[Marxism] Greece's future in the eurozone (3)

Dayne Goodwin daynegoodwin at gmail.com
Mon Jul 13 19:36:47 MDT 2015

1)  Alexis Tsipras: We decided to prevent a political Grexit with an
economic pretext
Prime Minister Alexis Tsipras’ speech in the Greek parliament
concerning the mandate to conclude the negotiation, July 11, 2015

2)  Saving Greece, Saving Europe
by Barry Eichengreen
Project Syndicate, July 13
 . . .
German Finance Minister Wolfgang Schäuble’s idea of a temporary “time
out” from the euro is ludicrous. Given Greece’s collapsing economy and
growing humanitarian crisis, the government will have no choice,
absent an agreement, but to print money to fund basic social services.
It is inconceivable that a country in such deep distress could meet
the conditions for euro adoption – inflation within 2% of the eurozone
average and a stable exchange rate for two years – between now and the
end of the decade. If Grexit occurs, it will not be a holiday; it will
be a retirement.

Early Monday morning, European leaders agreed to remove the reference
to this “time out” from the announcement of the latest bailout deal.
But this door, having been opened, will not now be easily closed. The
Eurosystem has been rendered more fragile and subject to
destabilization. Other European finance ministers will have to answer
for agreeing to forward to their leaders a provisional draft
containing Schäuble’s destructive language.

Economically, the new program is perverse, because it will plunge
Greece deeper into depression. It envisages raising additional taxes,
cutting pensions further, and implementing automatic spending cuts if
fiscal targets are missed. But it provides no basis for recovery or
growth. The Greek economy is already in free-fall, and structural
reforms alone will not reverse the downward spiral.

The agreement continues to require primary budget surpluses (net of
interest payments), rising to 3.5% of GDP by 2018, which will worsen
Greece’s slump. Re-profiling the country’s debt, which is implicitly
part of the agreement, will do nothing to ameliorate this, given that
interest payments already are minimal through the end of the decade.
As the depression deepens, the deficit targets will be missed,
triggering further spending cuts and accelerating the economy’s

Eventually, the agreement will trigger Grexit, either because the
creditors withdraw their support after fiscal targets are missed, or
because the Greek people rebel. Triggering that exit is transparently
Germany’s intent.
 . . .
Barry Eichengreen is Professor of Economics at the University of
California, Berkeley; Pitt Professor of American History and
Institutions at the University of Cambridge; and a former senior
policy adviser at the International Monetary Fund. His newest book,
Hall of Mirrors:The Great Depression, the Great Recession, and the
Uses – and Misuses – of History, was just published by Oxford
University Press.

3)  They have created a desert and called it Europe
by James Meadway
Counterfire, July 13

The Syriza government has made a total surrender on every single point
it was elected on, back in January. The deal, agreed in principle late
last night by the Eurozone finance ministers, commits Greece to
deepening austerity over the next three years, breaking every "red
line" it maintained in negotiations. Pension "reforms" and VAT
increases must be passed next week by the Greek Parliament. Greece is
to be forced to hand over €50bn of assets to a separate fund, as a
guarantee of its good behaviour.
 . . .
Yanis Varoufakis, who in a lengthy interview makes clear that his
attempts to prepare for bank closures and possible Grexit were ruled
out by the Cabinet, was forced from his position as finance minister
the morning after the result. Euclid Tsakalotos, an economist from the
strongly pro-European wing of the party, was drafted in to prepare the
terms of surrender.

There are several failures that lead to Syriza's collapse. At the
heart, however, was the poison of Europeanism. Far from a family of
equal nations, the EU is today revealed as an appalling debtors'
prison. But with the majority of Syriza unreservedly committed to
maintaining Greece's membership of the family, as part of a strategy
for change that placed the necessity of transnational institutions at
its centre, they have been unable to break. When taken to the crunch,
forced to choose between the two promises it made in its January
election - to end austerity and to keep Greece in the euro - Syriza's
leadership chose the euro.

The failure to prepare properly here - either technically, or
politically - meant the (unelected) European Central Bank could
continually apply pressure on Greek banks, threatening to withdraw
support and so bringing about their collapse. It did this ahead of the
first, temporary deal in February. And it enforced the banks' closure
once the Greek government moved to a referendum. This supposedly
technocratic institution, utterly (and deliberately) without any
meaningful democratic oversight, has behaved in a nakedly political
manner throughout.

The situation is still fluid, with approval of the deal subject to
national parliaments, and with major details yet to be clarified. But
it is possible, on the basis of the last five years, to predict three
things. First, without debt relief and with continued austerity,
Greece will continue its spiral of decline. Second, the deal will not
hold: the resistance Greeks have shown to successive austerity
measures, and which was seen on a grand scale in the No vote, will
reappear - even if it is now resistance to the Syriza government.
Third, faced with steady collapse and no prospect of recovery, Greece
will leave the euro. The question is when, not if.

For those in the UK, two things are necessary. First is to support all
those resisting new austerity measures, whatever the presumed
character of the government. Second, to reject Britain's continued
membership of the EU. It is simply not possible for anyone in good
conscience to offer their support to an institution so manifestly and
comprehensively opposed to democracy and committed to enforcing
neoliberalism - whatever the price paid by its victims.
Internationalism demands that we do whatever we can to undermine the
European institutions. In our own referendum, on British membership of
the EU, the left must vote No.
   _   _   _   _   _   _   _   _
Radical economist James Meadway has been an important critic of
austerity economics and at the forefront of efforts to promulgate an
alternative. James is co-author of Crisis in the Eurozone (2012) and
Marx for Today (2014).

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