Millennium Post

Tsipras is right on his stand on debts

Who is responsible for Greece’s soaring debts and the burgeoning economic crisis, the burden of which has been passed on to the underprivileged by successive governments? The myths about Greece’s debts in particular and the European debts in general, have long prevailed due to the propaganda peddled by big media and elite members of the euro-zone. These entities believe that Greece’s common masses are trying to destabilise the euro-zone by refusing to abide by the austerity programme proposed by the troika of International Monetary Fund, World Bank and European Central Bank.

Now with the Syriza party taking office in Athens, led by Prime Minister Alexis Tsipras and his erudite Finance Minister, who exposed the roots of the Greece crisis, delegates from other euro zone nations have begun to panic. There are efforts on the troika’s part to window dress the austerity package and impart an impression that the capitalist west is doing more than what can be done to save  Greece’s economy. Prime Minister Alex Tsipras, however, has called their bluff and allied with his finance minister are carrying on negotiations with leaders from other member nations of the Euro, including German Chancellor Angela Merkel. The Greek side has approached these negotiations with such dexterity that euro zone leaders are looking for new ways to market the watered-down austerity package. The myth propagated by big media has been busted, although some leaders are unwilling to admit it. 

At the root of the present debt crisis in Greece is rampant corruption by successive pro-rich governments. A study made by a well known economist Mark Blyth shows that Greek public spending through the 2000s was quite on track as compared to other Euro zone countries and the so called proliferation of public sector jobs consisted of only 14,000 for two years. Greece’s corrupt elite took away the bulk of government funding and local banks swindled the rest. The entire bailout package to Greece virtually went to the banks that gambled in the 1999 to 2007 real estate market and became bankrupt in 2008.

Greece’s application for EU membership in 1999 was rejected because its budget deficit was more than 3 per cent of its GDP, the cut off line for entry. This is when the American investment bank Goldman Sachs came in and for a fee rumoured to be approximately US$ 200 million, the multinational giant essentially cooked Greece’s books. These cooked up numbers allowed Greece to make its way into the EU. This scheme, which was worked out in collaboration with the then corrupt ruling politicians of Greece along with its bankers, was kept confidential until the entire fraud was exposed after the great real estate crash of 2008.

Western banks, including those of US and Europe, helped create an artificial boom in the real estate market to make a quick killing. They sacrificed the Greek economy at the altar of their high greed and forced the government to opt for an austerity programme in the name of saving the economy, when Europe went into recession in 2008. Greece was forced to apply for a bailout package from the troika. In exchange for 172 billion Euros the Greek government instituted an austerity programme that saw economic activity decline by 25 per cent and unemployment going up to 27 per cent. The cutbacks slashed pensions, wages and social services and drove 44 per cent of the population into poverty.

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

The same thing happened in Ireland and Portugal. In Ireland, the European Central Bank forced Ireland into adopting austerity measures after the crisis, which doubled its 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, it is learnt.

As regards to Portugal, it had a solid economy and a low debt ratio. Currency speculators, however, drove up interest rates on borrowing beyond what the government could afford. The European Central Bank saw all the misdeeds of the speculators but kept silent. The net result was that Portugal was forced to swallow a bailout package that wrecked its economy and made the common people poorer.

Tsipras has expressed his readiness for taking some measures to revive the country’s economy but not at the cost of his anti-poverty programme. He has a clear road map for the rejuvenation of an ailing Greek economy. He has sought some more time from the troika, so that he is able to spend the funds required to rejuvenate Greece’s real economy. On the other hand, Germany and the troika are trying to force Greece’s leftist government into accepting conditions that will undermine its support base at home and weaken the anti-austerity movements in different, yet poorer countries of the eurozone.

This is why the current fight between the Syriza-led government on one side and eurozone leaders and troika on the other is not limited to Greece. Prime Minister Tsipras is waging the battle of other poor European countries. Over the past few weeks, demonstrations have been held in Spain, Italy, Belgium, Austria, Germany and Great Britain. Tsipras’s call for a drastic change in the austerity programme is receiving mass support from the common people in eurozone countries, who are also victims of the greed and lust of private banks and the elite. It is high time that the anti-austerity movements of other European countries make common cause and join forces with Syriza in fighting these disastrous policies of the troika. This is the way towards building a more humane Europe.IPA

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