So the Greek public followed the lead of their prime minister Alexis Tsipras and his Syriza Party and voted overwhelmingly 61.3%-38.7% to reject the bailout deal demanded by the so-called troika of the International Monetary Fund, the European Central Bank, and the European Commission backed by Germany and France. The Greek finance minister Yanis Varoufakis, considered a key architect of the Greek strategy to fight the troika’s terms and had thus enraged them, resigned following the successful outcome of the vote so as to clear the way for fresh talks to begin.
I have not been following the details of this issue closely. But I do have political instincts and those tell me that governments and the big multinational financial institutions always favor the interests of the banks over that of ordinary people. We saw that in the US with the financial crisis and there is no reason to think it is any different with Greece where it seems like the troika is acting on behalf of the big banks and insisting on further austerity for ordinary people in order to preserve the interests of the international financial sector.
What seems to be at issue here is that the troika is willing to loan more money to the Greek government purely so that they can turn around and give it to the banks, and then squeeze the Greek people with austerity measures so that they can pay the money back to the troika. In the US we saw a similar plan where the government, both the US Treasury and Congress, was very willing to write huge checks out of taxpayer money to bail out the banks that handed out all the risky loans while not requiring any major restructuring of the banks to prevent such things again.
Since anything that sticks it to these transnational financial interests and to the arrogant German chancellor Angela Merkel gets my support, I applaud the Greek people for their vote. But let us be under no illusions. Greece is up against very powerful forces that will seek to punish it severely to show them and others that they are not to be trifled with and that anyone who defies the big banks will be crushed.
As Seumus Milne wrote on July 1 before the referendum:
It’s now clear that Germany and Europe’s powers that be don’t just want the Greek government to bend the knee. They want regime change. Not by military force, of course – this operation is being directed from Berlin and Brussels, rather than Washington.
But that the German chancellor Angela Merkel and the troika of Greece’s European and International Monetary Fund creditors are out to remove the elected government in Athens now seems beyond serious doubt. Everything they have done in recent weeks in relation to the leftist Syriza administraton, elected to turn the tide of austerity, appears designed to divide or discredit Alexis Tsipras’s government.
They were at it again today, when Tsipras offered what looked like almost complete acceptance of the austerity package he had called a referendum on this Sunday. There could be no talks, Merkel responded, until the ballot had taken place.
There’s no suggestion of genuine compromise. The aim is apparently to humiliate Tsipras and his government in preparation for its early replacement with a more pliable administration. We know from the IMF documents prepared for last week’s “final proposals” and reported in the Guardian that the creditors were fully aware they meant unsustainable levels of debt and self-defeating austerity for Greece until at least 2030, even on the most fancifully optimistic scenario.
That’s because, just as the earlier bailouts went to the banks not the country, and troika-imposed austerity has brought penury and a debt explosion, these demands are really about power, not money. If they are successful in forcing Tsipras out of office, a slightly less destructive package could then be offered to a more house-trained Greek leader who replaced him.
Hence the European Central Bank’s decision to switch off emergency funding of Greece’s banks after Tsipras called the referendum on an austerity scheme he had described as blackmail. That was what triggered the bank closures and capital controls, which have taken Greece’s crisis to a new level this week as it became the first developed country to default on an IMF loan.
Tsipras’s rousing victory has put a temporary halt to that plan to oust him but you can be sure that Germany and the troika are right now hatching a new plan to humiliate the people of Greece and its leader for the audacity of thumbing their noses at their rulers.
What we are seeing in front of our eyes is the new world order in action, where transnational capital and the financial sector rule the world. Milne continues:
Not only has no German or any other EU taxpayer taken any loss bailing out Greece. The real fear in Brussels and Berlin is not that people in countries such as Spain and Portugal who have taken the brunt of eurozone austerity will oppose relief for ravaged Greece – but that they’ll want an end to austerity and their own debts written off as well.
That’s what they call “moral hazard”. But it has nothing to do with morality and everything to do with a dysfunctional currency union, a destructive neoliberal economic model enforced by treaty and an austerity regime maintained to ensure a return to profitability on corporate terms.
That’s why Merkel and the ECB mandarins want Greece’s surrender. Upstart democratic governments that challenge austerity must be crushed: the real risk of contagion is as much political as financial. This is, after all, a system where unelected institutions and other states have the power to override elected governments – in fact to impose not only policies but effectively governments too, as we may be about to see in Greece. Anti-democratic firewalls are built into Europe’s institutions.
I feel sorry for the Greek people as they face a very bleak future however things shake out. The banksters are greedy and merciless beyond comprehension. The banks have already shown that they rule the US and are immune from any prosecution for their wrongdoings. If the US government will not act against them, what chance has the puny Greek government got? But unlike in the US, at least the Greek people got to have their say on this major issue and can take pride in knowing that they made a bold statement of defiance and independence.
UPDATE: Thanks to moarscienceplz, here is an excellent radio interview with political economist Mark Blyth that shoots down a lot of the myths around the Greek crisis. (You can also read the transcript.)
Meanwhile Thomas Piketty also slams Germany has having no moral standing to lecture other countries on not defaulting on debts.