Email
Password
Remember meForgot password?
    Log in with Twitter

article imageOp-Ed: Talks between Greece and euro zone finance ministers collapse

By Ken Hanly     Feb 17, 2015 in Politics
Athens - Euro zone finance ministers presented Greece with a proposal it could hardly accept since it would extend the present bailout and its conditions for another six months.
From the very first, Greece has made it clear that it did not want an extension of the existing bailout scheme and did not want to negotiate with the Troika. The new proposal would simply extend the existing scheme with the same austerity conditions. Greece has already caved on the issue of debt write offs and also reversing privatization. It is now supposed to accept the same conditions that caused Greece from the very beginning to refuse to negotiate with the Troika or to agree to any extension of the bailout with its austerity conditions. The euro zone ministers, no doubt led by Germany, are demanding Greece not only play by rules set out by the Troika, but also accept the conditions of the earlier bailout. The fact that all of this was rejected resoundingly by Greek voters is irrelevant. The whole point of the exercise is to show that when the needs of finance capital clash with those of the people, the people must be taught their wishes do not count, or change the situation. As Germany's Finance Minister Schaeuble put it, the Greek election does not change the bailout conditions. The conditions are not under the control of the people and if the peoples' representatives will not cooperate they will have to resign and be replaced by technocrats.
Greek Prime Minister Tsipras as well as Finance Minister Varoufakis both consistently emphasize that they want to stay in the euro zone. A considerable majority of Greeks also want to remain in the euro zone. However, the proposal — ultimatum might be a better word — demands that Greece submit to everything that Syriza had vowed to reject, for a period of six months, in order to obtain bridge financing for a final deal. The arrogant rejection of all that Syriza has argued for by imposing everything they are against makes one wonder if the euro zone wants Greece to leave, hoping that the hardships of a return to the drachma will teach other countries facing the same problems to be more cooperative in imposing austerity policies. A deal could have been reached.
Paul Mason of he BBC reports that the Greek negotiators had been presented with a memo by EU Commisssioner Pierre Moscovici that had terms favorable enough that Greece would be willing to sign on. Moscovici, however, was not an authorized emissary for the Eurogroup. When the group of ministers actually met, there was a significantly different proposal presented by Jeroen Dijsselbloem head of the group. The document was reported presented to Dijseelbloem a mere 15 minutes before the meeting. The proposal demands that Greece conform to the original Troika demands as to "tax policy, privatisation, labour market reforms, the financial sector and pensions" There is also a demand that the surplus should be raised from 1.5 percent of GDP as it was last year to 3 percent this year and 4.5 percent in 2016. No doubt the surplus would be used for the most part to pay off debt. Some in the Twittersphere argued that as Varoufakis had charged he had been subject to a bait and switch strategy with the Moscovici memo being the bait and the actual proposal the switch. In any event, the Greeks ended up being presented with a document that had worse terms for them than the one they had rejected just last week.
In spite of the fact that Syriza has not been able to gain any significant concessions, there seems to be considerable optimism that somehow a deal is near. Stock markets on the whole have not reacted negatively to events. On Tuesday the S&P 500 in the US reached a new high. The German Finance Minister Schaueble said that Germany is not inclined to provide Greece any slack. Indeed the screws have already been turning as Greek sovereign debt can no longer be used as collateral. The EU warns the Greek government that any change in bank management must be approved by its Single Supervisory Mechanism: The European Central Bank (ECB) has issued a terse warning to Greek banks, and particularly to the government in Athens, via its Single Supervisory Mechanism (SSM), over plans to overhaul lenders’ management. In a letter to Greek banks, the SSM stressed that any changes to their management can be implemented only after receiving the SSM’s approval. One more blow to democratic control of key institutions.
Although Greek Finance Minister Varoufakis calls the Eurogroup proposal absurd he also claimed that he was ready to do "whatever it takes" to reach agreement. Perhaps this will include accepting the absurd agreement as long as there are a few minor changes that allow him to save face and claim a great victory. Varoufakis insists that game theory should not even be used in the negotiations. Instead, he relies upon facts plus a rather naive idealism about changing motives: The trouble with game theory, as I used to tell my students, is that it takes for granted the players’ motives. In poker or blackjack this assumption is unproblematic. But in the current deliberations between our European partners and Greece’s new government, the whole point is to forge new motives. To fashion a fresh mind-set that transcends national divides, dissolves the creditor-debtor distinction in favor of a pan-European perspective, and places the common European good above petty politics, dogma that proves toxic if universalized, and an us-versus-them mind-set. Perhaps it is the other side that is using game theory and winning.
The facts as many liberal economists see them are that austerity policies are a failure. Austerity policies dampen demand that slow growth that makes paying debts even more difficult. It depends what facts you consider. Austerity policies also cut back on costly social programs, increase the reserve army of the unemployed, privatize public facilities and services, and create conditions more favorable to investors and capital as a whole. The collateral damage may be necessary to improve the climate for capital eventually. Greece already has come out of recession. The course should be stayed and Greece should be forced to pay its debts and not spend on wage hikes, better pensions etc.. Get rid of publicly owned facilities and services and turn them into new centers of profit.
Krugman titles an article on Greece "Athenae delenda est" which means if my little Greek is correct "Athens must be destroyed". That may be so but a conservative could always claim that this is just part of the creative destruction of capitalism. All those unsupportable wasteful social programs will be destroyed to make room for uncorrupt Horatio Alger types and entrepreneurs who will thrive once the rubbish is cleared.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
More about Yanis Varoufakis, greek debt crisis, alex tsipras
More news from
Latest News
Top News