Economic suicide

Many readers of the European and American press must be confused about what actually is happening in the negotiations between Greece. The European Troika have stepped up their demands on Syriza.
What is called ‘negotiation’ is in reality a demand for total surrender. The Troika’s demand is to force Syriza to go back on the campaign promises that it made to voters who replaced the old right-wing Pasok (‘socialist’) and Conservative New Democracy coalition, or else simply apply the austerity program to which that coalition had agreed: cutbacks in pensions, deeper austerity, more privatisation selloffs, and a tax shift off business onto labour. In short, economic suicide.
To read the press, one might think that Tsipras and Varoufakis are simply trying to capitulate, only to be turned down. Even many left observers have criticised them for taking the position that “We want to pay.”
What is not recognised is how successful the Syriza negotiating strategy has been. While most voters opposed austerity, they also initially (and still) have a fear from withdrawing from the eurozone. Tsiparas and Varoufakis have walked a fine line and accurately judged unyielding and totalitarian the Institutions’ ‘hard money’ creditor approach would be.
The eurozone’s rejection of what obviously is an attempt at reason has greatly strengthened Syriza’s hand to say ‘NO’ to deeper austerity. It would bring yet more unemployment, yet more emigration, yet more bankruptcy – and deeper distress prices for the public domain that the Institutions are insisting be sold off. On the surface, Syriza’s non-payment of the debt that earlier coalitions ran up (largely by not taxing the oligarchs who supported them) need not cause a great disturbance in financial markets. After all, the debts to which Greece objects are those run up to the IMF and ECB, not private bondholders.
Yet the eurozone may turn this non-economic crisis into a political crisis by following through on its threat to exclude Greece from the eurozone. Current conditions are such that much larger numbers of Greeks may now support this position than was the case last January.
At stake is much more than Greece itself. What the attendees at Delphi want is to rescue not only the Greek economy, but all Europe – by replacing the euro and the ECB with a less austerity-based monetary ideology. If they are driven out of the eurozone, they will be able to create a real central bank (via the Treasury) to monetise deficit spending to revive the economy.
It is clear that what is needed is to replace the IMF with an institution able to assess the ability to pay debts, and to write down bad debts accordingly. Such an institution would replace Chicago School austerity and fiscal policy with a more progressive monetary and tax policy. If the ECB follows through on its threat to wreck the Greek banking system, Syriza has put itself in a position to replace the oligarchs’ banks with a public option.
The Institutions evidently hoped that the government will face a no confidence vote if it is excluded from the eurozone. The reality is that it would have suffered a no confidence defeat if it had capitulated. The IMF and ECB won’t admit their 2010 mistake in not writing down the Greek debts, which stemmed largely from the falsified Goldman-Sachs-Papademos ploy that got usinto the eurozone in the first place.”
In sum, followers of recent news reports should bear in mind that despite all the statements of good faith that Greece “wants to pay its debts”, the reality is that there is no money to do so – except to the extent that the IMF may “extend and pretend” the charade by advancing Greece the IMF’s own money to pay.
As matters have turned out, Tsipras and Varoufakis have not paid foreign debts with Greek money. They have not balanced the Greek budget by cutting back pensions, nor have they sold off the crown jewels of publicly owned infrastructure that European banks hoped to finance to their clients.
Instead of selling out, Tsipras has given Greeks enough time to pull out their savings from the banks and convert them into euro notes (domestic circulation of which has risen by 13 billion euros), or into ‘hard’ assets such as cars (or even boats) with a resale value.
Excerpted from: ‘On the Delphi Declaration’.
Courtesy: Counterpunch.org