The Fall of Greece
Yes, It Really is a Capitalist Plot
By Diana Johnstone
URL of this article: www.globalresearch.ca/index.php?context=va&aid=17937
Global Research, March 4, 2010
Counterpunch - 2010-03-01
For Europe s poorest countries, European Union membership has long held out the
promise of tranquil prosperity. The current Greek financial crisis ought to
dispel some of their illusions.
There are two strikingly significant levels to the current crisis. While
primarily economic, the European Economic Community also claims to be a
community, based on solidarity -- the sisterhood of nations and brotherhood of
peoples. However, the economic deficit is nothing compared to the human
deficit it exposes.
To put it simply, the Greek crisis shows what happens when a weak member of
this Union is in trouble. It is the same as what happens on the world scale,
where there is no such morally pretentious union perpetually congratulating
itself on its devotion to human rights. The economically strong protect their
own interests at the expense of the economically weak.
The crisis broke last autumn after George Papandreou s PASOK party won
elections, took office and discovered that the cupboard was bare. The Greek
government had cheated to get into the EU s euro zone in 2001 by cooking the
books to cover deficits that would have disqualified it from membership in the
common currency. The European Treaties capped the acceptable budget deficit at
3 per cent and public debt at 60 per cent of GDP respectively. In fact, this
limit is being widely transgressed, quite openly by France. But major scandal
arrived with revelations that Greece s budget deficit reached 12.7 per cent in
2009, with a gross debt forecast for 2010 amounting to 125 per cent of GDP.
Of course, European leaders got together to declare solidarity. But their
speeches were designed not so much to reassure the increasingly angry and
desperate Greek people as to soothe the markets the real hidden almighty gods
of the European Union. The markets, like the ancient gods, have a great old
time tormenting mere mortals in trouble, so their response to the Greek problem
was naturally to rush to profit from it. For instance, when Greece is obliged
to issue new bonds this year, the markets can blithely demand that Greece
double its interest rates, on grounds of increased risk that Greece won t pay,
thus making it that much harder for Greece to pay. Such is the logic of the
free market.
What the EU leaders meant by solidarity in their appeal to the gods was not
that they were going to pour public money into Greece, as they poured it into
their troubled banks, but that they intended to squeeze the money owed the
banks out of the Greek people.
The squeezing is to take the forms made familiar over the past disastrous
decades by the International Monetary Fund: the Greek state is enjoined to cut
public expenses, which means firing public employees, cutting their overall
earnings, delaying retirement, economizing on health care, raising taxes, and
incidentally probably raising the jobless rate from 9.6 per cent to around 16
per cent, all with the glorious aim of bringing the deficit down to 8.7 per
cent this year and thus appeasing the invisible gods of the market.
This just might propitiate both the gods and German leaders, who above all want
to maintain the value of the euro. The financial markets will no doubt grab
their pound of flesh in the form of increased interest rates, while the Greeks
are bled by IMF-style shock treatment .
And what about that great theater of human rights and universal brotherhood,
the European Parliament? In that forum everyone gets to speak for a carefully
clocked 1, 2, or 3 minutes, but when it comes to the most serious matter, the
budget, the authoritative voices are all German.
Thus the chairman of the EP s special committee on the economic and financial
crisis, Wolf Klinz, has called for sending a high representative of the EU to
Greece, an economies commissar to make sure the Greeks carry out the austerity
measures properly. The Greek crisis can allow the EU to put into practice for
the first time its Treaty instruments concerning supervision of budgetary and
economic policy . Interest rates may go up because of risk , but there is to
be no risk. The pound of flesh will be delivered.
There was no such supervision of the financial fiddling which caused this mess.
The EU statistics agency Eurostat recently discovered and revealed that in
2001, Goldman Sachs secretly ( but legally , protest its executive officers)
helped the right-wing Greek government meet EU membership criteria by using a
complicated currency swap that masked the extent of public deficit and national
debt. [See Andrew Cockburn and Marshall Auerback, on this site.] Who
understands how that worked? I think it is fair to guess that not even Angela
Merkel, who is trained as a scientist, understands clearly what went on, much
less the incompetent Greek politicians who accepted the Goldman Sachs trickery.
It allowed them to create an illusion of success for a while. Success meant
being a member of the club of the rich, and it can be argued that this notion
of success has actually favored bad government at the national level.
Belonging to the EU gave a false sense of security that contribute!
d to the irresponsibility of incompetent political leaders.
Having euros to buy imported goods (notably from Germany) pleased rich
consumers, while the euro priced Greek goods out of their previous markets.
Now the debt trap is closing. The traditional way out for Greece would be to
leave the euro and return to a devaluated drachma, in order to cut imports and
favor exports. This way, the burden of necessary sacrifices would not be borne
solely by the working class. But the embrace of EU solidarity is there to
prevent this from happening. German authorities are preparing to lay down the
law to the Greeks, after reducing the income of their own working class in
order to benefit Germany s export-oriented economy.
Austerity measures are the opposite of what is needed in a time of looming
depression. Rather, what is needed are Keynesian measures to stimulate
employment and strengthen the domestic market. But Germany is firmly attached
to the export model, for itself and everyone else ( globalization ). For a
country like Greece, which cannot compete successfully within the EU, exports
outside the EU are crippled by its use of a strong currency, the euro. Bound
to the euro, Greece can neither stimulate its domestic market nor export
successfully. But it is not going to be allowed to extricate itself from the
debt trap and return to its traditional currency, the drachma. Poverty appears
to be the only solution.
There is discontent within the German working class at their country s policies
aimed at shrinking wages and social benefits for the sake of selling abroad. In
an ideal social Europe , workers in Germany would come to the aid of workers in
Greece by demanding a radical revision of economic policy, away from catering
to the international financial markets toward building a solid social
democracy. The reality is quite different.
The Greek financial crisis exposes the absence of any real community spirit in
the EU. The solidarity declared by the country s EU partners is a solidarity
with their own investments. There is no popular solidarity between peoples.
The EU has established a surrogate ideology of internationalism: rejection of
the nation-state as source of all evil, a pompous pride in Europe as the center
of human rights, giver of moral lessons to the world, which happens to fit in
perfectly with its subservience to United States imperial foreign policy in the
Middle East and beyond. The paradox is that European unification has coincided
with decreasing curiosity in the larger EU states about what happens to their
neighbors.
Despite a certain amount of specialized training needed to create a Eurocrat
class, the general population of each EU member is only superficially
acquainted with the others. They see them as teams in soccer matches. They go
on holiday around the Mediterranean, but this mostly involves meeting fellow
tourists, and study of foreign languages has declined, except for English
(omnipresent, if mangled). Mass media news reports are turned inward, featuring
missing children and pedophiles ahead of even major political events in other
EU member states.
Northern European media portray Greece practically as a Third World country,
peripheral and picturesque, where people speak an impossible language, dance in
circles on islands, and live beyond their means in their carefree way. The
crickets in the Aesop fable, scorned by the assiduous ants.
Media in Germany and the Netherlands imply that IMF-style shock treatment is
almost too good for them. The widening polarization between rich and poor,
between and within EU member states, is taken for granted.
The smaller indebted countries within the EU are amiably designated by the
English-speaking financial priesthood as the PIGS Portugal, Italy (perhaps
Ireland), Greece, Spain an appropriate designation for an animal farm where
some are so much more equal than others.
Diana Johnstone is author of Fools Crusade: Yugoslavia, NATO and Western
Delusions (Monthly Review Press). She can be reached at diana.jo...@yahoo.fr
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© Copyright Diana Johnstone, Counterpunch, 2010
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