In the understanding that in the final analysis only an increase in Greek
exports will allow Greece to pay off its debts to the Troika, this ought
to be a no-brainer. Demand that the rest of the E.U. increase its imports
from Greece.

John V


On 2015-03-30 10:13 AM, Robert Naiman wrote:
> Suppose that we were only allowed to raise a single demand in the
context of the Troika-Greece confrontation. Suppose that the demand had
to satisfy the following properties:
> 1. It's winnable.
> 2. Winning it would make a substantial difference to the well-being of a
bunch of people in Greece.
> 3. The demand would be popular in Greece.
> 4. The demand would be marketable in the West, something we could
organize a bunch of people around, such as labor leaders, health groups,
Members of Congress.
> What should the demand be?
> ---------- Forwarded message ----------
> From: Mark Weisbrot, CEPR <[email protected]>
> Date: Mon, Mar 30, 2015 at 9:06 AM
> Subject: Are the European Authorities Destroying the Greek Economy in
Order to "Save" It?
> To: [email protected]
>
>
> CEPR logo
> Are the European Authorities Destroying the Greek Economy in Order to
"Save" It?
>
> By Mark Weisbrot
>
> This article was published by Al Jazeera America on March 30, 2015.
>
> There is a tense standoff right now between the Greek government and the
European authorities – sometimes known as the Troika because it includes
the European Commission, the European Central Bank (ECB), and the
International Monetary Fund (IMF). ECB President Mario Draghi denied
this week that his institution is trying to blackmail the Greek
government.
>
> But blackmail is actually an understatement of what the ECB and its
European partners are doing to Greece. It has become increasingly clear
that they are trying to harm the Greek economy in order to increase
pressure on the new Greek government to agree to their demands.
>
> The first sign that this was the European authorities’ strategy came on
February 4 -- just 10 days after the Syriza government was elected --
when the European Central bank cut off the main source of financing for
Greek banks. This move was clearly made in bad faith, since there was no
bureaucratic or other reason to do this; it was more than three weeks
before the deadline for the decision. Predictably, the cut off spurred a
huge outflow of capital from the Greek banking system, destabilizing the
economy and sending financial markets plummeting. More intimidation
followed, including a slightly veiled threat that Emergency Liquidity
Assistance – Greece’s last credit lifeline from the ECB – could also be
cut. The European authorities appeared to be hoping that a “shock and
awe” assault on the Greek economy would force the new government to
immediately capitulate.
>
> It didn’t work out that way. The Syriza party had a mandate from the
Greek electorate to improve their living standards after six years of
Troika-induced depression and more than 25 percent unemployment. The new
Greek government backed off its demand for a debt “haircut,” and made
other compromises, but wasn’t going to simply surrender as if there had
been no election. The European authorities finally blinked on February
20 and agreed to grant a four month extension, through June, of the
prior “bailout” agreement – the quotes are necessary because most Greeks
have not been “bailed out,” but rather thrown overboard, having lost
more than 25 percent of their national income since 2008.
>
> The immediate condition for the February 20th agreement was that the
Greek government present a list of reforms that they would undertake,
which they did, and which European officials approved. Remaining issues
were to be negotiated by April 20th, so that the final installment of
IMF money – some 7.2 billion euros – could be released. One might assume
that the February 20th agreement would allow these negotiations to take
place without European officials causing further immediate and
unnecessary damage to the Greek economy. One would be wrong: a gun to
the head of Syriza was not enough for these “benefactors;” they wanted
fingers in a vise, too.
>
> And they got it. The ECB refused to renew the Greek banks’ access to its
main, cheapest source of credit that they had before the January 25
election. And they refused to lift the cap on the amount that Greek
banks could loan to the Greek government – something that they did not
do to the previous government. The result has been to create a serious
cash flow problem for both the government and the banks. Because of the
ECB’s credit squeeze, the government could soon find itself in a
situation that the 2012 government faced when it delayed payments to
hospitals and other contractors in order to make debt payments; and it
could even face default at the end of April.
>
> The amounts of money involved are quite trivial for the European Central
Bank. The government has to come up about 2 billion euros of debt
payments in April. The ECB has recently shelled out 26.3 billion euros
to buy eurozone governments’ bonds as part of its 850 billion euro
quantitative easing program over the next year and a half. The ECB’s
excuses for causing this cash crunch in Greece ring hollow: for example,
it argues that banks under the previous government didn’t have to have
the limit that the ECB is imposing on banks now, because the prior
government had committed to a reform program that would fix its
finances. But so has this one.
>
> It could hardly be more obvious that this is not about money or fiscal
sustainability, but about politics. The European authorities want to
show who is boss. And also, this is a government that they didn’t want.
And they really don’t want this government to succeed, which would
encourage Spanish voters to opt for a democratic alternative (Podemos)
later this year.
>
> The IMF had projected [PDF] the economy to grow by 2.9 percent this
year, and until the last month or so there was good reason to believe
that – as in 2014, after years of gross over-estimates – their forecast
would be on target. This growth would likely have kept Syriza’s approval
ratings high, together with its measures to provide food and electricity
to needy households, and other progressive changes. The ECB’s actions,
by destabilizing the economy and discouraging investment and
consumption, will almost certainly slow Greece’s recovery, and could
also be expected to undermine the government’s support.
>
> If carried too far, European officials’ actions could also inadvertently
force Greece out of the euro. It’s a dangerous strategy, and they should
stop undermining the economic recovery that Greece will need if it is to
achieve fiscal sustainability
>
>
>
> Mark Weisbrot is co-director of the Center for Economic and Policy
Research, in Washington, D.C. and president of Just Foreign Policy. He
is also the author of the forthcoming book Failed: What the "Experts"
Got Wrong About the Global Economy (Oxford University Press, 2015).
>
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