austerity

Greece’s debt crisis is one of the hottest geopolitical issues at the moment. Germany imposed a rescue package last week. The United States played a role of political deterrence towards the EU, to avoid the possibility that Athens could go into Moscow’s sphere of influence. To talk about these issues, European Affairs interviewed Andrew Spannaus, journalist and Director of Transatlantico.info.

[subscriptionform]
[level-european-affairs]
With Tsipras’s full-scale surrender, has Greece essentially become a protectorate of Brussels, or better, of Berlin?

“Europe wasted a great opportunity. After talking about the need to shift from austerity to growth, in essence nothing has changed. The European establishment – led by Germany, but don’t let the others off the hook – doubled down, using every weapon possible rather than admit to the failure of its economic policy over the last twenty years.
This is a defeat not only for Greece, but for Europe itself, which has shown 1. that it is unwilling to recognize its own mistakes, and refuses to question the fanatical adherence to budget parameters; and 2. that in this form Europe is not compatible with democracy.
The biggest question is: who’s giving the orders in Brussels and Berlin? Why does the EU insist on a policy that doesn’t work? It’s one thing to have to clean up problems and inefficiencies from the past, but the decision to make the situation worse through a policy of budget cuts and new taxes shows that something else is afoot. Europe has abandoned the best parts of its own history and now answers to other interests.”

“Despite the mistakes made in the past five months, I am proud that I have defended our people.” This is what Tsipras said to the Greek Parliament, at the time of the vote on the measures imposed by Europe. In your view, Did Syriza betray its electoral mandate and the result of the referendum?

“Over the past few months the Greek government alternated between a hardline position and a softer one. The goal was always to influence the negotiations and obtain some concessions. At a certain point it looked like Tsipras had decided to get serious: first with the opening towards Russia, and then the referendum. In the end though, he gave in to the blackmail and demonstrated that he wasn’t willing to risk the consequences of a full break-up.
The Greek people clearly rejected austerity; the problem is that in theory they wanted to remain in Europe as well. So while Tsipras certainly deserves some criticism, the fact remains that the two goals were incompatible: Europe = austerity, so there was no solution.
It’s not over yet. If the plan that Greece has accepted is actually implemented then the situation will get even worse; things could flair up again soon. Moreover, the political debate has changed: it’s impossible now to hide the contradictions and weaknesses of the current economic policy. Sooner or later there will be political leaders, and maybe entire countries, who will refuse to continue in this direction.”

The International Monetary Fund has said that Greece’s debt is unsustainable. Will the EU plan go forward anyway?

“The plan will go forward, but it won’t work. The first “rescue” packages for Greece – in which public money was used to save the private banks, in particular those in Germany and France – were supposed to create the conditions for economic recovery. The same was said for Italy. In reality the result was a drop in GDP, at catastrophic levels in Greece (-30%).
The notion that this type of debt can be repaid through spending cuts is simply absurd. The solution is to restructure and cancel part of the debt, and above all to implement a policy of investment to spur growth. This means ignoring certain dogmas, for example by increasing productive public spending. The part of the debt which is real, and not just due to speculative maneuvers, can be repaid only if the economy is actually growing; the current policy prohibits this, and thus can only fail.”

How big a role did the United States play in facilitating the negotiations between the EU and Greece? Was there, and is there, a real possibility that Athens could get closer to Moscow?

“A myth exists in Europe, about how the United States is against the Euro and afraid of the European Union. However, even if we were to grant the premise that the U.S. sees Europe only as a competitor, there is nothing to be afraid of as long as the current economic policy remains in place.
In the name of political union the strength and cohesion of the nations of Europe is being destroyed. The foundation of the EU was quite different, but starting in the 1990s a shift was made to the so-called “free market” policy that allowed large financial interests to dominate the economy. This is good for a few, not for the many.
Secondly, this myth has been debunked by the American position in this crisis: the U.S. didn’t want to see Europe break up, precisely due to the risk of a geopolitical shock. Tsipras showed that he understood the stakes when in St. Petersburg he said that a “new economic world is being formed,” while “the center of gravity of economic development is shifting.”
The West decided to close ranks, to avoid giving an opening to our “enemy” Putin. However the reality is that Europe’s policy of continuous austerity risks making the alternative of the BRICS even more attractive: numerous countries are already breaking away from the Western financial institutions precisely in order to avoid being controlled by a system dominated by large financial interests.”
Giacomo Pratali

[/level-european-affairs]