Seumas Milne - The crucifixion of Greece is killing the European project // Greek debt crisis: 'Who will trust Germany after this?' asks Paul Krugman
You couldn’t have had a clearer demonstration of what democracy
now counts for in Europe than this week’s immolation
of Greece. In January, after five years of grinding austerity imposed by
the troika of
creditors had shrunk its economy by a quarter and pushed millions into poverty,
Greeks rebelled and elected
an anti-austerity government.
Following months of fruitless negotiations, the country
voted last week to reject
the latest cuts, tax rises and privatisations demanded to deal with
the disastrous impact of the first phase of austerity. The response of the
eurozone’s masters was immediately to ratchet up the pain still further. For
the “breach of trust” of daring to put the terms to its people, Athens was to
be punished. So on Monday – threatened with expulsion from the eurozone and
economic collapse courtesy of the European
Central Bank’s cash blockade – the Greek prime minister, Alexis
Tsipras, bent the knee.
In exchange for what is called a bailout, but is in reality
the imposition of new debts to pay existing creditors, the Greeks
must hand over €50bn (£35bn) of public assets to an “independent”
privatisation fund. On top of that, they have to inject more austerity into a
shrinking economy and reverse any legislation deemed unsuitable by the
eurozone’s overlords – in other words, the opposite of everything Tsipras and
his Syriza party were elected to do.
That’s why European officials were so keen to let it be
known that Tsipras had been “crucified”
and “mentally waterboarded”. Greece would be turned into an economic
“protectorate”, one purred, where all key decisions would be taken by foreign
governments and unelected EU bureaucrats. No wonder Greek leaders declared that
they had been subjected to a coup, while the ex-finance ministerYanis
Varoufakis compared the “deal” to the Versailles treaty. This is the diktat
of a bankers’
ramp that can barely tolerate even a facade of democracy.
That’s been a familiar pattern in the developing world for
decades, in the guise of IMF and World Bank structural adjustment programmes.
But the eurozone has now given it permanent institutional form. The idea that
this crisis has simply pitted one democratic mandate – that of Greece – against the
hard-pressed taxpayers of 18 other eurozone members is nonsense.
Not only have the loans that bailed out French and German
lenders, rather than Greece, been highly profitable. But the real fear of
eurozone governments is that if Greece’s rebellion against austerity is
rewarded, other European electorates will want to go the same way. Which is why
Syriza must not only be defeated, but utterly crushed.
That this is about politics more than economics should now
be obvious. It’s not just that the austerity imposed on Greece has delivered a
1930s-style depression, or that Ukraine
was recently bailed out with generous debt write-offs but without any
crucifixions or waterboarding. One part of the troika, the IMF – dominated by a
US anxious to keep Greece in the Atlanticist camp – has now revealed it is well
aware Greece’s
debts will never be repaid without massive relief and that this week’s deal
could swell them to more than 200% of GDP. In other words, it won’t work.
But pre-Keynesian balanced-budget economics has
the eurozone’s rulers in its grip, as they seek to overcome the crisis by
restoring corporate profitability.
It was Syriza’s commitment to opposing austerity while
remaining in the euro at all costs that led to capitulation. What helped win
the election became a fatal handicap in office, as Tsipras resisted pressure
even to make contingency plans for Grexit. That would have strengthened his
negotiating hand, as well as giving Greece the option of escaping indefinite
economic depression.
The short-term costs of exit would certainly be harsh. But,
combined with measures to take control of the economy and tax the oligarchs, it
at least offers the chance of longer-term recovery. That’s now the view of many
inside Syriza and beyond, including those who voted against the eurozone diktat
in the Greek parliament yesterday, and support is likely to grow as economic
asphyxiation resumes. Otherwise, the far right will be the main beneficiary.
Either way, the fallout from what has happened this week is
likely to be momentous. Even if the latest deal is softened and holds for a few
months – under the formal aegis of a wounded Syriza-led government, or not – it
won’t last. Sooner or later Greece
will be forced out of the euro, or leave of its own accord. The only
question is who will control that process.
Once that happens, and euro membership is seen to be
reversible, the future of the wider eurozone will be thrown into question. A half-baked
currency union, without fiscal transfers or democratic structures, cannot last.
A eurozone nakedly dominated by one state, Germany, enforcing destructive
austerity on its vassals with such brutality, can have no enduring legitimacy. While it has benefited German capital, 16 years of the euro
have delivered flat
wages to German workers and stagnant
growth and productivity to countries such as Italy. This week has made a
mockery of monetary union as a path to a united democratic Europe and opened
the way for the eurozone’s breakup.
Once that process begins, expect the future of the European
Union itself, with the eurozone at its heart, to be put in question. What kind
of a union of partners treats one of its members like a recalcitrant colony,
destroys its economy if it steps out of line, and dismisses its democracy as an
impudent affront? In fact it’s one
that has always ducked democratic accountability, embedded deregulation and
privatisation in treaties, and preferred to fix policy – including the
race-to-the-bottom Transatlantic
Trade Investment Partnership – with corporate interests in secret.
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Greek debt crisis: 'Who will trust Germany after this?' asks Paul Krugman
The Nobel prize-winning economist Paul Krugman has said the
EU's demands of Greece are madness and accused Germany of killing the European
project. In a blog published in the New York Times before eurozone leaders announced they
had reached a compromise agreement on Monday morning, Krugman suggested German
demands over Greece were vindictive, adding: "Who will ever trust
Germany’s good intentions after this?".. read more:
http://www.independent.co.uk/news/world/europe/greek-debt-crisis-who-will-trust-germany-after-this-asks-paul-krugman-10384402.html