Two Unanswered Questions about the Greek “Bailout” Deal

Yesterday the Greek PM (Alexis Tsipras) agreed to a tentative deal with other EU leaders that would provide a “bailout” of 86 billion Euro to Greece in exchange for levels of austerity and privatization far surpassing those reject in a referendum about a week ago. Leaving aside all the speculation surrounding the circumstances of this deal, there are two broader questions about this situation that have not been answered properly (i.e without speculation, self-serving lies and bullshit).

Question 1: Why do such a large percentage (over 65%) of Greeks want to remain in the Eurozone?

One of the central electoral promises of Syriza was that it would stop further EU-imposed financial austerity and still keep Greece in the Eurozone. But even more curiously, various polls showed that 2/3 rds of Greeks wanted to stay in the Eurozone. While those percentages might have gone down in the last few weeks, I still have a hard time understanding why Greeks would want to be on a team where most other members hated and abused them. I mean, it is possible to remain in the EU even after exiting the Eurozone.

While average incomes in Greece (as measured in Euros) did rise after joining the Eurozone, it is hard to make the case that it has made their lives any better. The sad reality is that they could have gotten most of the benefits of joining the Eurozone by joining the EU but maintaining their own currency. While I can understand why the Greek 1% ers (or 10% ers) wanted to join the Eurozone, the extensive popular support for retaining the Euro as the default currency in Greece does not make much sense. It is ego? Is it false consciousness? Is it the desire to be seen as European rather than Mediterranean?

Question 2: Do Germans (both its leaders and average citizens) think that making Greece sign an economic version of the Versailles treaty in 2015 will somehow stabilize a fundamentally defective currency?

Let us for a moment assume that Tsipras can get this deal through the Greek parliament and make sure that it is implemented in full. Let us also assume that his government, or any other replacing it, can keep it going for a couple of years. Then what? Does it improve the economic situation of the average person in Greece over the next two years.. five years.. ten years.. twenty years? My point is that pretty much any plan based in the neoliberal scams of austerity and privatization will almost inevitably cause more open-ended financial deprivation for the average Greek person. To put it another way, there is no light at the end of this tunnel.

Even if we ignore the very real possibility that such policies would almost inevitably lead to the the rise of right-wing nationalist parties in Greece, we are still left with an even bigger problem- namely, that other countries in the Eurozone might decide, or end up, sabotaging the Euro. It is no secret that significant minorities of the population in France, Italy and Spain have always been hostile to the idea of a common European currency. It is also well known that two out those three countries are not in the best of financial circumstances- at least as seen through the lens of neoliberal capitalistic dogma. However unlike Greece, they are large and have economies diverse enough to go willingly exit the Eurozone- if it comes to that.

Now consider the terms imposed by Germany on Greece and its likely effects on the later. Do you think people in those three large Eurozone countries will ignore what they are now seeing (economic colonialism) and will almost certainly see (more economic deprivation) in the future. Do you think they would still want to retain a common currency with Germany, if the later can do to them what it is doing to Greece? Why would you retain a common currency with a dominant country in a group if you have no political representation in the decision making process of that country? Let us not forget that the US Dollar works because all states in the USA send elected representatives to Washington DC. If they did not, states not benefiting from the common currency would start dissociating themselves from those that did so at the cost of the former.

What do you think? Comments?

  1. Webe
    July 14, 2015 at 4:37 am

    Listening to news broadcasts and comments on European TV it is apparent that almost everybody is delusional and just not thinking.

    [1] The point you make about the USA (representatives to Congress) is completely missing in the discussion: Why is the European Parliament not deciding about the fate and finance of Greece? Why are there no trans-national political parties in the European Parliement but only a mosaic of each countries’ national parties? Why are unelected technocrats gathered in a body with no standing (the eurogroup has no mandate in any law) deciding what the character of the European union should be?

    [2] The Greeks are motivated by fear, fear of the unknown, a failure of nerve, fear that their economy cannot make it on its own, hope that there will be a miracle, disbelief at what is happening to them. This fear of short-term pain is repressing their knowledge that any such agreement sets them up for more intermediate pain and long-term failure and insolvency. It is like the Jews getting into the cattle cars instead of revolting and going down fighting, when death is imminent no matter what.

    [3] Many Germans feel a coup has been executed in their name, but the attitude behind this decision is [a] we have to put the fear of god into the other countries (lest the whole thing unravel); [b] the Greeks signed a contract and now they have to deliver (ordo-liberalism); [c] we cannot write off this money even if we wanted; [d] the Greeks should be more like us and have only themselves to blame.

    It is true that there is no legal framework for writing off the principle, that is why they are okay with delays and maturity extensions, etc. as long as they don’t have to deal with realized losses and the legal and political flotsam the euro is based on. Many people think that if you punish the Greeks long enough, they will shape up and pay: this is the thinking behind debtors prisons. The fact that no cuts in government spending will ever yield enough revenue just does not sink in [assuming the economy does not shrink further — which in itself is impossible –, the Greek government would have to devote about 17% of its spending until 2050 to pay off the debt]. Nor does it sink in that if Germany is winning 3-1, other countries cannot also be winning 3-1 unless Germany is losing 1-3 (all trade surplusses and deficits together must be exactly zero).

    The short of it is that people will gladly sacrifice others (and even themselves) for a brief respite from confronting their own delusions.

  2. July 14, 2015 at 2:03 pm

    As a middle-aged Greek, I can say that the older Greeks support the Euro, because it’s a stable currency that cannot be tampered with by the Greek Government – we did have up to 22% inflation with the Drachma. Of course, we have seen that even with the Euro it was possible to play fast and loose with the debt… There is also ego, and maybe a touch of hubris, in being in the Euro while no-one on our borders is – this has allowed a lot of Greek businesses to expand to countries near us (and sometimes move there completely).

    Yes, but Greeks could get most of those benefits by being part of the EU while staying out of the Eurozone.

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