Saturday 7 March 2015

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In early 2010, fears of a sovereign debt crisis, the 2010 Euro Crisis developed concerning some European states. What should be the response? How should economic and financial policies be coordinated at the EU level?

 

Russian federation has lost hybrid war in Ukraine

Posted by on 04/03/15

The witnesses and the experts report why this war has succeeded in Crimea, but miserably failed in Donbass.
The Russian “success” in Crimea has finished by a hard failure in Donbass. A country “Malorossia” stretching its territory from Lugansk to Odessa did not emerge and the hybrid war turned in a bloody and terroristic one, the “ears” of Russia are seen with the naked eye. The witnesses and the experts told why it happened in this way. As it turned out, Russia was not prepared for a hybrid war.

“You in Kiev do not understand and can`t see anything! It`s happening a coup d’état in the country, which is carried out by right-wing radicals and the West!” – told me one of the employees of the Crimean state administration of the SSU during our phone conversation. This conversation took place in January last year, when there was more than a month left until a bloody denouement of the Maidan and events in Crimea, and it clearly depicted not only the personal attitude of the officer to the events in Kiev, but the general mood on the peninsula formed by loyal central government, and local media. Only a few people from Crimea joined the Maidan, mostly those, belonging to the Crimean Tatar nationality. Most of the Maidan did not understand or accept. The image of the right radical with a chain or a bat in his hand, which was added by a glamor in the media and social networks, was well suited for general moods in Kiev and in the west of the country. However, in Crimea it caused the opposite reaction. By the end of February, when the incandescence of passions in the Ukrainian capital has reached its acme and the blood has flowed the river, anti-maidan moods intensified, and the revolutionaries did not bother to explain the Crimeans what was really happening. In fact, Ukrainians on their own had created one of the key reasons, which allowed Russian federation to succeed in the first part of the hybrid war against Ukraine.

 

NOBODY WAS PREPARING FOR THE ANNEXATION
It is said today that the Russian government simply needed a moment to fulfil its old dream – the annexation of the Crimea. It has been preparing for a long time, actively creating a fifth column in the peninsula, generously giving her sponsorship. This column actually led the “return to homeland”, security of which was provided by “polite people.”
“In fact, it is not quite true – says one of the officers of Crimean special services, who remained loyal to Ukraine. – The activity of Russia on the peninsula stepped up immediately after Yushchenko took power in 2004. It had greatly increased the financing of pro-russian public organizations, media, new projects had emerged. However, as admitted by the activists themselves, 70-80% of the funds were plundered, but in Crimea, where pro-russian moods are so strong, and Russians constitute more than half of the population, the remaining funds were unobtrusive enough to maintain them. This lied down on the fact that local politicians were actively using the theme of infringement of russian-speaking rights, and the economic situation, in contrast to Russia did not improve, every new government of the peninsula was more corrupted and in Crimea it was subconsciously associated with Ukraine as a whole, and not, for example, only with the Donbas. As a result, by 2014 the pro-Russian sentiment among the population in Crimea remained at a high level without the participation of Russia, which at that moment had a 20,000th Black Sea Fleet in Crimea. Therefore Maidan has enabled mood radicalization”. In addition, the authorities had used these moods to create a “protection” from the Maidan. The anti-maidan self-defence forces were created in Ukraine. Crimea – is not an exception. “Recruiting to the hundreds began in January. At the same time there began trainings, in order to enable us to deal more effectively with “right quadrant” members” – says one of the Crimean self-defenders.
The hybrid war organizers eventually used such people. Moreover that it can start, confirms the fact that in the beginning of the year Russia is still preparing for different scenarios of the situation in Ukraine. For example, according to the Crimean media – Putin`s adviser, Vladislav Surkov, visited Crimea in January who is, by the way, credited with the authorship of a hybrid war in the Crimea. The real purpose of he, and also a muscovite, the famous “militia” and “ex-Defense Minister of DNR” Igor Girkin, which is for purpose accused in working with the Russian intelligence services, arrived on the peninsula before the Maidan events, remains unknown, however, events that occurred a month later are known to everyone .
“In any case, regarding these events, it was in March that the hybrid war broke up, which is based on the fact that the war is supposedly waged by the population, not by foreign troops, everything was ready. The only thing remained to do was to pull the “trigger” in order to provoke people. This trigger was their own provocation “- concludes intelligence officer.
PROVOCATIONS
Who are the people spreading gossips and organizing provocations? We can now only guess. All the parties deny their participation. However, their range gives us a reason to make certain conclusions. When, for example, on February 26 in front of the Supreme Council of Crimea a collision between participants of two meetings occured – pro-russian citizens, who were supported by Cossacks from Sevastopol and the Crimean Tatars, who supported the Maidan. Crimean hospitals were commanded to release their chambers for wounded men.
“I was lying on the annual medical inspection in the republican hospital. After lunch, we all were told to pack our bags and immediately leave the walls of the hospital. This news has led people into a panic. There were many other non-residents, who were afraid of roads overlap and rushed to railway station. The news about future clashes spread at a speed of light”, – says diabetic patient Alexander. The fact that due to the stampede, an elderly person died and the parties splitting the world became known later.
“A couple of days before all the events, through the town began to rush cars, people trying to throw down the monuments to Lenin – says the self-defender of Crimea. – Who are they? No one knew. But they didn`t throw down the monuments before the intervention of local people.”
“That was strange. A truck arrived on the waterfront. People started throwing on it a rope, obviously, to knock him down. I was just passing by and ran in to give a good lesson to these radicals. However, they spoke Russian, and when we explained them that the citizens of Yalta will decide what and where to knock down, they silently left, “- says local artist Anatoly.
The head of one of the “militia” squadron based in North Crimea, Alexei was awakened by a call from his friends in the Council of Ministers on the night of February 27: “It was right after the Crimean Tatars made a row near the walls of the Supreme Council.” Do you know that there are 700 right sector members in Genichesk willing to put forth the Crimea?” – Said his friend and added that he urgently needs to protect children from these monsters, “If they burst in Crimea they will hang us one by one, you know.” I had no doubts concerning his words. Three days before this, the streets of Dzhankoi were flooded with lot of suspicious youth, who tried to arrange provocations, bullied with local people, and shouted “glory to Ukraine”. Even the local “Freedom” disowned these people, and the police did not react, scared to touch them. Now, six months later, I do not exclude that it was a provocation, organized by Ukraine. At that time, my goal was to collect as many men and advance to the border with the Kherson region. Almost a hundred of Dzankoinians as well as me were already in Chongar by six o`clock in the morning. No green men were still there.
There were three or four dozens of “Berkut” troops at the block post. It has become known later that they were from Sevastopol and Simferopol and arrived here at night. Closer to nine o’clock in the morning there were already five hundred people in Chongar, and there were more and more to arrive. Rumors concerning hundreds of right sector members arriving to Crimea spread in a couple of hours and everyone was ready to prevent their invasion at the cost of their lives. However, a few days later we found out that there were no so many right sector members amounts on the other side. These were Ukrainian soldiers stealthily reaching us and asked something about the provision because of problems the Ukrainian army had with the supply chain who told this.”
The fact that provocations could have been organized by already arriving “experts” confirms one of the leaders of the “militia” of Novorossia “former Defense Minister of DNR” Igor Girkin, who is suspected of having connections with the Russian intelligence services and works with them. In an interview with the Russian Internet site, he admitted that he was in Crimea in February: “Two days prior to the beginning of everything.” Including the national election of the mayor of Sevastopol Alexander Chaly and clashes that supposedly calmed the future leader of the Crimea, the current head of the “Russian” peninsula, and then the leader of the marginal unit “Russian unity” Sergei Aksenov. The fact that the latter was pre-selected as a leader who will lead the “popular protest” is also confirmed by Girkin: “I met him at the time of bringing the gifts for the Magi (Volkhvs) in January. It is a big tragedy that there was no such a person in Donetsk. When I entered the territory of the Donetsk region, I was hoping that I could find the same leader. ”
- When people were “raised”, its leaders were chosen and authorities buildings were captured, the last point in the hybrid war is always to ensure the safety of their activities what exactly has been performed by the “green men”, – said an employee of intelligence services of Ukraine.
The fact that he is right is confirmed by the participant of “Russian Spring” – a program of the radio station “Moscow speaking” in Crimea Igor Girkin: “Everything in Crimea was performed by the “green men”.
OPERATION “KRYMNASH” (Russian expression which means – Crimea is ours)
If the preparation of Russian Special Forces invasion, as claimed by the security services and the Ministry of Defense of Ukraine has been known a few weeks before the event, a lot of people have seen the movement of militaries of the Black Sea Fleet in Crimea. “There is a rotation,” – it was as always tersely explained, for example, the transit to the departmental Yalta sanatorium of CFP military trucks, was photographed by a man and posted to social networks.
However, regarding the background of events in Kiev and rumors about a possible attack of the Maidans on the rebellious peninsula, Russian military was perceived as those who keep the peace.
“That fear, which was spread by the Russian media while Ukrainian media has been quietly cut off, had one goal – to convey that a peaceful life in the Crimea is possible only with the Russian Federation” – shares his personal observations “militia” Alex. He was away from the Crimea: “Green men emerged only after two or three days at Chongar. They did not stand at the block post at all, and stayed away from us. At about the same time, Cossacks from the Kuban and Rostov appeared, who constantly talked about fellowship of nations and that Crimea can only be Russian.”
Thus, nobody have seen the real movement of cargos with military equipment. On the one hand, arms and military were dispatched to the naval base in Sevastopol and a military airfield near Simferopol, on the other – military units that were blocked, were not placed in the settlements. The length of the peninsula did its job.
“Even the presence of TV broadcast in military units did not change the situation. Note that the militaries acted peacefully. They did not take part in all sorts of assaults of Ukrainian military units in Crimea. They just stood nearby, as observers, or took the area near the border – says “militia” Alex. – The military units were assaulted and penetrated by “militia” and ordinary Crimeans. I.e., the “green men” were a sort of visual symbol of Russian non-interference. Herewith, in a crowded Simferopol airport, they used muscular and beautiful men who greatly impress women.”
Apparently, the absence of collisions and visual picture of calm was designed for Western countries that, as the soldiery affirm, hold the indecisive leaders of the country from any forced resistance. For Russia, as the analysts say, the situation at that time was twofold: on the one hand, the military had no identification signs and no one could directly accuse Russia, on the other – Russian Intergovernmental agreement allowed to increase Russian military forces in Crimea up to 40 thousand. However, what is more important, there was no bloodshed on the peninsula, which is essential for Western countries. By early March, Ukraine has missed its moment: the authorities were caught; acting Crimean parliament elected a new chairman of the Council of Ministers and declared a referendum on accession to Russia, and the “green men” or “polite people,” the title of Russian unmarked military, have already blocked Ukrainian military units.
“Back in early February, we developed a plan and under the guise of military exercises sent to Crimea the reconnaissance squadron of the 25th Dnepropetrovsk Airborne Brigade and special operation troops of Kirovograd and Ochakovo regiments. Only about 300 people. Moreover, we have prepared a plan of deployment of four battalions of airborne forces in Crimea, which makes up 1200 people. But … I was stated: our European partners suggest not to make any sudden moves, “- said Chief of Staff of the Ministry of Defense in his interview, at that time General Vladimir Zaman.
WHY IT CAME OUT WELL
During and after the annexation of Crimea, lot of people said that the peninsula has just been surrendered. Military units included. Examples are lying nigh. The Rear Admiral and the new commander of the Ukrainian Navy Denis Berezovsky went over to the Russian Federation without hiding this fact, but, for example, the commander of the 204th Brigade of Combat Aviation Colonel Julius Mamchur, who was famous for his unarmed march toward the Russian military and the breakthrough of the captured airfield Belbek recalled that chief of the General Staff Yuri Illin ordered to remove all weapons from the aircrafts. At the same time, more than a half of the personnel of the Ukrainian troops in Crimea went over to the side of the Russian Federation. No more than 8 thousand of 18 thousand came back to the mainland. “The reasons? How the army has been treated? How it has been supplied? Many military remained without houserooms. The Russians, as we saw it, earned a good salary, we had lot of family ties with them, and many of us served with them in the same troops in the Soviet Union”- described the situation one of the Crimean soldiers, who refused to go to the Russian troops.
However, according to the military who remained loyal to Ukraine – no one has been bribed beforehand. During the years of independence, Ukrainian government itself has done everything possible to reduce to a minimum the patriotism within Ukrainian army.
Example of spontaneity – Russian military actions in Crimea. The “Green men” were constantly mistaking – instead of blocking the Ukrainian military units, they besieged private or state-owned enterprises. The confusion was all the time within the first 10 days of the Crimean events, – says ex-chief of general staff Volodymyr Zaman.
Therefore, as the analysts say, the corruption of the former leadership of the country and the military played a tiny role in the Crimean annexation, if any.
“First of all, population loyal to Russia was pumped with information, which reached its basic instinct – self-preservation, and that only Russia can protect them. In this case, it secured the absence of protests from the population. On the other, there were no victims, and the Russian military, which cannot actually be called so, stood side by side, but away from force captures that were assigned to local activists, – says one of the military analysts. – If we add to this the rapidity of Russian actions, the new Ukrainian government`s indecision and lack of reaction of Western countries who pretended to notice nothing, we get a picture of what happened and we get the reason why the hybrid war in the Crimea succeeded. The most important things were done in the early days: seizure of power, population is loyal, and the Ukrainian military were blocked, as the escape routes to the mainland were blocked too – thereafter, any military operation of Ukraine would be ineffective. In addition, the subsequent referendum in late March and the signing of the merger agreement – has been just a matter of technique!”
WHY “DONBASSNENASH” (Russian expression that means “Donbass is not ours”)
In the same time, similar things happened in Donbass. At least, the beginning of “Russian Spring” in Crimea: information attack, seizure of state buildings, the appointment of the authorities, the referendum… However, everything ended up in another way – with blood, thousands of victims and the carnage. It is not ceasing until now.
The «ex-defense minister» of DNR Igor Girkin names one of the reasons: “We were perceived as the “green men”, but actually we were not them.
“Russian troops deployed in Donbass when there was a war, the forces of the antiterrorist operation crushed the terrorists who were scattered and did not have a single leader – says one of the military analysts. – So, when Russia realized its possible failure in Donbass, it began to operate using terrorist’s methods – supplying with weapons, involve the intelligence officers and military forces.”
There were no doubts that all this was performed by Russian Federation. Numerous evidences of Ukrainian military, who were even provided with the help from Russian soldiery to avoid captivity or were trashed near the border of Russian side with the purpose to “clean up” the borders from the ATO forces, are known to all. Let us not forget about the Western countries, which responded this time to a hybrid war with sanctions. All analysts in one voice claim that the hybrid war has long gone. “There is an information field about the militias and protection of native land, there are certain republics, leaders, but no longer loyal population, as it is exhausted and is looking forward to the end of the war. Even more when the front line of fire emerges the hybrid war ends and begins the real one, entailing numerous victims, by which the West cannot get through. As it cannot get through the downed plane, the whole story of which is very similar to Russian “perhaps”. The militants were given an anti-aircraft missile system from which, apparently, a plane with citizens from all over the world was accidently shot down. At this point the West, who can adequately respond and for which the hybrid war was designed stopped pretending that the hybrid war continues. For Russia, it was a failure, meanwhile for us – a tragedy that nobody knows when it will end.”

The nagging issue of tax optimisation

Posted by on 03/03/15

A number of trade unions have recently denounced McDonalds’ fiscal optimisation policies. According to the unions’ experts, between 2009 and 2013 McDonalds paid only 16 million euros in profit taxes across the EU states in which it operates instead of the 1.06 billion euros it should have paid if tax avoidance schemes had not been in operation.

Needless to say, although some EU governments and the OECD are claiming that they will soon put a stop to tax evasion practices employed by American multinationals in Europe, the situation does not look set to improve any time soon. Consequently, national EU budgets are still going to be starved for much-needed income and governments will be forced to borrow – sometimes at prohibitive rates – in order to make up for the shortfall.

For the past 30 years this is the type of economic model the US has pioneered around the world, with dire consequences for the political systems and social stability of allied European countries. In hindsight, this kind of “leadership” may prove to do more lasting damage to EU economies than the situation in Ukraine or the current slowdown in growth. To date, however, no American politician or party has tried to deal with this issue in any meaningful way.

 

Debt, sin and denial in Greece

Posted by on 03/03/15
By Carlos A. Primo Braga The future of the Greek economy and its place in the Eurozone are back in the headlines. In the short term, Athens' confrontational strategy will buy some time for Greece. Unfortunately, it is doubtful that it will pave a sustainable way ahead for the Greek economy.

Who’d Be A Russian Oligarch?

Posted by on 02/03/15
I had always presumed that life for a Russian billionaire must be pretty sweet. You know what I mean – private jets, international homes, super yachts, vast sprawling business empire, obligatory ownership of a football club, wedges of cash and lots of glamorous Russian girls. It all sounds pretty sweet to me! Obviously there have [...]

Varoufakis: Musky armpitted sex god

Posted by on 01/03/15

They used to say the EU lacks a narrative. The crisis has remedied that. The high stakes poker game being played out by Angela “cool-hand” Merkel and Yanis “motherfucker” Varoufakis has unleashed a colourful social media storm, which continues to throw up surprises, the latest being a successful German attempt at humour.

Featuring self-parodying stereotypes: blitzkrieg, parents slapping children, slapping generally, and the observation that “We started two world wars and almost won them both,” a video from Neo, a programme created by national broadcaster Zweites Deutsches Fernsehen (ZDF), is the latest to enter the fray.

The video – called “V for Varoufakis” – fuels the celebrity death match being played out on social media between between Mutti Merkel and her leather-jacketed, game-theorising Marxist opponent.

Shaven-headed Varoufakis is described as “the Greek minister of awesome” and “the walking debt”, depicted licking a motorbike seat and described as having musky tasting armpits.

The lost son of Zeus smells of sex and puts the hell in Hellenic, according to the video.

All of which will come as little surprise to Varoufakis presumably, since the social media storm has already seen him as Dr Spock, Bruce Willis in the action film Die Hard and the Terminator.

In a spoof image inspired by Star Trek, Mr Varoufakis was portrayed as Dr Spock, trying to read Merkel’s mind. Varoufakis now boasts 315,000 Twitter followers. Not bad for a New Left Review-reading economics professor.

Varoufakis would doubtless welcome the storm, given that he is known disciple of twisty neo-Marxist German philosopher Jürgen Habermas, whose ideas – insofar as anyone understands them – push for simple media narratives within the political demos. Indeed, the German Noam Chomsky has thrown his Frankfurt School weight behind Greece in the debate.

Nevertheless the latest video is quite a coup for Merkel’s side. Tackling head-on some of the darker noises coming from Greece about Nazi-era crimes through humourous allusions to German gold reserves (“Don’t ask where it came from”) and comparing rock star Varoufakis with Germany’s own finance minister Wolfgang Schäuble (“Our finance minister doesn’t even have legs”) is quite disarming.

Die Mehrheit der Deutschen sagt Nein

Posted by on 01/03/15

92,3 Prozent – noch nie war die Zustimmung im Bundestag zu einem Hilfsprogramm für Griechenland so groß wie gestern. Doch so unwohl wie am Freitag haben sich die meisten Abgeordneten auch noch nie gefühlt beim Thema Griechenland.

Dabei war das gestern im Vergleich zu dem, was noch kommt, bestenfalls eine parlamentarische Fingerübung. Es ging um mehr Zeit, nicht aber um mehr Geld für Griechenland. Beim Geld kommt es im Juni zum Schwur, dann geht es um die Frage aller Fragen: Soll dem Sorgenkind der EU noch einmal mit 20, vielleicht aber auch mit 30 oder 40 Milliarden Euro unter die Arme gegriffen werden, oder überlassen die anderen Eurostaaten Griechenland sich selbst?

Jeder weiß: Das liefe auf den ökonomischen Kollaps des Landes und sein Ausscheiden aus dem Euro hinaus. Die Versuchung dazu ist groß, denn das Sündenregister Athens ist lang und der Geduldsfaden nicht nur hierzulande dünn… (Die Linksregierung Tsipras) droht aus dem kaum reformfähigen auch noch ein reformunwilliges Land zu machen. Schlimmer geht’s nimmer, zumal auch bei einem dritten Hilfsprogramm von jedem frischen Euro, den Griechenland erhielte, die deutschen Steuerzahler 25 Cent schultern müssten.

Die Mehrheit der Deutschen sagt dazu Nein, doch das Gegenteil scheint aus heutiger Sicht rational geboten. Das ist eine schwer zu schluckende Kröte, aber ein Ende mit Schrecken wäre jetzt nicht nur die teuerste aller Lösungen, sondern auch die riskanteste. Wer in die Ukraine blickt, wo die Unantastbarkeit von Grenzen gerade in Frage gestellt wird, wer an die Instabilitäten im Nahen und Mittleren Osten oder in Teilen Nordafrikas denkt, der kann an einem ökonomisch schwachen und politisch irrlichternden Griechenland absolut kein Interesse haben. Der muss vielmehr alles in seiner Macht stehende tun, um den Laden – sprich Europa – zusammenzuhalten.

Das aber ist zunächst Aufgabe der Starken in einer Union, auch in einer Währungsunion, wobei die Schwachen mitspielen müssen. Damit wären wir bei Deutschland und den deutschen Euros auf der einen und dem griechischen Unwillen zu schmerzhaften Einschnitten auf der anderen Seite angelangt. Nur: Wie man es dann auch dreht und wendet – die Eckpunkte eines “weiter so” bleiben die gleichen.

Weiteres Geld gibt es nur gegen Auflagen, deren Umsetzung dazu führt, dass in das griechische Fass endlich ein Boden eingezogen wird. Die jetzige Regierung in Athen muss hier die Kurve kriegen. Dass sich unerfüllbare Wahlversprechen kassieren lassen, haben dabei viele Regierungen in anderen Ländern vorgemacht. Helfen können die anderen 18 Eurostaaten dabei nur, indem sie zuallererst geschlossen am Prinzip Geld gegen Reformen festhalten. Da ist Führung gefragt – und die kann nach Lage der Dinge nur weiter aus Berlin kommen.

#Greece in #Eurozone: What to expect in the next months?

Posted by on 26/02/15

 

The month-long negotiations between the Greek government and Eurozone ended up temporarily with the adoption of a 4-month extension of the current bailout program during which the Greek government is bound to undertake a specific course of action regarding these structural reforms that will convince the creditors that Greece is ready to receive the final loan package. The evaluation of the Greek proposals is due for end April, whereas by July the government should most probably sit down to the negotiation table with the creditors to discuss the steps ahead and the progress that has been made in the Greek economy.

What Greece gained from the agreement

The Greek government did achieve to extend the period of implementation of the current bailout program without being obliged to take further austerity measures, as those described in the latest negotiations between the previous government and troika, including pension/wage cuts and increase of VAT in tourist areas. The second achievement of the government is that it was granted with trust to pursue a specific reform plan that includes an ambitious tax evasion and counter-corruption program in order to increase public income and prove that alternative sources of revenue do exist, and which were never implemented by the previous governments. The third achievement is that the government pushed for the non-inclusion of a specific primary surplus rate that would be catastrophic for the necessary stability of the economy. In other words, the previously agreed primary surpluses of 3,5% and 4% for the next couple of years were postponed and put under discussion for the next rounds of negotiations with the creditors.

What Greece lost from the agreement

Although Greece’s achievements are many and vital, especially taking into account the mounting pressure since the beginning of February from all parts involved domestically, in European degree, and internationally, there are also some crucial points that the government failed to evolve and bring in the negotiation table. The first “missing point” is the stalemate observed regarding the re-negotiation of the excessive, toxic, and unsustainable public debt. For the time being, Eurozone, the IMF and the ECB dropped the discussion or, even worse, denied to depart from some common findings and assertions. The second “missing point” is the fact that the government is obliged to abandon the immediate and full implementation of the “Thessaloniki Program”, a string of vital reforms needed for the alleviation of the most vulnerable parts of the Greek society. Notwithstanding, this is the most disappointing outcome of the negotiations, as the government was hugely pressed to broaden / extend the implementation of the program from 2 months to 4 years, in exchange for the non-adoption of additional austerity measures.

The hard reality ahead

Nobody should expect that a loan agreement or an extension of such an agreement could come without any conditions. Syriza was elected to keep Greece in Eurozone with better terms, not to take Greece out of Eurozone. This was the position of the party before the elections, and this position was kept during the negotiations. The government “bought time”, and now it has to prove that it can govern efficiently.

But the major burden for the government is, again, time. Time is really pressing Syriza to bring about significant results on public finance consolidation. The European partners are clear on the conditions under which Greece could receive further financial assistance: increase public income, decrease public spending, sustain primary surpluses, and proceed to privatizations. A true quagmire and an overwhelming task.

Economy and Society are fed up

While for the time being the majority of the electorate supports the stance of the government, there are three important drawbacks in the horizon: the first is that the Greek economy is struggling five years now to comfort with austerity and restructure its foundations in a completely wrong, hasty and violent manner. The second is that Greece might probably seek for additional financial support even before April (and certainly before July-August), meaning that its debt will get even bigger and that the government will be once again strongly pressed to sign a new “Memorandum of Understanding”, the third in a row since 2010. The third drawback are simply the huge burdens of the past: the disastrous policies of Eurozone against Greece along with the support and consent of the previous governments.

In this respect, PM Tsipras stated it correctly: “Greece won a battle and the war continues”. But from now on we are not certain whether the conditions and the relevant confinements of this war would force Greece to default as a last resort of an honest redemption. A redemption for Greece, and a catastrophic defeat for Eurozone and Europe altogether.

 

To contact the author Dimitris Rapidis:

Email: d.rapidis@bridgingeurope.net

Twitter: @rapidis

 


Circular Economy package officially dead

Posted by on 25/02/15

The College of Commissioners today (25 February) adopted the executive’s 2015 work programme at their meeting in Brussels, signalling the end of the Circular Economy package of waste, incineration and recycling laws.

The package will be withdrawn and resubmitted later this year, despite protests from the European Parliament and EU environment ministers.

Although long-expected, the decision will spark criticism of what campaigners argue is a far too pro-business agenda being prosecuted by the Juncker Commission.

Especially as the Circular Economy package was on a “kill list” of pending legislation sent to the executive by trade association BusinessEurope (read our exclusive story from November last year).

The bill was targeted by Commission First Vice-President Frans Timmermans, as part of the executive’s drive for ‘better regulation’.

The College adopted a formal decision to withdraw the package and another 72 laws, according to sources. The Council and European Parliament will be informed, Heard in Europe was told.

Friends of the Earth Europe director Magda Stoczkiewicz said, “It is unacceptable that despite support for the Circular Economy package from businesses, a majority of MEPs and environment ministers, the European Commission has gone ahead and axed it.

“Changes could have been made to strengthen the Circular Economy proposal without scrapping everything and starting over – this only delays the action urgently needed.”

Danish Socialist MEP Magrete Auken said, “What a sad day for Europe. The fight for a sustainable future will be much tougher now.”

You can catch up with EurActiv’s coverage of the Circular Economy debate here.

 

Photo courtesy of Flickr and Partij van de Arbeid.

The United States of America Questions the Credibility of the European Union

Posted by on 25/02/15
By Andrew Duff If you are American you do not have to be Senator John McCain, who wants to arm the Ukrainians, to question the validity of Europe’s fond belief that reliance on soft power fits the bill for the 21st century.

Colloque sur la pratique de la subsidiarité et l’économie circulaire

Posted by on 24/02/15
La Maison de l’Europe de Brest – Centre d’information Europe Direct Bretagne Ouest organise à Brest Business School, à Brest, le jeudi 26 février 2015 de 8h30 à 12h30, un colloque ayant pour intitulé :”L’Europe des territoires : la subsidiarité au service du développement local.
L’économie circulaire, un levier du dynamisme économique territorial.”

Cet événement est placé sous la présidence de Monsieur Henri Malosse, Président du Comité Économique et Social Européen, et sous le haut patronage de Monsieur Harlem Désir, Secrétaire d’État chargé des Affaires européennes.

Au cours de deux tables rondes, les axes de réflexion suivants seront développés :

Table ronde n°1 – La stratégie Europe 2020, facteur de développement pour les territoires.

Table ronde n° 2 – L’économie circulaire, un levier du dynamisme économique des territoires.

Pour aller plus loin :

La  subsidiarité peut être entendue comme la résolution des problèmes au niveau le plus proche des personnes concernées (citoyens, salariés, élus locaux,…). Cela vaut pour la gouvernance politique (décentralisation) comme pour celle de l’entreprise et des organisations en général.

L’adaptation au contexte et à l’environnement est, pour les acteurs de terrain dans le monde globalisé et européanisé, nécessaire comme l’est la prise en compte de particularismes locaux.

Dans cette double perspective, la stratégie Europe 2020 pose le cadre d’une économie et d’une croissance intelligente (enseignement, formation, utilisation informatique et numérique), inclusive (visant à ramener vers le monde du travail des personnes éloignées par la formation et l’inclusion sociale) et durable (environnement, biodiversité, développement durable) réalisée par les échelons de la subsidiarité : l’État, la région, les métropoles et les communautés locales.

Dans la perspective de la stratégie Europe 2020, l’économie circulaire constitue une source d’innovation, un formidable potentiel de croissance durable et de développement. Elle vise quant à elle à introduire de nouvelles pratiques économiques mobilisant un grand nombre d’acteurs.

L’Union européenne, comme les territoires, est concernée à un haut niveau par ces questions. L’objet de ce colloque consiste à permettre un ensemble d’échanges sur ces thèmes qui peuvent paraître très théoriques mais qui sont en réalité très concrets. Une occasion également de présenter des expériences régionales ainsi que les financements européens s’y afférant.

Le Comité Économique et Social Européen (CESE) apporte son expertise sur ces éléments.

 

 

#Greece: What has not been said so far during latest Eurogroups

Posted by on 22/02/15

One step before reaching an agreement (?) on Greece’s bailout program, the government dispatched today the revised proposal including the extension of the current loan agreement for the next six (6) months, while introducing a moratorium in the implementation of new austerity measures suggested by troika last November. Meanwhile, the ECB decided yesterday to extend liquidity from ELA to the Greek banks, thus securing the proper function of the banking system. The Greek government and PM Tsipras want time to shift negative prospects of the economy and come back at the end of summer 2015 with entirely new facts regarding public finance performance and negotiate over a broader plan with the creditors. So far, there has been some key macroeconomic data released by IMF and OECD that confute a number of myths with regards to the Greek economy and policy-making these last years.

Figure No. 1: General Government Revenue

Since 2013, the IMF has been officially eloquent in the “wrongdoings” over the Greek bailout programs. In this respect, a number of key facts unveil such anomalies of domestic economy in comparison with the previous years on a 4-year round basis. In this respect,  the above figure shows that the general government revenue has not changed dramatically between 1992-2009, before the Greek government resorted to the IMF and sought for the first bailout program few months later.

Certainly, the consecutive austerity measures have increased public income since 2010, therefore it is at least incomprehensible the fact that previous governments were arguing on income gaps in budget plans until 2013, when primary surplus was achieved. Between 2010-13, budget gaps were persistent, whereas in 2014 the government unveiled a primary surplus that has been deconstructed in practice, meaning that it had no impact on real economic performance. Overall, between 2010-14, the governments did achieve to increase public income, but did not achieve to address tax evasion. In the meantime, this increase stemmed from lower and medium incomes, and not from highest incomes that could re-balance the relation between income – tax (i.e. lowest incomes pay lower taxes – highest incomes pay highest taxes).

Fact: Greece had not had major income burdens that could justify a huge public deficit, and thus a bailout program. Budget loopholes were manageable, and if they were not, it was a matter of political decisiveness and commitment to combat tax evasion and increase public income without imposition of austerity measures.

 

Figure No. 2: Average Reforms Pay-Off

Greece has performed better than any other Eurozone member-state between 2007-14. In other words,  and given the special circumstances of the Greek economy, the average reforms pay-off in Greece is extremely positive comparing to other Eurozone and OECD members-states. Nonetheless, these reforms did not bring neither a more productive and efficient bureaucracy, nor economic recovery and gradual development. Trust in domestic market was extremely weak, thus impeding investments.

Fact: Impeccable reforms pay-off  was never translated into structural economic developments that could turn domestic market and public finances viable and competitive. It was, again, a matter of political decisiveness and commitment to secure domestic markets against turmoils and capitalize reform packages.


Figure No. 3: Ease for Massive Layoffs

 

The above figure of OECD proves that since 2010, requirements of bailout programs and austerity prerequisites have turned labor market completely distorted. This was actually the major consequence of austerity, proving also the ease of the previous governments to resort to massive layoffs in order to lower public spending rather than build on combating against broad tax evasion and equalize public income in a more just, fair and democratic manner. Here lies the so-called political cost that previous governments assumed, but without achieving to turn it into their benefit due to the lack of concrete growth policies.

Fact: Layoffs increased immensely and ended up to the creation of sky-rocketed unemployment.

 

Concluding Remarks

The Greek government is going to use these facts in the coming Eurogroup (or European Council Summit) in order to prove that Greece is in that appalling state of humanitarian crisis because the political decisions of the previous years, coupled with excessive austerity measures, have created a toxic mixture of economic incapacity. The 6-month extension proposal of the current bailout program that would guarantee liquidity along with ECB’s ELA, but without the implementation of new austerity measures, could give time to PM Tsipras to prove that the Greek economy can move again in equal terms with social, human, and labor development. In this respect, and as Germany’s Minister of Finance Schäuble stated yesterday, the problem is not soaring Greek economy, but how Greek economy can stand alone on its feet.

Therefore, Greece’s gradual economic revival is a political issue, not an economic or technical one.

 

To contact the author Dimitris Rapidis

Email:  d.rapidis at bridgingeurope.net

Twitter: @rapidis

 

 

Against Oligarchy: SYRIZA or Barbarism

Posted by on 22/02/15

The talented French writer, dedicated revolutionary and wise politician André Malraux wrote in his memoires that Charles de Gaulle was France’s “alibi for courage”. According to Malraux, De Gaulle’s actions saved France not once, but twice. The first time, by organizing the resistance against the Nazis during the WWII and, the second time, by defusing the dangers of civil war during the Algerian crisis. In both cases, de Gaulle unflinchingly stood up against the conformist, corrupt French oligarchy which had surrendered to the foreign centers of power and, for this, he received the undying support of the French citizens. In fact, it was precisely de Gaulle’s dedication to the interests of the French people and the confrontation with the oligarchy that constituted the two key aspects of his political success.

I am convinced that Europe today also has its “alibi for courage”. It even seems that there are several potential candidates. Still, the one on whose success today depends not only the future of his state and the people he represents, but also the future of the whole Europe, is Alexis Tsipras.

Tsipras’ political and economic program is the last chance for the institutions of the European Union to be transformed in an evolutionary and predictable manner in order to adapt to the demands and needs of the EU citizens while being freed from the nontransparent and corruptive influences of the financial, military, and intelligence circles. This program represents the reality of strivings not only of the Greek citizens, but also of the tens of millions of people within the EU and beyond its borders whose living standard has been destroyed and the future made uncertain by the decade-long neoliberal policies of brutal privatization and debt enslavement. Tsipras offers the Brussels oligarchs a just deal, a deal which privileges the ordinary citizen above the banker and common sense above the dogma. However, there is a great deal of probability that his extended hand will be rejected.

The attempts to discredit Tsipras and the members of his government in the so-called independent Western media (in truth, owned by several oligarchic monopolies) began already during the election night. The supposedly well-informed “bloggers” wrote about the alleged links between Tsipras’ associates and the radical conservatives in Russia as well as his associates’ cooperation with the US Marxists. Many also reported on Tsipras’ last year visit to Moscow in an ominous tone, while the others raised panic about the government members who were ex-Communists. At the same time, these news sources kept silent about the fact that Tsipras also visited Washington DC, that he met with George Soros, and that he is committed to resolving the “explosive” issues of the divided Cyprus and the official name of the former Yugoslav Republic of Macedonia in the spirit of compromise and good relations with Greece’s neighbors. The assignment was to defame and destroy, not to respect and give a chance. It is tragic that the media demonization campaign against Tsipras and his government is still ongoing with full speed.

At the same time, many mechanisms of the global oligarchic capitalism have been mobilized to make it difficult, if not impossible, for Tsipras to direct the recovery of the Greek economy. The foremost credit rating agencies, for instance, all downgraded the credit ratings of Greece, while the World Bank and the IMF stated that all the austerity agreements have to be respected and fulfilled. The threats that Greece would be thrown out of the eurozone intensified, while the Turkish air force suddenly began infringing on the disputed airspace.

Taking into consideration the instigators and protagonists of the 1967 military coup, it is not possible to discount completely the possibility of the military overthrow of the legitimately elected government, assisted (as in 1967) by the NATO’s secret networks and the CIA. Still, reflecting on the most recent subversive methods utilized by the US intelligence community, one would rather expect some kind of a “color revolution” which would, through protests and street disturbances, demand the new elections under the pretext that Tsipras did not fulfill his electoral promises. The all-around chaos that would ensue on the streets of Athens would make the return to power of the old corrupt oligarchy increasingly likely.

This turn of events in Athens, together with the devastating war in Ukraine, would lead to the spread of instability across the European Union. The economic and social despair would give rise to the strengthening of the openly racist/fascist political forces whose explosive power would be skillfully directed by the oligarchy toward all existing minorities, especially the religious ones. This could also lead to the open declaration of war to Russia, but it could also instigate a series of internal mini-wars against the immigrants of the Middle Eastern and African origin. The public would then be inundated by the rumors of another kind of “Islamic state” (this time in Europe), while the eventual intervention of the US military would make parts of Europe look like the present-day Libya, Iraq or Syria. The European civilization, ambivalent from its inception, the cradle of both the good and the evil, could in the last instance be wiped out in some nuclear holocaust.

Of course, this is the worst possible nightmarish scenario, and, thankfully, it is far from inevitable. Still, the first important step in its prevention is the long-term survival of the Tsipras government. For this, the strong support of the like-minded political parties and movements is very much needed. As Ho Chi Mihn replied to the question of the delegation of the European communists as to what they could do to help Vietnam that it was best if they led revolutions in their own countries, so the best support to Tsipras from the rest of the world is that we in our communities, using the similar political program, radically confront our own oligarchies and their political and economic repression. The common and courageous struggle for human dignity and social justice is the only political alternative to the oligarchic warmongers.

Translated by the author. Originally published in the Montenegrin daily newspaper Vijesti on February 12, 2015.

Reiches Land wie Deutschland

Posted by on 22/02/15

Gratislebensmittel für Arme, Suppenküchen und Wintermäntel aus der Kleiderkammer – dass es in Deutschland viele mit wenig Geld gibt, daran haben wir uns schon fast gewöhnt. Trotzdem, der Bericht von heute setzt noch eins drauf: Noch nie gab es so viele Arme in Deutschland. Eine Schande ist das, Deutschland ist eines der reichsten Länder der Welt. Wirtschaftlich läuft es super, und die Arbeitslosenquote ist niedrig wie seit Jahren nicht mehr.

Und trotzdem gibt es sie, Menschen, die ein höheres Armutsrisiko haben, also Alleinerziehende, Arbeitslose, Rentner und Geringqualifizierte. Und nach wie vor müssen zu viele Kinder auf Dauer von Hartz IV leben. Einmal arm, immer arm – in kaum einem anderen Land gilt das so sehr wie bei uns.

Klar, Armut ist relativ…, verhungern muss niemand. Aber die entscheidende Frage ist, ob uns das reicht. Der neue Armutsbericht des Paritätischen Gesamtverbandes fällt pessimistischer aus als der offizielle der Bundesregierung, vielleicht zeichnet er auch ein zu düsteres Bild. Aber fest steht, er reicht aus, um ein Gefühl der Ungerechtigkeit zu vermitteln, und das kann eine Gesellschaft spalten. Ich will das nicht.

Im Grundgesetz steht: Eigentum verpflichtet. Ein reiches Land wie Deutschland sollte sich selber verpflichten, den Reichtum fair aufzuteilen. Genau daran sollte die Politik arbeiten. Eine Erhöhung der Hartz-IV-Regelsätze, mehr Geld für Alleinerziehende, mehr Geld für den Kampf gegen Langzeitarbeitslosigkeit und ein Update im Kampf gegen Altersarmut, das alles kostet Millionen. Aber ich finde, der Paritätische hat recht. Um das alles bezahlen zu können, gerade angesichts der Sparbremse, die Bund und Länder bald ziehen müssen, sollten Reiche vielleicht wirklich mehr Steuern bezahlen. 2013 war eine Reichensteuer ja noch Thema für viele Parteien, aber überraschenderweise nur bis zur Bundestagswahl.

Greece vs Eurogroup: national illusions and European hopes

Posted by on 22/02/15

A clash of titanic national illusions is at play in the critical negotiations between the new Greek government and the Eurogroup on the future of the financial assistance program to Greece.

It is an illusion for the Greek government to believe that it can escape its obligations to the other Eurozone countries that have financially supported Greece when it risked collapsing and over the past few years have already agreed to lower the cost and extend the maturity of Greece’ debt. It is an illusion to believe that, in an economic and monetary union that has rules as its cornerstone, a new Greek government can be let renegade at will agreements of previous governments. It is an illusion to believe that Greek democracy counts more than democracy in other Eurozone countries where the public opinion is against further financial solidarity with debtor countries. It is an illusion to claim that “we will not negotiate our national sovereignty”, as Prime Minister Tsipras declared in his first defiant speech in front of the Greek Parliament, pretending to ignore that participation in the European Union and in the Euro brings benefits but it implies also significant limitations to national sovereignty, especially in economic policy making. It is an illusion to believe that public spending in welfare can get Greece out of its troubles, without continuing structural reforms that put the country on a track of sustainable prosperity . It is an illusion to think that the Greek government can impose its will  to other countries by threatening to use its veto right, at the Greek government hinted it could do on the sanctions to Russia or the Transatlantic Trade and Investment Partnership (TTIP) being negotiated with the United States, or by trying to create an alliance of the debtor countries. It is an illusion to believe that Greek’s case is helped by boosting Greek nationalism and awaking the ghost of the past, by asking Germany for reparation costs of World War II. Last but not least, it is an illusion to believe that Greece could have a better future outside the Eurozone or in the sphere of influence of Russia.

But the illusions of the Eurogroup are of not less titanic proportions. It is inconceivable that the new Greek government can continue the adjustment program agreed by the previous governments without significant changes (as it was proposed by the Eurogroup last Monday with a draft statement that looks almost like a provocation). After years of fiscal consolidation that have left Greece with a higher debt ratio, record high unemployment, significantly lower living conditions for wide sectors of the population, and have strained the social fabric to its limits, a change in policies is unavoidable. It is an illusion to believe that when national democracy (which has spoken loud and clear at the last general election in Greece) and international rules and obligations come into conflict, eventually the former doesn’t matter. In fact the Tsipras government could be the last democratic bulwark before citizens disillusioned with democracy and strained by severe economic difficulties revert to far right extremists (a risk that goes far beyond Greece). It is an illusion to consider that in the current economic situation Greece (and in fact other European countries that are struggling to overcome a severe economic depression) can be transformed only by structural reforms and privatizations without any investments to boost demand. It is an illusion to believe that Greek’s problems are only a problem of Greece and that the Eurozone can postpone indefinitely the reform of its architecture and governance to address collectively and in a better way economic imbalances and debt levels in the Eurozone. Last but not least, it is an illusion to believe that, if worse comes to worse, Greece could abandon the Euro without any significant impact on the rest of the Eurozone.

Over and above rests the illusion that such problems can be solved by negotiations among 19 finance ministers sitting in the Eurogroup, or by 19 heads of state and government sitting in the Eurosummit. Each of them has a national constituency to represent and report to, 19 different national constituencies with 19 different priorities and national political dynamics.  First and foremost each of them is, rightly, concerned of its national interest and of the consequence of any deal on its respective national political situation.

The risk of a lose-lose conclusion for all parties involved is high. Maybe it can be avoided at the last minute. Maybe the Greek government can be forced to accept a continuation of the current programme, forced by the lack of liquidity for the banking and the public sector. Maybe the Eurogroup could eventually agree to some temporary relief. Maybe both parties can paper over their differences for some months. Buying time is at the moment the only way out for all parties. But a sustainable win-win-solution requires more than that. It requires a fundamental change in the way of addressing economic imbalances in the Eurozone when a country is unable to return to economic stability (if not prosperity) by itself.

How should such a deal look like?

  1. Greece should commit itself to continue its structural reforms, seriously fighting tax evasion, corruption and cronyism, reforming the public administration and breaking the vicious cycle between business, politics and vested interests. Likewise, national fiscal consolidation (including primary surpluses to enable debt reduction) should continue. These steps are all necessary for Greece to maintain the trust of other Eurozone member states and the EU institutions (that are providing significant financial support) and put the country on a track of sustainable prosperity
  2. At the same time, the  Eurozone should reward the consolidation and reform efforts of Greece with a bundle of investment initiatives especially targeting Greece. If public finances don’t allow room for demand-boosting measures that off-set the deflationary effects of the adjustment program, such initiatives should come directly from the European level. They would have more durable effects on the economy and its competiveness than national welfare measures to boost private demand.
  3.  This mix of national adjustment programme and European investments for growth should be formalised in a new “contract” between the European Commission and Greece, replacing the relevant part of the existing memorandum between Greece and the Troika. Similar arrangements could be put in place with other countries under Macroeconomic Imbalances Procedure. Such a contract would be akin to the “contractual arrangements” initially proposed by the German government and then the European Commission in 2013 and not far from the request of a “new contract” raised by the Greek government. Its execution should be implemented and monitored by the European Commission itself, not by the Eurogroup of finance ministers of the Eurozone.
  4. In parallel, discussions should be resumed on instruments to collectively manage a reduction of national debt in the Euro area, like the Debt Redemption Fund initially proposed by the German Council of Economic Advisors.  

Obvious problem with such a plan is that today the Eurozone does not have the tools and resources to support growth in Greece (or any other country) to incentivize and offset the effects of national adjustment efforts. Moreover, the institutional set-up of the Eurozone does not allow embarking in any debt issuance and/or management at European level nor does it allow the Commission to act as a Government of the Eurozone.

In fact, plans for contractual arrangements and incentive investments proposed by the previous Commissions have been shelved.  Plans for development of the Eurozone governance and instruments have been stalled for now two years. The Investment Plan for Europe proposed by the new European Commission can be a partial replacement, but it will take some months, possibly one year, to come to life. When it does, it will be hampered by severe limitations: limited availability of public money, over-reliance on its ability to attract private funds, selection of projects based on the profitability rather than, at least partially, development needs of affected regions, disconnect with the overall Eurozone governance framework. Some of these limitations may be corrected in the legislative process, should there be political will to do so. Further financial means could be gather by a more flexible use of existing structural funds (including waiving co-financing requirements, fast track the use of future funds allocated to countries under assistance, disregard any national co-financing from the calculation of the Stability and Growth Pack). Again, should there be political will. Likewise, the discussion on deepening the Eurozone has resumed with last week communication by the Commission’s President to the informal European Council on Preparing the next steps on better economic governance in the Euro area but its outcome is still uncertain.  

A change in ambition and pace in each of these initiatives is now extremely urgent. 

Obvious part of the challenge is that progress in solidarity mechanisms for the Eurozone is much more than an economic project, it is a political project, which raises  questions of government and democracy at Eurozone level, ultimately the question of whether the Eurozone wants to evolve into a political federal union. “Risk sharing and sovereignty sharing are linked” repeats often German Finance Minister Wolfgang Schäuble. It is such a political and economic project that should be put on a fast-track mode, to produce a durable solution for Greece and to brace the Eurozone for other similar situations that are inevitably recurrent in a monetary union of such wide geography and economic differences.

It the Eurozone doesn’t achieve rapid progress on these matters, any time bought by any temporary arrangement over the financial assistance to Greece will just be wasted. There is more at risk than the membership of Greece in the Eurozone, it is the future of the Eurozone itself that is at stake.

#Greece has the momentum and should exploit it

Posted by on 17/02/15

Time always matter. In 1946 Great Britain’s PM Winston Churchill gave a speech at the University of Zurich pointing out the paramount need for the creation of the “United States of Europe”. The statement of Churchill came after an unprecedentedly devastating war that destroyed Europe in political, human, and economic level. Almost 60 years later, the Lisbon Treaty came to solidify the sense of belonging in the EU and train the next generations with a very specific concept: every time that a member-state would need assistance, solidarity would automatically be put forth in economic, social, and political level. Greece is in a state of humanitarian crisis, being hugely affected by austerity measures. Greece and the Greek people should not be punished, but be assisted under a new political plan that overcomes the burdens and fallacies of Eurozone’s economic strategy since 2009.

Many member-states support Greece, but do not show it publicly

Italy, France, Belgium, Cyprus, Ireland are these member-states that support the strategy and proposals of the Greek government. These member-states actually support a rational choice that includes a new economic and investment plan for Eurozone, and a specific plan for Greece. With regards to Eurozone, during the last two Eurogroups it was clear to those following the discussions that, unofficially, a growing support over the proposals of the Greek government is establishing. Officially, the member-states face mounting struggles in dealing with the German policy and the strong insistence in keep going with austerity and the comparatively abnormal demands for budget surpluses of 4-4,5%. Especially France, which is deeply affected by austerity and pressing fiscal consolidation, is more than willing to assisting Greece in the negotiations and putting forward a compromise in the next Eurogroups, put also during the intermediate discussions. Minister of Finance Varoufakis and PM Tsipras have acknowledged these progressive shifts and the subtle alliances created during the previous days and should stick even more eagerly in the current strategy.

How domestic politics affect the compromise

Spain and Portugal were said to be two of the most passionate supporters of the new Greek government. This is not the case so far as the political leadership of both member-states face serious problems in implementing austerity politics. For Spain, the increasing political appeal of Podemos -i.e. standing first in recent pollsters- that fights for a new economic plan for Eurozone and Spain does not leave space to PM Rajoy to follow a different strategy other than resisting to the proposals of the Greek government. In Spain, as it used to be in Greece before elections of January, the most possible scenario is that until November and the general elections, the governing party would insist in austerity but receive growing pressure from the Spanish society to change direction. In this respect, Podemos, especially should Syriza achieve to bring about a fruitful outcome in the economic field, would achieve an impressive win and open a new round of negotiations over the austerity program of Spain.

Greek PM Tsipras & Podemos Leader Iglesias

 

Portugal has similar burdens, with PM Coelho to face pressures from labor unions and a great part of the electorate that is suffering from continuous economic hardship. Portugal has achieved what Greece achieved in mid-2013: Budget balance, primary surplus, controlled interest rates for borrowing, but a completely fragmented and corrupted economic and labor market. In September-October, Portugal holds parliamentary elections. Should Greece extends pressure on Eurozone over a new economic program, Coelho is expected to be even more squeezed by a movement that comes up vibrantly to confront with austerity: Juntos Podemos.

Joana Amaral Dias, Leader of Juntos Podemos in Portugal

 

“Carte Blanche” to Renzi and the “silent work” of Hollande

Italy’s PM Renzi was -before Tsipras’s raise in power – the “bad boy” of Eurozone. Squeezed by the German leadership to abide by the rules of austerity, he was until January 2015 confused on how to build a promising future for Italy’s economy. Now that Tsipras is taking all the blame for putting at question the entire austerity establishment, Renzi feels more comfortable, relieved, and ready to assist Tsipras in his efforts to change course in Eurozone. Meanwhile France PM Hollande, having failed to carry on the promises he was invested with when elected, is now supporting the Greek government in the bras-de-fer with the German government. Diplomatically, during Tsipras’s first participation in EU Summit last week, himself along with Renzi were trying to make the Greek PM feel at ease in a turbulent atmosphere. France is ready to discuss Varoufakis’ proposal on lowering annual primary surplus from 4-4,5% to 1,1,5% thus alleviating public finances and giving space for economic maneuvers by the Greek government. Such maneuvers include a concrete growth plan that would boost employment and productivity in the Greek economy, fight efficiently against corruption and tax evasion, and seek for broadening public income alternative sources towards the re-balancing of domestic economy.

Deadlock + Deadlock =  Compromise?

The Greek government wants a compromise. But it wants a compromise that would be balanced, equal and fair for all parts involved and for Eurozone altogether. The huge mistakes of the previous years, the overburdening of the Greek economy with excessive lending, and the absence of any plan to reverse negative prospects for the Greek and European economy, are now in the hands of the Greek government. The momentum is in the side of the Greek government and should exploit it.

To contact the author Dimitris Rapidis:

Email: d.rapidis@bridgingeurope.net

Twitter: @rapidis


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