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Greece 2

from Peter Radford

Well so much for that.

Where do I begin?

The so-called deal announced yesterday achieves none of its objectives. The written objectives that is. The unwritten ones we will get to in a moment.

There is no doubt in my mind that the Greek economy suffers from a surfeit of inefficiencies. It cannot sustain the social edifice erected on top of it without ridding itself of the multitude of privileges that various groups have accumulated for themselves through time. Greek government has been, for many years, a source of patronage and protection of a slew of inside deals that wreak havoc on those – the majority – on the outside.

I am sure this systemic problem must irk everyone living further north.


Clearing out those problems now is not the priority. Saving Greece is. Saving Greek democracy. Saving those who have no access to the myriad schemes and deals that enrich the minority. 

That was what I understood the left wing governing party to stand for.

What I did not understand that the Greek government apparently had no viable plan ‘B’. It made no serious effort to put an plan for an exit form the Euro. It had no idea of how to execute the issuance of an alternative currency.

Or so it seems.

So the Greek government entered this fight without heavy weaponry. It was bound to fail. It had to capitulate.

And what a capitulation it was. Yanks Varoufakis is calling it a new Treaty of Versailles. From what I can see, he is right. The deal is a disaster for Greece. It assures the destruction of whatever is left of the Greek economy. It will prolong, for many years if not decades, the stagnation and steady decline that has set in since austerity was forced on it. It will stir up political and social unrest. It will push the Greeks into a marginal and subjugated existence at the whim of technocrats and politicians who, apparently, used last weeks referendum result as a reason to execute what amounts to a coup. They have seized control of the financial operation of a sovereign nation.


To avoid a hair cut on the outstanding debt. A haircut that still seems inevitable.

Now for those unwritten objectives.

Sometime this weekend this became an exercise in punishment, in the extraction of reparations, and in the public humiliation of a democratically elected leader. This deal cannot have been about anything economic: it is manifestly a grossly foolish and viciously constructed error if it is. The Greek economy will not thrive under the boot of the Troika. This deal is not intended to resuscitate the Greek economy, it is intended to make an example of it.

The deal is, in effect, a demonstration of raw power. A kind of scorched earth, burn-down-the-villages, and round-up-the-citizens exercise designed to teach a lesson. It is a return to the pre-European Union realpolitik that so ruptured and ruined the continent in the early twentieth century.

It is an embarrassment and a humiliation for the Greeks, but more so for Germany and it enablers. The Germans have cast themselves backwards morally, they have stripped away all pretense and revealed an ugly truth about themselves: they see no “union” in the Eurozone, they see no equality, and they brook no democracy.

For months now Merkel and her aides have talked about their lack of “trust” in the efforts being made by the Greeks. Now the worm has turned. It is Germany whose intentions, motives, and words engender no trust. From the deliberate leak of German documents to the vicious behind the scenes campaign to eject Greece entirely from the Euro, no one can doubt that this was an exercise in old fashioned power politics.

Someone needs to write a new version of “The economic Consequences of the Peace”.

Europe is no longer a stable union, it is fractured and exposed as undemocratic. Greece is a virtual dominion living under constant threat with its assets pawned so as to save foreign banks.

This is a very bad day indeed.

  1. graccibros
    July 14, 2015 at 2:57 pm

    My conclusions to the letter, Peter, especially the lack of Plan B for exit and greater economic independence. I see several more posts by Yanis Faroufakis in my inbox this morning, perhaps he’ll shed some light on this.

    Yesterday I saw in one of the better commentaries on the fiasco the fact that Greece imports 99% of its energy needs. In a country of mountains, sunshine and seacoasts, there’s an alternative energy economy waiting to be built; of course, the last I read in detail there were plans for drilling for gas and oil off the coast, which I believe would be in the hands large multinationals, as per the usual.

    Naomi Klein’s latest book “This Changes Everything,” also documents the fight against a giant gold mining operation; again, the project was in the hands of a large multinational mining company, Canadian I believe. From where Greece is headed now looks like it will have more extractive industries, not less…

    It is a terribly divided country, with the most modern parts of the economy already integrated into the world economy, and the other half, as you described, Peter…in another reality… An honest, tough Plan B for leaving would have to move into greater independence for perhaps 5 years, minimum, maybe a decade, and having established a much more self-sufficient economy, it could then perhaps engage the rest of Europe on more equal terms. Whether it is possible to pull this off – really the real world program of Richard Smith’s “Green Capitalism: The God That Failed” in many ways, absent the deep green consciousness – is an open question which perhaps turns upon the reaction of the Greek economic elites…will they stay and be Greeks or leave and cement their primary identities as global internationalists…

    I keep coming back to the green alternative because if Greece were to have a Plan B for going it alone, it has to have a unifying emotional driver for re-organization and restructuring…what would supply that besides a resurgent Greek nationalism…well that’s my answer from a great distance; whether it has any resonance inside Greece I can’t say, but I couldn’t pick up much from Syriza about going green…that’s not where they were when N. Klein interviewed some of the leaders for her book, before their Jan 2015 government.

  2. mike
    July 14, 2015 at 3:22 pm

    Why on earth do either of you think that the people who are doing this to Greece would let Greece exit without the same nuclear response? YV has said that he was told that by his counterparts at the very start and that, although he actually did have a draft plan worked up, he couldn’t assure Tsipras that it would work. If the Eurozone is doing this to Greece as an example to other members that they better not think of stepping outside the powers that be, causing a failed Plan B nation would serve that purpose even better. Germany WANTED the exit, for Pete’s sake, and not just because they can’t stand to be in the same room with lesser beings. They certainly could and would never permit a successful Plan B nation. Think about the implications to their control from that. Actually setting the stage for a Plan B would have brought this on anyway. This is about power and Sopranos, not economics and other wishful thinking.

    • graccibros
      July 14, 2015 at 5:33 pm

      Fair enough Mike, and my own response takes this “nuclear” response by the Germans and Euro institutions into account, that they would pursue destruction of a independent Greece with every means available, so the Greeks must plan to not give them any avenues of approach or leverage to do so. Is that possible in the real world? I don’t know, but the fact that all of Greece is not in the modern world is some advantage.

  3. graccibros
    July 14, 2015 at 3:48 pm

    I have listened to the 29 minute long interview with Yanis here at http://yanisvaroufakis.eu/2015/07/14/on-the-euro-summit-agreement-with-greece-my-resignation-and-what-it-all-means-for-greece-and-europe-in-conversation-with-phillip-adams/

    At 20:00 Yanis addresses our questions: did they have a Plan B. His answer is ambiguous. Yes they had a small quiet planning group of 5; 500 would have been needed to carry it out – putting down on paper the steps necessary to launch their own currency and carry out other mechanics of a Greek exit…but they did not want to go that route, and here’s why: because Dr. Schaeuble made it very clear, repeatedly, that he was fine with , hoped for a Grexit, with his backup plan B a five year suspension with a local currency…(the motivation for the idea was to make such a hell of Greece that France, Italy and Spain would never dream of exit…)Varoufakis says the half-way measure is pure fantasy because a step in that direction would set off forces no one could control or fully see the full outcome of. He was always opposed to exit, that is why we on the outside couldn’t find a “Plan B”…now he says that what is on the table, a veritable Treaty of Versailles for Greece imposed by Germany, is worse, and striking out on their own may be the better choice, no matter how grim it may be earlier on.

    This makes some sense to me.

  4. graccibros
    July 14, 2015 at 4:08 pm

    I also thought this was an excellent commentary with a very appropriate title echoing back to Michael Lewis’ great book, “Liars Poker.” It takes what Varoufakis had in mind for a Plan B a little further than what he mentioned above, in the interview…but not a whole lot further:


    By Daniel Marans, a new name for me, at the Huff. Post. Long enough to supply some of the missing history.

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