It was July 4th and people were going nuts outside. Fire crackers going off, people drinking, dancing and barbequing in the streets, the bangs so frequent, the yelling and screaming so constant, I wasn’t sure if people were having fun anymore or getting into brawls. Either way, I was holed up in the house all weekend, avoiding the outside world, plugged into any device with an internet access, streaming constant updates from the situation back home. Greece is about 10 hours ahead of the west coast, so while half of me was present in Oakland, fireworks going off outside my window, the other half of me was watching the morning news as Sunday the 5th dawned on a Greece ready to take to the ballot box. They were faced with a #Greferendum.
The question posed was this: Should the new bail out program, suggested by the European Committee (EC), European Central Bank (ECB) and International Monetary Fund (IMF)—aka the blood-sucking Troika—on June 26, 2015, and which consists of two documents, titled “Reforms for the completion of the Current Program and Beyond” and “Preliminary Debt sustainability analysis,” be accepted?
This of course sparked a wave of criticism as to whether a referendum should have even been held, was it democratic, was the question stated clearly enough, would a “no” mean exiting the Eurozone (dubbed Grexit… sheesh), can pigs turn paper into gold, etc? People saw through the wool being pulled over their eyes and on July 5th, 61.31% of the 62.50% of the population who voted, voted “No,” versus the 38,69% of people who voted “Yes” to this new bailout dealt. Few discussed the amount of people who didn’t vote at all (37,50%). Some saw the “No” result as a minor victory, the other recent one being the election of a left wing government after decades of a dual party/family system. Others saw the whole thing as a sham, a farce for false hope—which didn’t turn out to be far from the truth.
Not surprisingly (though quite disappointingly for some) five days later, after having ranked up the anti-austerity propaganda and promises, the Greek Prime Minister, Alexis Tsipras, did a full-on political U-turn (or back flip as we call it back home) and said “yes” to this new bailout deal. This means more pension cuts, a hike in VAT taxes, more government funding cuts, privatization of state owned operations, and a deposit of 50 billion euros worth of assets. “’Cause I say so” and because they know we don’t actually have the money. The agreement, which is an exercise in vagueness and can be found online, doesn’t specify what kind of assets Greece would have to hand over…among its other delusional suggestions. That sounds like free range to me, meaning they will buy off everything at ridiculously low prices, then sell it off again for three times as much. “Greece: a holiday resort colony brought to you by Siemens!”
So why did Tsipras back-flip? Various parties have their reasoning, but the common opinion is that he was black-mailed. #ThisIsACoup was the supposedly the most used hashtag on Twitter on July 16th, the day of crucial talks in Brussels. “Who needs tanks when you have banks” was another one. “Merkel competing for title of worst German leader.” Everyone, including Tsipras, realized his government (and every government before that) was unprepared to follow through with full-blown opposition to the troika. With the troika having “lost their trust in Greek politicians” and threatening a Grexit—and also SYRIZA trying to use the Grexit’s negative repercussions as negotiation leverage—and amidst cabinet reshuffling, PM’s resigning, banks closed for a third week, and social unrest and widespread uncertainty ever present, it’s pretty evident Tsipras was in a bind. And without a Plan B he’s willing to bet his political career—and the whole country’s future—on, I’m guessing he cracked under pressure. If down the line the troika deal fails, and it will, he can blame the troika. If he failed to make any progress after a Grexit, it would all be on him.
However, polls show Tsipras is still favoured among the public, with 38% preferring him to the other “more corrupt” politicians who have been in power the last three decades. SYRIZA has only had six months to prove anything, but given that he essentially just agreed to a third bailout deal (the first was in 2010 under George Papandreou’s PASOK, the second one under Kostas Karamanlis’ New Democracy) Tsipras doesn’t seem to be having trouble following suit and making an utter clusterfuck of what was already an epic fail situation.
Since then, by the way, both those former PM’s have (obviously!) fallen off the face of the earth, while the three dominant parties in Greek politics have undergone major reshuffling. Just today (July 20) Tsipras’ new cabinet was announced, after more radical dissident “no” voters from within the party stepped down in protest against the new bailout agreement. Word on the street is they’re gonna form another party, further left than what SYRIZA claims to be—which can hardly be called left anymore, given what it has just agreed to. Picture this: if they all used to compete and bicker amongst themselves to get to the money table, now the money has dried up but they’re all chained to said empty table, and the hand that feeds is closing in for a slap.
Of course the troika doesn’t care about what the Greek people think or want or vote. Wolfgang Schäuble, Germany’s finance minster and member of the Christian Democratic Union of Germany (so you get the picture) supposedly said that elections cannot be allowed to change anything. Debt versus “democracy.” Greece was asked to accept concessions as a condition of even negotiating the new “rescue” plan. The troika knows Greece can’t afford a Grexit. It will “extend and pretend” for a few more months, “kick the can down the road” as the media are tagging it, and hand over just enough money to prevent immediate bankruptcy, but in no way offer any kind of resolution. After all, this is a problem it benefits from. What really worries them is the loss of power, and Europe has been on shaky ground for a while now.
The Euro Fantasy
The euro is a currency shared between 19 countries (the Eurozone) of the 28 consisting the EU. When the euro was “constructed” in 1993, after Germany was “unified again” with the fall of the Berlin Wall, and then eventually implemented in 1999, there seemed to be no provisions or plan for a country wishing or needing to exit the Eurozone. One of the euro ideas was that a common currency would increase the line of credit smaller countries would have access to.
This is why, in 2001, the then Simitis-run PASOK government got Goldman Sachs to help cook the books (the infamous “swaps”) so Greece would qualify for entry. Governments cooking their books is nothing new (they are the number one spenders of money worldwide) and neither is debt being written off. Germany in fact had its debt written off in 1953 after WWII, while Greece has been defaulting on or restructuring its debt in some shape or form for the 92 of the 150 years it’s been “independent.”
Most of the Greek debt is held by quasi-governmental institutions, and not the private sector. Some people declared it “illegitimate.” Their reasoning? Approximately 90% of the loans given to Greece, issued by the troika, went back towards bailing our private banks and, of course, paying off the troika—not towards reviving the Greek economy. The money was funneled though Greek banks to go right back into the foreign banks, who were lending us money for the loans we were forced to take out under troika rule. I think there’s a name for that…oh right, predatory lending.
Todays, Greece’s total debt amounts to higher than 175% of its GDP. To put it in perspective, the overall amount of foreign debt Greece has (in dollars) is just under $353 billion. The US’s foreign debt is just above $6 trillion. Then again, Greece is a very, very small country in comparison (with a population smaller than Ohio) and an even smaller economy, its GDP making up less than 2/10s of 1% of the global GDP. Its two domestic economic pillars are tourism and shipping, the second of which receives little scrutiny while enjoying high tax breaks.
That aside, the Greek debt is also unsustainable. Some people have known this since 2010. Greece defaulting and bringing about “the collapse of the euro and catastrophic effects on the global economy” has been a side-show story for years. Even the IMF, that benefits from lending more money to small counties that cannot see enough growth to pay the loan off, admitted that the debt was too big to service. It’s pretty evident by now, even to a ten-year-old, that this is a systemic problem, a vicious cycle.
Other countries, such as Portugal and Italy, like Greece, accumulated debt they could only repay by borrowing more money. As long as there was credit, and with the euro, there was apparently. Then the 2008 global debt crisis happened, bringing borrowing to a pause. The unified monetary policy made this a problem for Eurozone counties, who continue to have independent fiscal policies. So, Germany agreed to foot the bill, as long as countries followed the austerity measures that came along with the loan agreement.
See, upon entering the Eurozone, countries gave up their monetary rights to the ECB, who decides how much money is cut and what interest rates one can borrow at. So, even though Greece, for example, controls how much it can collect in taxes, which it gets from people’s earnings, under the troika’s thumb it doesn’t have a say in whether taxes are cut or not, or how much people’s earning will go down or not. This poses a contradiction.
And that’s really the realization that is now staring everyone in the face: this is about something larger than Greece. It could be about… [enter dramatic drum solo] the end of the euro! …or in the very least a major restructuring of how the EU and the Euro can coexist at the same time without causing a financial and humanitarian crisis along the way.
“The next day”
So, this is about more than Greece, or democracy or debt; for them this is about power and the struggle to keep the status quo in place. If the Eurozone failed, some consider it would be “the worst European [read German] failure since WWII”.
If Greece’s creditors agreed to cut the Greek debt by 50%, then other countries with staggering debt, like Italy, Portugal and Ireland, might ask for the same thing. Some are proposing that this was Germany’s plan all along: to make Greece an offer they would obviously refuse. It seems like Germany and the troika are wanting to set a precedent for countries like France and Italy who also have high debt rates, metaphorically cracking the whip before anyone gets too bold.
Some think of all this as an excellent tabula rasa moment for European countries to regroup. These “regrouping” scenarios seem to have two main faces. The US model, and the Fascist model. (So again, super fucked, or extra fucked.) The first one they are predicting might look a bit like a United States of Europe, where countries no longer have their own fiscal policies and instead have agreed to establish a new fiscal union which would have control over all Eurozone countries, now on both a monetary and fiscal level. This idea is not only über fucking complicated, as we would basically be talking about trying to unite a bunch of very different counties under common laws, but it is also rather unpopular among euro folk.
However, the technocrats in Brussels, as far as I gather, find the EU, and all the rules and regulations it must circumvent, annoying. The IMF is a horrid, corrupt organization, and the Eurogroup (the 19 finance minsters of countries that use the euro) apparently isn’t even a group recognized by law (as if that would have established its legitimacy, but whatever…) so it does not have to keep minutes, or answer to any laws, and can hold meetings behind closed doors. I’m guessing there is nothing they want more than a way to gain more power. A suddenly “revolting” southern Europe is the last they want on their agenda. Because the other trend across Europe, the rise of the right wing, is probably more in their favour, as opposed to debt-cutting lefties like now former finance minister, Yianis “one N” Varoufakis, who resigned—or was “asked to” anyway.
This other face of a possible “regrouping” would look more like a dreaded continuation of what we are sadly already witnessing: an increase in fascist and nationalist tendencies, as is the pattern during extreme polarization, political and financial turmoil. This has historically lead to bloody war, including civil war (so it would not be a first for Greece, the memories of its last civil war still vivid in people’s memories). If Greece exited the Eurozone, it would mean a field day for the nationalists and fascists, who want noting more than to seize a broken and vulnerable country to then “save” it.
In fact, so far Germany seems to be one of the few countries to benefit from its entry in the Eurozone. It also suits the German political status quo to have countries like Greece in a perpetual pseudo-depression, as it leaves more room in the trading playground for dominance. Statistics suggest that Germany, an export-based economy, has indeed seen less unemployment since entering the Eurozone (at 5%) in comparison to many other Eurozone countries (at about 13%). Greece’s unemployment rate is at 25,6% (that’s one in four people), its unemployed youth numbers staggering at 49,7% in 2015. Suicides tripled between 2009 and 2012, with now almost half the country either below the poverty line, or hovering just above it.
Chomsky called it class war, others slow genocide, for sure this was a set up. Whatever the deal is, this story will continue to unfold and will have most likely changed by the time you read this, and sadly all of the outcomes look grim as fuck. Whether that’s elections and a possible Grexit, or more austerity and a possible Grexit, the combinations of inventive fuckery seems endless really. The end-point for tonight at least, is that Greece is epically fucked either way. A Grexit has been forecast for down the line, so it is appearing inevitable to some, and it seems the real question is whether Greece will be able to default on its own terms, or once again succumb to the absurd troika rule. I have had much debate back and forth, over what the better solution might be (obviously neither of the ones on the table right now being the optimal one), what the rumoured upcoming elections might look like, what the country would look like under a new currency on the ground level up, what kind of structures would rise and fall, what social trends might prevail, etc., but that is a discussion for another time.
Endnote: What you just read is my understanding of the situation within conventional brackets. This is not my hardline opinion on the matter, merely a summary of the major events as popularly perceived. I’m not a financial analyst or political science major, and there are surely points I forgot, or left out for lack of space. I’m just trying to deposit a timeline of how fucked up their system is and how this is again working against the people. If you have comments, questions, or just want to get in touch, for whatever reason, you can reach me at firstname.lastname@example.org