After 5 months of posturing, wriggling, misinformation,
ultimatums, deadlines and acrimonious exchanges it finally looks as if (events
can change here with extraordinary rapidity) Greece will finally exit the
Eurozone after her bailouts expire on 30 June and she fails to pay amounts due
to the IMF on the same day. The Greek, European and certainly the British
public have been bored to tears by the whole sorry saga and have long subsided
into a catatonic stupor. The fratricidal strife between Ed and David Miliband
is a much more compelling story, if you are looking for blood and thunder,
while rather more important issues like Russian aggression, ISIS expansion,
Islamic terrorism and mass emigration from the Third World should really be
troubling our pretty little heads.
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| The Greek Team, Tsipras and Varoufakis |
Greece is by any measure a basket-case. GDP has declined 31%
since 2010, unemployment is 26%, youth unemployment exceeds 50%. All industries,
except tourism, are depressed and empty small shops, once a staple living for
many Greeks, litter every high street. A fraudulent €130bn Eurozone imposition
in 2010, stitching up the Greek taxpayer to bail out the French and German
banks was followed by a €110bn tranche in 2012 carrying onerous conditions of
austerity and reform. These economic policies have totally failed, triggering
off a reverse multiplier effect. The feeble and corrupt Greek governments in power
since 1981 and after The Crisis had done nothing to arrest this precipitate
decline.
When Leftist SYRIZA won the January 2015 election, the
Eurozone was alarmed. SYRIZA promised Greece an end to austerity and an end to
servile obedience to the hated Troika (EU commission, ECB and IMF). “Negotiations”
stumbled on for months with all Greek requests for alleviation of austerity met
with adamant refusal and zero flexibility. Insistence by the Eurozone on
further deflationary VAT taxation and cuts in pensions (already 40% down) were
exposed as nonsense by charismatic economist Yanis Varoufakis, the Greek Finance
Minister (not actually a member of SYRIZA). Varoufakis’ stance was supported by
all academic opinion and even privately by some Eurozone officials; but in
politics being right is only half the battle – persuading key players is also
necessary. Austerity had long become a religion in Brussels and Berlin and
apostasy was unthinkable.
Deadlock was inevitable in this scenario of “the unspeakable in full pursuit of the
uneatable”. The weak and outgunned Greek fox did well to bob and weave
against wildly over-rated “Swabian housewife” Angela Merkel, sclerotic Wolfgang
Schaeuble and the rest of the gang of Germanophil FANGS (Finland, Austria,
Netherlands, Germany and Slovakia). Anonymous Hollande made France irrelevant,
while recovering Spain, Portugal and Ireland were hostile. Only Italy’s Renzi
was fitfully sympathetic. The EU Commission in Brussels tried to be helpful
with Moscovici sensible but Juncker fluctuated daily and dispensed his slobbery
kisses and tactile stroking to all comers (I pray he never receives Her
Majesty!) Gloomy Draghi at the ECB has kept the Greek banks alive but is likely
imminently to pull the plug. Preening Lagarde at the IMF is out of her depth.
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| Rigid Schaeuble |
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| Sneering Dijsselbloem |
The final (?) crisis came last week when the Greek plan was
rejected out of hand and the Eurozone responded with even tougher conditions.
Tsipras of Greece was furious: “This odd
stance seems to indicate that either there is no interest in an agreement or
that special interests are being backed.” In truth the Eurozone were not
negotiating in good faith, they were hell-bent on regime change and were indeed
backing special interests – the Quisling political parties in Athens, led by
Samaras of New Democracy. As time was running short, the Eurozone expected
Tsipras to buckle under and submit to their diktats.
In fact he completely wrong-footed them by calling a 5 July referendum on the
Eurozone proposals, as he has no mandate to leave the Euro, but he will oppose
their programme. He fights for Greece and with this move “Even the ranks of Tuscany, could scarce forbear to cheer.”
Greece faces a difficult number of months as a new currency
will have to be introduced and there will be much disruption. If we were in
France in 1793, the tumbrils would be rolling. The worst of the scare-mongering
I largely discount; a devaluation is a necessary stimulus and does not mean the
end of civilisation as we know it. Greece really needs help in the form of debt
forgiveness and a mini-Marshall Plan but Europe does not have the imagination
or generosity to proffer it. Greece will muddle through and the Eurozone will
heave a sigh of relief, though its financial loss will be huge.
But, what a dismal example the whole episode is of
Euro-incompetence. The UK electorate should take note and vote a Big “OUT” at
the 2017 In/Out referendum!
SMD
28.06.15
Text Copyright © Sidney Donald 2015
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