The end of the EU and NATO is nigh, with Greece and Spain preparing to tear down the whole edifice on the basis of wisdom that, although consistently expressed in the House of Commons, has been ignored by the British media for a generation.
Costas Lapavitsas writes:
Costas Lapavitsas
The Greek parliament has failed
to elect a new president and the country’s constitution dictates that there should now be parliamentary
elections. These will
be critical for Greece and also important for Europe.
A victory for Syriza, the main leftwing party, would offer hope that Europe might, at
last, begin to move away from austerity policies. But there are also
grave risks for Greece and the European left.
The rise of Syriza is a result of
the adjustment programme imposed on Greece in 2010.
The troika of the European
Commission, the European Central Bank (ECB) and the International Monetary Fund
(IMF) provided huge bailout loans, with the cost of unprecedented cuts in
public expenditure, tax increases and a collapse in wages.
It was a standard,
if extreme, austerity package, with one vital difference: austerity could not
be softened by devaluing the currency as, for instance, had happened in the Asian crisis of
1997-98.
Greek membership of the euro had closed all escape routes.
Brutal austerity succeeded in stabilising Greece and
keeping it in the economic and monetary union by destroying its economy and
society.
The budget deficit has been drastically reduced, the current account
deficit has turned into a surplus and the prospect of default on foreign debt
has receded.
But GDP has contracted by 25%, unemployment has shot above 25%,
real wages have fallen by 30% and industrial output has declined by 35%.
The
human cost has been immeasurable, amounting to a silent humanitarian crisis.
Homelessness has rocketed, primary healthcare has collapsed, soup kitchens have
multiplied and child mortality has increased.
Since the summer of 2014, the depression has been drawing
to a close, helped by the strong performance of the tourist sector.
Yet, the
damage from troika policies is so severe that growth prospects are appalling.
The weakness is manifest in foreign trade, which the IMF expected to act as the
“engine of growth”. In 2014, Greek exports will probably contract, while
imports began to rise as soon as the depression showed signs of ending.
This is
a deeply dysfunctional economy.
In the midst of this catastrophe, the troika is insisting
on further austerity to achieve massive primary budget surpluses of 3% in 2015,
4.5% in 2016 and even more in future years.
Its purpose is to service the
enormous foreign debt, which has risen to 175% of GDP from about 130% in 2009.
Astonishingly, the IMF still expects Greece to register average growth of 3.4%
during the next five years – provided, of course, that it goes full speed ahead
with privatisation, deregulation of labour and market liberalisation.
The
troika has truly embraced the economics of the absurd.
In 2010-11, the Greek people actively opposed the
disastrous policies of the troika and its domestic allies, but failed to stop
them.
After 2012, however, as unemployment and poverty escalated, it became
difficult to organise popular protest.
Still, exhaustion with troika policies
is so great that voters have turned in droves to the left, in the hope that
Syriza will offer a better future.
Syriza promises first to achieve a substantial
write-off of Greek debt and, second, to lift austerity by aiming for balanced
budgets, instead of the surpluses demanded by the troika.
It will reconnect
families to the electricity network, provide food relief and shelter the
homeless. It will take immediate action to reduce unemployment through public
programmes.
It is committed to lowering the enormous tax burden and to boosting
public investment in an effort to accelerate growth.
There is nothing radical, much less revolutionary, in
these policies. They represent modest common sense and would open a fresh path
for other European countries.
After all, Syriza has repeatedly declared its
intention to keep the country within the economic and monetary union, and to
avoid unilateral actions.
There is little doubt that its leaders are committed
Europeanists who truly believe that they could help transform the EU from
within.
The trouble is that the EU is far
from amenable to Syriza’s ideas.
Germany’s exporters and banks have benefited
substantially from the euro and have no incentive to abandon austerity.
Berlin
has its plate full anyway as the eurozone is exhibiting renewed weakness, with
France and Italy on the ropes.
There is also Mario Draghi at the ECB, rambling on about quantitative easing,
a policy that Berlin detests.
The last thing that Germany would welcome would
be Syriza and its programme. A scaremongering campaign is likely in the coming weeks
to deter Greeks from voting for the leftwing party.
Should the campaign fail, a
Syriza government can expect hostility from the EU, which is not short of
weapons.
Syriza’s programme is sensible and modest, but lacks secure funding.
Greece also needs substantial finance to service its debts in 2015, perhaps up to
€20bn.
There are some debt repayments in the spring that might be manageable,
but further repayments – €6.7bn – must be made in July-August, which will need
fresh funding from abroad.
And, needless to say, Greek banking would be rapidly
asphyxiated if the ECB stopped providing liquidity.
A Syriza government will probably face an ultimatum to
capitulate, perhaps by being offered some watered-down version of austerity.
This would be a disaster for Greece and a major defeat for opponents of
austerity in Europe.
It is vital that Syriza wins and applies its programme
without flinching, helped by international support.
The battle lines are
forming in Greece.
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