The Greek Debt and the German Acquiescence The Real News Network, February 27, 2015
Initially, Germany stood firm in saying Greece would have to sign the existing loan program in order to secure an extension, but this was always an untenable position, says Professor James K. Galbraith, academic colleague and advisor to Greek Finance Minister Yanis Varoufakis. [...] PERIES: James, you wrote in Social Europe that it was not Athens, but in fact it may have been the creditor parties that had taken a step back naming the mixed messages from Germany. How is that so? GALBRAITH: What happened was that at the end of the day, the creditor countries and the creditor institutions took a step back. There had been through the entire process a very firm position taken by the German government that you had to sign up to the existing loan program, all of its conditions, lock stock and barrel, no changes that the elections have really meant nothing. This was an untenable position. It was a position that over the time of these discussions lost the sympathy of the European Commission, and I think also of the International Monetary Fund, and also of several other major governments. And it was a position from which the German government at the end of the day took a step back, agreeing to the essence of the Greek position all along, which was to have a financing arrangement that would be in place over a four-month period, and then discussions about the specific terms, based upon a list that was submitted yesterday to the institutions. So that strikes me - I wouldn't call that a capitulation; I would say that what happened was that the German government, having taken a very tough line through the process, took a step back from that tough line in order to secure a basic framework agreement for going forward. And that's where we are now. [...] PERIES: James, you're an insider now. Give us an inside look at how prepared the Greek government is to deal with the financial crisis, and also to manage the complexities coming up, perhaps, in four months again. GALBRAITH: Well, first of all, it is a brand-new government. It is a government of people who have not previously been in government, in many cases not previously in politics. It is a government that was faced with an extremely short and high-pressure deadline to come up with negotiating positions, documents, and presentations for creditor institutions, partner institutions, that have been in place for a long time. So it was a very challenging business, and would have been for any government in that position, to maintain its position in these discussions, and discussions which also involved 18 other finance ministers. I think it was quite remarkable that Yanis Varoufakis, the new finance minister, was able to pull off an agreement within the timeframe, that very tight February 28 deadline for the expiration of the existing program. And that's a good--that augurs well for prospects going forward. Right now, a major advantage of having the four-month window is that the government can begin to get their personnel in place, it can begin to define and implement the priorities that are immediately open to it, can begin to show progress on the very substantial areas where there is already agreement. And much of what was being discussed here, by the way, were issues that are matters that are not politically controversial--going after tax evasion, cracking down on corruption, reform of public administration. Much of this is common ground already, and the issues were whether it could be spelled out with sufficient clarity so that the creditor institutions and partner governments were fully aware of and persuaded of what the Greek government's position actually is. And I think that has largely been accomplished, and so that there is some breathing space for the government to, let's say, consolidate its position and begin to get some work done. [...] PERIES: James, in spite of this extension agreement, Greece is still in a financial crisis. How are they positioning themselves to manage things four months now down the road? GALBRAITH: Well, just to be clear about the terms that have been agreed to, what happened yesterday was that, first of all, the institutions and then the finance ministers agreed that the letter submitted by the Greek government was a sufficiently comprehensive basis for a start to discussions and negotiations on revision of terms of the existing arrangement and a possible new arrangement. Those discussions should begin quite soon. They can be carried out over a four-month window. But there's certainly, I think, reasonable hope that they won't take that amount of time, that in fact the agreement can be reached on, first of all, the large areas of common ground, and then a reasonable accommodation on the areas of difference in a much shorter period of time. And then you go forward from there having secured financing that will get you through the major repayments that are due this year. And after that, the situation becomes substantially more normal; that is to say, the government can go ahead and pursue its policies with a view to achieving some restoration of economic stability, economic growth, emelioration of the humanitarian crisis, and other major objectives that it has. So it's not a question of preparing for negotiations that start in four months. It's a question of getting the framework down now so that a governing program can go forward. full: http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=13320 _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
