[Marxism] European officials may be pushing regime change in Greece

Dayne Goodwin daynegoodwin at gmail.com
Wed Apr 22 10:04:06 MDT 2015

[I think that the attack on several Syriza cabinet ministers that
appeared in the Financial Times (Louis put this on the list yesterday:
) should be considered as evidence of Weisbrot's argument here.
There have also been suggestions that the Tsipras government should
break with its left wing and form a new coalition with neo-liberal

European officials may be pushing regime change in Greece
Destabilization efforts are causing economic damage
by Mark Weisbrot
Al Jazeera America, April 22

There are various narratives for what is happening to Greece as
another deadline looms – the April 24 gathering of eurozone finance
ministers in Riga, Latvia — and European officials show no sign of
compromise. The most common tale is that this is a game of
brinkmanship, with the Germans and their allies pushing for “reforms”
that the Syriza government in Greece doesn’t want to adopt. Most of
the media seems more partial to the European officials than to Greece.
But even among those who are more neutral or sympathetic to Greece, it
is still a story about hardline European officials threatening to use
their control over funding to the Greek government and banking system
in order to bring Greece to its knees.

But this narrative misses the elephant in the middle of the
negotiating table: While the Greek government cannot do anything to
replace its negotiating partners with people more to their liking, the
European officials on the other side seem to believe they can do
exactly that. And it is becoming increasingly clear that this is their
current strategy.

The idea is to do enough damage to the Greek economy during the
negotiating process to undermine support for the current government,
and ultimately replace it. The destabilization actually began before
the Jan. 25 election, when officials from the then-ruling New
Democracy Party announced that if Syriza won the election, Greece
would leave the euro and people would not be able to get money from
their bank accounts. In a nasty breach of protocol
<https://euobserver.com/political/126880>, they were supported by
important European officials.

As I have noted previously
the European Central Bank not only trained its guns on the new
government but started firing on Feb. 4, just nine days after the
election. That is when they cut off the main line of credit to the
Greek government even though they had weeks to make this decision.
This was followed by limits on the amount that Greek banks could lend
to the government – limits that the ECB did not impose on the previous

Greece has already lost a quarter of its national income over the past
six years and more than 25 percent of its labor force and the majority
of its youth have been put out of work.

These moves and repeated destabilizing statements from European
officials (and the International Monetary Fund) have had an enormous
impact on the Greek economy. Bank deposits have fled the country: They
hit a 10-year low in February, with about 24 billion euros having left
since early December. As Greek finance minister Yanis Varoufakis
pointed out last week during a visit to Washington's IMF/World Bank
spring meetings,
 the ECB is cutting off liquidity to the banking system at the same
time that they are increasing demand for liquidity by encouraging
people to sell off domestic assets and take their money out of the
banking system. On Monday some Greek sovereign bonds hit record yields
and the government ordered local governments to place their cash
reserves at the central bank. The financial turmoil is also affecting
the real economy, and could push the economy back into recession this
year if it continues

If all this seems like foul and malevolent behavior on the part of
European authorities, that’s because it is. Greece has already lost a
quarter of its national income over the past six years and more than
25 percent of its labor force and the majority of its youth have been
put out of work. Whatever anyone might say about the responsibility of
prior governments for the initial recession (one that the United
States and almost all of Europe shared), it was the troika (the ECB,
European Commission, and IMF) that turned it into a Great Depression
for Greece. They really should accept some responsibility for the
current situation, instead of simply insisting that the Greek
government continue with a failed program as if there had been no
election <http://www.cepr.net/index.php/publications/reports/the-greek-economy-which-way-forward>

Since 2008 I have debated IMF economists
at their spring and fall meetings numerous times about their policies
in Europe. Over time they have increasingly appeared not to believe in
what the IMF was doing in Greece and the Eurozone. At the meetings
this past week they declined to send anyone to a panel discussion. I
doubt very much that any IMF economist would want to defend the 4.5
percent of GDP primary budget surpluses, to be run indefinitely, that
are part of the IMF’s agreement with the prior Greek government. And
as Reza Moghadam, the former head of the IMF European department wrote
in the Financial Times two weeks ago, “Europe is demanding
implementation, in the next few weeks, of a long and comprehensive
list of actions that previous governments were unable to deliver in
the space of a few years.”

Are European leaders making impossible demands of the current Greek
government as part of a strategy to get rid of it? Varoufakis met with
President Barack Obama last week and there were press reports that he
asked the president to encourage European officials to negotiate in
good faith. In early February President Obama appeared to be doing
this, stating that “You cannot keep on squeezing countries that are in
the midst of depression.” But he has not said anything similar since

Obama very much does not want Greece to leave the euro, and neither
does German Chancellor Angela Merkel. So despite a number of
catastrophic predictions this week — many of them probably politically
motivated — it is very unlikely to happen. But the strategy of trying
to destabilize the Greek economy and government without forcing Greece
out of the euro has its risks. It is also profoundly anti-democratic
and wrong.
   _   _   _   _   _   _   _
Mark Weisbrot is co-director of the Center for Economic and Policy
Research in Washington, D.C. and president of Just Foreign Policy. He
is also the author of the forthcoming book "Failed: What the 'Experts'
Got Wrong abou the Global Economy."

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