Tuesday, July 14, 2015

No it is not over yet, not by a long chalk

On another forum someone pointed out that it must be at lest 2,500 years since Iran (a.k.a. Persia) and Greece dominated the headlines to the extent they have been doing for the last week or so. That is true with some exceptions: there was the time six months ago, and a year ago, and two years ago and so on. Nor have the two stories gone away. President Obama may be lauding the nuclear agreement and pretending that it has nothing to do with Congress (memo to the Prez: read that Constitution at last) but Congress does not think so and there are a good many unhappy people in the region, starting with Israel and continuing with most Arab states. So that one will run and run.

What of Greece? Did the runner from Brussels bring the good news as the one from Marathon had done? Not exactly. On the one hand there will be a third bail-out (anyone who is surprised by that has not been paying attention) but on the other hand the terms imposed on Greece are about the same if not worse than the ones they voted against in that referendum. And this time the Prime Minister has accepted them because he had no alternative.

To his and the Greek population's surprise it emerged that they were not holding the whip hand. Far from it: they voted against the austerity plan on the assumption that they will still be getting a bail-out and emergency funds to keep going in the style they seem to have accustomed themselves to. (Well, maybe not quite in that style as anyone who has a transferable skill is leaving or planning to leave the country.) The trouble with that reasoning as I have pointed out before, is that you cannot vote democratically or otherwise about something you cannot control. In other words, for the Greeks to vote in favour of getting more money from other EU member states was pointless - it is the other states that were going to decide on that and they, too, have people and electorates.

The sad truth is (well, sad from the Greek point of view) that it is they who are desperate to stay in the eurozone while the other members do not seem to care all that much. My suspicion is that most of the big banks and government departments in German, France and the other countries have been making various plans for a Grexit and will be more or less prepared. Not fully, of course, as one can never be fully prepared for something like that, but more or less. Whether the Greek government has made any plans remains a moot point. For the time being they are hanging on in there and I do mean the eurozone.

Will the Greek government survive in Greece? That remains to be seen but I predict that they will. No other real alternative is being presented. Tsipras is facing a rebellion in Syriza but is being supported by the opposition parties. A good deal of hysterical nonsense is being spouted:
Greek Energy Minister and Left Platform leader Panagiotis Lafazanis said yesterday, “Our so-called partners led by the German establishment, behaved towards our country as being their colony and they are nothing more than brutal blackmailers and financial assassins.”
Clearly, even elementary knowledge of economic facts is not a requirement in the Greek government. As for political understanding, don't even think of it. Greece has been a colony of the EEC/EC/EU ever since it joined and its own political establishment, backed by its electorate has done nothing to change that situation.

Meanwhile, the agreement might (though probably won't) be scuppered by the German Bundestag who seem to think that democracy and voting is not just for the Greeks.
“The package is neither credible nor viable,” centre-right MP Klaus-Peter Willsch told Tagesspiegel.

MPs from the larger of the two centre-right parties, the Christian Democratic Union (CDU), Wolfgang Bosbach and Willsch announced their intentions to vote “no” on Friday, just as they have in previous votes regarding Greek aid.

Still, most of the Bundestag’s centre-right, Social Democrats and Greens are expected to vote “yes” on a mandate the German government needs for negotiations on a third bailout for Greece. The Left Party is expected to reject the plan. In a second vote, the Bundestag would later have to agree to the new assistance programme.

The agreement established on Monday (13 July) morning in Brussels is a further attempt to “patch-up cracks in the system with a lot of money”, Willsch said. Among other things, he criticised the scope of the planned €50 billion trust fund. This was already recorded as a privatisation target in the first bailout package, but not even 10% of it was actually achieved.

Hans-Peter Friedrich, the deputy chair of the centre-right group in the Bundestag, expressed his doubts over reform pledges from Greece’s left-wing government.

“I do not believe one word the Greek communists say anymore,” Friedrich told Bild.
Looking at it from another point of view, I cannot help wondering whether the sort of weeping and wailing and gnashing of teeth that is to be seen on the left of our own political spectrum, especially among the europhiliacs, has anything to do with the fact that the Greek government that is allegedly being "humiliated" is of the fairly extreme left-wing variety. Would we see the same if it had been of the right?

Brendan O'Neill has written an excellent piece on the born again left-wing eurosceptics who are in agony because the poor Greeks and their left-wing government is being so badly treated.
But I’m not feeling very welcoming to these latter-day doubters, currently live-tweeting their Euro-existential angst and clogging their newspaper columns with tortured questions about whether the EU really is a ‘great achievement of enlightened internationalism’. (Answer: no, you donuts.) For two reasons.

Firstly because it’s just too late. Where the hell were you guys in 2001, when the Irish people rejected the Nice Treaty and were subjected to a tirade of abuse from EU officials before being made to vote again? Where were you in 2005, when the Dutch and French peoples were libelled by EU officials as racists and xenophobes and ‘the generally pissed off’ for having the temerity to reject the EU Constitution? Where were you in 2006 and 2007 when some of eastern Europe’s elected leaders were told by Brussels to tone down their political rhetoric or face being found in contravention of EU obligations? Greece is far from the first European nation to have its democratic impulse nulled by Brussels bureaucrats.

I’ll tell you where you were back then: you were on the side of the Eurocrats sneering at the pesky masses. You treated criticism of Europe as a kind of mental malaise: Europhobia. And you let it be known that all good people, like you, back the EU, whereas only bad people — racists, nationalists, fat blokes with the St George’s Cross tattooed on their arses — oppose it. You formed a chattering-class ring of steel around the EU, deflecting all critical jabs and barbs as the unhinged mutterings of the generally pissed-off. So, yeah, your Damascene conversion to the cause of Euro-questioning is a tad irritating, to be frank.

The second reason I’m not rolling out the red carpet for these people coming around to a way of thinking they once branded a phobia is because they’re doing it wrong. They aren’t genuinely opposed to the EU; they’re just really angry with Germany. In fact, much of this oh-so-late Euroscepticism, especially from the left, is really anti-German sentiment in disguise. It’s the return of the British disease: a hives-like allergy to all things German and a rash fear that this nation is once again plotting to subject all of Europe to its black, unforgiving boot.
As a matter of fact I, too, am fed up with the stupid cry of "Nazi Germany marches again" and "Merkel is just like Hitler". No, this Germany is not Nazi, Merkel is nothing like Hitler, the country is a democracy and has to pay attention to its own people and, in any case, the other putative donors (there is no point in pretending that these are loans) are not too happy with Greece either.

This is what I said on the anniversary of the bringing down of the Berlin Wall:
And now, my fellow eurosceptics, let us do a little bit of maths. The Federal Republic of Germany, popularly known as West Germany, became a constitutional democracy in May 1949, that is sixty-five years ago. That democracy was strong enough to take in twenty-five years ago a section of Germany that had been a Communist country for forty years. Since then united Germany has had many problems (haven't we all?), both economic and political but it has remained a democracy and there seems not possibility of it being anything else. As against that, the Nazi regime lasted for twelve years. That's twelve years against sixty-five and twenty-five. Could we now stop talking about Germany as being always and for ever potentially Nazi?
Obviously no, we cannot get out of that stupid rut for if we did we might have to think a little more seriously about the present and the future.

Many of the people who have been raising the wicked Germans oppressing the Greeks cry found themselves spluttering with fury when it became apparent that Britain would have to contribute £1 billion to the short-term funding (there really is no money there). The UK is, therefore, opposing any immediate solution that would involve British taxpayer's money. As I am one of them I have no objections to that stance (though it ignores certain other funds) but I am a little perplexed by people's attitude of being generous at Germany's and other eurozone countries' expense.
A diplomatic source said Monday that Poland too would oppose the use of EFSM to provide emergency cash for Greece.

The source added that even some eurozone countries are wary of the bridge-funding idea, saying Greece has enough money to meet its short-term needs.

Other solutions to provide the bridge-funding have been aired, for instance, the use of SMP profits - the profits made on Greek bonds by the ECB and eurozone national banks - or bilateral loans to Greece from countries including France and Italy.

"I foresee those negotiations being very difficult because I don't see many countries having a mandate to give money without any conditions", Finnish finance minister Alex Stubb said Monday.

Arriving at the Ecofin meeting on Tuesday, Luxembourg finance minister Pierre Gramegna said there is "no ready product on the table yet" and that ministers would listen to experts from the euro working group who have been tasked to work on the issue.

According to Germany's Handelsblatt newspaper, German finance minister Wolfgang Schaeuble proposed at Monday's Eurogroup that Greece issues IOUs to repay its debt to the IMF and ECB.
Well, that should solve it. Would IOUs be acceptable to Greek pride about which we have been hearing so much recently?

Just to make things worse, the IMF tells us that they are actually worse than we think. Much worse.
A secret International Monetary Fund study showed Greece needs far more debt relief than European governments have been willing to contemplate so far, as Germany heaped pressure on Athens on Tuesday to reform and win back its partners' trust.

The IMF's stark warning on Athens' debt was leaked as Greek Prime Minister Alexis Tsipras struggled to persuade deeply unhappy leftist lawmakers to vote for a package of austerity measures and liberal economic reforms to secure a new bailout.

The study, seen by Reuters, said European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension. Or else they must make annual transfers to the Greek budget or accept "deep upfront haircuts" on existing loans.
That is a complex, technical way of saying that Greece is going to be kept going by the rest of us, that debts will not be repaid, that no reforms will be sufficient to solve the problems and .... that we shall all have to keep them going. Even colonies are stronger economically than that.

Is there a solution to any of this? I am not sure anybody knows what it might be. Certainly leaving the eurozone might be a starting point for Greece but it will still have the debts and an dysfunctional economy. Leaving without some idea of what to do next will solve nothing.

As I said, it is not over, not by a long chalk.

No comments:

Post a Comment