Jordan's parliament passes IMF-backed tax law to reduce public debt    Iron curtain blues: Films on the cold war in Cairo's 11th Euro Panorama    Withered roses: Emad Abdelwahab's latest painting exhibition 'Cup of Roses' at Dai Gallery    Remittances from Egyptians abroad rise 20.4 pct y/y in September: c.bank    Egypt's industrial production rose 32 % in Q1 2018    Netanyahu in political showdown to avoid early Israeli election    Pope says world mustn't turn a blind eye to migrants, the poor    Jude Benhalim celebrates her first flagship store in Cairo    UK Ambassador: Egypt becomes a global gas hub, made investment success    North Korea's new 'tactical' weapon test highlights military modernization    There's a lot of satisfaction: Portugal coach after Italy draw    Trump calls CIA assessment of Khashoggi murder premature but possible    A Korean in Cairo    Palermo summit on Libya yields uncertainty over joint effort for solution    French protesters rail against Macron's fuel taxes with road blocks    APEC fails to reach consensus as U.S.-China divide dominates    UK's May sees ‘no alternative' to her Brexit plan    Tennis: Zverev sets up tasty Federer clash at ATP Finals    In-form Hwang calms injury fears after Brisbane strike    Japanese Saraya to establish $10m worth cosmetics, pharmaceutical complex in Ain Sokhan    EALB grants EGP 50m to Tamweely Microfinance to fund micro-enterprises    Egypt's PM forms committee tasked with preparing amendments for NGOs law    Al-Sisi stresses Egypt's commitment to save biodiversity    If women have equal opportunities as men, they can add $28tn to the global economy: Vice Chairman of Mastercard    Madbouly heads to Addis Ababa to partake in 11th AU Extraordinary Session    Egypt to not impose capital gains tax    Gas, telecommunications, achieve highest growth rates during Q1 of current FY    Egypt's Sisi attends funeral service for police officer Satea El-Noemany    British Council in Egypt celebrates 80th anniversary of success and continued hard work    Egypt attaches great importance to biodiversity in sustainable development: Sisi tells COP 14    Vietnam to host Formula One races in 2020, more countries could follow    Salah's composed finish gives Egypt exciting 3-2 win over Tunisia    Germany: Could this crop of youngsters force Joachim Löw's hand?    ATP Finals: Alexander Zverev sets up last four clash with Federer    Germany's longest-running soap to end in 2020: What made Lindenstrasse so popular    UN conference to address biodiversity loss as it kicks off in Egypt's Sharm El-sheikh Saturday    Egypt ready to face Carthage Eagles at Borg El-Arab stadium    Original torch of the Statue of Liberty moves again    Egypt's Sisi has ordered local council elections for early 2019: Minister    Egypt's Sisi renames El-Nahda Square after late police officer Satea Nomani    Religious issues in parliament    Military court postpones verdict in ‘Al-Sisi assassination' case    An initiative on the Nile    Abu-Kabsula    Laila Murad    "Scent of Time"    Egypt FM calls for overcoming delay in implementing Nile dam decisions during Adis Ababa talks    Sameh Shoukry heads to Addis Ababa    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.





Neither Grexit nor capitulation
Published in Al-Ahram Weekly on 08 - 07 - 2015

European armchair doom-mongers boasting vaingloriously of giving a pink slip to Greece and booting the Mediterranean nation out of the European Union were shown to be spouting madness in the country's referendum this week, when the Greek electorate delivered a resounding “no” to the austerity terms being offered them.
Greece had been the first industrially advanced nation to be populated by an “un-people,” to paraphrase George Orwell. By this Orwellian reasoning, Greece did not deserve the honour of being a member of the European Union and should have been catapulted out of the Eurozone.
But a “Grexit” is not in the offing. In a flurry of diplomatic bustle, German chancellor Angela Merkel paid a surprise visit to Paris earlier this week to take the floor with French President François Hollande. Merkel and Hollande among other European leaders both know that a Grexit is out of the question.
Greek Prime Minister Alexis Tsipras and his leftist Syrzia Party pose a systemic risk to the capitalist political status quo in Europe, but not to the European economy or to the Eurozone. Among the questions raised by the Greek move are whether the Eurozone is an exclusively northern European club of wealthy nations and whether the Mediterranean nations qualify as being fully-fledged Europeans.
The Mediterranean is the “South,” literally and metaphorically, of Europe. It is the nations of the European “South” – Italy, Spain, Portugal and Greece – that have faced a uniquely tough set of problems. Greece is simply the most heavily indebted of them.
Meanwhile, the German press has been rife with criticisms of the Greek choice. “With this government, Greece has reached the end of the road when it comes to the euro,” trumpeted the Suddeutsche Zeitung. “They [the Greeks] have reached a frenzy of nationalism that can only be intensified in one way: hatred, anger, maybe even violence. There is no further basis for cooperation with Greece in the Eurozone,” the paper said.
Greek government officials have been openly labelled as “terrorists and blackmailers”. “Alexis Tsipras and his government have promised their voters the impossible,” warned the Frankfurter Allgemeine Zeitung.
Greece was the last country to join the Eurozone in 2001 before the official launching of the European currency in 2002. One of the stipulations was that no member state should have a budget deficit of more than three per cent of GDP. But Greece is bound to stay within the Eurozone despite not being able to meet these criteria.
In January, the Greek government promised voters that it would end years of austerity and it appears that no power can stop it. The EU can bully Greece, but it cannot dismiss the Mediterranean nation from the Eurozone. That would be a “collective failure,” as Merkel so aptly put it.
The European Central Bank (ECB) has tightened its liquidity conditions for the Greek banking system, but a Grexit would be a failure for the Eurozone and for the European Union as a whole, as Merkel, Hollande and other European leaders understand perfectly well.
The ECB was continuing its freeze on emergency liquidity assistance to Greece as the Weekly went to press, and further talks between the Greek government and its creditors were being scheduled.
Mediterranean leaders have been less hawkish. “We should make sure in each case it is very well managed and not used as a stick to beat the others with,” Maltese Minister of Finance Edward Scicluna said.
Northern European leaders were less accommodating. “The referendum result didn't change the economic reality in Greece,” Peter Kazimir, the Slovakian finance minister, insisted. “The situation has got to the point where a viable deal is only possible at the highest political level.”
Finnish Minister of Foreign Affairs and International Trade Alex Stubb stated that Helsinki would not support debt forgiveness or an extension of the bailout package to Greece.
Marcel Fratzscher, head of Germany's DIW Institute, was quoted as saying that Greece was fast spiralling into “economic catastrophe.”
But leftists in Europe understand that the crisis is not simply economic, but instead is political and ideological. Tsipras had been invited by creditors to present a fresh reform programme, but had showed up to meetings not wearing a tie and in sharp contrast to the pin-striped suits of his counterparts in Europe.
The graphic divergence is glaring. And so is the body language.
Greece's creditors want economic reforms in the country, or so they claim. The mechanisms of European monetary union mean that Greece is now trapped in an untenable debt structure, making the situation of the left-wing government in Athens impossible.
Even the Managing Director of the International Monetary Fund (IMF) Christine Lagarde conceded that there was nothing the IMF could do in the face of the resilience of the Greek electorate. “The IMF has taken note of yesterday's referendum held in Greece. We are monitoring the situation closely and stand ready to assist Greece if requested to do so,” she said.
Berlin and Brussels are intensifying the pressure on Athens. But Greece, the birthplace of democracy, has spoken its mind. The Greeks rejected further austerity measures this weekend, and Tsipras will now speak at a special session of the European parliament in Strasbourg.
The Greek-Australian economist Yanis Varoufakis, the country's former finance minister, resigned promptly after the referendum. “I shall wear the creditors' loathing with pride,” he said. Euclid Tsakalotos, a civil engineer working in the shipping industry and schooled at Eton College and Saint Paul's School in England, two of the country's most distinguished public schools, succeeded him.
After meeting with Irish politician Gerry Adams in March 2015, Tsakalotos declared that both the Irish political party Sinn Fein and Syriza were “part of a great realignment in European politics.”
For now, Tsipras has been invited by Greek's creditors to present a fresh reform package. The root problem, however, is that the debt is no longer just owed to the banks, investment funds and private investors. The country's creditors claim that the hole in the country's budget has simply grown too big to hide.
The country's socialist government, and not the bankrupt Greek state or people, are being penalised. Europe simply does not want a leftist government in power in Greece, even as the Greek people have opted for a socialist government.


Clic here to read the story from its source.