Impending European standoff

The Greek people have given their unequivocal verdict in Sunday’s referendum against the imposition of the unsustainable austerity programme imposed by the troika. This troika of  lenders  in their bail-out package for Greece had asked for a long line of restructuring measures to be undertaken. Despite continuous propaganda by the pro-west media and the anti-Syriza politicians in Athens, 61 percent of the citizens who participated, gave their full support to their Prime Minister Alexis Tsipras’s appeal to say “No” to the bailout package and help the beleaguered coalition government led by Syriza to be empowered to renegotiate the bailout package terms in favour of the  Greek people.

Soon after the referendum results were declared on July 5 night, Prime Minister Tsipras in his televised address said that “you made a brave choice. The mandate you gave me is not the mandate of a rupture with Europe, but a mandate to strengthen our negotiating position to seek a viable solution”. This is the spirit with which the Greek government will now bargain with the troika of creditors led by the International Monetary Fund and the European Central Bank to work out a fresh package which will protect the gains the common Greek masses won  during the present tenure of the Syriza government in Athens.

Greece has never said that the country intends to opt out of euro and Eurozone. The only thing the new Greek government has been emphasizing in the prolonged negotiations is that the new government has the mandate  given by the Greek Parliament to improve upon the austerity package and as a corollary, the bailout package has to be revised a bit to ensure that the Greek economy gets some time for recovery. This was a very legitimate plea of the Tsipras government since the Greece debts had piled up over the last thirteen years due to the wrong policies of the previous regimes as also the banks which participated in the real estate bubble that rocked the Greece economy in 2008.

The deliberations at the negotiations between the creditors led by IMF and the ECB with the Greece Government in the last week of June this year clearly show how the Prime Minister Tsipras tried to come to an agreement with the troika with some small adjustments but he was not given that chance and the ECB took such a rigid position that accepting that would have meant bringing further miseries to the lives of the common Greeks who are already ravaged by low growth and unemployment.

Greece Finance Minister Yanis Varaoufakis candidly told the Eurogroup meeting that his government is not in a position to accept the June 25 proposals of the troika since the approval would mean that the bailout package would impose further austerity on the already ravaged Greek citizens. What was most striking was that the troika was not even ready to consider the Greece suggestion of higher contribution by the employees for the pension funds instead of reducing the lowest of pensions suggested in the bailout package. Thus, the main thrust of the bailout package was on passing on the burden of austerity to the deprived sections of the Greek population as against the upper classes who were vastly benefited in the previous regimes through profiteering and corruption.

As the Greece Finance Minister noted in his blog on June 28 that the proposed disbursements schedule in the bailout package indicates that there is nothing in the troika’s proposal capable of inspiring even the faintest of hopes that at the end of the new extension, Greece can stand on its own feet. Further, Greece debts will remain unsustainable by the end of the year and that market access will remain as distant then as it is now as the IMF can not be trusted upon to disburse its <g data-gr-id="76">share,US$</g> 3.5 billion that the institutions are counting as part of the funding package.

Many of the Eurozone members warned before the referendum that a No vote would mean cutting bridges with Europe and driving Greece’s crippled financial system into outright bankruptcy. This is not so. As one Syriza supporter explained to media at the victory rally on Sunday night at Athens” The message from the No is that we are not scared after all the pressure that we faced from both Europe and within. We want to leave fairly and freely within Europe”.

Greece Government is desperately making efforts to restore some order in its economy ravaged by the corrupt politicians and the bankers. The Tsipras government is carrying the sins of the previous <g data-gr-id="46">crony capitalist</g> regimes which were hand in gloves with the bankers. 

As leading US economist Joseph Stiglitz said that Europe and the US have moved the private sector debts to public sector and manipulated the respective governments to bear the burden created by the greed and  crony capitalism of the private sector, especially the bankers.

In <g data-gr-id="60">fact</g> similar developments took place in Ireland and Portugal. In Ireland, the European Central Bank forced Ireland into adopting austerity measures after the crisis that doubled the unemployment rate and forced the country’s younger population to emigrate. 

Almost half of Ireland’s income tax just goes to service the interest on debts. In Greece, the western banks including those from US and Europe created an artificial boom in the real estate market to make quick bucks and they sacrificed the Greek economy at the altar of their high greed and forced the Greek government to opt for an austerity programme when Europe went into recession in 2008.

In the last seven years, the troika package has not improved the economy of Greece and now fresh austerity measures are also leading the common Greek citizens to the level of acute deprivation. 

Prime Minister Tsipras has proved that the Greek masses are with him and he is the master in deciding what is best for the revival of the ailing economy of Greece. The IMF, the ECB and the leaders of Germany and France must read the signals from  the referendum verdict and reorient their programme to ensure that the Greek economy is restored to the growth path. Greek leadership has shown their highest sense of democracy and now it is the turn of the Eurozone leaders to give up their rigid stand and work out a compromise bailout  package that will help the  common people of Greece to pin hopes on a brighter future.