Should the Greeks be happy now?

24 June 2018

Should the Greeks be happy now?

This summer the Greek aid programme will come to an end, following the agreement in the Eurogroup on an easing of the country's debt obligations.  But should the Greeks be feeling relieved? In exchange for the aid the country will continue to exist under effective receivership. Moreover, the real winner remains Germany. Not only were the German banks which at the high point of the crisis continued to carry Greek advances on their balances rescued, it turns out now that the German central bank earned €2.9 billion on the bonds and loans which it bought.

Greece was admitted to the Eurozone for purely political reasons, and for a long time international bankers such as Goldman Sachs were always willing to play along and continue their loans, even though they knew very well that the Greek economy could not carry such a burden of debt.  Only when, during the financial crisis, things began to go awry, did everyone realise that a smokescreen had been hiding the realities, a smokescreen created by the member states of the Eurozone themselves, by the international bankers and successive corrupt Greek governments.

Syriza had the task of righting the ship. Cuts on government spending, on public services and on benefits and pensions were enforced in order to reduce the debt. Greek Prime Minister  Alexis Tsipras succeeded in meeting these conditions, but at the cost of widespread misery for ordinary Greeks.  There were protests, but most Greeks remained attached to the euro, as their voting behaviour demonstrates.  Amongst all the 'reforms' were a large number of neoliberal hobbyhorses, such as privatisation of roads and of drinking water, which will also count in the assessment.

And now the ministers in the Eurogroup have voted to extend the debt repayment period for Greece from 32.5 years to 42.5 years.  And through an additional financial buffer they can be rendered creditworthy to – once again – the banks. In exchange for this the Eurogroup is demanding that four times a year inspectors be allowed to check whether the 'reforms' have not been reversed. Understandable if the risk falls on those extending the credit, but less so when you consider that a country such as Germany made billions in profits as a result of the aid package.

In the run-up to the European Parliament elections next year the debate around the euro will undoubtedly burst into life. Jeroen Dijsselbloem, the former Dutch finance minister who stood down as president of the Eurogroup at the beginning of the year, warned that we would be unable keep Italy on its feet should the country run into difficulties. A fine prospect, as is the fact that whatever happens, it won't be the bankers but the public who pick up the tab. Bankers continue to rake it in while the measures imposed on them to restrain their activities are being once more reversed or diluted.  But the cuts in Greek pensions will remain for at least forty years. In this, the euro has become a symbol of injustice.

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