A bad day for Europe

Why Greece’s humiliation diminishes us all.


Last Sunday, after first details emerged of the conditions Greece would have to fulfill in order to be granted a new bailout deal by the Eurozone, the internet community’s reaction was shock.

Twitter users created the hashtag #ThisIsACoup to voice their fury at the Eurogroup’s negotiating tactics with Greece. It has been used more than 400,000 times. People around the world were watching the events in Brussels with disbelief: the German finance minister Wolfgang Schäuble and the Eurogroup did not seem to be looking for a viable compromise, a negotiation of equals, they seemed to be working towards Greece’s total submission.

The goal was to humiliate the Greek government.

The four-page list of demands with which the Greek negotiators were confronted was not designed to help the country’s economy to recover. Instead, the conditions for a new bailout programme resemble a vendetta by the creditors. The Greek people are being collectively punished for daring to challenge the neoliberal austerity dictate. The website of the German newspaper DER SPIEGEL even called the demands “cruelties”.

For instance, the VAT increase forced upon Greece will badly damage the country’s main income source – tourism. The pension cuts will have a terrible social impact, as the old people’s pensions are the last stable income source for many Greek households. The Greek labour market is supposed to be “streamlined” – a euphemism for adjusting it to predator capitalism – by weakening unions and making firings easier. The Greek state will have to turn over many of its assets to a Trust fund – run by Greek authorities but supervised by the creditor institutions (International Monetary Fund, European Central Bank and EU-commission). The assets’ privatization shall generate 50 billion Euros, even though experts admit the sum is exaggerated.

One of the most vindictive demands, however, is the re-deployment of the notorious troika to Athens – a commission of experts appointed by the creditor institutions . The ‘troika’ will have to approve every relevant law before the Greek government can propose it to parliament. A shady commission of un-elected technocrats supersedes a democratically legitimized parliament.

The continued austerity will worsen the crisis in Greece.

The measures, some of which will have to be passed by the Athens parliament within just a few days, will most certainly intensify the recession in Greece. The idea of austerity in times of economic slump has long been disproved. The experts argue that Greece desperately needs debt forgiveness – even the IMF conceded that. But in the world of Wolfgang Schäuble and other European hardliners, a financial haircut is no option. For them, this is a morality play.

The German politicians’ narrative on this crisis is: the Southern Europeans have overspent in the past, the austerity is nothing more than the justified price they pay for it. This logic implies that mercy for Greece would lead other crisis states into temptations – seducing them to stand up to the austerity doctrine.

The harsh conditions for Athens are therefore also meant to be a signal for other nations. Spain is having a general election later this year, and the European creditors are worried about a possible victory for the far-left Podemos party.

The shameful attempt to get rid of Syriza.

For this reason, the creditors used a number of dirty tricks in an attempt to bully the far-left Syriza party out of power in Greece. In the days before Greece’s Syriza Prime Minister Alexis Tsipras called for a referendum on the creditor offers, the troika had made inacceptable demands. The Greek side had made many concessions, yet the creditors had repeatedly dismissed them. Instead, they made demands that would have cost Syriza its power. After Tsipras’ desperate referendum call, the European Central Bank refused to lift the borrowing ceiling for its emergency loans to Greek banks. This decision led to a cash squeeze in Greece, and consequently, in the chaos and closure of banks. The IMF boss Christine Lagarde declared Greece in arrears immediately after it missed a debt repayment – even though IMF guidelines would have allowed her to grant the Hellenic Republic a four-week grace period.

And what happened after Greeks overwhelmingly rejected the creditors’ terms?

In last weekend’s negotiations, the Greek administration was willing to make major concessions, when Wolfgang Schäuble crashed into the talks with new and surprising talking points: a trust fund for Greek state assets, to be created in Luxemburg, and, if Greece refused, a five-year ejection from the Eurozone. Although the five-year Grexit plan was soon trashed by the other Eurozone members, the trust fund – albeit slightly eased – remained. Schäuble’s move seems like a nasty little payback against Greece.

We need to reform Europe

The Greek side had travelled to Europe to secure its place in the Eurozone, ready to give up many of its positions in exchange for it. But instead of being merciful and cooperative, the other Eurogroup ministers drafted Sunday’s four-page memorandum, which resembles a fiscal declaration of war on Greece. Alexis Tsipras had no choice but to sign the bad deal to avoid the total collapse of Greece. The Eurogroup’s deliberate and cruel humiliation of Greece diminishes us all. We need a different Europe. A Europe that cares about the people, that does not only benefit the elites, that gives refugees a chance; a Europe of fairness and solidarity. Sadly, hopes for this different Europe suffered a major setback with the weekend’s developments.

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