Photo by Sam Valadi
International financial institutions are playing a game of chicken with Greece. Let’s hope they back down.
“Ultimately, the European authorities—including the German government—are going to make some concessions because Angela Merkel does not want to be remembered as the chancellor who broke up the Eurozone,” Mark Weisbrot, co-director of the Center for Economic and Policy Research, tells The Progressive. “So they will have to reach an agreement, and also because of pressure from the United States.”
European officials have been fulminating at the temerity of the Greek government’s decision to defer its loan payments.
“I do not have a personal problem with Alexis Tsipras,” European Commission President Jean-Claude Juncker recently said, referring to Greece’s new prime minister. “He was my friend. He is my friend. But, frankly, in order to maintain [the friendship], he has to observe some minimum rules.”http://www.theguardian.com/world/2015/jun/07/juncker-fury-greek-bailout-talks-g7-summit-russia-sanctions
The head honchos in Europe seem to be oblivious—or unconcerned—about the severe damage done by the policies they have imposed on Greece. The Greek people have borne the brunt.
“Vasiliki Meliou, who started working at her bank at eighteen, has already seen her pension payments cut by 35 percent,”The New York Times reports. “She says she sometimes cannot sleep for fear of what might happen next.
“In the latest round of negotiations, Greece’s creditors are demanding that Prime Minister Alexis Tsipras make further cuts in pensions as a condition of continuing to help Greece pay its enormous debts,” the piece explains. “The creditors want to establish substantial early-retirement penalties for those who still choose the option, and to cut existing pensions even more—even the smallest ones. The proposal also demands further unifying the funds and establishing a closer link between contribution and benefits, most likely setting the stage for yet more cuts.”
As if this won’t cause enough distress, the Times reports that the creditors also want the taxes on medicines and on electricity in the country to be essentially doubled.
The new Greek government’s partially successful maneuvering to lessen the suffering is what is causing so many European high priests to become apoplectic.
“For almost six months, Tsipras has been running rings round” the financial institutions, reports The Guardian. “He has important things going for him, most notably his democratic mandate and the knowledge that no European country wants to be held responsible for ejecting Greece from the Euro.
Progressive experts are urging Greek officials to stay the course.
“I wouldn't have any advice for them other than what they are doing,” says Weisbrot. “They were elected to change the economic outcome in Greece to allow for a recovery, and that's what they are trying to do.”
Weisbrot cautions, though, that European policymakers have it in for the Greek government.
Their “strategy appears to be one of regime change—weakening the Greek economy during negotiations, trying to undermine support for Syriza [the ruling party], in order to eventually topple the government and get a new government that will do what they want,” he says. “It seems like Washington is OK with this strategy, so long as Greece is not forced out of the Euro.”
Which is a pity, because, as Weisbrot points out, the United States—with all its power and influence—could do a lot for the Greek public.
“It could play a positive role by pushing the European authorities, especially the IMF and Germany, to give up on trying to force more pension cuts and labor law ‘reform,’ ” he says. “Also, it could push for enough fiscal space—i.e., deficit spending—to allow for a real economic recovery that brings down unemployment.”
The Obama Administration should show solidarity with the Greek people at this crucial juncture, instead of siding with those inflicting continuous pain on them.