The failure of the current negotiations between Greece and the German-led “troika” — the European Central Bank, IMF and European Commission — reveal Greece has nothing to gain from remaining in the euro. It’s time to leave.
The austerity programmes rammed down Greece’s throat by the troika has been a catastrophe for Greece’s people.
Today, unemployment stands at 25 percent. GDP has fallen by one third. Disposable income has fallen by a quarter. Salaries and wages have declined by 20 percent. Real public health spending has been cut 40 per cent and hospitals have been running out of medicines. Around 40 per cent of the population lives below the poverty line.
With living standards going into free-fall, the suicide rate jumped 35 per cent from 2010-2012 according to a study in the British Medical Journal. The neo-Nazi Golden Dawn has become the third largest political party in Greece.
Despite the obvious harm austerity has caused, in the current negotiations the troika — and most importantly, Germany — have only offered more of the same.
They are now demanding Greek pensions be “reformed”. In a country where half the pensions deliver sums below the poverty line, the troika wants them cut further. They want Greece to privatize state monopolies, such as its airports, seaports and the rail operator. They want them sold quickly, cheaply and the government to have no remaining equity stake.
The justification for five years of austerity, one must remember, was the repayment of debt. Austerity, it was (and still is) insisted would help pay it down. Yet austerity has had the opposite effect: Greek debt has risen from 110 percent of GDP in 2007 to 180 percent today.
When Alex Tsipras’s left-wing government was elected this January, they were given a mandate to push for something different. Greece’s people —understandably — were tired of the status quo. So they voted for Syriza.
Credit where its due, Syriza tried to negotiate and strike a fairer deal. In talks with the troika, they insisted on debt cancellation, resisted unpopular privatisations and cuts to pensions.
But the troika is relentless; their will is iron. Undeterred by the economic depression, they continue to insist that Greece drinks more poison. They refuse to negotiate with Syriza.
This tone-deaf refusal to compromise is coldly calculated. As Berlin and Brussels know full well, accepting the current proposals would constitute political suicide for Syriza, who were brought to power on a platform promising change.
And this, it is clear, is exactly what they’re hoping for: they refuse to negotiate precisely because they want Athens to capitulate. And capitulation, they hope, will see Syriza ejected from power. As Robert Wade, a professor of political economy at the London School of Economics put things:
“[the troika]wants to see the Tsipras government… replaced by one that is more compliant… The prospect of endless depression will hopefully erode Syriza’s electoral base to the point where a ‘more realistic’ government comes to power. This is the strategy of ‘coup d’état by stealth’, without the military having to do it.”
Whether this strategy fits the definition of a coup or not is idle semantics. What matters is that after five years of punishing austerity, when Greece began demanding different terms, Germany began pushing for regime change.
So what then is to be done?
At this stage, the only solution is for Greece to leave the euro. Without leaving the euro, as five months of Syriza’s unsuccessful negotiations and five years of depression make clear, Greece will remain at the troika’s mercy, its helpless victim.
Leaving the euro would give Greece control over its own central bank and solve the underlying problem in this crisis: its lack of monetary sovereignty. Countries like Australia and the US cannot default on debts in their own currency: if worst comes to worst, the Reserve Bank of Australia or the Federal Reserve can simply print money.
But not so for Greece. As they have no control over the ECB, when the eurozone financial crisis emerged Greece was put in the position of a third world debtor owing money in a foreign currency.
To be sure, leaving the single currency would be painful in many respects: I’m not going to gloss over this. It would involve devaluation, which would make importing goods more expensive. It would also make borrowing money much harder, at least in the short term. It’s probably for this reason that opinion polls show that 70 per cent of Greeks want to keep the euro.
But is going back on the drachma really worse than this?
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