mfioretti: greece*

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  1. Southern Europe is still angry

    And it is angry at the European Union, in particular France and Germany, for a perceived lack of solidarity on the euro and on immigration and refugees.

    There was a warning when Alexis Tsipras won in Greece during the height of the euro debt crisis, with his promises to change the European Union. And while he got slapped down by Brussels and became somewhat tamed in the national interest, anti-European feelings are alive in the southern countries of the bloc, as well as in the authoritarian-lite governments of Central and Eastern Europe.

    Leaders in Brussels and Paris would have been heartened earlier on Sunday when the Social Democrats in Germany voted to remain in a coalition government with Ms. Merkel, keeping her in power and allowing Germany to try to work with Mr. Macron on overhauling the eurozone. But that may be harder after the Italian vote.

    As the French leader of the National Front, Marine Le Pen, said in a Twitter message on Sunday, “The European Union is going to have a bad night.”
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  2. Italy’s eurozone trials are nothing new. Before Italy had even joined the common currency area in 1999, its attempts to qualify for membership — by introducing the required “fiscal discipline” — had resulted in nearly a decade of rising unemployment. Moreover, no Italian government was ever in a position to exercise a meaningful choice about whether it was wise to join the eurozone. Unless Italy ended its membership in the European Union, it was politically bound to take on the currency by treaty obligations over which it had no consequential say.

    Now Italian voters have responded by putting into office politicians who do not accept the legitimacy of European Union-wide rules.

    Of course, this voter rebellion is in part mirrored by the election that brought the Syriza party to power in Greece in 2015. The eurozone and the European Union survived that experience. But the fate of Italy matters much more for the European project than that of Greece. Syriza gambled on a threat of Greek secession when Greece already faced the risk of expulsion. An eventual crisis over an Italian exit would be an entirely different proposition.
    Tags: , , , , by M. Fioretti (2018-03-10)
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  3. Britain has the perfect opportunity to return the artefacts to Greece. It’s the right thing to do – and could earn concessions in fraught negotiations
    Tags: , , by M. Fioretti (2017-04-05)
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  4. Next Sunday, we get to see whether European centrism’s “double-or-quits” strategy will pay off. In Austria, where far-right populist Norbert Hofer is neck and neck with a Green candidate in the re-run of the election for the ceremonial presidency role, the left and centre are frantically trying to mobilise party-loyal working-class voters. They may fail.
    François Fillon is as big a threat to liberal values as Marine Le Pen
    Natalie Nougayrède
    Natalie Nougayrède
    Read more

    In Italy, on the same day, the centre-left government looks set to lose a referendum designed to strengthen the power of the executive over parliament. If the prime minister, Matteo Renzi, steps down and the markets crash, and Europe imposes a bank rescue plan that raids ordinary people’s savings, then you could get both a domestic banking and a eurozone crisis by Christmas.

    this grassroots culture of globalisation is breakable, if you try hard enough – because it can only exist in a space sealed off from official politics. At the typical European bar, beach or coffee shop, tolerance exists because educated people leave their nationality and religion at the door. The assumption among the young – implicit but strong – is that all politics is bullshit and does not matter.

    Now politics and nationality have begun hammering on the door. And initially they have produced mainly paralysis and fear.

    Fillon v Le Pen is not “good news for Europe”. Neither is Juncker’s promise to double down on all the mistakes that led us here; nor the IMF’s insistence that Greece should destroy its democracy some more; nor Renzi’s decision to play shit or bust with the Italian banking system.

    This is no longer a confident, transnational elite, revelling in Samuel Huntingdon’s famous description of national governments as “residues from the past whose only useful function is to facilitate the elite’s global operations”. And they are now up against a far-right international movement – Trump, Farage, the Breitbart media folks – whose coherence waxes as the globalists’ coherence wanes.

    We can stop this. But only if we reject the incessant demand for austerity, privatisation, longer hours, lower wages and the theft of a young generation’s future. That’s why the centre-left, in the short time available, must find the French people somebody better than Fillon.
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  5. When Greeks lose their jobs, they have a grace period of one year: they'd better find another job within that period, because if they don't they are out of health insurance. If they fall sick, they have to come up with something, or die.

    It's not just Greeks. It turns out in every European Union countries but the United Kingdom and Italy, employment is a pre-requisite for access to health care. But Greece was hit hardest by the 2008 crisis: many more people than elsewhere have turned into long-term unemployed. Everyone is struggling: “We had poor people ten years ago, too – shrugs Maria, a psychologist volunteering at MCCH – but at that time people could fall back on their families, or their neighbors, for help. Not anymore: their families and neighbors are themselves in trouble, and there's little they can do. People are getting desperate.”

    In 2011, some senior doctors started comparing notes, and they saw a perfect health care storm brewing at the horizon. “We knew something very bad was coming, and people would die – says Maria – so we decided we must do something.”
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  6. Belgian Justice Minister Koen Geens at European Council headquarters in Brussels two days after the attacks in Brussels. (Eric Lalmand/AGENCE FRANCE-PRESS/Getty Images)
    By David Ignatius Opinion writer March 24

    “We have the Europe we deserve,” admitted French Prime Minister Manuel Valls on Wednesday. The question is how Europeans can build the security structures they need.

    The first requirement is solidarity, within each country and among the 28 nations of the European Union. This begins with better links with the Muslim communities, the angry, alienated people at Europe’s table. Yes, Europe needs to be more welcoming, but that’s only half of it. Muslims need to embrace the obligations of European residence and citizenship.
    David Ignatius writes a twice-a-week foreign affairs column and contributes to the PostPartisan blog. View Archive


    What would this solidarity look like? After Sept. 11, 2001, Muslims in the United States by the thousands volunteered for the U.S. military and intelligence agencies. They despised the terrorist acts that had been committed in their name by al-Qaeda and wanted to show themselves and their fellow citizens that they were loyal Americans.

    European Muslims should step up now in a similar way. In immigrant neighborhoods like Molenbeek in Brussels or the banlieues that surround Paris, Muslim leaders who want change should organize campaigns to enlist their neighbors in the army, police and security services; these leaders can create a new social compact by showing their fellow citizens that they are ashamed of what the jihadist thugs have done and are unafraid of retribution. European Muslims need to feel ownership of security, rather than viewing the police as an occupying army.

    The jihadists often emerge from a youth-gang subculture of violence and intimidation. No wonder the Belgian authorities stumbled for four months looking for Islamic State fugitive Salah Abdeslam. No wonder they couldn’t find the suicide bombers who struck Tuesday, four days after Abdeslam’s arrest, even though they suspected an attack was coming. Nobody would talk to them. The community was “deaf and dumb,” as the mobsters liked to say about ethnic neighborhoods in the United States.
    Why are terrorists targeting Brussels?
    Play Video1:36

    The second requirement is fairness. The European Union has largely been a project of the elites. The powerful companies (and nations) have prospered. The weak have suffered. When the bills came due, the haves told the have-nots to tighten their belts. Should it surprise us that this arrogant system is cracking at the seams?

    The Greeks may have exploited a system that gave them a financial free ride, but the Germans then insisted on imposing an impossible debt-repayment scheme that was meant to teach the debtors a lesson. The Germans should have known better: The punitive repatriations plan imposed by the allies after World War I created the bitter payback of Nazism.

    The third requirement is for Europe to grow up about intelligence. Many Europeans seem to think that good intelligence is created by immaculate conception, rather than through the hard and sometimes intrusive work of surveillance. The authorities often don’t mind if the United States does the counterterrorist snooping, so long as they don’t have to admit it to their publics.

    Europeans don’t like to talk about intelligence, and they often pretend their countries don’t spy. This immature approach leaves them unable to demand accountability from the security services after chronic intelligence failures like the ones we have seen in France and Belgium. How can you reform something if you won’t talk honestly about how it works?

    A fourth requirement is for a trans-Atlantic partnership that’s equal to the seriousness of this crisis. All the alarm bells are ringing. The leaders of the United States and Europe should meet in a crisis summit — Brussels would be a good spot — and they should stay until they have agreed on plans for collecting and sharing intelligence together, so that citizens across Europe are safer.

    Bureaucracy, a modern European specialty, is the enemy: To forge an alliance that can succeed, Europeans must break through national, regional and international barriers to fight a global adversary. President Obama, perhaps more popular in Europe than in the United States, can lead this trans-Atlantic partnership and create a legacy that’s worthy of him.

    The final requirement is to think ahead about changes that will create better stability in the future. If it’s 1941 in terms of the shock, it should be 1944 in terms of planning for the future — devising the post-crisis equivalents of the International Monetary Fund, the World Bank and the United Nations that can cope with the explosion of rage that has swept Muslim Europe, North Africa and the Middle East. It’s an interconnected problem, and the solutions require shared, visionary ideas about governance, economic development and global tolerance.

    Fix it or lose it. That’s the challenge today for Europe. It won’t get it right without American help. Now is the time to start.
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  7. Despite the potential of our land, Greece now imports the majority of its food and on average we are the second most obese people in the EU. These abnormalities are largely attributable to the EU’s Common Agriculture Policy, which has supported the growth and development of a very narrow range of large-scale monocultures, almost entirely for export purposes. The failures of the CAP have had a profound effect not only on our food culture and agricultural skills, but also on the landscape of the country. In just three decades, Greece has lost most of its local agricultural varieties and almost all of its dry land, low-input agriculture was pushed out of the market. In Crete, a large number of two-thousand-year-old olive trees were turned into firewood, within a very short period of time.
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  8. The euro zone is to benefit German industrial output.

    ECB turned off the money supply to Greece to force Greece to its knees. Once there was unconditional surrender, a choice between suicide or execution, ECB turned back on the money supply to Greek banks. The money that was lent, flowed back out to pay off international creditors, a point Germans should note when they keep referring to bailing out Greece.

    The Fourth Reich showed they would happily destroy a country if that country did not give in to its demands. They forced onto Greece, not only a surrender, but an unconditional surrender, part of which is rape and pillage of the country, enclosure of the commons, sell off of Greek assets on the cheap. But at least we all now know what the Fourth Reich is capable of, Its brutality was exposed for all the world to see. At least Podemos in Spain now know exactly what they are dealing with.

    It was meant to set an example to Podemos, do not dare oppose the Fourth Reich this too will be your fate.

    But it has had had the opposite effect, for pro-democracy activists across Europe to double their efforts to defeat the Fourth Reich.

    What we have learnt, we have to work from the grass roots upwards. Syriza has grass roots support that most parties would die for, the NO vote showed that. But it was not enough. We have to restructure society from the bottom up.

    Greece may have lost a battle, but not the war, the fight continues.

    John Cassidy, writing in The New Yorker:

    Syriza’s surrender wasn’t necessarily an ignominious one. As Lenin commented of the failed 1905 revolution in Russia, it was a retreat for a new attack, which ultimately proved successful. “I’m not going to sugarcoat this and pass it off as a success story,” Tsipras said to parliament on Wednesday, prior to the vote, acknowledging that the spending cuts and tax increases contained in the agreement would deal another blow to the Greek economy. However, that wasn’t the full story, Tsipras insisted. “We have left a heritage of dignity and democracy to Europe,” he said. “This fight will bear fruit.”

    The euro zone is to benefit German industrial output.

    The problem Greece has is many idle hands, work that needs doing, and no money to connect the two. What connects the two is money.

    In the Great Depression there was no money, in US banks were closed, because they were bust.

    They created scrips, alternative currencies, across Europe and in the States. They were successful, incredibly successful. The reason they do not exist today is because they were too successful, the Central Banks closed them down.

    In 1931, a German coal mine operator decided to open his closed mine by paying his workers in wara. It was backed by coal. Because it was backed by coal, which everyone could use, local merchants and wholesalers were persuaded to accept it. The mining town flourished, and within the year at least a thousand stores across Germany were accepting wara, and banks began accepting wara-denominated deposits. Feeling threatened, the German government tried to have the wara declared illegal by the courts; when that failed, it simply banned it by emergency decree.

    The following year, the depressed town of Wörgl, Austria, issued its own stamp scrip inspired by the success of the wara. The Wörgl currency was by all accounts a huge success. Roads were paved, bridges built, and back taxes were paid. The unemployment rate plummeted and the economy thrived, attracting the attention of nearby towns. Mayors and officials from all over the world began to visit Wörgl until, as in Germany, the central government abolished the Wörgl currency and the town slipped back into depression.
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  9. So, is this a coup? Has the Greek government surrendered its national sovereignty to a group of foreign politicians?

    The short answer is yes. Greece elected its Syriza government with a very clear mandate to reject demands for austerity. It then held a nationwide referendum which delivered a resounding NO to very specific demands for austerity. The Greek people have spoken – and yet, somehow, all those demands for austerity have now been accepted, and Greek prime minister Alexis Tsipras is being described as “a ‘beaten dog’ whose only remaining option was to submit to the creditors’ will”.

    The demands being made of Greece are almost laughably granular – they cover things like “Sunday trade, sales periods, pharmacy ownership, milk and bakeries”, alongside much bigger issues like pension reform. If national sovereignty means anything, it surely means that countries get to make their own decisions on things like bakeries. So clearly Greece has given up its national sovereignty, and when you give up your sovereignty to a group of leaders who were not elected by your own people, one entirely apposite word for that is “coup”.

    Tsipras was faced with a choice between two unacceptable outcomes, and he picked the one which would allow Greece’s banks to reopen, and allow the country’s arrears to the IMF to be repaid. In other words, Greece is at least going to have a functioning economy, now.

    The real problem with this deal is not that Greece is being asked to sign on to certain conditions before it can receive billions of euros in new money. The European single currency has always had conditions. The problem, rather, is the nature of those conditions. The euro was conceived as a single European currency – something which would bring the continent together, both economically and politically. Now, however, the euro is tearing its constituents apart.

    As Wolfgang Münchau explains in the FT, the euro has not been economic good news for pretty much any of its constituents bar Germany. Something designed as a one-size-fits-all currency has become a one-size-fits-Germany currency. Every other country in the eurozone has been forced to live with some combination of an overvalued currency and/or austerity, while the Germans, where the euro is undervalued, have happily been exporting their way to prosperity.

    In the early years of the euro, that was OK, because politics trumps economics. Political unity in Europe – the whole reason why the European Union exists in the first place – was seen as the ultimate goal. And when countries started suffering economically, Europe’s politicians and central bankers stepped up to loan them cash at below-market rates.

    Then those loans started coming due, and everything went to shit.

    This time is different in one big respect, however: involuntary Grexit was very much on the table. The Germans made it abundantly clear that they were both willing and able to kick Greece out of the euro, even if the Greeks themselves wanted to stay in. Up until now, exit from the euro has been unthinkable; from now on in, it’s going to be top of mind, whenever internal tensions start rearing up within the eurozone. The impossible has become – clearly, obviously – possible, which means that all of Europe’s sovereigns, especially Spain and Portugal, are going to see more volatility than ever in their borrowing costs every time they start pushing back against German demands.

    Tsipras was forced to accept Germany’s humiliating demands because he had no other choice. Next time – and you can be sure that there will be a next time – Greece will have its very own Grexit plan, and the Germans will be very happy to call the Greeks’ bluff and tell them to go ahead and use it. (That said, France, Italy, and Spain will all want to keep the eurozone intact, so Grexit is far from being a foregone conclusion.)

    One possible lesson from the latest round of Greece negotiations is that the technocrats were right. Previous Greek governments might have agreed too easily to Europe’s harsh terms, but Syriza’s fight was ultimately self-defeating. All that Tsipras achieved, through his belligerence, was even tougher terms – and an even deeper recession.

    But there’s another lesson to be drawn, which is that Europe has now reached the absolute limits of how far it can violate the will of the people. Greece has said NO, and it will say NO again, and the echoes of that vote will be heard across Spain in December.

    In a sense, it doesn’t matter what Tsipras agreed to in the early hours of Monday morning, because there’s absolutely no way that Greece is going to be able to actually deliver on those promises.
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  10. Some of the basic laws demanded by the troika deal with taxes and expenditures and the balance between the two, and some deal with the rules and regulations affecting specific markets. What is striking about the new program (called “the third memorandum”) is that on both scores it makes no sense either for Greece or for its creditors.

    As I read the details, I had a sense of déjà vu. As chief economist of the World Bank in the late 1990s, I saw firsthand in East Asia the devastating effects of the programs imposed on the countries that had turned to the I.M.F. for help. This resulted not just from austerity but also from so-called structural reforms, where too often the I.M.F. was duped into imposing demands that favored one special interest relative to others. There were hundreds of conditions, some little, some big, many irrelevant, some good, some outright wrong, and most missing the big changes that were really required.

    Back in 1998 in Indonesia, I saw how the I.M.F. ruined that country’s banking system. I recall the picture of Michel Camdessus, the managing director of the I.M.F. at the time, standing over President Suharto as Indonesia surrendered its economic sovereignty. At a meeting in Kuala Lumpur in December 1997, I warned that there would be bloodshed in the streets within six months; the riots broke out five months later in Jakarta and elsewhere in Indonesia. Both before and after the crisis in East Asia, and those in Africa and in Latin America (most recently, in Argentina), these programs failed, turning downturns into recessions, recessions into depressions. I had thought that the lesson from these failures had been well learned, so it came as a surprise that Europe, beginning a half-decade ago, would impose this same stiff and ineffective program on one of its own.

    Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina: The macro-policies demanded by the troika will lead to a deeper Greek depression. That’s why the I.M.F.’s current managing director, Christine Lagarde, said that there needs to be what is euphemistically called “debt restructuring” — that is, in one way or another, a write-off of a significant portion of the debt. The troika program is thus incoherent: The Germans say there is to be no debt write-off and that the I.M.F. must be part of the program. But the I.M.F. cannot participate in a program in which debt levels are unsustainable, and Greece’s debts are unsustainable.

    None of this makes sense even from the perspective of the creditors. It’s like a 19th-century debtors’ prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.

    Consider the case of milk. Greeks enjoy their fresh milk, produced locally and delivered quickly. But Dutch and other European milk producers would like to increase sales by having their milk, transported over long distances and far less fresh, appear to be just as fresh as the local product. In 2014 the troika forced Greece to drop the label “fresh” on its truly fresh milk and extend allowable shelf life. Now it is demanding the removal of the five-day shelf-life rule for pasteurized milk altogether. Under these conditions, large-scale producers believe they can trounce Greece’s small-scale producers.
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