Every child knows that there are always two sides to a conflict. This universal truth, however, got lost in the last couple of days, when representatives of the creditor institutions alleged that Greece broke off the talks unilaterally, rejecting a truly generous offer by the creditors. A deal could have been reached, had it not been for the stubbornness and childishness of the Greek government whose game-playing is bringing Europe to the brink. Unfortunately, this narrative has been widely and uncritically echoed by the most influential media.
The creditors‘ narrative
The EU commission has quickly released a draft that was offered to Greece – the institutions are very worried about dominating public perception of the current situation. But the published documents are not a reliable source – even though virtually all major news outlets have interpreted them as proof that the institutions were making great efforts to comfort the arrogant Greek side – given that in the past weeks, scores of different drafts and proposals were passed around from Brussels to Berlin to Athens and back, we cannot say whether these papers actually reflect the creditors’ latest offers or not. One of the few things we know is that the institutions refused to accept a debt relief and restructuring, the infamous “haircut” that might be the only viable option in the long run. Greece alleges that the institutions demanded tough cuts to Greece’s pension system, a claim that was backed up by Financial Times writer Peter Spiegel, who commented on twitter that the institutions’ demand to phase out EKAS – a kind of subsidy for low pensions – by December 2019 amounted to a pensions cut, “regardless of what Mister Juncker” stated.
So no, we are not witnessing a change in the direction of the instituions’ policies. They stick to austerity, and refuse to acknowledge it has failed in the past five years and only led to worse living conditions for the poorest. In fact, it is the Greek side that has made drastic concessions in recent weeks, proposing measures that are contrary to their election campaign promises. The Syriza administration has risked its political credibility to bring home a deal with the creditors, whereas the EU commission, the European Central Bank (ECB) and – especially – the International Monetary Fund (IMF) have shown little interest in changing course.
The creditors might be orchestrating a ‘regime change’ in Athens
To me, it looks like part of the negotiating strategy of the creditors is to bring down the Syriza government and replace it with an “easier” partner. In the past few months, both IMF and ECB have been firing their financial guns at Greece. This has not caused the current economic chaos, but it has definitely worsened the situation. And increasingly many scholars ( here and here) believe now that the aim of pushing Greece closer to the brink of economic collapse is destabilizing the political situation and ultimately toppling the Syriza government. This is the point the economist Marc Weisbrot, co-director of the Washington-based Center for Economic and Policy Research, makes in a recent opinion piece for the Globe and Mail:
Just 10 days after the election, the ECB cut off its main line of credit to Greek banks, even though there was no obvious reason to do so. Shortly thereafter, the ECB put a limit on how much Greek banks could lend to the government – a limit that the previous government did not have
Last Sunday, in what the Financial Times called a ‘drastic move’, the ECB also explained it would not raise the limit of 90 billion euros for the Emergency Liquidity Assistance (ELA), a programme under which the ECB and the Bank of Greece could provide emergency funding for Greek banks that were in trouble due to the massive bank run that has occurred in the last weeks. Maintaining the 90 billion euro cap – despite the fact that almost all the money has been already spent – forced the Greek authorities to shut down banks, thereby intensifying the chaos in Greece. Additionally, the head of the IMF, Christine Lagarde, has repeatedly announced that if Greece does not repay its loan by tonight’s deadline, she will immediately inform the Fund’s executive board. She is doing this voluntarily – the IMF’s own guidelines provide her with the option of treating Greece with mercy: she could wait for a month before informing the executive board, and the complaint would only be “official” after another four weeks. But Lagarde seems to insist on declaring the Hellenic state bankrupt ASAP – possibly to weaken the Tsipras administration. The creditors are playing dirty in this game.
What needs to be done
I do not agree with all of Syriza’s positions. But I think that the Greek side of this has been under-represented in many media. And while the decision to call in a referendum will probably turn out to be a bad choice for Mr. Tsipras, he faced a lose-lose situation. Simply accepting the dictate from the creditors was not a viable alternative, either. We need the creditors now to face economic and political common sense: admit the failure of austerity and start cooperating with Greece on a solution that creates long-lasting growth and reduces the social crisis in the country.
This is not only a conflict between Greece and the institutions, or between Northen Europe and the periphery, it is also one „between people and a cruelly unworkable version of capitalism“, as Guardian today.described it in the