Only Thing Now Certain in Greece: Austerity’s Failure, Debt’s Destruction
by Jon Queally, Common Dreams
Wednesday, July 01, 2015
In a blog post listing six short arguments, Varoufakis explained why Syriza is urging the Greek people to vote ‘No’ against the bailout deal:
- Negotiations have stalled because Greece’s creditors (a) refused to reduce our un-payable public debt and (b) insisted that it should be repaid ‘parametrically’ by the weakest members of our society, their children and their grandchildren
- The IMF, the United States’ government, many other governments around the globe, and most independent economists believe – along with us – that the debt must be restructured.
- The Eurogroup had previously (November 2012) conceded that the debt ought to be restructured but is refusing to commit to a debt restructure
- Since the announcement of the referendum, official Europe has sent signals that they are ready to discuss debt restructuring. These signals show that official Europe too would vote NO on its own ‘final’ offer.
- Greece will stay in the euro. Deposits in Greece’s banks are safe. Creditors have chosen the strategy of blackmail based on bank closures. The current impasse is due to this choice by the creditors and not by the Greek government discontinuing the negotiations or any Greek thoughts of Grexit and devaluation. Greece’s place in the Eurozone and in the European Union is non-negotiable.
- The future demands a proud Greece within the Eurozone and at the heart of Europe. This future demands that Greeks say a big NO on Sunday, that we stay in the Euro Area, and that, with the power vested upon us by that NO, we renegotiate Greece’s public debt as well as the distribution of burdens between the haves and the have nots.
For Mark Weisbrot, co-director of the Center for Economic & Policy Research, what is most striking about the behavior of the Troika is how blatantly they are using their financial authority to exert political pressure within Greece. By backing an argument also put forth by Nobel-winning economist and columnist Paul Krugman earlier this week, Weisbrot suggests that elite forces in Europe are now using the financial crisis to force the current government from power.
Weisbrot says that from perspective of the Troika, “regime change” in Greece remains the only logical strategy to make sure that those who have stood in opposition to their policies are jettisoned and that submission to foreign authority, no matter the internal damage, returns to the impoverished nation. What’s worse, he writes, is that what Tsipras and his government are willing to accept-and what the nation, in fact, needs to enjoy a return to economic balance and prosperity-is not radical at all.
What Weisbrot concludes is what Krugman and other high-profile economists like Joseph Stiglitz also now believe: Greek voters should say “No” this weekend to further austerity, buck the bullying of the Troika, and take their economic future into their own hands.
But as Stiglitz, along with his Columbia University colleague Martin Guzman, explained in an article written late Tuesday, there remains a better path for Greece than the one put before it by foreign creditors. Citing the case of Argentina, which more than a decade ago defaulted on its IMF obligations in order to wipe out what it said was an unjust and unsustainable debt burden, Stiglitz and Gusman argue that decision carries important lessons for present-day Greece.
“When debt is unsustainable, there needs to be a fresh start,” they write. “This is a basic, well-recognized principle. So far, the Troika is depriving Greece from this possibility. And there can’t be a fresh start with austerity.”
They conclude, “This Sunday, Greek citizens will debate two alternatives: austerity and depression without end, or the possibility of deciding their own destiny in a context of huge uncertainty. None of the options are nice. Both could lead to even worse social disruptions. But while with one of them there is some hope, with the other there is not.”