Greek artist Stefanos has been defacing Euro banknotes for an entire year, reflecting on his country’s ongoing economic, social and political problems. He creates scenes of death, freedom and revolution. Speaking to Design Boom Stefanos said:
The Greek government’s mounting financial woes are leading it to contemplate the unthinkable: defaulting on a loan from the International Monetary Fund. Instead of demanding repayment and further austerity, the IMF should recognize its responsibility for the country’s predicament and forgive much of the debt.
That is the opinion of Ashoka Mody – visiting professor in international economic policy at Princeton University. Previously, he was a deputy director at the International Monetary Fund’s research and European departments. This is yet another demonstration that there is no serious technical case to prosecute a hard line on full debt repayment (since it cannot be repaid) or the austerity conditions of loan disbursment (since they they have sent the Greek economy into a freefall).
Take it away Mr. Mody….
Greece’s onerous obligations to the IMF, the European Central Bank and European governments can be traced back to April 2010, when they made a fateful mistake. Instead of allowing Greece to default on its insurmountable debts to private creditors, they chose to lend it the money to pay in full.
At the time, many called for immediately restructuring privately held debt, thus imposing losses on the banks and investors who had lent money to Greece. Among them were several members of the IMF’s board and Karl Otto Pohl, a former president of the Bundesbank and a key architect of the euro. The IMF and European authorities responded that restructuring would cause global financial mayhem. As Pohl candidly noted, that was merely a cover for bailing out German and French banks, which had been among the largest enablers of Greek profligacy.
Ultimately, the authorities’ approach merely replaced one problem with another: IMF and official European loans were used to repay private creditors. Thus, despite a belated restructuring in 2012, Greece’s obligations remain unbearable — only now they are owed almost entirely to official creditors.
Five years after the crisis started, government debt has jumped from 130 percent of gross domestic product to almost 180 percent. Meanwhile, a deep economic slump and deflation have severely impaired the government’s ability to repay.
Almost everyone now agrees that pushing Greece to pay its private creditors was a bad idea. The required fiscal austerity was simply too great, causing the economy to collapse. The IMF acknowledged the error in a 2013 report on Greece. In a recent staff paper, the fund said that when a crisis threatens to spread, it should seek a collective global solution rather than forcing the distressed economy to bear the entire burden. The IMF’s chief economist, Olivier Blanchard, haswarned that more austerity will crush growth.
Oddly, the IMF’s proposed way forward for Greece remains unchanged: Borrow more money (this time from the European authorities) to repay one group of creditors (the IMF) and stay focused on austerity. The fund’s latest projections assume that the government’s budget surplus (other than interest payments) will reach 4.5 percent of GDP, a level of belt-tightening that few governments have ever sustained for any significant period of time.
Following Germany’s lead, IMF officials have placed their faith in so-called structural reforms — changes in labor and other markets that are supposed to improve the Greek economy’s longer-term growth potential. They should know better. The fund’s latest World Economic Outlook throws cold water on the notion that such reforms will address the Greek debt problem in a reliable and timely manner. The most valuable measures encourage research and development and help spur high-technology sectors. All this is to the good, but such gains are irrelevant for the next five years. The priority must be to prevent Greece from sinking deeper into a debt-deflation spiral. Unfortunately, some reforms will actually accelerate the spiral by weakening demand.
On April 9, Greece repaid 450 million euros ($480 million) to the IMF, and must pay another 2 billion in May and June. The IMF’s managing director, Christine Lagarde, has made clear that delays in repayments will not be tolerated. “I would, certainly for myself, not support it,”she told Bloomberg Television.
Inevitably, debt relief will be provided — but in driblets and together with unrelenting pain. The Greek government will need to withhold payments to suppliers and workers, and will raid pension funds. Five years from now, the country’s economic and social stress could well be even more acute. The question will be: Why was more debt not forgiven earlier? No one is willing to confront that unpleasant arithmetic, and wishful thinking prevails.
Having failed its first Greek test, the IMF risks doing so again. It remains trapped by the priorities of shareholders, including in recent years the U.K. and Germany. To reassert its independence and redeem its lost credibility, it should write off a big chunk of Greece’s debt and force its wealthy shareholders to bear the losses.
From Bloomberg see here
In an interview with Jacobin magazine, Elena Papadopoulou gives her views on the origins of crisis and what Syriza must do now to bring about real change. Government survival is not enough. It needs to rise above the turmoil and be putting in place the pieces that will connect survival with real change for the longer term. It needs to be retaining the trust or ordinary Greeks while showing Europe there can be another way.
Elena Papadopoulou is working as an economic adviser to the Mr. Euclid Tsakalotos, the Greek alternate minister on international economical affairs.
In the short period of the bridging agreement, Syriza’s goal should be to keep its red lines, while at the same time pursuing a left-wing agenda that connects short-term measures with medium-term policies that lead to social transformation.
At the same time, it needs to convince the people — inside and outside Greece — that the application of such a program is indispensable for Greece to survive and develop, and that the reason that the government pursues it is because anything else would destroy its society.
When this short period finishes, we have to make sure that we have made progress in both fronts: on the one hand keep putting the question of the political and economic impasses of the eurozone, taking into account all those facts that show that this is actually the case, and on the other, pushing a genuine left-wing agenda forward so that our social base can be reassured that we will not abandon its interests.
Bringing fairness, equality, and hope for Greece to escape the vicious circle of austerity is the only credible guideline for the government, not only for the negotiation period, but for its governance overall.
The full interview can be found here
Ana Kokkinos is an Australian film director. Kokkinos was born in Melbourne and prior to her career in film, she worked as an industrial lawyer. In 1991 she was accepted into the Victorian College of the Arts‘ graduate film and television programme.
Her films include a 1992 short film Antamasi, 1994’s Only The Brave (winner of the Grand Prix at the Melbourne International Film Festival), 1998’s Head On (based on the novel “Loaded” by Christos Tsiolkas) and 2005’s “The Book of Revelation“. She has also directed episodes of Australian television programs such as Young Lions and The Secret Life Of Us.
In 2009 she directed Blessed.
The ongoing humanitarian crisis as a result of the austerity measures imposed by the Euro zone has become a tragedy of epic proportions.
I don’t think the general population here in Australia really has a true sense of the catastrophe that has befallen the Greek people.
We, as Greek Australians however, only know too well how it has affected peoples daily lives and wreaked havoc on generations of Greeks, young and old, where the basics of life – food medicine and shelter – the things we take for granted, are now beyond the reach of many Greeks.
Our relatives and loved ones are suffering. One of my aunts, who once owned her own home, has now been reduced, at the age of 91, to living in the basement room of an apartment block with no window with her unemployed 63 year old son. Generations of young Greeks are doomed to a life of misery without hope and prospects because the tyranny of austerity demands nothing less.
So why impose austerity measures that kills the lifeblood of a people? What’s the point of austerity when it reduces people’s capacity to feed themselves and their children? Why ignore the democratically elected Greek governments’ right to determine reforms and to stimulate economic and social activity in a way that preserves dignity and self-determination?
Because EU policy towards heavily indebted countries like Greece is one of extending the pay back period, but pretending that all debts will eventually be paid.
So why is this fiction being continued?
It’s not just the political expediency of debt extension to placate German voters, or the prospect of contagion to other countries such as Portugal, Ireland and Spain.
The underlying reason is that those in power do not really want the debt to be fully repaid. The real goal of lending money to the debtor is not to get the debt reimbursed with a profit, but rather the indefinite continuation of the debt that keeps the debtor in permanent dependency and subordination.
When Argentina a decade or so repaid its debt to the IMF the reaction of the IMF was surprising – they expressed a worry that Argentina would use its new freedom and financial independence from international financial institutions to abandon tight financial policies and engage in careless spending.
As Slavoj Zizek points out, the ongoing pressures on Greece to implement austerity measures fits perfectly with what psychoanalysts call the superego.
The superego is not an ethical agency proper, but a sadistic agent, which bombards the subject with impossible demands, obscenely enjoying the subject’s failure to comply with them. The paradox of the super ego is that, the more we obey its demands – the more we feel guilty.
It’s not unlike a vicious teacher who assigns his student’s with impossible tasks, and then sadistically jeers when he sees their anxiety and panic. This is what is so wrong with the EU demands; they do not give Greece a chance – Greek failure is part of the game.
This is why the EU establishment are so concerned about Syriza – they admit debt, but without guilt.
Varoufakis has fully acknowledged the weight of the debt, but since the EU austerity measures haven’t worked for 7 years, and in fact the debt is even larger now, and therefore clearly not working, another path needs to be found.
But what Tsiparas and Varoufakis also acknowledge I think, is that the biggest threat to Greece is the corrupt state of Greece itself – what the EU should be blamed for, is that while it criticized Greece for its corruption and inefficiency, it supported the politics of New Democracy which embodied this corruption and inefficiency.
For this reason, the main task of all progressive people is to express their solidarity with Syriza as they try to cut the Gordian knot of neoliberal dogma.
Syriza’s struggle reaches far beyond a set of demands around the basic needs of its peoples – it is the struggle to find a new path that honours the integrity of its people, the struggle to find an entirely new way of life that doesn’t merely pay heed to a world threatened by rapid globalisation and a culture of servitude.
As a filmmaker this bigger narrative is one which I believe will be expressed by the great artists and storytellers of Greece – whilst they have been decimated by austerity, I FEEL a great sense of hope that this next generation of storytellers who will shine a light on these human realities and keep the ideas of freedom and democratic practice alive.
In the same way that Greeks themselves have found new ways of cooperating and have banded together through this crisis, the lessons they will learn and the new paths they will forge, will become a beacon for us all. The very fact that Syriza persists in the struggle for a humane outcome to their negotiations with the Euro policy makers, means there is a chance for us all in our pursuit for freedom and equality.
I join with you all in expressing our solidarity with Syriza and the Greek people.
Note: In an effort to try and understand the issues around austerity beyond the usual political discourse, I found Slavoj Zizek’s thoughts on the Greek crisis the most compelling. I have drawn heavily on his thoughts for this speech.
Ana Kokkinos, 21st April, 2015.
The Australia-Greece Solidarity Campaign had a successful public meeting in the historic Melbourne Trades Hall. Approximately 200 people came to listen to the speakers that included recorded message from Euclid Tsakalotos (Alternate Minister Foriegn Affairs for International Economic Relations) and Yannis Varoufakis Minsiter of Finance. Both Ministers provided a brief and interesting account of the immediate challenges faced by the government in attempting to pursue a program that addressed the humanitarian crisis and escaped politics of austerity.
Both of the speeches can be viewed below.
The meeting was also addressed the President of the Australian Council of Trade Unions (Ged Kearney) who reminded the audience of the global presence of austerity politics and their damaging effects across the world and including Australia. She was clear in stating her suport for the new Greek governemnt in its attempts to get a fairer deal for Greek workers and the people in general.
The National President of the Australian Manufacturing Workers Union (AMWU) addressed the meeting and discussed the significance of the SYRIZA government for working people everywhere and parallels with governments in Brazil and other countries.
The film maker Anna Kokkinos provided a more personal account of the crisis and a perspective on the psychological aspects of the crisis and the drama that it both depicts and creates.
The meeting also heard from Michael Kokkinos,head of the Secretariat for Greeks abroad , a body responsible for developing close ties between the government and the diaspora
Theo Markos, Jeanna Vilthoukas and Adam Rorris from the campaign presented perspectives from the organisers on the need for further activities to gatherAustralians and other supporters of the Greek government and people during this extraordinarily difficult time in Greece.
The meeting with concluded with comments and questions from peoplke attending the meeting where a wide-range of views were epxressed on the crisis andthe difficult task that lays before the Greek government.
Excerpts from a speech by James K, Galbraith on the SYRIZA government. James K. Galbraith holds the Lloyd M. Bentsen Jr. Chair in Government/Business Relations and a professorship of Government at the Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin.
…what the Greeks have done, and this is what has attracted me to become as engaged as I could be in this situation, what they’ve done in the past few months, is astounding. They have dismantled – I think definitively – and banished an entire previous political class.
They have ended a rather rotten and corrupt previous, two-party duopoly, and they have installed a government of dissidents, activists and professors…..
And the Greek people did this, by the way, in the face of a wall of resistance from their own media, which continues, and in the face of a wall of incredulity from their European partners, which also continues. I would say that possibly nothing quite comparable to this has happened in Europe since the election of Solidarity in Poland at the end of the 1980s. And it is obvious that it has had a galvanising effect on the political atmosphere outside of Greece, in fact, in many places around Europe, and is spreading an aspect of possibility that was not there before, opening up a window of opportunity. I believe the word in Spanish for the atmosphere that is emerging is ‘podemos‘. And that is the breeze which is wafting fresh air over the entire European scene.
I have been, of course, watching the European scene with some care for the last five years especially, and the transformation, the psychological transformation, is already perceptible outside of Greece. Inside Greece it is a fundamental fact that one can observe at any time.
At the same time it is also true that the new government confronts an elaborate, well-laid political and economic trap. It’s more than a trap actually. It’s more like a minefield or an obstacle course that is entirely of human construction. It’s purely artificial.
The trap is comprised of deadlines, deadlines for reviews, deadlines for payment schedules and cash flow hurdles, that were put in place before the 25 January election, in some cases with a view towards the likely timing of that event. It is comprised also of caps on liquidity assistance to the banking system, on issuance of T-bills by the government and the ability to discount T-bills at the European Central Bank – which came into play after the election.The pragmatic intervention of someone, for whom I don’t ordinarily offer a great deal of effusive praise, namely the Chancellor of the Federal Republic of Germany, has to be acknowledged. It’s a pragmatic step which may amount to a turning of the corner.
Each of those measures can be, and has been, rationalised as a measure of supervision or oversight or precaution. We can argue about whether that’s a legitimate rationalisation or not. I would have my questions, my doubts. But what one can say for sure is that the ensemble of these obstacles and, let’s say, precautionary financial measures, is, from a macroeconomic standpoint, from a psychological standpoint, fundamentally counterproductive. It adds materially to the instability that is perceived with respect to the Greek economy, to the instability of the financial system. It adds materially to capital flight, and to the political pressures that have been on the government and to which neither the government, nor the Greek public has shown any inclination to bow.
To get past the trap, to get through the minefield, has required manoeuvres of a fairly high order of adroitness in at least three stages. The first was to establish, in principle, that the previous agreement, the Memorandum of Understanding as it was called – which had subjected Greece to a form of colonial government, according to which practically everything that the government did was dictated from outside, by the institutions known as the troika – was a thing of the past. That it was finished, that the Greek public had rejected being ruled this way in an open and decisive election. And, at least in principle, that proposition was accepted, after some fairly rancorous negotiations that led to the communique on 20 February. This was a major step forward, although one that did come at the cost of deferring certain measures in the SYRIZA election platform, including raising the minimum wage, not reversing privatisations that have previously occurred and accepting a primary surplus target, which, although lower than the previous completely unrealistic one, was and is still constraining on the Greek government.
The second stage, still ongoing, involves establishing this reality at the operational level. It involves establishing a professional, acceptable working relationship between the international teams, which do have a legitimate role. And that role is finding out the facts and assuring the European partners of the good faith of the Greek government. And that has required an adjustment on the part of the international teams who came back to Athens, I think, still hoping that they could conduct business as they have done before, basically under the same operational rules that had governed under the Memorandum of Understanding. They found out that that was not the case and there was a certain amount of friction that was associated with that discovery.
I think it’s fair to report, in the last several days, some progress has been made. Technical discussions were suspended for a while, with the proposition being that the teams would present their request for documents from the Greek government in writing. And the teams are now doing that. They are working to present a list of documents that they require and that request will be responded to. The Greek Ministry of Finance has issued a statement saying that they view this as a constructive development. It’s putting the relationship between the two sides on a proper footing of good order and regular exchange of documents.
A third stage in the process is one which has to be resolved at the political level. And that involves restoring the liquidity of the Greek government and giving enough financial stability to the banking system so that economic activity can begin to resume. That’s been a major problem, especially in these last two months, in the atmosphere of fear that surrounded the election and the atmosphere of uncertainty that has succeeded it. Basically, banks have suspended most of their activity and a great deal of capital has left, requiring, as I say, these intermittent and rather small increases in liquidity assistance to keep the system in function.
But that is not sufficient to allow the government the breathing space, either to develop its programme of reforms, or to begin to open up the prospect of some recovery in the economy. And a decision to move past that mechanism of destabilisation had to be taken at the political level and it is possible that that was accomplished, in part at least, in Berlin (referring to a meeting between Tsipras and Merkel in March).
See full transcript of speech here