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Op-Ed: The contradictions in Greek policy continue

Some of the key contradictions near the end of negotiations saw the Greek negotiators agreeing to proposals that violated “red lines”. In the end, the offer of the Troika was so loaded with cuts and austerity policies that Tsipras called a referendum rather than to agree to it. But there are aspects of the negotiations that were themselves in seeming contradiction to Syriza’s principles, a prime example being the issue of military spending.

The Wall Street Journal lists five issues that the Troika and the Syrza government disagree on. One of them is military spending. The Greek government proposed a reduction in military spending of 200 million euros in 2016 while the Troika creditors proposed twice that, 400 million. So a leftist government that has a platform that includes leaving NATO refuses to double a reduction in military spending while its creditors demand it? Why?

Greece spends far more of its GDP on defense than the average for NATO members. In fact, it is the third highest spender in terms of GDP, spending 2.2 per cent of its GDP on defense. If this spending were brought down just to the NATO country average this would finance three quarters of what the Troika has demanded in pension cuts. Yet Syriza wants to cap the cuts at half of what the Troika would allow.

One article suggests why Greece does not want more cuts: “German and French arms-export interests surely explain the silence on the creditor side: Greece is one of their biggest customers.” This hardly explains why the Troika who represent the exporters favour bigger cuts while the Greek government does not. Perhaps there are huge profits being made by Greek importers or Syriza fears the military. Another explanation of the lack of cuts in military expenditure is that the US has been demanding European countries spend more on supporting NATO. This explanation again runs counter to the fact that the Troika favour bigger cuts than Greece. Why would Syriza care what the US wants for NATO? The reason given should ensure that the Troika resisted cuts.

Another contradictory aspect of the present situation is the resignation of Finance Minister Varoufakis. Varoufakis said that he would resign if the YES vote won. The NO vote won but he resigns anyway even though the vote would indicate support for his rejection of the bailout deal. Why did he resign? There are somewhat different stories: Greek finance minister Varafoukis resigns to further negotiations with the Troika.
“Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.
I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.
So Tsipras and Varoufakis are already signalling that they will give in to the demands of the Troika to send more compliant negotiators, who will no doubt accede to further demands. This assumes that the Troika still want a deal. They may have decided to force Greece to exit the euro zone. Tsipras seems to act as if this is unthinkable and has avoided doing anything to prepare Greeks for such an eventuality. A planned Grexit rather than a deal is not even to be mentioned. Another explanation of why Varoufakis was forced to resign is that he made sensible suggestions as to what Greece should do.

Varafoufakis said to the Telegraph on Sunday before referendum results were in: “If necessary, we will issue parallel liquidity and California-style IOU’s, in an electronic form. We should have done it a week ago.”
California issued temporary coupons to pay bills to contractors when liquidity seized up after the Lehman crisis in 2008. Mr Varoufakis told the Telegraph that this should not be a prelude to Grexit but a legal action allowed within monetary union.
Even though Varoufakis saw the move not as a step to a Grexit, it could be interpreted as such and that is enough to force the resignation of Varoufakis. The Troika demands that Varoufakis fall on his sword . While doing so, Varoufakis prates on about proudly wearing the badge of contempt his opponents have pinned upon him.

Tsipras claims he has a strong hand now that the referendum shows the people are behind him. The people voted for anti-austerity measures when they elected the Syriza government. It made no difference to the Troika at all. Why would it be any different now, especially when the Greek government is again signalling it is desperate for a deal, and is bleeding to death economically? If there is a Grexit, it will be because the Troika want it not because the Greek government does. Syriza has ensured that the Greek people are not prepared and will have no idea what is involved or what the Greek government has planned. As the appended video shows, the referendum, is not regarded as changing conditions for negotiations. The discussants wonder why the referendum was held at all.

Greece's Finance Minister Yanis Varoufakis says he is resigning  in a shock announcement despit...

Greece's Finance Minister Yanis Varoufakis says he is resigning, in a shock announcement despite the government having secured a resounding victory for the 'No' vote in the country's bailout resignation
Andreas Solaro, AFP


A woman holds a placard reading

A woman holds a placard reading “No cuts” during a demonstration in support of Greece, in Madrid on July 5, 2015
Javier Soriano, AFP


Greece votes 'No'

Greece votes 'No'
P. Pizarro/D. Mayer, AFP

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