Wednesday 17 July 2019

Soapbox: Greeks, beware of 'adults in the room'

Enda Kenny lectures the Greeks on how to love austerity, while the IMF tries a coup

Soapbox cartoon
Soapbox cartoon
Gene Kerrigan

Gene Kerrigan

What's been going on in recent weeks looks like a silent coup against the Greek government. It could be EU and IMF arrogance and incompetence, but it smells more like an attempt at regime change. It's hard to know what role the Irish government is playing in this.

The media presents the Greek crisis as an austerity drama ('Is time running out for Greece?'). The picture is one of a stubborn, inexperienced Greek government refusing - for ideological reasons - to accept an austerity programme that will allow it repay its debts.

In the face of this irresponsibility, hardworking IMF and EU officials try desperately to convince the feckless Greeks to see sense.

We could have real negotiations, moans Christine Lagarde of the IMF, if only there were "adults in the room".

That's the fairytale. But, given our own experience of how these "bailouts" work, we can see there's something very different going on between the Troika and Greece.

The question for us is: Is the Irish Government complicit in this attempted coup, along with the EU ministers, the IMF and the ECB apparatchiks?

Or is it merely trotting alongside, trying to impress the others by giving the Greeks the odd kick?

We know that the Greeks got into debt because they're lazy, compared with the hard-working Germans. And they haven't had a glorious recovery because they refused to listen to Enda Kenny and implement austerity, unlike the sensible Irish.

The problem with this fairytale is that, according to OECD figures, the Greeks work 42.5 hours a week, on average, compared with 35.7 hours for the Germans.

As for austerity, they Greeks have cut 25pc of the public service. They pushed back retirement age. State assets have been sold off cheap to the usual suspects. The Troika has cut incomes so drastically that adult children have to move back to the family home, as they can't afford to keep separate households.

The severity of the austerity forced on the Greeks exceeds that forced on the Irish. The Greek deficit in 2009 was 15.6pc. And by 2014 it was 2.5pc, an unprecedented and brutal "adjustment".

From the beginning, the "adults in the room" have - even by their own standards - made a terrible mess of Greece. In 2010, the Troika ensured that private gamblers would be bailed out - with the private debt passed to the Greek people.

The IMF knew that applying severe austerity would cause the Greek economy to contract, but by a low single figure percentage. It contracted by 26pc.

The IMF knew that applying severe austerity would cause unemployment to soar to 15pc. It soared to 25pc.

With unemployment up to 50pc for young people, those with qualifications and skills the country needed just walked away. The growth that could have eased the recession was squashed out of existence.

By 2011, it was obvious that the Greek debt was unsustainable. The billions owed will not be paid because they cannot be paid. The IMF's rules say it must not loan money to such a debtor - as the money will not be recovered.

A debt writedown, allowing the debtor to recover and become productive again, is required. But Merkel and the ECB said no.

The IMF broke its own rules. What mattered, first under Dominique Strauss-Kahn, now under Christine Lagarde, was saving the euro.

The Greek debt was continually rolled over - economic madness, but it allowed the Troika maintain political control.

And, so, the austerity hawks hammered the Greek people. It wasn't just that their policies weren't working, they were plainly making things worse. But the "adults in the room" kept hammering.

The Irish media, and particularly RTE, hardly ever mentions the Tsipras government without referring to it as "hard left", "far left" or "radical left". And that's fair enough.

Never, ever, is Michael Noonan described as "hard right", though he is. Never once is that label applied to Merkel, Draghi or the flint-eyed hitmen of the ECB, though that is their political position.

Never once have I heard a report explain that austerity, privatisation, protection of bondholders, deregulation, opposition to writedowns, the religious belief in austerity, are all aspects of a hard right wing position, one shared by Merkel, the ECB hitmen, the IMF and Fine Gael.

Instead, the hard right wing position is presented as the norm - the natural, sensible, agenda-free position. It's just, y'know, the way you do things. Anything else is extreme.

So, the extremist ideology that underlay the credit bubble, that undermined economies and businesses, and that now destroys families, thrives by remaining unnamed and invisible.

The success of Syriza, being lefty outsiders, created a problem.

We know from the Troika's visits here that it's the bottom line that matters. As long as the austerity is inflicted at an agreed level, the Government is free to decide the detail.

In recent weeks, though, nothing the Greeks offered was acceptable.

It had to be the Troika's way or nothing. The fine detail of measures affecting chemists and bakers became holy writ.

With a bit of luck, the "adults in the room" might push Greek unemployment above 30pc.

Last weekend, there was a calculated effort to cause a panic in Greece by raising fears that the banks wouldn't open after the weekend. The conservative commentator Ambrose Evans-Pritchard, writing in The Telegraph, accused the Troika of "deliberately provoking a bank run . . . to force Greece to its knees"; and "consciously and deliberately accelerating a financial crisis . . . as a negotiating tactic", while seeking "ritual capitulation for the sake of it".

One of the remarkable things about the current crisis is that it isn't just the left that sees the madness of the Troika's plotting. Natural opponents of Syriza are disturbed by the contempt for democracy.

A silent coup is achieved by forcing a government to accept measures that will undermine its stability.

If Syriza accepts more rampant austerity, its own support may split, the measures may not get through parliament - and in the ensuing election, hard right parties may get to put a government together.

If Syriza says no, it is being manoeuvred into a position in which it can be accused of defaulting, and leaving the eurozone.

At this stage, the Troika may figure things are stable enough for the euro to survive such an exit. They might be right - they might not be.

The "adults in the room", the EU, ECB and IMF, act as though they run Greece. They appear to see the presence of Alexis Tsipras, Yanis Varoufakis and their government as a technicality, an irritant.

Why can't Alexis and Yanis be like that nice Enda, and his pal, Michael? They simper, they smile, they never disagree with anything the "adults in the room" decide.

It's unlikely that Kenny and Noonan have any actual role in the silent coup.

And Enda lectured Tsipras on how he should do as Ireland did, and everything would work out fine.

"In Ireland's case, we did not increase income tax - we did not increase Vat, we did not increase PRSI", said Enda. And the Greeks should follow our lead.

The universal social charge, then, doesn't exist - the various tax and Vat increases never happened - the water tax is a figment of our imagination.

I have no doubt Mr Kenny believes what he said: we've a paradise without tax increases. There are some consequences, of course.

Some sick people are deprived of treatment, some die prematurely; kids are robbed of the supports that could change their lives; the old dread the day they'll need a hospital bed, But if you don't mention the emigration, I won't mention the suicides.

Sunday Independent

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