If the EMU powers persist mechanically with their stale
demands – even reverting to terms that the previous pro-EMU government
in Athens rejected in December – they risk setting off a political
chain-reaction that can only eviscerate the EU Project as a motivating
ideology in Europe.
Forced Grexit would entrench a pervasive suspicion that
EU bodies are ultimately agents of creditor enforcement. It would expose
the Project’s post-war creed of solidarity as so much humbug.
Greece could not plausibly remain in Nato if ejected from EMU in acrimonious circumstances. It would drift into the Russian orbit, where Hungary’s Viktor Orban already lies. The southeastern flank of Europe’s security system would fall apart.
Mr Tsipras is now playing the Russian card with an icy ruthlessness, more or less threatening to veto fresh EU measures against the Kremlin as the old set expires. “We disagree with sanctions. The new European security architecture must include Russia,” he told the TASS news agency.
He offered to turn Greece into a strategic bridge, linking the two Orthodox nations. “Russian-Greek relations have very deep roots in history,” he said, hitting all the right notes before his trip to Moscow next week.
– From Ambrose Evans Pritchard’s article in the Telegraph: Greek Defiance Mounts as Alexis Tsipras Turns to Russia and China.
By Michael Krieger: Over the past couple of months, I’ve at times been a strong critic of
Greek leadership’s seeming unwillingness to demonstrate the courage
necessary to flip the bird to EU bureaucrats and usher in paradigm level
change for the long suffering nation. At the core of the problem seems
the be the mandate under which Syriza was elected — namely to end
austerity, but remain in the euro.
This presents a serious problem, since the threat of leaving the euro is the only real leverage the Greeks have. If they aren’t willing to risk that, then they aren’t really willing to risk much of anything. The key issue facing Tsipras and Varoufakis seems to be how they can take bold action while at the same time reducing the severity of the immediate pain certain to come in the short-term. Surely EU bureaucrats and the U.S. would try to punish Greece as severely as possible so as to ensure that other uppity Southern European nations would never dare follow in their footsteps. This is where a pivot toward Russia and China might provide a hedge and some leverage. Ambrose Evans Pritchard discusses this in his excellent article published by the Telegraph.
Here are some excerpts:
Greece could not plausibly remain in Nato if ejected from EMU in acrimonious circumstances. It would drift into the Russian orbit, where Hungary’s Viktor Orban already lies. The southeastern flank of Europe’s security system would fall apart.
Rightly or wrongly, Mr Tsipras calculates that the EU powers cannot allow any of this to happen, and therefore that their bluff can be called. “We are seeking an honest compromise, but don’t expect an unconditional agreement from us,” he told the Greek parliament this week.
Mr Tsipras is now playing the Russian card with an icy ruthlessness, more or less threatening to veto fresh EU measures against the Kremlin as the old set expires. “We disagree with sanctions. The new European security architecture must include Russia,” he told the TASS news agency.
He offered to turn Greece into a strategic bridge, linking the two Orthodox nations. “Russian-Greek relations have very deep roots in history,” he said, hitting all the right notes before his trip to Moscow next week.
Panagiotis Lafazanis, Greece’s energy minister and head of Syriza’s Left Platform, was in Moscow this week meeting Gazprom officials. He voiced a “keen interest” in the Kremlin’s new pipeline plan though Turkey, known as “Turkish Stream”.
Operating in parallel, Greece’s deputy premier, Yannis Drakasakis, vowed to throw open the Port of Piraeus to China’s shipping group Cosco, giving it priority in a joint-venture with the Greek state’s remaining 67pc stake in the ports. On cue, China has bought €100m of Greek T-bills, helping to plug a funding shortfall as the ECB orders Greek banks to step back.
One might righteously protest at what amounts to open blackmail by Mr Tsipras, deeming such conduct to be a primary violation of EU club rules. Yet this is to ignore what has been done to Greece over the past four years, and why the Greek people are so angry.
Leaked IMF minutes from 2010 confirm what Syriza has always argued: the country was already bankrupt and needed debt relief rather than new loans. This was overruled in order to save the euro and to save Europe’s banking system at a time when EMU had no defences against contagion.
Finance minister Yanis Varoufakis rightly calls it “a cynical transfer of private losses from the banks’ books onto the shoulders of Greece’s most vulnerable citizens”. A small fraction of the €240bn of loans remained in the Greek economy. Some 90pc was rotated back to banks and financial creditors. The damage was compounded by austerity overkill. The economy contracted so violently that the debt-ratio rocketed instead of coming down, defeating the purpose.
Marc Chandler, from Brown Brothers Harriman, says the liabilities incurred – pushing Greece’s debt to 180pc of GDP – almost fit the definition of “odious debt” under international law. “The Greek people have not been bailed out. The economy has contracted by a quarter. With deflation, nominal growth has collapsed and continues to contract,” he said.
The Greeks know this.
It is this clash of two entirely different and conflicting narratives that makes the crisis so intractable. Mr Tsipras told his own inner circle privately before his election in January that if pushed to the wall by the EMU creditor powers, he would tell them “to do their worst”, bringing the whole temple crashing down on their heads. Everything he has done since suggests that he may just mean it.
Perhaps Greece is about to fool us all and pull off a major power play.
Stay tuned.
In Liberty,
Michael Krieger
Source
X art by WB7
Forced Grexit would entrench a pervasive suspicion that
EU bodies are ultimately agents of creditor enforcement. It would expose
the Project’s post-war creed of solidarity as so much humbug.Greece could not plausibly remain in Nato if ejected from EMU in acrimonious circumstances. It would drift into the Russian orbit, where Hungary’s Viktor Orban already lies. The southeastern flank of Europe’s security system would fall apart.
Mr Tsipras is now playing the Russian card with an icy ruthlessness, more or less threatening to veto fresh EU measures against the Kremlin as the old set expires. “We disagree with sanctions. The new European security architecture must include Russia,” he told the TASS news agency.
He offered to turn Greece into a strategic bridge, linking the two Orthodox nations. “Russian-Greek relations have very deep roots in history,” he said, hitting all the right notes before his trip to Moscow next week.
– From Ambrose Evans Pritchard’s article in the Telegraph: Greek Defiance Mounts as Alexis Tsipras Turns to Russia and China.
This presents a serious problem, since the threat of leaving the euro is the only real leverage the Greeks have. If they aren’t willing to risk that, then they aren’t really willing to risk much of anything. The key issue facing Tsipras and Varoufakis seems to be how they can take bold action while at the same time reducing the severity of the immediate pain certain to come in the short-term. Surely EU bureaucrats and the U.S. would try to punish Greece as severely as possible so as to ensure that other uppity Southern European nations would never dare follow in their footsteps. This is where a pivot toward Russia and China might provide a hedge and some leverage. Ambrose Evans Pritchard discusses this in his excellent article published by the Telegraph.
Here are some excerpts:
Two months of EU bluster and reproof have failed to cow Greece. It is becoming clear that Europe’s creditor powers have misjudged the nature of the Greek crisis and can no longer avoid facing the Morton’s Fork in front of them.What a clown. Nothing created by man is unbreakable and irrevocable. That is the one undisputed lesson from history.
Any deal that goes far enough to assuage Greece’s justly-aggrieved people must automatically blow apart the austerity settlement already fraying in the rest of southern Europe. The necessary concessions would embolden populist defiance in Spain, Portugal and Italy, and bring German euroscepticism to the boil.
Emotional consent for monetary union is ebbing dangerously in Bavaria and most of eastern Germany, even if formulaic surveys do not fully catch the strength of the undercurrents.
Yet if the EMU powers persist mechanically with their stale demands – even reverting to terms that the previous pro-EMU government in Athens rejected in December – they risk setting off a political chain-reaction that can only eviscerate the EU Project as a motivating ideology in Europe.
Alexis Tsipras leads the first radical-Leftist government elected in Europe since the Second World War. His Syriza movement is, in a sense, totemic for the European Left, even if sympathisers despair over its chaotic twists and turns. As such, it is a litmus test of whether progressives can pursue anything resembling an autonomous economic policy within EMU.
We live in gentler times today, yet any decision to eject Greece and its Syriza rebels from the euro by cutting off liquidity to the Greek banking system would amount to the same thing, since the EU authorities do not have a credible justification or a treaty basis for acting in such a way. Rebuking Syriza for lack of “reform” sticks in the craw, given the way the EU-IMF Troika winked at privatization deals that violated the EU’s own competition rules, and chiefly enriched a politically-connected elite.
Forced Grexit would entrench a pervasive suspicion that EU bodies are ultimately agents of creditor enforcement. It would expose the Project’s post-war creed of solidarity as so much humbug.
Willem Buiter, Citigroup’s chief economist, warns that Greece faces an “economic show of horrors” if it returns to the drachma, but it will not be a pleasant affair for Europe either. “Monetary union is meant to be unbreakable and irrevocable. If it is broken, and if it is revoked, the question will arise over which country is next,” he said.
Greece could not plausibly remain in Nato if ejected from EMU in acrimonious circumstances. It would drift into the Russian orbit, where Hungary’s Viktor Orban already lies. The southeastern flank of Europe’s security system would fall apart.
Rightly or wrongly, Mr Tsipras calculates that the EU powers cannot allow any of this to happen, and therefore that their bluff can be called. “We are seeking an honest compromise, but don’t expect an unconditional agreement from us,” he told the Greek parliament this week.
Mr Tsipras is now playing the Russian card with an icy ruthlessness, more or less threatening to veto fresh EU measures against the Kremlin as the old set expires. “We disagree with sanctions. The new European security architecture must include Russia,” he told the TASS news agency.
He offered to turn Greece into a strategic bridge, linking the two Orthodox nations. “Russian-Greek relations have very deep roots in history,” he said, hitting all the right notes before his trip to Moscow next week.
Panagiotis Lafazanis, Greece’s energy minister and head of Syriza’s Left Platform, was in Moscow this week meeting Gazprom officials. He voiced a “keen interest” in the Kremlin’s new pipeline plan though Turkey, known as “Turkish Stream”.
Operating in parallel, Greece’s deputy premier, Yannis Drakasakis, vowed to throw open the Port of Piraeus to China’s shipping group Cosco, giving it priority in a joint-venture with the Greek state’s remaining 67pc stake in the ports. On cue, China has bought €100m of Greek T-bills, helping to plug a funding shortfall as the ECB orders Greek banks to step back.
One might righteously protest at what amounts to open blackmail by Mr Tsipras, deeming such conduct to be a primary violation of EU club rules. Yet this is to ignore what has been done to Greece over the past four years, and why the Greek people are so angry.
Leaked IMF minutes from 2010 confirm what Syriza has always argued: the country was already bankrupt and needed debt relief rather than new loans. This was overruled in order to save the euro and to save Europe’s banking system at a time when EMU had no defences against contagion.
Finance minister Yanis Varoufakis rightly calls it “a cynical transfer of private losses from the banks’ books onto the shoulders of Greece’s most vulnerable citizens”. A small fraction of the €240bn of loans remained in the Greek economy. Some 90pc was rotated back to banks and financial creditors. The damage was compounded by austerity overkill. The economy contracted so violently that the debt-ratio rocketed instead of coming down, defeating the purpose.
Marc Chandler, from Brown Brothers Harriman, says the liabilities incurred – pushing Greece’s debt to 180pc of GDP – almost fit the definition of “odious debt” under international law. “The Greek people have not been bailed out. The economy has contracted by a quarter. With deflation, nominal growth has collapsed and continues to contract,” he said.
The Greeks know this.
It is this clash of two entirely different and conflicting narratives that makes the crisis so intractable. Mr Tsipras told his own inner circle privately before his election in January that if pushed to the wall by the EMU creditor powers, he would tell them “to do their worst”, bringing the whole temple crashing down on their heads. Everything he has done since suggests that he may just mean it.
Perhaps Greece is about to fool us all and pull off a major power play.
Stay tuned.
In Liberty,
Michael Krieger
Source
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