This week’s G20 Summit in Cannes was overwhelmed by the Greek economic crisis, when Prime Minister George Papandreou (who was not invited) threw a huge spanner into the works by stating, while the ink was still drying on the latest bailout plan for the Greek economy, that he would be submitting the agreement to a referendum. In response, the markets took fright, the G20 leaders ran around like headless chickens, and Papandreou was left fighting for his political survival when his finance minister and long-time rival, Evangelos Venizelos, publicly opposed the plans.
As was reported early this morning, the latest news is that, although George Papandreou narrowly won a vote of confidence last night, he “has agreed to step aside to make way for a government ‘of broad acceptance’” that, it seems, will be led by Evangelos Venizelos. As the Guardian explained, “The deal with Venizelos was struck in a desperate bid to avoid snap elections that Papandreou said would be ‘a catastrophe’ for a country on the edge of political and economic collapse.”
Prominent voices call for the return of the drachma
The referendum may have been cancelled, but that doesn’t mean that the huge problems with the bailout deal for which George Papandreou wanted a referendum have been resolved. In the last few days, these problems have, to my surprise, been most eloquently explored in the mainstream media outside Greece in a column for Fox News by Peter Morici, a professor at the Smith School of Business, University of Maryland School, and former chief economist at the US International Trade Commission.
In his column on Thursday, Morici began by explaining that, although the latest bailout plan for Greece involved writing off half of the debt held by private institutions, it also involved a further round of “draconian austerity measures” that will be ruinous for the Greek people, as they will “further drive up unemployment, and shrink Greece’s economy and tax base at an alarming pace, placing in jeopardy eventual repayment of Athens’ remaining debt.”
“Ultimately,” he added, “Greeks would face reductions in their standards of living upwards to 50 percent, perhaps more, to generate the exports necessary to pay off foreign creditors. If everything goes as planned, Athens will still be saddled with a debt that is 120 percent of their GDP a decade from now. Everything hardly ever goes exactly as planned, and 120 percent of GDP is an amount most economists believe is unworkable. Hence, the Greeks may bleed a lot for no real purpose than to sustain a failed experiment in a single currency, and the odds are steep against the plan succeeding.”
The reason this harsh experiment in austerity might not succeed, it is clear, is because the imposition of the austerity measures seems guaranteed to cause an “economic meltdown” that may snowball within a year or two.
Professor Morici believes that the Greek people “should be given the opportunity to vote on taking such a gamble, and their fate should not be left to leaders far beyond their borders and who they did not elect,” adding, “It is convenient for Europeans to blame the Greek mess on a government and citizens who deluded themselves into believing they could live beyond their means — forever — but the euro zone was fundamentally flawed from the start. It lacked the common fiscal institutions needed to somewhat equalize the social safety net across its participants.”
He added that this fundamental flaw in the pan-European project has meant that some countries, like Greece, Italy, Spain and Portugal, have found themselves overvalued, while others — Germany, for example — have been undervalued, making Germany “hyper-competitive,” and leaving Greece and its Mediterranean companions “with chronic trade deficits, shortages of currency, the need to borrow, and eventually the crises these nations face today.”
The bailout plan, he declares, “is a giant band aid for a failed euro and the mistaken belief that a common currency is necessary for a united Europe,” adding, “The EU was making very good progress toward an integrated continental market and greater political and cultural cohesion before the euro. The euro has become a symbol without a purpose — indeed a symbol with a destructive end.”
These reflections about individual nations’ blame versus EU irresponsibility struck a chord with me, because, after visiting Greece in summer and seeing how hard those who had jobs were working, in a country with mounting unemployment, I have found it depressing to speak to various fellow citizens of mine in the UK, who have put all the blame on ordinary Greek people, and not on the government that took money it couldn’t afford to pay back, and on the foreign banks that lent the money, even though they knew about the risk involved and pretended to ignore it.
The Greek people may, collectively, have been guilty of a damaging shyness regarding taxes, and the politicians who took the EU money may have been profoundly unwise to do so, but if my government took out unwise loans and then blamed me when they couldn’t be repaid, I would be out on the streets protesting, and not sitting at home trying to blame myself for my government’s actions, whether or not I had voted for them.
To my mind, the Greek people are being required by foreign banks to accept an economic death sentence, in which, stripped of their assets by creditors and plunged into an ever-increasing spiral of unemployment, they are unable to ever recover because their economy is fatally wounded, and incapable of raising enough revenue to dig them out of an ever-growing hole, servicing an unconquerable debt mountain.
The alternative, as Professor Morici proposed, is for Greece to be “given the option of staying in the EU but dropping the euro — essentially the status the UK enjoys.” He added, crucially, “By readopting the drachma, re-marking sovereign and private debt to the reinstituted national currency, and letting the value of the drachma fall to levels consistent with a trade surplus that permits Greece to service its debts, Greece’s economy would begin growing again, and many of Greece’s army of unemployed would be put back to work.”
He also explained, “With a reinstituted drachma, foreign creditors would receive payments on Greek debt less than they are currently owed,” but if the Greek economy were to be “more fully employed and generating exports,” the losses involved “would be far less than will ultimately occur though the mindless austerity now imposed.”
The return of the drachma was also mentioned in a New York Times article on Tuesday, in which it was noted that opting out of the Euro would mean that “depositors would take their money out of local banks and, with a sharp devaluation of as much as 50 percent, inflation would loom.” It was also noted that “[a] return to the international credit markets would take years.” However, reinforcing Peter Morici’s viewpoint, the Times also noted that, although “there would be disruption and panic initially,” the precedent of Argentina, “when it broke its peg with the dollar in 2002,” indicated that a cheaper currency would create an “export boom,” and “the ability to control the drachma would eventually work in Greece’s favour.”
Vasilis Serafeimakis, a senior executive at Avinoil, one of Greece’s largest oil and gas distribution companies, said that, at present, “The real problem is that we are operating under a foreign currency. If we had our own currency, we could at least print money.” Costas Lapavitsas, a Greek economist at the University of London, and a longtime advocate of returning to the drachma, told the Times, “The view that Greece should exit the euro is more widespread than you would think. It is just that the opposing view is so dominant.” As the Times put it, he had been “educating himself about the euro” for over a year, “convinced that the benefits from a devaluation of Greek’s currency, while no doubt painful, would result in a return to growth more quickly than further wage cuts and layoffs.”
The Times also noted that many other “prominent voices” have been arguing that “it is impossible for Greece to regain competitiveness while clinging to the euro currency,” including “prominent economists like Nouriel Roubini, Kenneth S. Rogoff and Martin Feldstein, as well as the investor George Soros.”
Recently, Stergios Skaperdas, a Greek economist at the University of California, Irvine, argued in an academic paper that “a cheaper drachma would stem imports, bolster exports and, crucially, give Greece the flexibility to control its own monetary policy and ease the effects of fiscal retrenchment,” although he “conceded that getting this view across remained a difficult one as many Greeks found it troubling to accept that their euro dream might be over.” As he put it, “For most Greeks, including economists, adopting the euro was like marrying a dream spouse — beautiful, intelligent, caring, even rich. And then, rather suddenly, the marriage turned into a nightmare.”
Although the mainstream view is more typically voiced by economist and former government advisor Yannis Stournaras, who said, “There is no way that Greece leaves the euro … We would have a disorderly default, the debt would double — it is out of the question,” another academic, Theodore Mariolis, an economist at Panteion University in Athens, recently argued that “the No. 1 problem for Greece under the current system — ahead of debt sustainability, unemployment and the problems of a mismanaged public sector — was its international competitiveness, which he said had declined 30 percent since the country embraced the euro.” He estimated that “a 50 percent devaluation of the new drachma would soon erase this competitiveness gap.”
At the conclusion of his Fox News article, Peter Morici stated that the Greek people should only “accept the bailout and continue in the euro only if they determine the currency serves them well,” and that, as it currently stands, that may not be the case. “As currently constituted,” he notes, “a single currency may serve the ‘One Europe’ designs of France and Germany, but make Greece and the other Mediterranean states nothing more than the victims of a northern conquest.”
Resisting “northern conquest”
This notion of conquest is something that has been running through the Greek people’s response the crisis, but has not generally gained much attention outside Greece itself. Last Friday (October 28), for example, was the national Greek anniversary of OXI, meaning, “no,” when Greece entered the Second World War after saying “no” to the Italian Ambassador, who brought a demand from Benito Mussolini, insisting that Axis forces be allowed to occupy certain unspecified “strategic locations” in Greece.
Last Friday, as noted in a “Letter from Athens: OXI = No! Occupy the Acropolis!,” an unidentified Greek academic wrote about the occupation of the Acropolis, when “a group of artists, authors and academics smuggled a big OXI sign into the Acropolis, wrapped up round the body of an excellent theatre actress under a very large coat.” The author noted that the protestors “managed to demonstrate for more than half-an-hour,” and succeeded in doing so because the police were distracted by ther main protests in Syntagma Square, and “none of them managed to climb the Acropolis in time.” Below is a video of the occupation, and other videos are here and here. The author explains that “the main slogan heard is: NO at 1940, NO again by us today, the occupation will be kicked out of Greece again.”
The author also explains that, of the two songs sung, “the first is a 19th century song sung by the Cretan rebels at the various rebellions against the Turkish occupation, calling for armed resistance, which we sung at all the illegal demonstrations in Athens and Salonica during the last two years of the Military Junta and which I hadn’t sung or heard sung since,” and “the second is the Greek National Anthem ‘Ode to Freedom,’ written by a great 18th-19th century poet, Dionysios Solomos, who was also a Garibaldist, about the 1821-1825 war for National Independence, which I had also not sung since the end of the dictatorship, more than 30 years ago.”
Manolis Glezos and the longer view of resistance
Mention of the resistance to the Italians under Mussolini — and the Nazis — is also central to the opposition to the Greek crisis mounted by the celebrated Socialist and activist Manolis Glezos, who, 70 years ago, as the Guardian noted in a profile in August, “scaled the walls of the Acropolis to tear down the swastika, hoisted over the monument that Hitler had triumphantly described as a symbol of ‘human culture.’ This single act of defiance — the first direct action against Nazi rule in Greece — would go on to cast the headstrong young man as one of the country’s greatest defenders of democracy.”
Now 89, Glezos, who, after the war, spent nearly 20 years in prison (much of it in solitary confinement) during Greece’s civil war its years of military rule, is now fighting a new enemy, and “has become a symbol of resistance in another, very different sort of war” — one that has pitted Greece “against the forces of world capitalism and thrown it into an unprecedented struggle for its economic survival.” Speaking to the Guardian, Glezos, who had once more assumed an iconic position, after pictures of him “being teargassed by a riot policeman outside the Greek parliament” in March 2010 “sent a tremor through Europe’s nascent anti-austerity movement,” said, “Not since the German occupation have we been in such a difficult and dangerous situation. Economically, democratically, the Greek people are seeing hard-won rights being wiped away. Unemployment is growing, shops are closing daily and decisions that are totally unconstitutional are being made.”
“People are not going to back down. They are very conscious of what they want,” he added, ,explaining that, although it was summer, and the protests were on hold, he had “been very busy attending neighbourhood assemblies to discuss what our future tactics might be.”
However, although he was “appalled by the harshness with which rallies have often been crushed,” he reserved his “greatest criticism” for the behaviour of Germany and Britain, which, he said, were both guilty of “enormous ingratitude.” As he explained, “Germany today lives not under Nazi rule but in a state of freedom and that it owes in great part to the struggle of the Greek people,” adding that “Hitler’s disastrous decision to postpone the invasion of the Soviet Union” was “a result of the unexpected resistance encountered in Greece.”
“Then,” he said, “there is the issue of food. If German people are alive it is because Greek people died.” He explained that he had “not forgotten the howls of the starving or the images of municipal carts carrying the corpses of those who, during the Nazi occupation, collapsed begging for food in the streets of Athens.” As the Guardian added, “He knows not only because he was there; he counted them.”
He explained: “I worked in the statistics office of the International Red Cross and every day I would note the deaths of around 400 people as a result of famine. We lost 13.5% of our population, more than any other occupied country, because all of our foodstuffs, our crops, were requisitioned [by the Wehrmacht]. For those two reasons alone Germany should help Greece.”
He also revisited Greece’s importance to the Allies, mentioning how Greeks defeated Mussolini’s forces on the Albanian front in 1940, and asking, “Who did Churchill so famously say fought like heroes? Britain should have tried and helped Greece at this difficult moment. Its behaviour should have been different.”
Providing a detailed analysis of Greece’s suffering, he said, as the Guardian put it, “It wasn’t just the famine and the thousands killed in reprisals as a result of mass resistance, or the eradication of virtually all of Greece’s once vibrant Jewish community or the destruction of the countryside.” It was also “the other indignities suffered by Greece under Hitler.” These included “[t]he pillaging of archaeological treasures, the plundering of factories and homes, the looting of national resources, the crippling of the Greek economy” — “all part of what Churchill would go on to call the ‘long night of barbarism’ and from which,” as Glezos added crucially, “it has yet to recover.”
Just as significantly, Glezos, who is the head of the National Council for the Reclamation of German Debt, added, “To this day, Greece remains the only country in Europe that never received reparations from Germany. We never got back any of the antiquities that they took, or the buildings that they seized, or the tons of silver and nickel that they stole. If you take into account the enforced occupation loan, I estimate that they owe us around €162 bn, plus interest.”
In addition, Glezos proposed that Germany should directly “fund companies in Greece and scholarships for students bound for Germany by way of compensation,” and is “infuriated that Greeks are invariably typecast by the German media as lazy laggards when studies show them working the longest hours in Europe.”
Again striking at the heart of the matter, he stated, “The latest agreement to save Greece is all about saving banks and financial capital, not people. After the war, we won our freedom but we emerged as vassals, first of the English and then the Americans. Being indebted in this way keeps us in that subordinate role. Our new masters are the troika [the EU, IMF and ECB] and they have to go. Mark my words, the Greeks will play a pivotal role in resisting the policies they want to impose.”
Andy Worthington is the author of The Guantánamo Files: The Stories of the 774 Detainees in America’s Illegal Prison (published by Pluto Press, distributed by Macmillan in the US, and available from Amazon — click on the following for the US and the UK) and of two other books: Stonehenge: Celebration and Subversion and The Battle of the Beanfield. To receive new articles in your inbox, please subscribe to my RSS feed (and I can also be found on Facebook, Twitter, Digg and YouTube). Also see my definitive Guantánamo prisoner list, updated in June 2011, “The Complete Guantánamo Files,” a 70-part, million-word series drawing on files released by WikiLeaks in April 2011, and details about the documentary film, “Outside the Law: Stories from Guantánamo” (co-directed by Polly Nash and Andy Worthington, and available on DVD here — or here for the US). Also see my definitive Guantánamo habeas list and the chronological list of all my articles, and, if you appreciate my work, feel free to make a donation.
Having lived in Greece for a number of years, I believe that this is the most perceptive and comprehensive article on the current situation there that I have yet to read: Ζήτω Ελλάδα!
Thank you, Ben. That really means a lot to me.
I have done a lot of thinking about the Greek situation since visiting in summer (a week in Athens, a week on Agistri), when the protests were on hold, because people were busy being lovely and friendly and running the tourism business that is so essential, or were on holiday themselves (Agistri, for example, had loads of people “illegally” camping by — or on — various beaches). However, everyone I spoke to — when asked — expressed the same opinion: that the ordinary working people were being horribly squeezed, and that this was only going to get worse, further damaging people’s ability to survive. Moreover, there were fears for the tourist trade, as prices were shockingly high, and, just after we left, on Sept. 1, VAT on restaurants was going up from 13 to 23 percent, with restauranteurs genuinely worried that they were going to be priced out of a competitive position in the European tourist trade, which would be disastrous, of course. Everything I heard, and everything I analyzed convinced me that it was only by escaping this ever-tightening noose that Greece would have a chance to survive.
On Facebook, Laurette LaLiberte wrote:
George Kenneth Berger wrote:
Digging and sharing, Andy. I’ll be sending this to others soon.
David J. Clarke wrote:
The Canadian PM has expressed relief that the democratic notion of a referendum has been averted observing that ‘cooler heads’ have prevailed. I assume by ‘cooler heads’ he means the people who caused the crisis in the first place, who have received massive bailouts at the expense of taxpayers, who ran up deficits while in government and now expect the defrauded to pay for the criminal and corrupt practices of oligarchs. It is a conspiracy and they are the ‘Illuminati’ and the whole rotten endeavor reeks of sulphur. Power to the Greek people!
George Kenneth Berger wrote:
Andy, this is excellent. I am glad to have supplied the photos and the videos.
Thanks, Laurette, George and David. Very good to hear from you all. George, I do hope that some of your Greek friends will pick up on this. It came very directly out of my feelings while in Greece this summer, and I’d been trying to find an opportunity to get my thoughts into an article. I was particularly struck by how a bailout that involved selling off Greece’s assets to service a colossal debt while unemployment was climbing and those in work were being subjected to savage wage cuts, and prices were high and still rising was a recipe for an unsalvageable disaster, and that remains my understanding of the situation. If austerity genuinely did promise a way out, then maybe it would be worth the huge sacrifice, but there is no guarantee that it will not fail, leaving Greece in the most awful situation. I found this prospect unacceptable as a fellow European — and still cannot accept that the Greek people deserve this.
George Kenneth Berger wrote:
I tweeted this and emailed it to my friend, who knows the Greeks involved. I told him that they would be interested in this. I’m pretty sure that he will forward it to them.
Thanks again, George. That’s very good of you.
That movie i had seen it before but with the name of Mexico,Beyond the shadow of doubt when a mayor crisis Explodes all the blame goes directly to the common people, and not to the politicians,bankers,bussinessmans and similar vermins who nest deep within the systems who claim are gonna make us richer and prettier and part of the first wold.
But like the same, those vermins insist to keep the same model only ’cause they are serving foreing interest and giving the back to their own contries..(they are already richer mans so who minds about this poor bastards)
When Chichen Itza be on sale that means we are marchin’ the same pace as the Greeks.
Painfully from Mexico.a Big hug to the Pueblo Griego……δῆμος ἑλληνος(it is well written?)
Thanks, Antonio. Very good to hear from you, but sorry to hear about the similar problems in Mexico. Here in Europe it is generally only those of us with long memories who recall the IMF model of dealing with an economic crisis — savage cuts to the public sector, economic liberalisation, wholesale privatization. It was inflicted on the UK in 1976, and paved the way for Margaret Thatcher’s transformation of the UK from 1979 onwards (although she ensured that some of the money that was made remained in the UK, even though there was never a “trickle down” effect to the rest of the people, as she promised), and it’s at the heart of what’s being imposed on Greece, but it’s also, of course, a model that has been used to subjugate other countries around the world for decades, for the benefit of the few at the expense of everyone else.
George Kenneth Berger wrote (in response to 8, above):
He wrote me back about an hour ago. He said “Splendid! I am sending it to Greece.” Good to hear that, Andy.
Dejanka Bryant wrote:
Superb article, Andy. Glad you added George’s photos and video, too. I am in love with these particular paragraphs you wrote:
“These reflections about individual nations’ blame versus EU irresponsibility struck a chord with me, because, after visiting Greece in summer and seeing how hard those who had jobs were working, in a country with mounting unemployment, I have found it depressing to speak to various fellow citizens of mine in the UK, who have put all the blame on ordinary Greek people, and not on the government that took money it couldn’t afford to pay back, and on the foreign banks that lent the money, even though they knew about the risk involved and pretended to ignore it.
The Greek people may, collectively, have been guilty of a damaging shyness regarding taxes, and the politicians who took the EU money may have been profoundly unwise to do so, but if my government took out unwise loans and then blamed me when they couldn’t be repaid, I would be out on the streets protesting, and not sitting at home trying to blame myself for my government’s actions, whether or not I had voted for them.”
Thanks, George, Thanks, Dejanka. That’s very much appreciated. I’ve had a few other very supportive comments on my website, which I find very encouraging indeed, as what struck me in summer was my sense of solidarity with the Greek people. Not for a moment did I have the feeling that what was happening in Greece was somehow different in kind from what is happening elsewhere, although the scale of the assault is greater in Greece, of course.
I thought this should have been obvious to anyone living in the UK, and having to confront the artificial, ideological “austerity” policies of the Tory-led coalition government, but although many people I know see the bigger picture, others are either simple racists (never happier than when claiming that people in countries outside England, or outside the UK, or, at least, outside northern Europe, are lazy and corrupt) or have been dangerously blinded to their own wilful impoverishment by the lies of David Cameron and George Osborne (like a British version of the suicidal Tea Party), or both. It’s increasingly clear that the West’s economic problems are much bigger than any one country, and, as a result, we need to be thinking and agitating across borders.
George Kenneth Berger wrote:
Cannot agree more, Andy. I have been spreading this around a bit today
If you can’t get this with English subtitles, hold the cursor over cc without clicking. A pop-up will appear. Select ENGLISH.
Yes, thanks, George. I’ll be watching it soon. Looks very important.
So here’s my commentary on the video, plus a transcript, plus the video itself: http://www.andyworthington.co.uk/2011/11/07/we-are-all-greece-expert-explains-how-the-greek-crisis-is-being-manipulated-by-banks-and-governments-to-enslave-us-all/
Excellent. Thanks again, George.
George Kenneth Berger wrote:
My pleasure, Andy. I’ll do my best to send this to some friends who are not on FB. I just dugg and shared your commentary.
There are plenty of examples of tax loopholes and social programs in Germany as well. Germans get five weeks vacation per year, and they are required to take three weeks at a time once a year, because it is important that they be well rested. An unwed German mother who had a baby could take five years off from work, with adequate monetary compensation, to raise her child. Germany also paid parents 100 euros a month for each child, until the children reach maturity. The state offered this monetary incentive to parents to grow the population.
For Greeks, well organized government programs have always been an impossible luxury. Too many Greeks have to leave Greece to find work elsewhere. The ones that went to Germany a generation ago, were never offered citizenship. They and their families remained guest workers. No government social programs for them, just work. When given an opportunity to make and save money to better themselves and the lives of their families, Greek people are very hard working. I have met many nice German people as well, but my life’s experience tells me, with a fair level of certainty, that the Troika’s aggressive austerity measures will destroy what little is left of the Greek economy. It is an ill advised micromanagement experiment, and it needs to end now, before Greece becomes a failed state.
Money must be printed to grow the GDP and lift Greece out of recession. One member nation’s historically based fear of inflation cannot always be the focus of a multinational monetary union. The German electorate’s obsessive fear of inflation is irrational. There are enough global deflationary pressures out there to fill the oceans. The US quantitatively eases during rough economic times to compensate for the reduced rate of economic activity. Unlike Europe, we are a fully integrated society/economy with well developed monetary and fiscal tools.
So, the problems with the single currency are systemic in nature. It is a monetary union without a proactive Treasury and Central Bank. The German constitution forbids the development of a strong European Central Bank, and the German Central Bank refuses to take on the role as the European lender of last resort.
The solution? Greece should stay in the European Union, but leave the common currency, and return to the Drachma. This is the only humane and economically feasible solution to the European dilemma. Should Greece be allowed to leave, more nations will surely choose to follow, but the Euro must be dropped in order for the union to survive.
Thanks, Vangelis. It’s very good to hear from you, and to have your analysis. I’m glad to have another voice explaining, in detail, why Greece must return to the drachma, rather than allow itself to be turned into a failed state by inflexible politicians and bankers elsewhere in Europe.
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