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Solidarity with the Greek People

28th June 2015

The Greek referendum: a quick response

By Mick Brooks

Five months ago the left wing party Syriza was elected on a wave of enthusiasm to form the new Greek government on a clear anti-austerity platform. The Greek people have suffered a decline of a quarter of its Gross Domestic Product (GDP) since recession struck in 2009. This is as big a disaster as the USA suffered in the Great Depression of 1929-33. Unemployment stands at 25% and nearly half of all young people are without a job.

Syriza has been since locked in negotiations with the Troika (the International Monetary Fund, the European Central Bank and the European Commission) over Greece’s enormous foreign debt, currently standing at almost 180% of GDP. Of course none of this debt was incurred by the Syriza government.

Syriza has actually made concession after concession in the course of the negotiations. All literate economists regard the Greek debt as unpayable. They believe much of it must be written off. Sadly literate economists do not include the functionaries of the Troika.  The Troika remains implacable. They fear above all the threat of a good example. They are determined to grind the opponents of austerity down lest they light a blaze that will illumine the way for the rest of the European working class. Negotiations have broken down.

Syriza has decided to refresh its democratic mandate. The Troika’s position is, “What has democracy got to do with it?” The ECB has decided to cut off all emergency aid to the Greek government.  Greek banks may be forced to close. The Troika’s aim is to plunge the country into chaos.

Syriza is recommending that Greek voters say ‘No’ to national humiliation and impoverishment in the referendum next Sunday.

• Austerity has manifestly not worked over the past five years. On the contrary it has weakened the Greek economy. As long as austerity continues to bear down on the Greek people, no economic recovery is in sight.

• Foreign debt stood at 120% of GDP in 2009. Now it is almost 180%. Why? It is because the Greek government is paying interest upon interest, and interest upon interest upon interest on the debt. That is not sustainable.

• According to the Nobel Prize winning economist Paul Krugman Greece is running the biggest cyclically adjusted primary surplus in the Eurozone of more than 5% of potential GDP. What does this mean? It means Greece would be paying down the debt fast rather than racking it up further, if it didn’t have to pay so much interest. Instead the country is running fast but going backward. The ‘Financial Times’ calls it a “quasi-slave economy”.

For more graphic detail on the hardships imposed on the Greeks, see Michael Roberts’ latest blog:

• Successive governments in Greece have slashed and slashed at public spending. For the Troika this is not enough. They demand still more ‘reforms’. In Greece hospitals have no medicines. Schools have no books for the children to learn from. The Troika calls this ‘reforms’ and demands more and more hardship. Really this is barbarism.

• The Troika argues that the Greek economy is in such a mess because Greeks just borrowed money irresponsibly in the past. Now, they say, ordinary Germans are paying to keep the Greek economy afloat. This is a lie told by German conservative politicians to their electorate. None of the money the Troika proposes to withhold from Greece actually goes into the country to pay wages and salaries and uphold workers’ living standards. It goes straight back to financial institutions in northern Europe to service the existing debt.

• The American economic historian Barry Eichengreen explains who was really bailed out in his recent book ‘Hall of Mirrors’: “German banks, led by the troubled Commerzbank, held some 17 billion Euros of Greek debt. The exposure of the German private sector, including pension funds, insurance companies and thrifty burghers searching for yield, came to as much as 25 billion Euros, a considerable fraction of what the Greek government owed. What was at stake, in other words, was not just the solvency of the Greek government but the stability of the German financial system.” Commerzbank was bailed out. Greece was put on starvation rations.

• If I bet on a horse and lose, I don’t expect the taxpayer to reimburse my stake. Why should the banks collect their winnings when they win but start to howl and demand their money back if they lose?

A vital struggle for workers fighting austerity all over Europe is opening up. Greek resistance is inspiring, but they cannot be allowed to fight on alone. Comrades should raise the issue in trade unions, local Labour Party meetings and wherever they can find an echo.

• Say no to austerity!
• Solidarity with the Greek people!

As a first step, sign the petition to drop the debt.

Sign here

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