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Thursday, November 10, 2011

A superb article by Ambassador Leonidas Chrysanthopoulos

The Eurozone Crisis

On 26 October, the Euro-Summit issued another statement that included another decision of how to once again save Greece. This decision was once again hailed as a milestone, just like the decision of 21 July, similarly hailed as a European solution.
As far as Greece is concerned, the so-called 50% debt reduction was actually a reduction of 28%, since the decision states: ‘ ...we invite Greece, private investors and all parties concerned to develop a voluntary bond exchange with a nominal discount of 50% on national Greek debt held by private investors.’ Thus we are speaking of an amount of 100 billion Euros that will be written off Greece’s total debt of 350 billion Euros. For agreeing to the new austerity measures as per the 26 October decision, additional bailout money would be granted.
Greece is also expected to accept measures that ‘should secure the decline of Greek debt to GDP ratio with an objective of reaching 120% by 2020.’ In other words, the Greek people will be submitted to extreme austerity measures in order to reach the level of debt that existed in 2009 when the crisis broke out.
Unacceptable monitoring systems have been set up to control the full implementation of the programmes. Around 130 monitors are preparing to install themselves in sunny Athens to control Greece's economic policy. Thus Greece loses part of its sovereignty, which is quite humiliating for a nation with an unparalleled history. All economic decisions are to be controlled through the EU, including those that have to do with the purchasing of armaments from Germany, France and the USA. This part of the financial budget of Greece has been exempted from austerity restrictions so far.
In the meantime the situation in Greece is continuing to deteriorate as a result of the austerity measures imposed upon the country and which the government proudly displays in numbers. A 12% reduction of expenses in the health sector have resulted in severe problems for hospitals to adequately treat their patients. Deep cuts in salaries and pensions, increase of the VAT, imposition of so-called solidarity taxes and of more property taxes has led to a drastic decrease in consumption. This has led to an unprecedented number of business closures, not only of SME's but also of larger foreign companies closing down their Greek operations because of lack of profits. The increase in oil and gas taxes is very cold comfort for a population that has reduced heating to an absolute minimum. Cuts in education have resulted in a system with few books, and unpaid teachers. Young and talented people are leaving the country, which is experiencing a massive brain drain. Recession and unemployment have led to social unrest and civil disobedience, both with a tendency to increase rather than slow down. Supermarkets are being robbed by modern day Robin Hoods and the food stolen distributed to those who do not have. Many are reverting to bartering.
And the Greek politicians in the middle of this crisis prefer to play musical chairs, with many of them lining up for the new ministerial positions that will now open in the interim government. The former Greek Prime Minister made a wonderful move by proposing a referendum that would allow the people of Greece to decide on whether or not they agree with the 26 October decisions of the Euro-Summit. However, for some obscure reason he withdrew the proposal the next day. In the meantime, the proposal scared the world enormously and drove the global markets into a frenzy. Greece was being threatened by members of the G-20, Eurozone and EU. We all saw then the true meaning of so-called EU solidarity and the lack of the EU’s respect for democratic procedures. An immediate threat to kick Greece out of the Euro followed, disregarding the fact that in the Lisbon Treaty such a move is not even foreseen and would need year-long negotiations.
The new Greek Government is now composed of members of the two political parties that participated in the rape of the country and is being called to negotiate the details of the 26 October decision, before February elections. Only after the February elections and only after harsher measures have been imposed on the Greek people, might the EU realise its mistakes. And this is the essence of the EU's problem. It has not yet understood that the measures that it has been imposing on Greece for the last two years have not had positive results. On the contrary, they are increasing the debt of Greece and destroying what is left of its economy. Rather than telling Athens when it is convenient for the EU to hold Greece's election or demanding that the leaders of the two main political parties, the president of the Bank of Greece, the new Prime minister and the new minister of Finance confirm in writing their acceptance of the 26 October decisions, Brussels should better examine why the measures are not working. Otherwise the Eurozone will fall apart. Look what is happening in Italy. France is also adopting austerity measures.
The EU is telling the Greeks that the 26 October decision is the only way out of the crisis. Fortunately or unfortunately the people disagree - and so does the Greek economy, otherwise it would not insist on deteriorating in spite of all the bailout programmes. A rethinking needs to take place. And it will take place, with or without the participation of politicians. People have started bartering already, swap-markets, trade services, and voluntary neighbourhood-help programmes are increasing. All this shows a trend towards the creation of an alternative economy, building up of its own volition, by default, in the absence of a government programme corresponding to the needs and desires of the people. If the politicians want the support of the population, they must develop systems and measures that the population can agree to and which offer them a future. In properly functioning democracies, at least, policies cannot be made against the will of the population.
Such measures can range from initiating regional initiatives, like those already functioning successfully in more than twelve EU member states, to a total elimination of the Greek debt, on the condition, of course, that Greece would undergo structural changes. Such a solution would in the long run cost less to the EU than the bailouts and would be beneficial both for Greece and the EU. But before doing that, the Greek economy must start functioning again, by reducing or eliminating the austerity measures.
And since we are speaking about a total debt cut, why does not humanity think of pressing the reset button that would eliminate global debt, and allow it to start from the beginning on a new basis.

Leonidas Chrysanthopoulos
November 8, 2011

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