“...
this new European power is being constructed, with Greece being the
first victim. To some, this represents a golden opportunity to make
an example out of Greece for other countries that might be thinking
of not following this new line of discipline.”
Full
article by the Greek PM, Alexis Tsipras, in Le Monde
On 25th of
last January, the Greek people made a courageous decision. They dared
to challenge the one-way street of the Memorandum’s tough
austerity, and to seek a new agreement. A new agreement that will
keep the country in the Euro, with a viable economic program, without
the mistakes of the past.
The Greek
people paid a high price for these mistakes; over the past five
years the unemployment rate climbed to 28% (60% for young people),
average income decreased by 40%, while according to Eurostat’s
data, Greece became the EU country with the highest index of social
inequality.
And the
worst result: Despite badly damaging the social fabric, this
Program failed to invigorate the competitiveness of the Greek
economy. Public debt soared from 124% to 180% of GDP, and despite the
heavy sacrifices of the people, the Greek economy remains trapped in
continuous uncertainty caused by unattainable fiscal balance targets
that further the vicious cycle of austerity and recession.
The new
Greek government’s main goal during these last four months has been
to put an end to this vicious cycle, an end to this uncertainty.
Doing so
requires a mutually beneficial agreement that will set realistic
goals regarding surpluses, while also reinstating an agenda of growth
and investment. A final solution to the Greek problem is now more
mature and more necessary than ever.
Such an
agreement will also spell the end of the European economic crisis
that began 7 years ago, by putting an end to the cycle of uncertainty
in the Eurozone.
Today,
Europe has the opportunity to make decisions that will trigger a
rapid recovery of the Greek and European economy by ending Grexit
scenarios, scenarios that prevent the long-term stabilization of the
European economy and may, at any given time, weaken the confidence of
both citizens and investors in our common currency.
Many,
however, claim that the Greek side is not cooperating to reach an
agreement because it comes to the negotiations intransigent and
without proposals.
Is this
really the case?
Because
these times are critical, perhaps historic–not only for the future
of Greece but also for the future of Europe–I would like to take
this opportunity to present the truth, and to responsibly inform the
world’s public opinion about the real intentions and positions of
Greece.
The Greek
government, on the basis of the Eurogroup’s decision on February
20th, has submitted a broad package of reform proposals, with the
intent to reach an agreement that will combine respect for the
mandate of the Greek people with respect for the rules and decisions
governing the Eurozone.
One of the
key aspects of our proposals is the commitment to lower – and hence
make feasible – primary surpluses for 2015 and 2016, and to allow
for higher primary surpluses for the following years, as we expect a
proportional increase in the growth rates of the Greek economy.
Another
equally fundamental aspect of our proposals is the commitment to
increase public revenues through a redistribution of the burden from
lower and middle classes to the higher ones that have effectively
avoided paying their fair share to help tackle the crisis, since they
were for all accounts protected by both the political elite and the
Troika who turned “a blind eye”.
From the
very start, our government has clearly demonstrated its intention and
determination to address these matters by legislating a specific bill
to deal with fraud caused by triangular transactions, and by
intensifying customs and tax controls to reduce smuggling and tax
evasion.
While, for
the first time in years, we charged media owners for their
outstanding debts owed to the Greek public sector.
These
actions are changing things in Greece, as evidenced the speeding up
of work in the courts to administer justice in cases of substantial
tax evasion. In other words, the oligarchs who were used to being
protected by the political system now have many reasons to lose
sleep.
In addition
to these overarching goals that define our proposals, we have also
offered highly detailed and specific plans during the course of our
discussions with the institutions that have bridged the distance
between our respective positions that separated us a few months ago.
Specifically,
the Greek side has accepted to implement a series of institutional
reforms, such as strengthening the independence of the General
Secretariat for Public Revenues and of the Hellenic Statistical
Authority (ELSTAT), interventions to accelerate the administration of
justice, as well as interventions in the product markets to eliminate
distortions and privileges.
Also,
despite our clear opposition to the privatization model promoted by
the institutions that neither creates growth perspectives nor
transfers funds to the real economy and the unsustainable debt, we
accepted to move forward, with some minor modifications, on
privatizations to prove our intention of taking steps towards
approaching the other side.
We also
agreed to implement a major VAT reform by simplifying the system and
reinforcing the redistributive dimension of the tax in order to
achieve an increase in both collection and revenues.
We have
submitted specific proposals concerning measures that will result in
a further increase in revenues. These include a special contribution
tax on very high profits, a tax on e-betting, the intensification of
checks of bank account holders with large sums – tax evaders,
measures for the collection of public sector arrears, a special
luxury tax, and a tendering process for broadcasting and other
licenses, which the Troika coincidentally forgot about for the past
five years.
These
measures will increase revenues, and will do so without having
recessionary effects since they do not further reduce active demand
or place more burdens on the low and middle social strata.
Furthermore,
we agreed to implement a major reform of the social security system
that entails integrating pension funds and repealing provisions that
wrongly allow for early retirement, which increases the real
retirement age.
These
reforms will be put into place despite the fact that the losses
endured by the pension funds, which have created the medium-term
problem of their sustainability, are mainly due to political choices
of both the previous Greek governments and especially the Troika, who
share the responsibility for these losses: the pension funds’
reserves have been reduced by 25 billion through the PSI and from
very high unemployment, which is almost exclusively due to the
extreme austerity program that has been implemented in Greece since
2010.
Finally–and
despite our commitment to the workforce to immediately restore
European legitimacy to the labor market that has been fully
dismantled during the last five years under the pretext of
competitiveness–we have accepted to implement labor reforms after
our consultation with the ILO, which has already expressed a positive
opinion about the Greek government’s proposals.
Given the
above, it is only reasonable to wonder why there is such insistence
by Institutional officials that Greece is not submitting proposals.
What end is
served by this prolonged liquidity moratorium towards the Greek
economy? Especially in light of the fact that Greece has shown that
it wants to meet its external obligations, having paid more than 17
billion in interest and amortizations (about 10% of its GDP) since
August 2014 without any external funding.
And finally,
what is the purpose of the coordinated leaks that claim that we are
not close to an agreement that will put an end to the European and
global economic and political uncertainty fueled by the Greek issue?
The informal
response that some are making is that we are not close to an
agreement because the Greek side insists on its positions to restore
collective bargaining and refuses to implement a further reduction of
pensions.
Here, too, I
must make some clarifications:
Regarding
the issue of collective bargaining, the position of the Greek side
is that it is impossible for the legislation protecting employees in
Greece to not meet European standards or, even worse, to flagrantly
violate European labor legislation. What we are asking for is nothing
more than what is common practice in all Eurozone countries. This
is the reason why I recently made a joint declaration on the issue
with President Juncker.
Concerning
the issue on pensions, the position of the Greek government is
completely substantiated and reasonable. In Greece, pensions have
cumulatively declined from 20% to 48% during the Memorandum years;
currently 44.5% of pensioners receive a pension under the fixed
threshold of relative poverty while approximately 23.1% of
pensioners, according to data from Eurostat, live in danger of
poverty and social exclusion.
It is
therefore obvious that these numbers, which are the result of
Memorandum policy, cannot be tolerated–not simply in Greece but in
any civilized country.
So, let’s
be clear:
The lack of
an agreement so far is not due to the supposed intransigent,
uncompromising and incomprehensible Greek stance.
It is due to
the insistence of certain institutional actors on submitting absurd
proposals and displaying a total indifference to the recent
democratic choice of the Greek people, despite the public admission
of the three Institutions that necessary flexibility will be provided
in order to respect the popular verdict.
What is
driving this insistence?
An initial
thought would be that this insistence is due to the desire of some to
not admit their mistakes and instead, to reaffirm their choices by
ignoring their failures.
Moreover, we
must not forget the public admission made a few years ago by the IMF
that they erred in calculating the depth of the recession that would
be caused by the Memorandum.
I consider
this, however, to be a shallow approach. I simply cannot believe that
the future of Europe depends on the stubbornness or the insistence of
some individuals.
My
conclusion, therefore, is that the issue of Greece does not only
concern Greece; rather, it is the very epicenter of conflict between
two diametrically opposing strategies concerning the future of
European unification.
The first
strategy aims to deepen European unification in the context of
equality and solidarity between its people and citizens.
The
proponents of this strategy begin with the assumption that it is not
possible to demand that the new Greek government follows the course
of the previous one – which, we must not forget, failed miserably.
This assumption is the starting point, because otherwise, elections
would need to be abolished in those countries that are in a Program.
Namely, we would have to accept that the institutions should appoint
the Ministers and Prime Ministers, and that citizens should be
deprived of the right to vote until the completion of the Program.
In other
words, this means the complete abolition of democracy in Europe,
the end of every pretext of democracy, and the beginning of
disintegration and of an unacceptable division of United Europe.
This
means the beginning of the creation of a technocratic monstrosity
that will lead to a Europe entirely alien to its founding principles.
The second
strategy seeks precisely this: The split and the division of the
Eurozone, and consequently of the EU.
The first
step to accomplishing this is to create a two-speed Eurozone where
the “core” will set tough rules regarding austerity and
adaptation and will appoint a “super” Finance Minister of the EZ
with unlimited power, and with the ability to even reject budgets of
sovereign states that are not aligned with the doctrines of extreme
neoliberalism.
For those
countries that refuse to bow to the new authority, the solution will
be simple: Harsh punishment. Mandatory austerity. And even worse,
more restrictions on the movement of capital, disciplinary sanctions,
fines and even a parallel currency.
Judging
from the present circumstances, it appears that this new European
power is being constructed, with Greece being the first victim. To
some, this represents a golden opportunity to make an example out of
Greece for other countries that might be thinking of not following
this new line of discipline.
What is not
being taken into account is the high amount of risk and the enormous
dangers involved in this second strategy. This strategy not only
risks the beginning of the end for the European unification project
by shifting the Eurozone from a monetary union to an exchange rate
zone, but it also triggers economic and political uncertainty, which
is likely to entirely transform the economic and political balances
throughout the West.
Europe,
therefore, is at a crossroads. Following the serious concessions made
by the Greek government, the decision is now not in the hands of the
institutions, which in any case – with the exception of the
European Commission- are not elected and are not accountable to the
people, but rather in the hands of Europe’s leaders.
Which
strategy will prevail? The one that calls for a Europe of solidarity,
equality and democracy, or the one that calls for rupture and
division?
If some,
however, think or want to believe that this decision concerns only
Greece, they are making a grave mistake. I would suggest that they
re-read Hemingway’s masterpiece, “For Whom the Bell Tolls”.
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