Oppose the Dictate of the EU and IMF!
On Sunday, July 5, the Greek people will vote in a referendum over whether to accept the bailout conditions proposed on June 25 by the “troika” of the European Union (via the European Commission), the International Monetary Fund (IMF) and the European Central Bank (ECB). The holding of the referendum is the culmination of the impasse that has been developing between the stand that there is an alternative to austerity and the dictate of these institutions that there is no such alternative.
Contradictions have been sharpening since January with the election in Greece of the Syriza government with an anti-austerity mandate. Within days of this election, the ECB unilaterally cancelled its acceptance of Greek bonds in return for funding. The purpose of this punitive measure was to tie Greece’s hands. It was an immediate declaration that anything but superficial negotiation was not going to be acceptable. Nevertheless, Greece managed to obtain a four-month extension to its bailout of €240bn from the troika on February 20. However, the institutions withheld the final portion, using this to insist on Greece carrying out a “reform” package to its approval.
In March, the Greek government presented a law to provide free electricity and food stamps for the poorest households, to offset what it referred to as a “humanitarian crisis” being created by the austerity measures. The EU responded firmly to pressurise the Greek parliament to reject this law. These early developments were to demonstrate that falling out of line with the creditors’ demands would not be permitted. A letter by the European Commission’s Declan Costello effectively stated that to vote on the new law would violate the terms of the February 20 agreement.
In the event, the Greek parliament approved the law in the face of the threats begin made. In response, the ECB made it illegal for Greek lenders buy further short-term government bonds, sharpening the Greek funding crisis.
The crisis began to come to a head in June. The final €7.2bn tranche of its bailout, due to expire on June 30, the day of a repayment to the IMF of €1.6bn, was still being withheld conditional on Greece fulfilling further demands for economic austerity and structural overhauls with the same anti-social aim. It was known that without these funds, Greece would default on the IMF payment.
By mid-June, agreement has not been reached, with the IMF withdrawing from talks on June 11. On June 16, Greek Prime Minister Alexis Tsipras said the “persistence of institutions to pursue a failing program of cuts and austerity which can not be accepted” was deliberate. and accused the ECB of “financial asphyxiation”.
On June 22, Greece put forward a new plan to the creditors making significant concessions. Though initially welcomed by the troika, with reports optimistic of a deal, by the end of the week these institutions had presented further demands, particularly surrounding pensions, which had already been cut by nearly half. On June 27, considering this a step too far, Tsipras announced that the measures would be put to a referendum, which was ratified by the Greek parliament on June 28 by 178 votes to 120.
The Greek government had requested an extension to allow the referendum on June 5 to take place. The request was refused, and the Greek government announced capital controls and bank closures on June 28, which would be in place for a week. The controls include a limit on withdrawals of cash from machines of €60 per day. Greece missed its payment to the IMF on June 30 and formally entered arrears.
The Greek government submitted a new proposal on Wednesday, July 1. While making further concessions, this proposal seeks a new two-year loan to deal with financing problems through the European Stability Mechanism (ESM), together with a further debt restructuring.
The treatment of Greece by the troika is a big exposure of the role of these institutions, particularly the character of the EU and what interests it represents. These institutions seem intent on creating havoc in the country. In place of any serious plan to solve the crisis, which is certainly possible given the will to do so, is their determination for Greece to submit. Their actions and measures have been plainly punitive. The troika has been determined to either force complete submission to its demands or to bring down the Greek government.
Commentators have pointed out the irrationality of the measures so far imposed and the further measures proposed. But the point is that there is no rational plan from the creditors to resolve the crisis in such a manner that Greece can rebuild its economy and stand on its own feet once more. What plan exists amounts to nation-wrecking and annexation. It is a fact that, prior to the to the first bailout in 2010, the debt of Greece stood at 118% of GDP. After five years of austerity it has risen to 174% of GDP because of the deep recession into which the country has fallen.
Various commentaries have gone further to suggest that the Greek national debt is illegitimate. Such suggestions certainly deserve attention. There is a growing voice to write off the Greek debt. In June, the Greek parliament released the preliminary findings of the Audit Committee on Public Debt, concluding that “Greece not only does not have the ability to pay this debt, but also should not pay this debt, first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece”, and that “this debt because it is illegal, illegitimate, and odious”.
A number of commentators have also elaborated the role of various big banks in creating the debt crisis through complex financial transactions reminiscent of the sub-prime mortgage crisis, the interest rate swap scandal and other similar fraudulent activity. Further, according to John Hilary, executive director of War on Want, the IMF itself has made over $1.5bn as a result of interest on the bailout loans.
As with every key issue at the present time, the effort is being made to further divide the population and sow fear, to make this referendum a vote with a gun to the head. Through such tactics, the troika is aiming at regime change in Greece. Ignoring the Greek government, they have declared that the referendum is on membership of the Eurozone. With imperial arrogance, these institutions, along with the media, have been going all out to discredit the Greek government, painting it as incompetent. With the same arrogance, they imagine that they are all-powerful. Their aim is to impose austerity on all, not only Greece, come hell or high water. No opposition is to be permitted to this dictate. The message to Greece and to everyone is: if you try to take a stand, we will ruin you.
Yet they are not all-powerful and they will not get away with it. Not only will history condemn the actions of these institutions, they face an existential crisis. In place of any plan, a pragmatism of the most brutal kind rules to bring Greece into line, keep it in the fold, keep the EU together, and silence the clamour for the most basic rights. This is a watershed moment, and perception of the EU will be forever altered by the events of the past two weeks and the following period.
No to the Dictate of the EU and IMF!
Stand with the Greek People against Austerity!
There Is an Alternative to Austerity! End Austerity Now!