Saturday 22 October 2016

EU should take lesson from German history and give Greeks a break

Published 07/07/2015 | 02:30

German Chancellor Angela Merkel arriving at the Chancellery in Berlin, Germany, yesterday as France and Germany called for an emergency summit of eurozone leaders to discuss Greece
German Chancellor Angela Merkel arriving at the Chancellery in Berlin, Germany, yesterday as France and Germany called for an emergency summit of eurozone leaders to discuss Greece

Asked by a journalist why he had voted 'No' in Sunday's referendum, one Greek man's response summarised the majority sentiment: "They're going to f**k us either way."

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Scaremongering EU leaders did everything but warn a plague of locusts would descend on Athens if Greek voters rejected the latest bailout deal, but they did it anyway. After seven long years of crushing austerity, with no end to the misery in sight, they decided the devil they don't know was preferable to the hell they're currently enduring.

A succession of Irish government ministers, affecting the sort of tone usually reserved for admonishing toddlers, took to the airwaves yesterday to bemoan the result as feckless and destructive.

Those stupid Greeks just don't know what's good for them, they sighed.

Not content with patronising the Greek people, some politicians tried to turn the Irish people against them. If Greece gets a debt deal the €350m the Irish Government gave them would go up in smoke, they said.

Where were these penny-pinchers when IBRC wrote off €1bn for just 40 of its customers, and can we also get that money back?

No, you see, while companies must be given every opportunity to get back on their feet, the same logic doesn't apply to sovereign nations, whose people must be bled dry and ground down into the dirt to satisfy every last outstanding penny.

Politicians spout an incredible amount of sanctimonious guff at the best of times, but the levels of nauseating hypocrisy being directed at the Greeks, for having the temerity to object to becoming indentured debt slaves in perpetuity, have reached epidemic proportions.

Our politicians, who have graduated from whipping boys to the bullies brandishing the weapons, are not the only ones talking gibberish. Take European Commission President Jean-Claude Juncker, for instance.

Juncker gave an emotional press conference last week in which he begged the Greek people not to vote 'No' and "let down the European Union".

According to him, it is the Greeks, with their irritating moaning about their debt being unsustainable, who are wrecking the EU. Strangely, Juncker had no similarly harsh words for Luxembourg last year, the country he led as prime minister between 1995 and 2013, when it was revealed it had struck tax deals with more than 340 multinationals that saved them billions.

For instance, in one year alone, 2012, $95bn in profits from American companies sloshed through the country, with those corporations paying just $1.04bn in taxes - a rate of 1.1pc.

Of course, all of these tax avoidance measures are perfectly legal so no one will go to jail.

In fact, the only people charged in Luxembourg so far are the three individuals who leaked the scandal - two employees of accounting firm PwC and a French journalist.

The cherry on top of this heart-warming tale is that Juncker's self-described mission for his tenure as European Commission President is "to fight tax evasion and dumping - to put some morality, some ethics into the European tax landscape".

Truly, you couldn't make it up.

The lesson from all of this, if you needed reminding, is that taxes are for the little guy.

EU leaders are in a perpetual state of outrage over tax collection in Greece, but no one seems to care that clever accounting by corporations has resulted in countries all over the region losing hundreds of billions in tax income.

One has to wonder in whose interest the EU is being run. Is it for private capital or ordinary citizens? One suspects the former, because if EU leaders chased tax-avoiding companies with the same zeal they are using to go after Greek pensioners, we'd all be a lot better off.

It's about time that Juncker, and his acolytes in our government, asked themselves what the EU is supposed to be about. Is it all about the free market or should it also include some element of social solidarity?

Nobody is denying the Greek economy was a basket case during the boom but the country will never be able to repay any of its debts unless it is given some breathing space.

It should be remembered that in 2010, when Greece first got into trouble, it was the Troika that decided to pump their citizens' cash into Greek banks to save them. In fact, 90pc of the money they got went to private creditors in what was, ultimately, a proxy bailout of the entire European banking system.

In Greece, as in Ireland, the rich guys had the party and the poor guy has been left with the bill. According to one recent study from the German-based Macroeconomic Policy Institute, between 2008 and 2012, taxation was increased by 337.7pc for lower income households, compared with just 9pc for higher income groups.

Commenting on increased levels of income inequality in Greece, the report notes the "growing poverty and total pauperisation of a substantial part of Greek society" - impoverished people that the latest Troika deal would further immiserate.

These are the Greek workers who are too poor to avoid their taxes and they are in the majority - ordinary salaried workers who have suffered nothing but cuts and hardship for seven years. Historically, the issue of debt was dealt with much differently.

Economist Thomas Piketty, in an interview with 'Die Zeit' magazine this week, reminded Germans they weren't always so committed to repaying debt.

Noting that 60pc of Germany's debt had been written off post-World War II, he said: "When I hear the Germans say they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke!

"Germany is the country that has never repaid its debts. It has no standing to lecture other nations," he added.

Maybe, for once, we could learn a lesson from history and save Greece before it exits the euro and repays its creditors nothing.

Instead of creating a precedent for a country to leave the euro, let's create a precedent to write down debt - one that would actually act in our interests.

Irish Independent

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