dallagnol knows that he formed a gang in the Car Wash taskforce to pass on information to the US, and to strike a deal – a financial deal even – through which Dallagnol would raise a 200 million real fund to do something here in Brazil. My conscience is clear because my innocence is proven. Now I want to prove their guilt in the crimes they committed against Brazil. Attempting to destroy Brazil’s sovereignty.
Today I do not feel any hatred or resentment. I am actually destined to continue fighting for democracy, because as you know, although I will be 75-years old on October 27th, I have the energy of a thirty-year old and the political will of a twenty-year old. Therefore I still have a lot of energy to fight for democracy and for the Brazilian people and also to try to contribute to a world with new leaders that are more impetuous and brave for politics, because world governance nowadays has been outsourced.
Crises are no longer managed by governments, but rather by bureaucrats. So there are no more political leaders and this weakens politics and originates people of the like of Trump and Bolsonaro. [from 12:15 mins]
The full story is available in the “Secret Brazil Archive” at The Intercept but you can also read a summary of some of these allegation in a Guardian report published in June 2019.
Asked why he did nothing to reform oligarch-owned media in Brazil, Lula says:
I didn’t do anything because in Brazil to change the rules for the media you need to submit a bill to be voted in the National Congress and the majority in Congress being so conservative will never approve the rules to make the media more democratic.
We created a public TV channel. Certainly we did not make the necessary investments to make it competitive – not financially competitive – but competitive with regards to providing more information to society. This is something I regret not having one.
We developed a project to regulate the media – it was complete by mid-2009. We did not have support from Congress because elections would be held the following year, and we left it for the new administration. This is one thing that we will need to do when the PT returns to the government, because information that is meant for society cannot have an owner. Information cannot be conveyed to society from the viewpoint of ‘the economy’, or of a part of that society. [from 20:00 mins]
And regarding the incarceration and looming potential extradition to America of Julian Assange, Lula reminds us:
It is true that the Americans may hate Snowden because he was a State Department employee and he leaked information, but the fact is that Assange should be considered a hero by all democratic countries around the world. Because he was the one who used Snowden’s leaks to expose US espionage in Petrobras, in Brazil, in Germany, in Argentina, in France. That is why Assange cannot be handed over to the US. Assange should win the Nobel Peace Prize because he managed to expose the rotten espionage of the US in the rest of the world.
It is a pity that European and South American countries are not brave enough to stand up for Assange for all the good he did for mankind. [from 18:30 mins]
At the beginning of the interview, Afshin Rattansi asks Lula directly “why are you accusing your successor Jair Bolsonaro of genocide?” To which he replies:
For a very simple reason, our president did not take care of Brazil and of the Brazilian people as he should have done. This pandemic did not reach Brazil without prior notice. We already had experience of what was going on in other countries around the world, and the president should simply have done the obvious, only what common sense teaches us to do.
The president, since he doesn’t know about anything except weapons and violence, should have set up a technical committee with experts and scientists. He should have gathered all state governors as well as mayors and established a crisis committee to guide Brazilian society – to participate in the process of mitigating the impact of the pandemic in Brazil.
He did not do this. He decried the pandemic. He said that people should not wear masks. He proscribed a drug called chloroquinine to the population without any scientific basis. And to this date he continues to vulgarise death because effectively he does not believe in science, or in the Brazilian people, and he does not respect individuals. The only thing he does is compliment Trump and to try to copy the same foolish things that Trump does in the US. [from 1:27 mins]
Later in the interview, Lula is asked what he believes the likely consequences of Bolsonaro winning 2022 election will be, especially when it comes to impacts on the environment. He replies:
[Protection of] the Amazon must remain an issue for the Brazilian society. The Amazon does not need to have squatters or invaders. Instead of cattle breeders and soy bean farmers, the Amazon needs to be occupied by researchers, anthropologists and scientists to study its plants and animals, and all of the pharmacological wealth it has, as well as its potential to feed our society.
The Amazon is extraordinary for mankind and Brazil needs to have the obligation, the moral and ethical commitment, to preserve the Amazon in order to provide balance to Planet Earth. This is an irresponsibility of the Bolsonaro government, which has destroyed the entire surveillance system. Even the director of the agency that monitored deforestation with spatial imaging was dismissed. Now they are blaming the indigenous people and the small farmers for deforestation.
I have high hopes that in 2022, Brazil will return to democracy: that the people will elect a democrat for president who respects the environment and our air space; our borders; and who knows the meaning of our country’s sovereignty. [from 22:30 mins]
Adding finally:
I am convinced that the only solution we have is to strengthen democracy including for the American people now. They have the right to change American politics by electing someone who is civilised; someone who has some humanity; someone who has at least some respect for blacks, for native Americans, for the women and for differences between human beings. Therefore we have the duty to rebuild democracy in the world, so that we can prevent the destruction of Planet Earth, which is like a boat and we are all sinking in it.
I think we need to realise that the Americans are going backwards in exercising democracy. Recently I saw Trump calling Obama a communist. Calling Biden a communist. Calling Clinton a communist. He doesn’t even know what communism is.
I think ignorance is defeating intelligence and… intelligence, humanism, solidarity need to be restored in the world. The world today is being ruled by committees, not by governments. I think that governments need to rediscover their role in governance including the United Nations.
The UN needs to change its role. Today’s UN cannot be the same as it was in 1948. We need to have African countries in the UN Security Council. We need Latin American countries in the Security Council. And countries like India. It cannot be the same five countries as in 1948. We need to create a new global governance.
In 1948 the UN was strong enough to create the State of Israel. In 2020 the UN does not have the power to create the Palestinian state.
It is shameful because we need to renegotiate the role of the UN and other institutions. We need to discuss the IMF. What is the use of the IMF? What is the use of the World Bank?
I have already talked to Pope Francis. I have gone to the World Council of Churches in Geneva. We need a global campaign against inequality on our planet. It is not possible that half a dozen entrepreneurs in digital corporations make in one year what billions of human beings do not ever have. We also need to discuss the role of capitalism. And I am willing to do this. [from 24:35 mins]
Note that: The transcript above is my own although based on the translation provided by the show. It is more or less complete but reordered with time stamps for each section.
2 From an article entitled “Their Little Show” which is Part 4 of a series of 14 articles based upon what is described as “A massive trove of previously undisclosed materials provid[ing] unprecedented insight into the operations of the anti-corruption task force that transformed Brazilian politics and gained worldwide attention”, entitled “Secret Brazil Archive” published by The Intercept. https://theintercept.com/series/secret-brazil-archive/
Important note: It is well past the period spanning the end of May and beginning of June when Bilderberg meetings are ordinarily scheduled, so it should be observed that the home page of the official Bilderberg website still declares in bold capitals:
THE MEETING 2020 IS POSTPONED.
It does not say for how long.
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The effectiveness of political and religious propaganda depends upon the methods employed, not upon the doctrines taught. These doctrines may be true or false, wholesome or pernicious—it makes little or no difference.
This is the sixth of a sequence of articles based around the ‘key topics’ at last year’s Bilderberg conference discussed here in relation to the prevailing political agenda and placed within the immediate historical context.
This piece focuses on issues relating to climate change, ‘sustainability’ and the future of Capitalism:
A schematically enhanced version of last year’s ‘key topics’
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“Suddenly, saving our planet is within reach. We have a plan. We know what to do. Stop the damaging stuff, roll out the new green tech, stabilise the human population as low as we fairly can, keep hold of the natural wealth we have currently got and we’ll have built a stable, healthy world that we can benefit from forever. We now have the choice to create a planet that we can all be proud of, our planet, the perfect home for ourselves and the rest of life on earth.”
— narrative spoken by Sir David Attenborough on World Wide Fund for Nature (WWF) promo
Well, well. @WWF have removed the video and apologized. Don't hold your breath for a proper examination of what they actually do though: racism's built into their whole model. Here's what they don't want you to see: pic.twitter.com/cjWMGfTgen
WWF recently released (June 5th, 2020) a short video 2 of British “national treasure” and conservation icon, Sir David Attenborough, telling us that “suddenly” saving the world is within reach. He says they know what to do and have a plan to build a stable, healthy world that we can benefit from forever. What’s not to like? Well, a lot! WWF’s plan regurgitates a 19th century racist assumption: That too many of the wrong kind of people threaten us all.
Their “plan” has four commandments: 1) “stop the damaging stuff”; 2) “new green tech”; 3) get population down, and; 4) keep hold of “natural wealth we have currently got.” Let’s begin by removing the two “no-brainer” outliers, the first and last in the plan, stopping doing damage and keeping existing advantages. Both are self-evident approaches to pretty much anything. What we’re left with then is just two answers to the planet’s problems – new green tech and reducing population.
So begins a damning critique of the ‘Big Green’ agenda and a recent WWF promotional film to “save the planet” written by Stephen Corry, an activist and campaigner who has worked since 1972 with Survival International, the global movement for tribal peoples’ rights. 3
Corry continues [all footnotes retained from the original]:
[I]t’s in the other “solution” – getting the population down – where both Attenborough and WWF really plumb the depths of their elitist ideology. One can visualize the meetings of writers who struggled to express this without attracting attacks from those like me who think the 200-year old cry of “overpopulation” is ideological, fundamentally racist, certainly eugenic, and nothing to do with science.
The writers finally came up with, “stabilize the human population as low as we fairly can.” They presumably thought that using “stabilize” rather than “reduce” (which is what they mean), and that inserting “fairly,” would satisfy the critics. That only goes to show just how little they understand what the problems with their “overpopulation” dirge actually are!
The inconvenient truth, never mentioned by the ideologues, is that the Global North’s population has been dropping for generations. Overall numbers are still growing there only because they’re boosted by newcomers from the Global South. 4 The largest growth area is sub-Saharan Africa, where the population density remains extremely low and where they use very little of the world’s resources themselves. 5 That’s because the “natural wealth they have currently got” is largely stolen from them by the North. 6 Have a look at the area at night from a satellite to see just how little energy is used in Africa compared to Europe, or get the view from a plane, as Attenborough will have done hundreds of times.
In other words, if you’re worried about overpopulation threatening the environment, then you’re blind to the real menace: It’s not the growing number of “have nots” in the South, but growing overconsumption by the “haves” in the North.
Adding:
The story reminds me of WWF fundraising from 1994, which posed the very odd question: whether to send in the army or an anthropologist to stop indigenous people destroying the Amazon (its proposed answer, needless to say, was to give WWF yet more money). Yes, WWF actually suggested that indigenous people, not the industry bigwigs 7 it invites to sit on its boards are the destroyers of the world’s largest rainforest, an ecosystem which those same indigenous people are both responsible for creating and by far the best at protecting. That can now be proven from satellite pictures and data about the higher biodiversity in indigenous-controlled territories.
The real tragedy here is not what Attenborough and WWF believe – that won’t change unless and until savvier folk get a controlling hand – it’s that they are able to foist their propaganda on so large a sector of the Global North, including on many progressives. Perhaps many white environmentally-aware people really do believe that “overbreeding” will overrun the Earth and see it as a duty, even “sacred” duty, to defend the planet from the barbarian hordes. That’s been the really big lie drummed into us for over a century, it’s a key component of racism and anti-immigration. It has financial support from corporations and big foundations, and enormous backing from governments which dedicate massive amounts of our money to foment it. Worst of all, those who promulgate this lie are now planning on getting billions more dollars through their terrible “new deal for nature,” which is warming up to be the biggest land grab in history. They want control of no less than one-third of the globe for their “Protected Areas,” and yes, they are sending in the army, often private militias, to get local people out. 8
Click here to read the Stephen Corry’s full article entitled “The Big Green Lie” published by Counterpunch on June 26th, 2020.
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In the short clip embedded above, recorded in November 2014, Baka from Ndongo, a village where WWF has a regional base, call upon WWF to stop funding the anti-poaching squads that have persecuted them for years. A slighter longer report is embedded below featuring the Baka at Yenga, Cameroon:
Many Baka refer to both WWF and the anti-poaching squads it funds as “dobi-dobi” or ‘dobi-dobiyu’ (WWF). Here, they are referring to WWF itself.
Click here to learn more at Survival International.
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Big Green
The first man who, having enclosed a piece of ground, bethought himself of saying, “This is mine”, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars, and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows: “Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.”
Whenever I peruse the list of participants for any forthcoming Bilderberg meeting, the names that really stand out are not those of the bankers, hedge fund bosses and major industrialists; and nor are my eyes especially drawn to the inclusion of usual suspects from journalism, academia (especially economics departments) and the major political parties, or with high ranking attachment to the military and intelligence agencies, nor even the occasional monarch; last year it happened to be His Majesty the King of the Netherlands – Funny how they include NLD after his title presumably as a token to their inherent egalitarianism!
But the names that always grab my attention are instead those I’m just not expecting to see at all. For instance last year:
Henry, Mary Kay (USA), International President, Service Employees International Union
Hers was certainly amongst the names stood apart. These are a few of the others:
Solhjell, Bård Vegar (NOR), CEO, WWF – Norway
Rockström, Johan (SWE), Director, Potsdam Institute for Climate Impact Research
Buitenweg, Kathalijne (NLD), MP, Green Party
With sincere apologies to Oscar Wilde: to invite one environmentalist may be regarded as a misfortune; to invite three looks like a plan of action. Not that environmentalist ties to Bilderberg are as novel as they may first appear.
#BP at #Bilderberg: the chairman, Helge Lund, arrived in Montreux in his travel sneakers. I just hope he brought some headphones, so he can tune out during the session on 'Climate Change & Sustainability'. Also at #Bilderberg is BP board member & ex-MI6 boss Sir John Sawers. pic.twitter.com/BvqxBsfOAo
In fact, anyone familiar with the history of Bilderberg knows that the attendance of the King of the Netherlands is also in keeping with the origins of the meeting, which had been co-founded by Prince Bernhard, consort of Queen Juliana of the Netherlands. And those familiar with the generally unspoken history of modern environmentalism will recall that Prince Bernhard is one of the co-founders of the World Wildlife Fund (as WWF was originally known); becoming its first President in 1961.
nothing to see here, just the King & Prime Minister of the Netherlands arriving at #Bilderberg to meet with the heads of #NATO, Davos, the Bank of England, HSBC, Microsoft, AXA, Total, Thales, Santander, the German defence minister, the Irish finance minister & the PM of Estonia. pic.twitter.com/Dv3JOcuhr9
Moreover, when Bernhard was forced to step down as WWF President in 1976 because his involvement in the Lockheed Bribery Scandal came to light, he was immediately succeeded by John Loudon, the former CEO of Royal Dutch Shell (called “Royal Dutch” for very good reason) And there was more to Loudon’s network of interests:
After [John Loudon] stepped down as chairman in 1965, he continued to be active in the company as chairman of the board of supervisory directors for 11 more years.
When David Rockfeller, the president of Chase Manhattan Bank, set up an advisory committee in 1965 to counsel the bank on its growing international business, Mr. Loudon was named as chairman. He retired from the group in 1977. 10
From an obituary published by The New York Times on February 9th, 1996.
What the NYT fails to mention here is that once Loudon became WWF President in 1976, his appointment also crossed over with tenure on that advisory committee of Chase Manhattan. Noteworthy too is the fact that President of Chase Manhattan, David Rockefeller, has sat alongside Prince Bernhard as a fellow member of Bilderberg since its inception in 1954. Afterwards he became co-founder of closely-allied globalist body, the Trilateral Commission.
These unseemly beginnings of WWF ought to serve as a caution, and especially to those on the left, that the environmental movement is not all it seems. That Bilderberg is back to greening itself ought to come as no surprise either.
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On 22 June 2011, German public broadcaster ARD aired a documentary by Wilfried Huismann in which WWF was directly accused of contributing to the willful destruction of habitat and species it claims to protect and of harming indigenous peoples. The documentary entitled “Silence of the Pandas – what the WWF does not tell us” [In German: Pakt mit dem Panda – was uns der WWF verschweigt] (which is embedded below) calls into question the WWF’s close associations with major corporations including Monsanto:
In it [Wilfried Huismann] complained above all about the proximity [of WWF] to the agricultural industry. One of the problems is that the WWF is sitting with so-called round tables for soybean (RTRS) and palm oil (RSPO) producers together with large agricultural groups such as Monsanto. 11
From a review of the documentary by Der Spiegel.
The excerpt below is from an earlier report by Der Spiegel that was similarly critical of the WWF’s soy and palm oil policies at this time:
SPIEGEL has traveled through South America and the Indonesian island of Sumatra to test this. In Brazil, an agro manager talked about the first shipload of sustainable soy that was certified according to the WWF standard and reached Rotterdam with a lot of PR noise last year. The manager conceded that the origin of the cargo was not exactly known. In Sumatra, members of a tribe reported how hired troops from WWF partner Wilmar [International Limited is Asia’s leading agribusiness group] had destroyed their homes. They had been in the way of undisturbed palm oil production.
Representatives of independent non-governmental organizations such as Rettet den Regenwald [trans: Rainforest Rescue] and Robin Wood no longer see the aid organization as just the trustee of the animals. To many, the WWF seems more like an accomplice of the corporations to whom it grants the license to destroy nature in exchange for large donations and small concessions. 12
Click here to read the full Der Spiegel article entitled “Kumpel der Konzerne” which translates as “Buddy of the corporations”
Huismann was subsequently sued by WWF over the documentary and the book he based on it, and in an out of court settlement agreed to remove or else revise some of the claims.
As the Der Spiegel review explains:
In fact, the “black book” was not available for a long time from providers such as Amazon or Thalia – for fear of legal disputes. “Rarely has the book trade been so intimidated after the publication and deterred by the distribution of the book,” complained Random House lawyer Rainer Dresen. The German Journalists’ Union (DJU) also criticized the environmentalists’ “legally questionable attempts at intimidation” and the “anticipatory obedience” of the dealers in a statement. 13
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‘Natural Capital’ and ‘Green Growth’
“We must adapt our ways to the carrying-capacities of this planet and distribute the resources more fairly. And the only way to achieve that is to move toward a model of economic growth where the value of natural capital is fully integrated in economic and political decision-making by governments and by businesses and citizens alike. This to me is the essence of green growth, which of course means that the dichotomy between green growth and just growth is a false one. Just as you cannot take on a larger financial debt you can handle, you cannot use natural resources, which is like taking up a loan from nature, beyond nature’s capacity to renew itself. However, done properly, green growth means prosperity and a better future.” [from 7:40 mins]
From then-Norwegian Minister of the Environment, Bård Vegar Solhjell’s keynote speech during Forests: the 8th Roundtable at Rio+20, a CIFOR-hosted event, which brought together over 550 scientists, policy makers and members of civil society to discuss the role of forests in providing the world with food, energy, income and clean water:
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“Natural capital” has become a buzzword in the sphere of environmentalism. It means literally putting a price tag on nature or as the World Forum on Natural Capital puts it:
Natural capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things.
It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.
The most obvious ecosystem services include the food we eat, the water we drink and the plant materials we use for fuel, building materials and medicines. There are also many less visible ecosystem services such as the climate regulation and natural flood defences provided by forests, the billions of tonnes of carbon stored by peatlands, or the pollination of crops by insects. Even less visible are cultural ecosystem services such as the inspiration we take from wildlife and the natural environment 14
This is the top result from a Google search on the topic. The next result brings up the Natural Capital Coalition which “was launched in January 2020 and hosts over 370 leading organizations to accelerate the use of capitals thinking”. The blurb on their website continues:
Originally established in 2012 as the TEEB For Business Coalition and hosted by ICAEW, the Natural Capital Coalition quickly became the global leader in mainstreaming natural capital approaches in the private sector, and released the internationally recognized Natural Capital Protocol in 2016.
The ICAEW for those not fully literate in contemporary acronyms is the Institute of Chartered Accountants in England and Wales, which perhaps doesn’t need further comment, while TEEB is a group whose title in full is The Economics of Ecosystems and Biodiversity. The opening statement on their official website begins:
The Economics of Ecosystems and Biodiversity (TEEB) is a global initiative focused on “making nature’s values visible”.
Interestingly, one of their listed partners is the Norwegian Ministry of Foreign Affairs, another is Pricewaterhouse Coopers. I think the picture is becoming clearer, arguably all the more so when we discover the World Bank has its own entry that is again ranked on page one of any Google search. Here’s how the World Bank lists “natural capital” with commendable frankness as just another “asset”:
Long‐term development is a process of accumulation and sound management of a portfolio of assets—manufactured capital, natural capital, and human and social capital. 15
A decade ago, Forbes magazine ran an article entitled “Names You Need to Know In 2011: Natural Capital Project”. It explains:
[U]ntil recently it’s been difficult to put a truly measurable value on what are often threatened natural resources. The Natural Capital Project, a non-profit venture led in part by scientists from Stanford University, has changed that. Its software tool, called InVEST, helps to map out the value of natural land or seascapes—assets the group calls “natural capital.” 16
The same Natural Capital Project is still going strong and back in March 2019 they had teamed up with Stockholm Resilience Centre (SRC) in an official partnership. Prior to his invitation from Bilderberg, Professor Johan Rockström had been the Executive Director of SRC for twelve years (2004–2012) where he led a team of scientists in developing a scientifically debatable, neo-Malthusian Planetary Boundaries framework.
Alongside Rockström’s SRC, the National Capital Project also proudly lists three more “world-class academic institutions – Stanford University [its host], the Chinese Academy of Sciences, the University of Minnesota” and amongst its six core partners, two of the world’s largest NGOs, The Nature Conservancy and Bård Solhjell’s World Wide Fund for Nature. 17 In short, last year’s Bilderberg meeting brought together two attendees who are both deeply embedded within this ‘natural capital’ matrix, which aims to set a price on everything in nature.
As Bram Büscher and Robert Fletcher write in an excellent rebuttal of this new environmental accountancy:
The fact that the food we eat and the water we drink apparently need to be labeled “natural capital” only becomes meaningful in the context of capitalist growth. In this context everything should, in principle, become “capital”.
It is therefore vital to be clear on what “capital” really means. In daily conversations and some economic theory, the term is frequently defined as a “stock” or as “assets”. More accurate, however, is to see capital as a process, a dynamic. It is about investing money (or value) in order to make more money (or value). In short, capital is “value in motion”.
Capital in a capitalist economy is therefore never invested for the sake of it. The aim is to extract more money or value than had been invested. Otherwise it would not be capital.
It follows that the move from “nature” to “natural capital” is not an innocent change in terminology, another word for the same thing. Rather, it constitutes a fundamental reconceptualisation and revaluation of nature. Natural capital is about putting nature to work for capitalist growth – euphemistically referred to as green growth.
The move from nature to natural capital is problematic because it assumes that different forms of capital – human, financial, natural – can be made equivalent and exchanged. In practice – and despite proponents’s insistence to the contrary – this means that everything must potentially be expressed through a common, quantitative unit: money. But complex, qualitative, heterogeneous natures, as these same proponents acknowledge, can never adequately be represented in quantitative, homogenous money-units.
And even if we try, there is an untenable tension between the limitlessness of money (we can always generate more money) and the limits of natural capital (we cannot exchange evermore money-capital into natural capital, for all eternity).
Natural capital is therefore inherently anti-ecological and has little to do with giving value to nature, or rendering this value visible. It is the exploitation of nature to inject more value, and seeming legitimacy, into a faltering capitalist growth economy.18
Click here to read the full article published by Wrong Kind of Green in September 2016.
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It’s not the end of the world
In searching for a new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. All these dangers are caused by human intervention, and it is only through changed attitudes and behavior that they can be overcome. The real enemy then, is humanity itself.
— The First Global Revolution: A Report by the Council of the Club of Rome19
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On behalf of environmentalists everywhere, I would like to formally apologize for the climate scare we created over the last 30 years. Climate change is happening. It’s just not the end of the world. It’s not even our most serious environmental problem.
Michael Shellenberger, quoted above, has credentials that give weight to these contentions. He was named a Time magazine Heroes of the Environment in 2008 – the same year he won the Green Book Award – has provided expert testimony to US Congress and was invited by the Intergovernmental Panel on Climate Change (IPCC) to serve as Expert Reviewer of its next Assessment Report. Just as importantly, Shellenberger is able to draw upon his wealth of experience as an environmental activist as the next statement in this recently published mea culpa entitled “On Behalf of Environmentalists, I Apologize For the Climate Scare” (soon afterwards retracted by Forbes magazine), goes on to add:
I may seem like a strange person to be saying all of this. I have been a climate activist for 20 years and an environmentalist for 30.
Unsurprisingly then, Shellenberger’s piece (which is still available online at other sites) has caused a bit of a stink. In response, for instance, the Guardian ran a long item which criticises some of the claims but mostly highlights Shellenberger’s close links to the nuclear trade association Nuclear Energy Institute (NEI). My purpose here is not to defend or promote Shellenberger and I certainly do not share his opinions about the need to expand nuclear power (as many previous articles testify) however, it is worthwhile reminding ourselves that the Guardian’s chief environmental columnist, George Monbiot, is another well-known and outspoken advocate for nuclear power (read my previous criticism here).
In any case, the most significant issue Shellenberger raises goes beyond such particular concerns as the dangers of ‘climate change’ and our best response to it (including nuclear); points which remain highly contested. The point is that we are no longer allowed to contest any of this – the constant demand being that we must “get with the programme”. As he says:
Until last year, I mostly avoided speaking out against the climate scare. Partly that’s because I was embarrassed. After all, I am as guilty of alarmism as any other environmentalist. For years, I referred to climate change as an “existential” threat to human civilization, and called it a “crisis.”
But mostly I was scared. I remained quiet about the climate disinformation campaign because I was afraid of losing friends and funding. The few times I summoned the courage to defend climate science from those who misrepresent it I suffered harsh consequences. And so I mostly stood by and did next to nothing as my fellow environmentalists terrified the public.
I even stood by as people in the White House and many in the news media tried to destroy the reputation and career of an outstanding scientist, good man, and friend of mine, Roger Pielke, Jr., a life long progressive Democrat and environmentalist who testified in favor of carbon regulations. Why did they do that? Because his research proves natural disasters aren’t getting worse.
But then, last year, things spiraled out of control.
Alexandria Ocasio-Cortez said “The world is going to end in twelve years if we don’t address climate change.” Britain’s most high-profile environmental group claimed “Climate Change Kills Children.”
The world’s most influential green journalist, Bill McKibben, called climate change the “greatest challenge humans have ever faced” and said it would “wipe out civilizations.”
Mainstream journalists reported, repeatedly, that the Amazon was “the lungs of the world,” and that deforestation was like a nuclear bomb going off.
As a result, half of the people surveyed around the world last year said they thought climate change would make humanity extinct.
And in January, one out of five British children told pollsters they were having nightmares about climate change.
Whether or not you have children you must see how wrong this is. I admit I may be sensitive because I have a teenage daughter. After we talked about the science she was reassured. But her friends are deeply misinformed and thus, understandably, frightened.
Click here to read Michael Shellenberger’s full article.
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Final thoughts: XR and the ‘Fourth Industrial Repression’
“I don’t want you to be hopeful, I want you to panic”
These days you will often find grown men dressed in polar bear costumes parading outside the entrances to the G20 or COP, rubbing their eyes to brush away fake tears. The TV companies flock to it. They love every kind of manipulative theatrics. Not that we are supposed to believe the polar bears are truly sad of course; that’s just for the children. No, this otherwise quite blatant appeal to sentimentality – well, polar bears are cute, let’s face it – is deliberately tempered. They are crying dry self-conscious tears that are laced with postmodern irony: crocodile tears shed for the presumed fate of the human race.
And I wonder what they really want, sweating beneath those layers of Mickey Mouse costuming. What do modern environmentalists want in general? Most of ones I know (many are friends) actually consume a great deal more than I do, and whenever I propose modest solutions of my own, the response is highly predictable.
Here is one challenge I sometimes like to set them. If you really wish to put a stop to overconsumption – as in principle I do too – then let’s begin with a straightforward ban on advertising, I will say. After all the primary purpose of such ubiquitous mass psychological manipulation is in driving our desire to consume – and I don’t even bother mentioning the unseen role advertising plays both in weakening our personal sense of self and buttressing the extant free market system (There are a whole host of good reasons to place a ban on advertising – read this for my fuller thoughts).
A ban can be rolled out in stages, I propose (maintaining the inherent modesty of my proposition and reminding them of the successful restrictions that now prohibit advertisements for cigarettes and other tobacco products), and the first step might simply introduce bans on commercials for SUVs or airlines or oil companies or something else that is considered especially polluting.
It’s then that the eye-rolling generally begins. Excuses are sought for why a ban of this kind would make no real difference and the conversation moves on. Thus, although, they say they dream of radically changing the world, my experience is that even such a simple and workable idea is likely to be rejected out of hand. This response is telling don’t you think?
Do they want to allow corporate providers to go on lying to us all on a daily basis, cajoling us to buy their unnecessary products? Or are they just afraid of the economic repercussions such a ban might have? In fact I believe both answers apply, and the reasoning is quite straightforward and understandable. The environmental movement is itself inherently consumerist: beset with ingrained market-led values of a system it claims to oppose; and all the environmentalists I know are happy consumers of eco-friendly brands.
Yet, and though modern environmentalism seeks inherently materialist solutions including, if it is deemed necessary, the final commodification of the entirety of the natural world, it habitually confuses all of this with spiritual ends. Even the word ‘ethical’ is becoming narrowly redefined in some quarters. In the future it may simply mean obeying controls on how much one consumes and observing the proper restrictions on provision and/or access to ‘natural resources’. Being a good consumer will finally equate to being a good person.
Unlike the old-style conservationism it supplanted (which had serious issues too as described in sections above), a darker side to the new environmentalism has gradually evolved as focus was shifted from preservation of our natural environment by acting primarily on a local scale to calls for the prevention of an impending global catastrophe. The threat of a terror it evokes is of such magnitude that it seems nearly impossible to surmount: an existential crisis that arguably calls for miraculous or semi-miraculous modes of intervention.
“The end of the world” is of course attractive to some, if only because of its unique power to diminish all other problems and fears by rolling them up into a single ball of quintessential evil. Old-style religious zealots, chastising sinners or else parading their own sinfulness under the burden of heavy banners that declare “The End is Nigh” are seldom seen on our high streets nowadays. Their self-inflicted mournfulness intensified all the more by the derision of the average passerby and unintentionally sanctified: “for blessed are ye, when men shall hate you” 21
But many of today’s eco-prophets of doom have picked up the same banners to parade in their stead. Enter the ‘Red Rebel Brigade’ furies (not to be confused with Mao’s Red Guards!) dressed in scarlet gowns and veils, weeping blood over funereal face-paint:
Other emblems of the new faith are the death’s head and the increasingly familiar and starkly angular XR hourglass, which always looks to me like a neatly folded swastika:
Screenshot from Guildford Extinction Rebellion website
Aspects of these performances are presumably intended to give you the creeps, at least if you take them seriously, though it’s hard to see beyond the amateur dramatics and cappuccino angst. As death cults go, this has to be one of the most convivial – most greenies I know wouldn’t hurt a fly (some literally).
And what plans do they have to save the planet, besides new bicycle lanes, shopping ‘bags for life’, bamboo toothbrushes and veganism? To judge by the literature on affiliated websites whatever this envisioned transformation involves, its goals are remarkably vague – waking people up to the ‘climate emergency’ is enough for now basically.
Meanwhile, the ‘Fourth Industrial Revolution’ (4IR) or ‘Industry 4.0’ constructed around 5G and the Internet of Things (IoT) is awaiting implementation – a development I discussed in greater length in a previous article within this series. As Klaus Schwab, founder and executive chairman of the World Economic Forum, writes in his book of the same title:
“The changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril.” 22
And behind the overarching 4IR hi-tech rollout that combines artificial intelligence, gene editing and advanced robotics – “blurring the lines between the physical, digital and biological worlds” to quote the current UK government website 23– there are other gilded labels like ‘smart growth’ and ‘sustainable development’ that disguise more insidious intent: translated it will mean the microscopic monitoring of our personal lives and household activities with attendant regulations and social controls allied closely to an incrementally tightening regime of ‘austerity measures’. Economic hardship applied not only to our western economies, but stifling development across the third world. (Rest assured that the billionaire class with their private jets, private yachts and private islands, whose agenda is being inadvertently pushed, will not be subjected to the same privations and exclusions).
As anarchist author Paul Cudenec outlines in a short essay published by Wrong Kind of Green, “The Fourth Industrial Repression wants to replace everything true and authentic with its replicas, with a reality not so much virtual as entirely fake”:
The 4IR wants us all to be on our own, online and in line.
The 4IR empties everything of meaning, particularly words. It says “sustainable” when it means ecocidal. It says “development” when it means destruction. It says “basic universal income” when it means slavery.
When the 4IR talks about “social impact investing” it really means it wants to turn human beings into lucrative investment opportunities.
When the 4IR talks about “a new deal for nature” it really means it wants to privatise the whole living world so as to make the billionaire class even richer than it already is.
Concluding:
The 4IR employs huge armies of professional liars and gullible fools to spread its propaganda and scream abuse at all who dare challenge its fearmongering falsehoods.
The 4IR is a death cult which dreams of wiping out everything that is natural, everything that is wild, everything that is free.
Click here to read the full article entitled “Resist the Fourth Industrial Repression!”
Finally, should any of these demands require the further hollowing out of western democracies in order to put greater powers into the hands of technocratic administrators, then so be it. For what sacrifice is too great when you believe the fate of the whole planet hangs in the balance, and worse, when we are so swiftly “running out of time”?
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It is interesting to note that in 2018 Cardinal Pietro Parolin, Vatican Secretary of State, was invited and attended the Bilderberg Conference when it convened in Turin. What is relevance? Well, almost precisely twelve months later, in the wake of an audience with chief executives and chairs from global finance and multinational energy companies, Pope Francis officially declared a global “climate emergency”:
“Future generations stand to inherit a greatly spoiled world. Our children and grandchildren should not have to pay the cost of our generation’s irresponsibility,” he said, in his strongest and most direct intervention yet on the climate crisis. “Indeed, as is becoming increasingly clear, young people are calling for a change.”
The Pope’s impassioned plea came as he met the leaders of some of the world’s biggest multinational oil companies in the Vatican on Friday to impress upon them the urgency and scale of the challenge, and their central role in tackling the emissions crisis. It followed a similar meeting last year, but this time the Pope’s stance was tougher as he warned that time was running out and urged them to hear “the increasingly desperate cries of the earth and its poor”.
From a Guardian article published last year entitled “Pope Francis declares ‘climate emergency’ and urges action”.
The chief executives or chairs of BP, ExxonMobil, Shell, Total, ConocoPhilips, Chevron and several major investors including BlackRock and Hermes, responded by calling on governments to put in place carbon pricing to encourage low-carbon innovation, and called for greater financial transparency to aid investors.
However, they made no pledges to reduce their greenhouse gas emissions, and set no timetable for action.
But, as the article goes on to say, carbon indulgences may be offered in lieu…
In two statements, which came at the end of a two-day meeting in the Vatican that was addressed by the pope and led by senior Vatican churchmen, the signatories called for a “combination of policies and carbon pricing mechanisms … designed in a way that simultaneously delivers innovation and investment in low-carbon solutions while assisting those least able to pay”. 25
Click here to read the full Guardian report published in June 2019.
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Additional: The technocratic society
“UN Agenda 21/Sustainable Development is the action plan implemented worldwide to inventory and control all land, all water, all minerals, all plants, all animals, all construction, all means of production, all energy, all education, all information, and all human beings in the world. INVENTORY AND CONTROL.
“Have you wondered where these terms ‘sustainability’ and ‘smart growth’ and ‘high density urban mixed-use development’ came from? Doesn’t it seem like about 10 years ago you’d never heard of them and now everything seems to include these concepts? Is that just a coincidence? That every town and county and state and nation in the world would be changing their land use/planning codes and government policies to align themselves with…what?
“Far from being a ‘conspiracy theory’ or a ‘tin-foil hat’ fantasy, this is an actual United Nations plan, signed onto in 1992 by President George HW Bush along with 178 other world leaders. The UN called it Agenda 21 because it is the Agenda for the 21st century. According to UN Secretary General Maurice Strong, the ‘affluent middle-class American lifestyle is unsustainable.’ That includes single family homes, private vehicles, appliances, air-conditioning, & meat-eating. They are a threat to the planet” — Rosa Koire 26
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Embedded below is Rosa Koire’s special presentation to the New Hampshire Legislature. It took place in the Legislative Office Building just behind the Capital in Concord on June 25, 2012. She shared with concerned legislators what she has learned about the true nature of Sustainable Development:
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1 Quote taken from Brave New World Revisited (1958), Chapter 7, by Aldous Huxley.
4 The United Nations Department of Economic and Social Affairs. “Migration and population change – drivers and impacts”. Population Facts, no 2017/8 (2017).
9 Quote from philosopher Jean-Jacques Rousseau’s “Discourse on Inequality” (1754) which has the formal title, Discourse on the Origin and Basis of Inequality Among Men (Discours sur l’origine et les fondements de l’inégalité parmi les hommes), also commonly known as the “Second Discourse”.
Before translation, the original passage reads:
“Le premier qui, ayant enclos un terrain, s’avisa de dire: Ceci est à moi, et trouva des gens assez simples pour le croire, fut le vrai fondateur de la société civile. Que de crimes, de guerres, de meurtres, que de misères et d’horreurs n’eût point épargnés au genre humain celui qui, arrachant les pieux ou comblant le fossé, eût crié à ses semblables: Gardez-vous d’écouter cet imposteur; vous êtes perdus, si vous oubliez que les fruits sont à tous, et que la terre n’est à personne.”
The section was translated by Google translate. The original text is below:
Darin beklagte er vor allem die Nähe zur Agrarindustrie. Problematisch sei unter anderem, dass der WWF zusammen mit großen Agrarkonzernen wie Monsanto an sogenannten Runden Tischen für Soja- (RTRS) und Palmölproduzenten (RSPO) sitzt. Auch der SPIEGEL hatte kritisch über die Soja- und Palmöl-Politik des WWF berichtet.
The section was translated by Google translate. The original text is below:
Der SPIEGEL ist durch Südamerika und auf die indonesische Insel Sumatra gereist, um das zu prüfen. In Brasilien erzählte ein Agro-Manager von der ersten Schiffsladung nachhaltigen Sojas, die nach WWF-Standard zertifiziert wurde und im vergangenen Jahr mit viel PR-Getöse Rotterdam erreichte. Die Herkunft der Ladung, räumte der Manager ein, kenne er gar nicht genau. Auf Sumatra berichteten Angehörige eines Stamms, wie angeheuerte Trupps des WWF-Partners Wilmar ihre Häuser zerstört hatten. Sie waren der ungestörten Palmöl-Produktion im Weg gewesen.
Auch Vertreter unabhängiger Nichtregierungsorganisationen wie Rettet den Regenwald und Robin Wood sehen in der Hilfsorganisation längst nicht mehr nur den Treuhänder der Tiere. Vielen kommt der WWF eher wie ein Komplize der Konzerne vor, denen er gegen große Spenden und kleine Zugeständnisse die Lizenz zur Zerstörung der Natur erteilt.
The section was translated by Google translate. The original text is below:
Tatsächlich war das “Schwarzbuch” längere Zeit über Anbieter wie Amazon oder Thalia nicht zu beziehen – aus Angst vor Rechtsstreitigkeiten. “Selten wurde der Buchhandel nach der Veröffentlichung derart flächendeckend eingeschüchtert und vom Vertrieb des Buchs abgeschreckt”, beklagte Random-House-Jusitiar Rainer Dresen. Auch die Deutsche Journalistinnen- und Journalisten-Union (DJU) kritisierte in einer Erklärung die “rechtlich zweifelhaften Einschüchterungsversuche” der Umweltschützer und den “vorauseilenden Gehorsam” der Händler.
NatCap is a partnership of four world-class academic institutions – Stanford University, the Chinese Academy of Sciences, the University of Minnesota, and the Stockholm Resilience Centre – advancing new science together with, inspired by, and implemented through two of the world’s largest NGOs, The Nature Conservancy and World Wildlife Fund.
19 Quote from The First Global Revolution: A Report by the Council of the Club of Rome, Part I “The Problematique”, Ch 5, “The vacuum”, p 75, written by Alexander King & Bertrand Schenider, published by Pantheon Books in 1991. https://archive.org/details/TheFirstGlobalRevolution/page/n85
Here are some further extracts:
In searching for a new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like would fit the bill. All these dangers are caused by human intervention, and it is only through changed attitudes and behavior that they can be overcome. The real enemy then, is humanity itself.”
A few pages earlier
“The old democracies have functioned reasonably well over the last 200 years, but they appear now to be in a phase of complacent stagnation with little evidence of real leadership and innovation. It is to be hoped, with a new found enthusiasm for democracy in the liberated countries today, that people will not reproduce slavish copies of existing models that are unable to meet contemporary needs.”
Which leads us to a different subheading “The limits of democracy”, following which the text continues:
“Democracy is not a panacea. It cannot organize everything and it is unaware of its own limits. These facts must be faced squarely, sacrilegious although as this may sound. In its present form, democracy is no longer well suited for the tasks ahead. The complexity and the technical nature of many of today’s problems do not always allow elected representatives to make competent decisions at the right time. Few politicians in office are sufficiently aware of the global nature of the problems facing them and little, if any, awareness of the interactions between the problems. Generally speaking, informed discussion on the main political, economic and social issues takes place on radio and television, rather than in Parliament, to the detriment of the latter. Political party activities are so intensely focused on election deadlines and party rivalries that they end up weakening the democracy they’re supposed to serve. This confrontational approach gives an impression that party needs come before national interests. Strategies and tactics seem more important than objectives, and often a constituency is neglected as soon as it is gained. With the current mode of operation, Western democracies are seeing their former role decline and public opinion drifting away from elected representatives. However, the crisis in the contemporary democratic system must not be allowed to serve as an excuse for rejecting democracy.
Adding:
In the countries now opening up to freedom, Democracy is being introduced in a situation which demands greatly changed attitudes and patterns of behavior demands from citizens. The inevitable problems of phasing in democracy are difficult to solve. But there is another, still more serious question. Democracy does not necessarily build a bridge between a colonial or neo-colonial economy or a centralized bureaucratic economy towards a market economy based on competition and producing growth. In a transitional situation such as the present which because of sudden and unforeseen change has been neither planned nor prepared for. The necessary structures attitudes market relations and managerial styles simply do not exist. If such a situation is allowed to go on too long, it is probable that democracy will be made to seem responsible for the lagging economy, the scarcity and uncertainties. The very concept of democracy could then be brought into question and allow for the seizure of power by extremists of one brand or the other.
20 From a speech delivered by 16-year-old Greta Thunberg to the World Economic Forum at Davos on January 25, 2019 [from 2:20 mins]:
21 Blessed are ye, when men shall hate you, and when they shall separate you from their company, and shall reproach you, and cast out your name as evil, for the Son of man’s sake. Luke 6:22.
On yesterday’s episode of RT’s Going Underground, host Afshin Rattansi spoke to former President of Ecuador Rafael Correa (2007–17) on the uprising taking place in Ecuador against incumbent President Lenin Moreno’s austerity budget; whether the violence is likely to get worse; why Moreno refuses to bring the elections forward; and whether Lenin Moreno can survive the crisis and the prospect of a civil war in the country. They also discussed the imprisonment of Julian Assange and the revelations of spying against Julian Assange and himself.
[The following transcript is my own]
Afshin Rattansi: Former President, thanks for coming on the show. Let’s just begin before [we come to] Julian Assange to what is happening in Ecuador. Lenin Moreno, your successor, accuses you of an attempted coup in Ecuador. We’re getting reports of three oilfields seized, 12% of Ecuadorian oil output hit, and he himself has fled the capital.
Rafael Correa: Thank you very much for this opportunity for letting me tell to the world what is happening in Ecuador. Everything that is happening now is the government’s fault. He betrayed the programme approved in the elections and adopted an extreme neoliberal programme. They had a terrible agreement with the IMF; prompted a crisis by cutting domestic financial sources, reducing taxes for the wealthy and increasing useless expenditure. And there you have the consequences. When he had to set a very strong package of measures, poverty had already increased three points. After ten years, poverty has started rising again under this government. It’s grown three points and the very drastic package of measures was the tipping point, where, amongst other things, he doubled the price of diesel – one of the main fuels – and has tried people’s patience. That’s the reason for the protests.
AR: I’ll get to Christine Lagarde’s IMF austerity measures in a moment. She’s of course leaving the IMF to run the de facto EU bank, the ECB. But, what do think about Lenin Moreno’s chances of staying in power. He’s fled to Guayaquil and there are reports of him saying killings to come, although the Minister of Defence has said there are not tanks on the streets of your capital, there are camouflaged armoured cars.
RC: Let’s start with the final part of the question. Perhaps it is hard for me to be objective, because I have also been persecuted by this government, but I don’t remember – since I’ve had political awareness – having seen a repression of this magnitude. In the 70’s we had military dictatorships. I was a teenager. But not even at that time can I remember the people being so brutally restrained.
So he takes this decision by suppressing constitutional rights, by bugging communications, entering [?] houses without a legal order, and all of this. They are also using their force, including with lethal weapons against the protesters. This is something that has not been seen before. I do not remember anything like since the time I became politically aware.
In terms of government: the government has already fallen. Moreno has already fallen. They have to look for a constitutional and democratic way of keeping peace and keeping the country running otherwise they can lead us to a civil war – more than a civil war – a brutal repression by the enforcing authorities.
Luckily, our constitution offers those measures – democratic and institutional measures – in the case of social turmoil Article 130 allows the assembly with a vote of two-thirds of its members to authorise the election to be brought forward. And the President himself under Article 148 of the constitution has the faculty to bring the elections forward.
Why isn’t he doing this? He knows if he brings the elections forward he will lose and we will win. So he prefers the country to fall. They prefer the violence. They prefer this very serious situation instead of getting out by the measures that I insist are part of the constitution in a perfectly institutional and perfectly democratic manner.
AR: Do you think he wants to be the next Pinochet?
RC: No. Lenin Moreno, he was a puppet of the oligarchy, but he has been an instrument and he will stay there as long as he serves the groups of power.
AR: Why former president, are you not in Ecuador now with the tens of thousands of indigenous people demonstrating in Quito? And will you run again to become leader of Ecuador?
RC: I am not interested in that. My plans for life are different. I had to get back into politics because they destroyed my nation and because of the persecution and group persecution we have suffered. In Ecuador crimes of hatred are taking place every day.
They say we have to chase the Correistas. We have to clean our government from the Correistas, which is not only allowed by the media, but also fostered by certain press groups that do hate us, because they experienced controls on the privilege and their abuse while we were in power.
From 2007 to 2017 was the decade of most progress for the nation in our history. We doubled the economic product, we were the regional champions in reducing poverty and reducing inequalities, but this is not understood here in Europe. That is something that the elites do not like. It bothers them. Because it is only in the vertical direction of social relationships, in the inequalities, where they hold their power. Because they believe they are superior to others. If you offer our elites the choice to be three times more prosperous but equal to the rest of the people they will reject that.
AR: Well speaking of media – you’re in Europe – why do you think the media arguably seem more interested in pictures of demonstrations in Hong Kong and previously in demonstrations against Maduro in Venezuela, than armoured cars on the streets of Quito in your country?
RC: The answer is obvious. It’s because they play a clear political role. It would be enough to see but for a few exceptions who owns the hegemonic media – the national ones within the Latin American countries – which is a very serious problem. But even at an international level they do not belong to the poor. They do not belong to charities, except for a few exceptions; they belong to big capital and play a political role to defend the status quo. The media at a national level within our countries and at a global level plays a political role, but at least at a global level they keep certain limits – more professionalism. As you said, there is a total asymmetry in the information. Double standards. If there are demonstrations in Hong Kong they are not even shown – sorry, I mean if they are against the Chinese regime they’ll be shown every day, right?
AR: I want to ask you about Julian Assange in a moment, but I’ve got to ask you, as today is the anniversary of the Washington-linked killing of Che Guevara – you mention neoliberalism – why do you think his face is on the flags, probably on flags in your capital city, certainly on flags of the Gilets Jaunes in Paris and across France? What does he mean to you on the anniversary of his death?
RC: Well again, double standards. They talk about democracy and respect of human rights when it is convenient to them. So the killing of Che Guevara is a good example of that. He was captured alive and he was executed extrajudicially while he was in prison. It was a crime but who was sanctioned for that crime? And ordered by the actual CIA – they have the names but nothing happens. It is like the case of Julian Assange. They chase the ones who exposed the war crimes but not the ones who committed them, and these crimes are still unpunished, as in the case of Che Guevara.
What is the meaning of Che Guevara? We can agree or disagree about the ideology of Che Guevara but no-one can deny his authenticity or his commitment to go through extreme circumstances – even to leave his own family and give his life for his ideology – and that is something that should be respected by everyone.
AR: Well you gave asylum to Julian Assange at your embassy in London. He’s facing a court hearing on Friday for extradition to the United States for espionage. What did you make of the El Paísrevelations that your embassy was actually being bugged allegedly by CIA-linked security services – including the bugging of his lawyer Geoffrey Robertson QC?
RC: Remember they said exactly the opposite: that from the embassy Julian Assange used to spy. There is evidence that they have been spying on me and my family, and spying on Julian Assange, including the sacred conversations between a client and his lawyer. So it is extremely serious. And take it as granted that Julian Assange will be extradited to the United States. Always from the beginning that was the agreement.
AR: You said you may have been the subject of surveillance too. Do you think that came from Washington and do you think that whistleblowers of war crimes by Nato countries – Boris Johnson and Donald Trump, who previously said he liked Wikileaks, he “loved Wikileaks” – they want Assange dead as a lesson to other whistleblowers?
RC: You see the international double standards. The asylum we granted to Julian Assange was not because we agreed with what Julian Assange had done. I believe in a nation’s national security and that certain information should be confidential, however, war crimes cannot be hidden. But the asylum was granted to him because there were no guarantees of a fair process and because he was to be judged with laws that allow for the death penalty that threaten the international [?] system of human rights. All the human rights treaties at a global level are against the death penalty.
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
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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”
“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.
*
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
*
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:
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
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.
“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
*
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
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.
*
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.
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.
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.
*
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.
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
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.”
Try again:
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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.
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.”
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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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.
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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:
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.
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 Stern. 1
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“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
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.
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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 Group. 4
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.
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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.”
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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.”
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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
In June 2014, Yanis Varoufakis was interviewed by Harald Schumann. Excerpts would feature in another collaboration between Arpad Bondy and Schumann; their follow-up documentary The Trail Of The Troika (in German, Macht ohne Kontrolle – Die Troika), which plotted another route across the continent in order to show how “austerity measures” have utterly failed to rescue the eurozone economies, and how in the process “the Troika” has also flagrantly breached its own European treaty regulations. Unfortunately, an English version of this more recent documentary is at present unavailable on youtube or elsewhere (so far as I can ascertain – but I will certainly embed a version as and when I find one). Meanwhile, uploads of the various interviews filmed during its making are now freely available, and embedded below is Schumann’s unabridged interview with Varoufakis, of which I have again selectively transcribed some of the answers he gave last summer:
What was the bailout for? The bailout was not in order to bail Greece out. Greece was never bailed out. The bailout loan that was extended in May of 2010 had a very singular, simple purpose. It was to transfer banking losses from the asset books of banks, not only Greek ones, but also French ones and German ones, onto the shoulders of the taxpayers. Initially the Greek taxpayers – because they knew that these shoulders were too weak to bear those losses, eventually it was always part of the plan to transfer them onto the shoulders of the German, and the French, and the Dutch and the Finnish taxpayers. And “the Troika” is here supervising this sinister transfer. [5:45 mins]
Smart people in Brussels, especially in Frankfurt, and of course Berlin, knew in May 2010 that Greece would never be able to repay its debts. They knew that again in the Spring of 2012 when they extended the second loan. They know it again now. In their minds they have already written off a very large bulk of the billions and billions that was given to the Greek state to give to the Greek banks and to give to the rest of the banks. All other things being equal, of course, “the Troika” would much rather more money was repaid than less money. But all other things are not equal. At this very moment in time, as we speak, while the Greek banks have huge black holes that we all know, even though they are not being admitted to, something similar is happening in the rest of the eurozone. Deutsche Bank, Finanzbank, BNP Paribas are skating on thin ice. They will never admit to it. And part of the angst and of the anxiety of the powers in Brussels, in Frankfurt, in Berlin, is how not to admit to the German, to the French, to the Dutch, to the Finnish people, that their banking sector was never really put back on an even keel. 8 [7:15 mins]
In 2010, what they had done was this: they lied to the Greek people and to the German people. They said to the Greek people: We have avoided bankruptcy. And they said to the German people that the Greeks, they were waivered, now we are going to punish them with austerity. But we will lend them the money because European solidarity demands that. In reality, what they were doing was transferring banking losses from the bankers – the European bankers, all of them – onto the shoulders first of the Greek taxpayers and eventually onto the German taxpayers, because the Greek taxpayers could not shoulder all of this money.
So they had lied to the German taxpayers. They said: We are not going to haircut the Greek debt. They were always going to haircut the Greek debt. They knew it. What they did with first bailout loan was to shift that big bulk, a 110 billion, from the bankers’ loss book onto the shoulders of Europe’s taxpayers. And then, after that had been effected, of course then they had to haircut – to do what they said they were never going to do – and who did they haircut? They haircut the small bondholders and the pension funds… So the PSI, the second bailout, the haircut of the private sector, was part of the original process of shifting the burden of adjustment and the cost of the crisis from the shoulders of those who caused it, onto the shoulders of those who didn’t cause it in Greece and in Germany. And all that in the name of European solidarity. And then they wonder why right-wing parties of the extreme part of the spectrum are winning power – or, at least, winning seats in the European Parliament. [21:30 mins]
Asked whether he thought the 2008 crisis had been caused as a result of incompetence or due to a more deliberate act of conspiracy, Varoufakis replied:
It wasn’t a conspiracy. It was a very simple operation: How do we stay in power? Mr [Jean-Claude] Juncker said it. Once he admitted: we know what needs to be done, we just don’t know how to do it and remain in power. Now don’t forget that before 2008, 2010, all parties of government, whether they were Christian-Democratic, Social-Democratic, it doesn’t matter. They had developed this extremely close relationship with the financial sector. They had looked at the financial sector as the cow that would bear the milk from which they would feed all, not only their political parties and careers, but also the welfare state – from the point of view of the Social-Democrats.
There was a kind of Faustian bargain between our politicians and bankers. We will let you do what you want, and you pay us a small amount proportional in order to fund our states. So when the crisis hit – which was completely unexpected for them – they had neither the analytical power nor the moral authority to go to these bankers and say: You know what, you’re out. You’re bankrupt, we’re taking over the banks… 9 [24 mins]
Finally, here was what Yanis Varoufakis, the economist (and not yet Finance Minister) said when asked for “any realistic proposal [to] how the dire economic situation in Greece can be improved”:
Well, we have to stop doing what we are doing and do something quite diferent. And there are two levels at which you should see this, because let’s not forget that once we have a monetary union you can’t talk about the overcoming of the crisis in one part of it in isolation to the others. It would be like talking about how South Dakota would escape the Great Depression in 1933 without the rest of the United States going through the New Deal. So we need a New Deal for Europe… 10 [32:30 min]
But, I have to insist: The solution must be European, because the crisis is European. And there are things we can do within two weeks to end this euro-crisis without violating any of the European Union treaties as long as we have the political will to do it. 11 [34:30 min]
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there is a better alternative… (and always was)
Q: Your Finance Minister Varoufakis said that he is not afraid of an Armageddon.
A: He said in parliament: if you enter into negotiations, you are not seeking a breakup. But you have to keep a breakup in mind as a contingency. I share this view.
Q: So you have a Plan B in case Greece does decide to exit from the single currency?
A: We don’t need a contingency plan because we will stay in the eurozone. But we won’t achieve this objective at the expense of the weak – like our previous government.
– Alexis Tsipras in same interview published in Stern magazine.
On April 16th, Varoufakis was invited to speak at a press conference hosted by the Brookings Institute which is based in Washington. In answer to a question about being trapped in a position where the Greeks are left with little alternative but to default, Varoufakis replied:
I would willingly, eagerly and enthusiastically accept any terms offered to us if they made sense. I would have no problem with the Memorandum of Understanding if it was founded upon a reform programme that attacked the worse cases of rent-seeking in Greece, and made the reforms that were necessary in order to enhance efficiency and social justice. If it came for the planet Mars, if it came from Berlin, if it came from Brussels, if it came from Portugal, from Slovakia, I don’t care which, I would have embraced it. The problem we have with these conditions – you know, the take it or leave it conditions – is not so much the authoritarianism, it is that fact that we’ve tried that medicine and it hasn’t worked…
It is almost precisely three years ago since I wrote a post entitled ‘austerity’ or ‘Grexit’: is there really no better alternative for Greece? There have since been more than two and a half years of unrestrained “austerity” (prior to Syriza’s victory), a “take it or leave it” Hobson’s choice, which has deepened the crisis not only in Greece but across the entire eurozone. ‘Grexit’ has never been a realistic alternative, and as Syriza have maintained from the outset, they have no intention whatsoever of ditching the euro. So ‘Grexit’ becomes ‘Grexident’, in other words, an impossibility. Because any accidental Greek exit can only occur if it is accidentally on purpose, and that would mean ‘Grexpulsion’ – a term the mainstream has yet to adopt for obvious reasons.
In Washington, Varoufakis was once again unequivocal about Syriza’s position:
“Toying with ‘Grexit’, which is something we don’t do – we are refusing to discuss it, because as I have said before even worrying about it is like worrying about being hit by a comet in a universe in which comets are attracted to you if you are worried about them – toying with ‘Grexit’ and ideas of amputating Greece is profoundly anti-European because anybody who claims that they know what the effect of a ‘Grexit’ is, are deluded.” [52 mins]
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Which brings us to an impasse. Accept “austerity” or get out! Jump off a cliff or suffer slow death by a thousand cuts. Is there really no genuine alternative for the Greeks?
Well, the answer to that question actually depends upon what you value. If you think that all debts are sacrosanct, then it necessarily follows that the Greeks must go on paying the banks to their bitter end. That the debt is unpayable doesn’t matter. That the debt is the consequence of so much ineptitude and malfeasance within the banking system doesn’t matter either. The Greeks must cough up because otherwise the chaos will worsen (or so we are again constantly given to believe). But if you value human life above money, and recognise that debts that cannot be repaid will never be repaid, then you can begin to think more constructively. In fact, the alternative becomes immediately and blindingly apparent. Since a debt cancellation will inevitably come sooner or later, the only real question is how much longer must the Greeks be punished in the meantime.
A way-out of all this mess is entirely possible. It doesn’t involve “austerity” and does not necessarily require a Greek exit from the eurozone. What is needed is simply an end to the bottomless banker bailouts and then new money being made available for reconstruction projects and other productive enterprise within Greece, Spain and elsewhere. Such a ‘New Deal’ injection is unlikely to be offered by the IMF, and neither will it be supported by the likes of Angela Merkel. But it can be fought for by the Greek people themselves, and in this battle to stop the wanton destruction of their nation, as fellow Europeans we should stand with them, recognising that the same aggressive financial interests that have already eviscerated Greece, will be pillaging our own lands soon enough.
The paragraphs above are taken from the post I wrote three years ago – yet so little has significantly altered that it remains pertinent enough to repeat it.
Back to Varoufakis who puts flesh on those barest of bones regarding the ‘New Deal’ option for Europe (and presenting the way ahead without any recourse to deficit spending by governments – so heretical to the neo-liberals):
Europe as a whole, the eurozone as a whole, is typified not only by a mountain of great private and public debts, which we do have. But there is another mountain hiding behind it: a huge mountain of idle savings with nowhere to go. And it should be our joint project to energise, to motivate, those idle savings, to help them overcome their great fear that keeps them idle, and channel them into productive investments – not investments into assets, but investments into real productive capacity. Now, how do we do this? Well, we have the European Investment Bank [EIB] that could do this. And we have the European Central Bank which is embarking on quantitative easing. Well, why can’t the EIB fund a major ‘New Deal’ for Europe, that channels investment to the private sectors of the countries and regions within countries that have a major output gap? [44 mins]
The whole of Varoufakis speech at the Brookings Institute and the subsequent Q+A session is embedded below:
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last frenzy of reasonableness…?
Just days after Syriza were swept to election victory on January 26th, economist and former US Assistant Secretary of the Treasury for Economic Policy under Reagan, Paul Craig Roberts, published an article entitled “Is Democracy Dead In The West?” which began:
We will find out the answer to the question posed in the title in the outcome of the contest between the new Greek government, formed by the political party Syriza, and the ECB and the private banks, with whose interests the EU and Washington align against Greece.
Roberts, once known as the “Father of Reaganomics” but more recently a repentant neo-liberalist and outspoken opponent of the financial elites, continues:
The new [Syriza] government wants to moderate the agreements made by previous Greek governments that sold out the Greek people. The new government wants to stop giving away at bargain prices Greek public assets to clients of its creditors, and the new Greek government wants to raise the Greek minimum wage so that the Greek people have enough bread and water on which to live.
However, for the private bank creditors, for Merkel’s Germany that stands behind the banks, for Washington which could care less about the Greeks, for the Greek elites who see themselves as “part of Europe,” Syriza is something to be rid of.
Adding that:
A purpose of the “Greek financial crisis” is to establish that EU members are not sovereign countries and that banks that lend to these non-sovereign entities are not responsible for any losses with regard to the loans. The population of the indebted countries are the responsible parties. And these populations must accept the reduction of their living standards in order to ensure that the banks do not lose any money.
This is the “New Democracy.” It is a resurrection of the old feudal order. A few super-rich aristocrats and everyone else serfs obliged to support the ruling order. 12
Click here to read Paul Craig Robert’s full article.
The question is, who is actually right here? Certainly we ought to acknowledge that elements in Paul Craig Roberts’ more conspiratorial outlook are irrefutable, recognising that Goldman Sachs did indeed deliberately help to hide previous government debt in order to extend credit to Greece. The Greeks were set up; this has been established – details of Goldman Sachs involvement can be found in this previous post.
Varoufakis is diplomatic, arguably too diplomatic. But then, is Paul Craig Roberts unduly pessimistic when he says that Syriza can now do “very little”, and, in either case, is the very moderate and rather modest approach of Varoufakis a good one, pragmatically speaking? Extending a hand of friendship being unlikely to impress “the powerful rich interest groups that rule the West [who] could not care less about the people over whom they rule” (to quote Roberts again, who knows them well, of course). Yet it may be effective in another way, such relentless persuasion and his “frenzy of reasonableness” at least winning the more public battle for hearts and minds. My own view is that Varoufakis (and Syriza) have adopted a sensible stance, which is in fact evidenced by the harsh criticism they have received from both extreme flanks. Appearing too flexible has made him a target for derision from the more radical (and Communist) left-wing, whereas standing his ground irritates his more powerful opponents working within the establishment (who lash out publicly whenever Varoufakis is out of earshot).
Meanwhile, ‘Grexident’, German Finance Minister Wolfgang Schäuble’s own portmanteau neologism (I gather), is now trending on twitter – not literally, of course, because it doesn’t have a celebrity angle. But the hashtag certainly exists and the tweets that include it are mostly German and Greek, alternating like a stack of incomprehensible post-it-notes. And sadly, the word ‘Grexident’ isn’t the only eurozone nonsense currently trending:
Academic-turned-finance minister Varoufakis was called “a time-waster, a gambler and an amateur”, a source privy to the closed-door talks told the news service Bloomberg.
This is according to a Guardian article published on Friday [April 24th] and entitled “Time is running out for Greece, says Eurogroup chief”. The article continues:
Jeroen Dijsselbloem, head of the eurogroup of finance ministers, told reporters in Latvia it was a “highly critical” meeting as Greece had still not agreed a comprehensive and detailed list of reforms.
Although there were positive signs, there remained “wide differences to bridge on substance”, he said.
“We are all aware that time is running out … too much time has been lost.” […]
Dijsselbloem warned on Friday that after the lack of recent progress it would be very hard to consider a new programme for Greece to cover its funding needs beyond June. He ruled out giving Greece an early slice [of] bailout cash. […]
ECB president Mario Draghi also betrayed his exasperation and warned that central bank could impose tougher conditions in return for keeping Greek banks afloat.
Weeks ago, the Riga meeting had been pencilled in as the moment when the eurozone could sign off an aid payment for Greece, but in the event ministers vented their frustration with Varoufakis for Greece’s failure to bridge the gap with creditors.
Just to remind you, Mario Draghi is not only the former vice chairman of Goldman Sachs – directly implicated in bringing the crisis to Greece – but serves as a trustee of the Brookings Institute. 13
So watching Varoufakis descend into the belly of the beast that is the Brookings Institute and to receive such a warm welcome and nonjudgmental reception, I must confess that I was instantly reminded of the film, Goodfellas, Martin Scorsese’s gangster classic, and of one scene in particular:
“If you’re part of a crew, nobody ever tells you that they’re going to kill you. It doesn’t happen that way. There weren’t any arguments or curses like in the movies. So your murderers come with smiles. They come as your friends, the people who have cared for you all of your life, and they always seem to come at a time when you’re at your weakest and most in need of their help.”
But Varoufakis is not easily daunted, and so, as the Guardian piece describes:
Varoufakis said the talks [in Latvia] were “intense”, but remained confident that the two sides will resolve their differences in time.
“We agreed that an agreement will be difficult but it will happen and it will happen quickly because that is the only option we have,” he told a press conference.
Varoufakis later declared: “We want an agreement and we are willing to make compromises to achieve this … The cost of not having a solution would be huge for all of us, Greece and the eurozone”. 14
In saying so, he is quite correct. Not only the Greeks, but the Germans too, whose major banks are set to carry the heaviest losses in the event of default, ought to be aware of the extreme dangers of such brinksmanship. A basic instinct for self-preservation is what Varoufakis is relying on, but for so long as the banks and other financial institutions remain confident of receiving further bailouts, it is the German taxpayers who ought to worry – as should the rest of us – because so long as they remain “too big too fail” (i.e., untouchable) then bankers like Mario Draghi and co really have nothing at stake. For once the Greeks are unable to shoulder the debt burden, as Varoufakis reminded us last summer, it will be passed on to the shoulders of the Germans and the French.
Indeed, the people of Europe stand to lose enormously if this so-called ‘Grexident’ (in reality ‘Grexpulsion’) leads to ‘Grexit’ and then to ‘Grextagion’ as it will be doubtless be called; as idiotically named as it will have been idiotically contracted and spread. Because, if no compromise can be reached in spite of Varoufakis’ tireless efforts, then sooner then we imagine we may all be standing in the Greek people’s shoes.
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Update:
A weekend can be a very long time in politics…
Unbeknownst to me, on Sunday 26th [the day before I posted this article] Yanis Varoufakis had put out a tweet in which he quoted the words of Franklin D Roosevelt, who famously said “They are unanimous in their hate for me; and I welcome their hatred”, adding simply “A quotation close to my heart (& reality) these days”:
FDR, 1936: "They are unanimous in their hate for me; and I welcome their hatred." 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 reportreleased 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.
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:
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.
“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.”
“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]
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]
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.
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.
wall of controversy 