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Tue Apr 21, 2015, 10:52 AM

TRNN: Syriza’s Choice: Bail on the People or the Troika

Dimitri Lascaris says debt relief is not on the table, but unnamed European government officials are indicating some modest short-term concessions might be in order - April 21, 2015


PERIES: So Dimitri, tell me, Troika and all of the European institutions are all leaning on Greece heavily. It is like trying to draw blood from a stone. What do you make of this pressure?

LASCARIS: I think that they've begun to conclude that they've pushed the Greek government as far as it's prepared to go. One line in the sand that the Greek government does not appear prepared to cross is further reductions in pensions. The Greek government also is not prepared to make any more hard, definitive commitments in respect to the privatization program. What it has said is that it won't undo privatizations that have been completed and will not disrupt those that are in progress, although there's some question as to what terms it would be prepared to accept with respect to those that are in progress but not completed. The Greek government has not committed to going ahead with uncommenced privatization processes. So that's a red line also that they seem to have drawn.

And I think that the eurozone leaders are coming to the conclusion that they've pushed Greece very far, the Greek government. It's as far as they're prepared to go. And it's time for them to begin making some modest concessions to achieve some kind of a short-term deal that in the end will not solve the long-term crisis.

The reason why I say that, that there are signs that they are prepared to make some modest concessions at this eleventh hour, is you're seeing reports in the media--for example in Bloomberg, three officials, unnamed officials of the eurozone governments have said, you know, that as long as Greece doesn't backtrack on commitments made thus far and as long as it does something, without specifying what that something may be, to implement further reforms in addition to those so-called reforms, in addition to those that have been implemented thus far, then a deal can be done.

This is, this is new. But it's extremely modest. And from my perspective what got lost very early on in the conversation and is not on the table at this stage, a critical, key component by the Greek government's own account is debt relief. That seems to have evaporated. And without any long-lasting debt relief, any substantial reduction in Greek debt, a write down of the Greek debt, you're simply engaging in the, to borrow the words of Minister Varoufakis himself, in a game of extend and pretend. And this crisis will inevitably erupt in the future.

PERIES: Now Dimitri, in the hour-long conversation we had just aired on The Real News, conversation between Yanis Varoufakis the finance minister and Joseph Stiglitz the economist, Stiglitz actually asked Varoufakis, he says within the framework that currently exists is, you know, what is it that can be done? And I was shocked at Varoufakis's answer, where he didn't ask for debt relief, as you said. This would have been his opportunity to bring on board a critical, key economist in the discussion on this very issue. Why do you think he's doing that?

LASCARIS: Well, I think that his determination to keep Greece within the eurozone is greater than his determination to effect radical reform--reform, progressive reform, within Greece. I think he does genuinely desire to do the latter, but his determination to do that is not as great as compliance with demands of the eurozone, for the purpose of keeping Greece within it.

The idea that he's continuing to advance, it's an interesting idea, is that you know, Europe is--and I'm simplifying it--but that Europe would essentially shift to a pro-growth approach to the eurozone through infrastructure investment. Through a development bank that the European Union has established. And that, that bank would borrow money at low interest rates and then inve--and create growth through infrastructure investment and other types of investment.

The problem for Greece--and that would be a positive development, to be sure. And it is one that I think is doable within the existing legal framework of the European Union. Although it may not be doable within the current political environment. Even if it were doable in the current political environment, Greece cannot grow its way out of this debt. No matter what is done. It's simply too great. It is unsustainable. It is far too high a percentage of Greece's GDP. And it has to be written down. And until that very difficult negotiation is engaged in in good faith by all parties, this crisis will not end. And the suffering of the Greek people--and others within the European periphery who, other states where the debt loads have become unsustainable, their suffering will not end either.

PERIES: Now Dimitri, somewhat amusingly they all played on the term "times are changing", and I think when Yanis Varoufakis referred to that in this discussion with Stiglitz he was referring to the pressure that these countries that are currently experiencing difficulties in terms of debt, like Greece, Spain, Portugal, and others could bring on some sort of change within the eurozone to address these issues that a number of them are having. Do you think that's a real possibility?

LASCARIS: I'm skeptical that it is. The governments that wield by far the greatest power within the eurozone are both politically and ideologically invested in a neoliberal vision of Europe that is fundamentally incompatible with dramatic progressive reform, in the periphery or elsewhere. And unless those governments are dislodged from power, there is really no, there's no meaningful prospect for long-term progressive reform within the current framework of the eurozone. I mean, that's just the unfortunate reality.

Now, if Greece does--interestingly, opinion polls, or current opinion polls are indicating that Syriza continues to enjoy very high public support, even roughly double, a little bit less than double of what it enjoyed at the point of the election in January. They're showing public support for Syriza in the range of 70%. And if Syriza can effect meaningful albeit modest reform, that may start a movement. That may revitalize a movement within Europe. It may give more, for example, impetus towards parties like Podemos in Spain.

And so I suppose there's a small prospect that once you start the ball rolling, so to speak, in terms of achieving some change in the conversation, some substantive change of the policies towards more pro-growth, towards more humane treatment of the more vulnerable members of European society, at that stage you may see over a longer term meaningful political change, political movements, within the eurozone.

But I think, you know, given the power, the distribution of power within the eurozone and the ideological inclinations of those who exercise it, that is unlikely to occur within this, the current framework of the eurozone. And if it does occur, it's going to occur over a very long time frame, and Europe is in, urgently in need of dramatic reform. You know, that, that approach, the incremental approach is not going to accomplish in the near term what needs to be accomplished in order to sustain the union.

PERIES: So then what options does Greece have? I mean, it really does not have the money to make these next payments. What could it possibly do under these circumstances?

LASCARIS: Well as I've, I've advocated previously and will continue to advocate, Greece needs to default on this debt and commence a negotiation with its creditors for a massive writedown. Greece needs to withdraw from the eurozone, Greece needs to regain sovereignty over its currency. It needs to engage in an external devaluation rather than continuing this vicious internal devaluation, these wage cuts, these cuts in social benefits. And it needs to rebuild its economy in accordance with certain basic humanitarian principles.

And other states within the eurozone may need to do that. For example, Spain. But short of that, given, as I say, the current ideological inclinations of those who exercise the greatest power within the eurozone, I don't see the necessary reforms occurring to achieve a stable, robust and egalitarian democracy within the eurozone.

PERIES: And in order to change the current political outlook on Europe and who Greece is negotiating with, if Podemos is actually successful in Spain, who else is in line to make a difference in that framework?

LASCARIS: Well, at the moment, you know, the party as I understand it in Italy, another country which is burdened by unsustainable debt and is suffering from the austerity quite significantly, although not as badly as Spain and Greece from the austerity policies of the Troika. That's the party of Beppe Grillo. He tends to be more of a right-wing populist persuasion, so I'm not sure that, that that would provide a viable answer on a long-term basis for Italy.

Really, the two parties that stand out within the periphery, within the countries that are most indebted and most suffering from austerity are Podemos and Greece at this stage. I'm not aware of any, you know, real, viable alternatives. But I think that there's a great hunger and an appetite amongst the European populace for parties like Syriza, like Podemos. And if they can, if they can achieve some measure of palpable success for their own constituents I think you may see the rise of progressive parties within other jurisdictions quite quickly. Things could turn quickly. Relatively quickly.

But at the end of the day, without, without debt relief, these peripheral states are not going to achieve the reforms that they need to in order to revive their economies and protect the most vulnerable members of their society.

PERIES: We'll be watching. Dimitri, thank you so much for joining us today.

Reform is going to happen, perhaps not LaGarde's version. Austerity is being rejected, as it should be.

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Reply TRNN: Syriza’s Choice: Bail on the People or the Troika (Original post)
mother earth Apr 2015 OP
zeemike Apr 2015 #1
mother earth Apr 2015 #2
mother earth Apr 2015 #3

Response to mother earth (Original post)

Tue Apr 21, 2015, 01:08 PM

1. Honestly most of this is over my head.

But what is clear to me is the end game is for the banksters to own Greece lock stock and barrel with a debt trap...same for the rest of the world.
And I hope their rebellion is successful because the world does not need oligarchy.

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Response to zeemike (Reply #1)

Tue Apr 21, 2015, 05:23 PM

2. Sounds to me like you have a pretty fair grasp of it, the oligarchy, the banksters, same poison,

same disaster, predatory capitalism, sweeping globally, with enforcement of austerity that has been proven time and time again to worsten the plight of an already unsustainably indebted working class. The debt cannot be repaid unless there is debt relief, it far exceeds GDP beyond any realistic terms of ever paying it back. The troika (European Central Bank, International Monetary Fund & European Union) are demanding austerity continue, upon the backs of the very working class who are and have been struggling for survival, and apparently they want them to sell off Greece to private industry (i.e., Shock Doctrine) which has already been steadily happening under corrupt politicians, until Syriza.

The corruption started with gov't and tax evasion of the wealthy, coupled with shock doctrine principles of the troika, austerity measures forced on a nation whose working class had no choice in the grand heist, which could not have taken place without the Troika turning a blind eye. It's been playing out for years. Now Troika offers no alternatives in the way of debt relief to Syriza who does not want to leave the EU, but really...what choice is left? So if leaving the EU means Syriza (left wing gov't) poses a referendum to seek a vote by the people, the Troika hopes Syriza will be ousted, but they did not "bank" on 70% growing support for Syriza that does not intend to sell out their people. So, Syriza will most likely stay with support to leave the EU (many scenarios available online, but tread carefully), and remember the lesson of Iceland. (Also, fascism, aka The Greek Dawn grows under the most desperate of situations, neo-Nazis are gaining a foothold in Greece, again, until Syriza, and to me, this is Germany's greatest shame in this struggle that is playing out).

There are a string of countries in the same boat as Greece (Spain, Portugal, Ireland, Italy, etc.) which is why Greece is being dealt with so harshly, if Syriza is successful, the Troika knows there will be a domino effect. They fear a Syriza success, they'd like a Syriza ousting.

I encourage you to view Yanis Varoufakis videos on YouTube...you'll get a quick education, and you will understand how globally all of working class people are being exploited & played for fools. The winners are always the same, the oligarchy our own USA has become, and like the Greeks, all it took were politicians and tax evasion of the uber wealthy, ours done "legally", lol. At least, that's my synopsis.

If you choose to do a little research, remember the birth place of democracy, and understand once again, another lesson may be at hand.

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Response to mother earth (Original post)

Wed Apr 22, 2015, 09:12 AM

3. Why Greece’s economy will get worse before it gets better, 4-22-15

Negotiations will likely have to break down before the debt-troubled nation and its lenders have the incentives and political rationale to agree on a plan to turn the economy around.
Greece, which is quickly running out of cash, pledged to its euro zone partners in February that by the end of April it would agree with creditors on a comprehensive list of actions to unlock its remaining bailout funding.
The debt-troubled nation was supposed to present the list to euro zone finance ministers on Friday, but it’s unlikely that a package will be agreed even by the end of the month.
As a result, in the next several weeks, the situation in Greece may deteriorate rapidly. The country could eventually fall out of the Euro, despite the intention on all sides to avoid that outcome.

This would likely plunge Greece into a renewal of the depression it was just exiting. Europe would suffer as well, although not as badly, with growth falling significantly. America would also be impacted, given that the European Union EU is our largest trading partner: we would lose jobs and profits as the EU imports less from us and as the U.S. dollar got even stronger, hurting our exports to all parts of the world. A more radicalized and alienated Greece could also become a serious geo-political nuisance for us, with close ties to Russia, its cultural cousin.

Though the timeline is uncertain, the odds are that a deal will be cut that avoids this very painful outcome, but there is a real possibility of disaster because of the conflicting views and political situations of the key parties.

The good news is that there is indeed a deal to be made. The broad outlines have been clear to experts for a couple of months. The interest rate Greece pays on its massive debt to the other nations in Europe would be cut to nearly zero and payments would be pushed out another decade or two, but there would be no reduction in the amount that would eventually need to be repaid. Europe would agree to accept Greek budgets that are a little less austere, but still are in surplus prior to the payment of interest. Greece would agree to further economic reforms, but Europe would allow more choice in which ones and how they are implemented, and even rollback of some very unpopular parts of prior agreements.

Importantly, Greece would have to accept that the generous funding is contingent on actually implementing agreed reforms and that this process would be monitored by the lenders.

Greece would have to compromise more than its European partners, but both sides would have to cross lines they have drawn in the sand. Europe would have to accept that the previous economic programs they foisted on Greece were flawed and substantial modifications needed. Greece would have to accept that most of their problems are their own fault and that borrowing hundreds of billions of euros from the rest of Europe inevitably requires handing over some control to the lenders and accepting painful reforms.

The core problem of the negotiations is that the new Syriza Party government in Greece views the world very differently from the governments in the rest of Europe. “Syriza” is a Greek acronym for “The Party of the Radical Left” and those last two words should be taken very seriously. Long-term members of Syriza, such as most of the members of Parliament, are suspicious of, or even actively hostile to, capitalism and the European system of economic governance. They do not see why Greece should follow a path of “reforms” that read to them like a right-wing wish list. Further, they have no previous governing experience and had no reasonable expectation of ever being in charge even 18 months ago. They have never gone through the internal fights that are necessary to move from a party of ideology to one of actual governance. As a result, their campaign promises were unrealistic and they do not have an internal consensus to back away from some of them.

Equally fundamentally, Greece is misreading its own importance to Europe. Yes, it would be very painful for its partners if Greece fell out of the Euro, since this would call the foundations of the monetary union into question and renew the Euro Crisis, and it is true the money could be found to accede to the Greek demands. However, Germany and much of the rest of Europe, believes that giving into what they see as unreasonable demands by a newly elected radical left government will guarantee that such governments arise in Spain (where Podemos is very much like Syriza) and eventually in other countries. This political contagion could be very damaging, leading to far worse risks than just Greece leaving the Euro.

For its part, Europe is being too rigid in its demands and has not accepted its share of the responsibility for the Greek economic and humanitarian disaster of the last few years that was caused in part by EU-mandated austerity programs. Europe does have to move too, just not nearly as far as the Greeks do.

My fear, and best guess, is that negotiations will have to break down and trigger damaging economic consequences in Greece and the rest of Europe before the two sides have the incentives and political rationale to agree to what should already have been agreed. The risk, of course, is that we could get the ever-growing economic and political damage, but not the eventual agreement. Europe has muddled through the earlier crisis rounds, and the ugly process is likely to work again, but this could be the time they fail to snatch compromise from the jaws of defeat.

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