EU-IMF blackmail aimed at Ireland and Greece

The principle of self-determination of nations may, to some, appear irrelevant in the context of the eurozone crisis. The 17 countries signed up to the single currency are all, on the face of it, independent states free to determine their own destiny.

Dig deeper and it’s another story, however. Take the examples of Greece and Ireland, two of the so-called “periphery” eurozone states.

They may be at opposite ends of Europe but they share one thing in common – a clear and present threat to their right to determine their own future.

Irish voters have been told in no uncertain terms to vote “yes” in Thursday’s referendum on whether the country should back the new European Union fiscal union treaty that imposes strict spending controls on member states.

Yesterday, Irish prime minister Enda Kenny went on television to warn voters that a rejection of the new treaty would bring “uncertainty at a time Ireland definitely doesn’t need it”. He attacked the No side for “its politics of negativity, of defeat, of opportunism and of fantasy economics”.

This was a bit rich coming from a political class that helped drive the Irish economy and financial system into the ground in a rampant demonstration of the self-same fantasy economics.

Jim Stewart, senior lecturer in finance at Trinity College, Dublin, points out in the Social Europe Journal, says the fiscal treaty can be added “to the list of flawed policy making that has helped turn an economic crisis … into a national catastrophe.”

If the Yes vote succeeds, the treaty will be incorporated into the Irish constitution and gives other signatories the right to bring a case against Ireland in the event of non-compliance. “It is the same thinking that initially set penal interest rates on Ireland’s borrowing under the EU/IMF Programme.”

In practice, the long struggle for Irish independence is fundamentally weakened by a form of EU blackmail imposed by Germany, the European Commission, the European Central Bank and the International Monetary Fund. And this is the case in Greece too.

Christine Lagarde, the managing director of the IMF, has now added insult to injury with a fresh attack on the Greek people who are seen as thankless for daring to hold a general election on the bail-out terms imposed on the country in exchange for loans.

Lagarde said Greeks had to take responsibility for their fate, adding that deprived children in Africa needed more help than people in Greece. "I think they (the Greeks) should help themselves collectively ... by all paying their tax." That’s a bit difficult when one in five is out of work – rising to 50% amongst young people – and the economy is in free-fall as a result of the EU-IMF imposed austerity measures.

Just as in Ireland, ruling class politicians are passing on the threat if voters next month repeat their support for parties like Syriza that want to renegotiate the bail-out conditions. Antonis Samaras of New Democracy said a vote against the loan terms would leave Greece with “no food, no drugs, no fuel. It will have to live with permanent power cuts".

What Samaras is saying in effect is that there is no point in next month’s elections which follow the recent stalemate. You can vote against austerity but in the end, the EU-IMF will have their way. You can vote against the fiscal treaty in Ireland, but ultimately there’s no choice, according to prime minister Kenny.

The struggle for self-determination clearly needs renewing and not just in Greece and Ireland. Working people throughout the capitalist EU will have to create their own popular, democratic independence, working together across Europe on a new revolutionary and equal basis.

Paul Feldman

Communications editor

Down with the 21st century Troika!

Whoever coined the term ‘Troika’ for the combined staff of the International Monetary Fund, the European Central Bank and the European Commission has a grim sense of recent history.

During the 1930s, Troikas – commissions of three appointees - were instruments of Stalinist repression operating at every level of administration. They were introduced to circumvent the legal system with a means for quick execution or imprisonment following a conviction without trial.

Troikas were responsible for sentences of death or exile for more than 600,000 Soviet citizens. They had other punishments available too. They and other parts of the Stalinist machine were used to consign upwards of 20 million people to forced labour camps.

And forced labour camps using and consuming 15 million workers from close to 20 European countries were also the basis of the economy in Nazi Germany before and during World War Two.

What have all these terrible episodes of 20th century European history got to do with today, you may ask? Surely the EU-ECB-IMF version of the Troika has nothing like labour camps in mind?

Well, let’s give them the benefit of the doubt on that one. But the logic and the consequences of the actions they are pursuing in Greece (soon to be visited on other countries) – unless they are halted – are just as terrifying.

Greek workers are to be reduced to pauperism to deliver the terms of the €130 billion bail-out agreed in principle this week. For the Greek economy to approach anything like competitiveness, its workers would have to be driven to work for lower levels of pay than anywhere else. That is equally certain to stoke up the revolt.

Germany’s stronger economy, is already dependent on ultra-low rates of pay. Its low wage sector grew three times as fast as other employment in the five years to 2010. Pay in Germany, which has no nationwide minimum wage, can go well below one euro an hour, especially in the former East German region. Greek workers will have to labour for less.

Having done its work in Greece, the Troika must now turn its attention back to the rest of Europe where conditions are deteriorating fast. But their efforts won’t be enough to keep a lid on the volatility and growing social resistance around Europe.

Back in December, Pedro Nuno Santos, vice-president of the Socialist Party in Portugal’s parliament, transmitted something of the feeling of the protests in the streets against the new right-wing government’s plans to raise the working week to 42 hours. and cut wages by 16% for the higher paid, and 8% for lower paid public workers.

"We have an atomic bomb that we can use in the face of the Germans and the French: this atomic bomb is simply that we won't pay," he said. "Debt is our only weapon and we must use it to impose better conditions, because recession itself is what is stopping us complying with the (Troika) accord. We should make the legs of the German bankers tremble," he said.

Santos’ call for southern European states to join forces to resist the austerity dictates of the stronger northern economies was quickly replaced by the 17 eurozone countries agreement on a stricter fiscal discipline which will loom large in the Troika’s armoury over the coming period.

The scale of today’s global crisis, prepared by decades of ballooning fantasy finance, overshadows the 1930s. We cannot begin to imagine the consequences of allowing capital to continue to its reign. Strikes and street protests have to become part of a wider revolutionary struggle for power over capital and crony political state systems. We cannot defeat the modern Troika without that perspective. And to succeed, we need a global network of organisations that are committed to seeing this struggle through to the end.

Gerry Gold
Economics editor

Greeks sold into debt slavery

“It's no exaggeration to say that today is a historic day for the Greek economy,” said Lucas Papademos, banker and unelected prime minister of Greece. Yes indeed. February 21 was the day he signed his country’s people into debt slavery for the foreseeable future.

He also abandoned his country’s right to self-determination, turning Greece into a department of the Brussels bureaucracy, which will now have a permanent team of officials in Athens to enforce cuts and make pay-outs.

The terms of the second bail-out of Greece’s sovereign debt are so harsh that even officials inside the European Union secretly acknowledge they can’t be met. Even if every Greek worked round the clock for nothing, the country’s debt mountain cannot be made manageable.

A confidential 10-page “debt sustainability analysis” by EU officials says the spending cuts demanded will deepen a five-year old recession, making it extremely difficult – in actual fact, impossible – for Greece to gain from the €170bn bail-out.

“The Greek authorities may not be able to deliver structural reforms and policy adjustments at the pace envisioned in the baseline,” the report cautioned. Here the resistance by Greek workers, which has already produced several general strikes and violent confrontations with the state, is a key factor. The report’s key passage (with translation) says:

“Greater wage flexibility [eurospeak for wage cuts] may in practice be resisted by economic agents [trade unions]; product and service market liberalisation may continue to be plagued by strong opposition from vested interests [workers] ; and business environment reforms [free market competition] may also remain bogged down in bureaucratic delays.”

So the bail-out might have to rise to €245 billion, the report admits, because one thing is certain – Greece won’t be able to borrow on the financial markets this side of the Messiah making an unexpected return. Under the bail-out terms, banks and private investors are being asked to accept a write-down of 53% in what they loaned to Greece (while the European Central Bank keeps 100%). Bankers may yet revolt against these terms and derail the bail-out agreed after 14 hours of negotiations.

There is absolutely nothing in the bail-out but new loans to service existing and upcoming debt. This is a desperate deal to keep the ailing euro afloat at the expense of the entire population of a member state. Already unemployment for the under-25s in Greece is nearly 50%, having risen by more than a third since November 2010. The national suicide rate has doubled from 2.8 per 100,000 people in 2008, to about 6 last year. Hundreds of people are sleeping rough on the streets. Half of the country’s small businesses cannot pay wages and Greeks have withdrawn about a third of the money on deposit at the banks, fearing financial meltdown.

The Greek state is now in turmoil, not trusted by large sections of the population. "The political system is incapable of handling the situation. The people who created the problem are now going to solve the problem: that's the paradox," said broadcaster Stelios Kouloglou.

Between them the two ruling parties, Pasok and New Democracy, now only command a third of the votes in the latest opinion polls. No one knows what the general election scheduled for April will produce. That could derail the bail-out because smaller parties have not signed up to the deal unlike Pasok and New Democracy were made to. A military junta ruled Greece from 1967 until 1974 and with the country beginning to resemble a failed state, a new intervention by the colonels is not to be dismissed.

What the bail-out shows yet again is that the global debt crisis is insoluble within the present profit-driven economic framework. Reduced living standards produce lower tax revenue, more unemployment, higher welfare benefits and more bad loans for banks to deal with. This is not a Greek but a global problem, with countries like the US and Britain amongst the most indebted. The prospect for “economic justice” under these conditions is less than zero. For that to happen we will have to make capitalism history.

Paul Feldman
Communications editor