The Unrepentant IMF!

IMFDespite the persistent effort of the Greek Media to present the report issued by the Independent Evaluation Office on July 8 (here is the full text), which examines the contribution of the IMF on the “rescue” plan of three countries (Greece, Ireland and Portugal) as a “public apology”, the facts belie them.

Leonidas Vatikiotis

In a prima facie look, the report sheds light on the weaknesses that characterized the IMF’s involvement in the eurozone. For instance, it highlights, the widely-held “Europe is different” mindset that encouraged the view that large imbalances in national current accounts were little cause for concern and that sudden stops could not happen within the euro area”… Reality and particularly the ECB cruelty (when e.g only a few days after the victory of Syriza in the elections of January 25, 2015, halted the ELA to the Greek banks) proved to be unpredictable even for the IMF criteria…
The report also refers to the two major decisions which determined the participation of the IMF in the program, which both violate the statutes of the organization: Participation without guaranteed sustainability of the Greek debt and introduction of systemic exclusion clause which was subsequently used to finance Ireland and Portugal.

Moreover, on page 20, paragraph 42, there is a revealing detail about the undemocratic way which IMF works. «The way in which the second criterion was modified lacked transparency (de Las Casas, 2016). The proposal to change the exceptional access framework was embedded in the staff report for the Greek SBA request, and Executive Directors received no advance notice that such a change was forthcoming. While several Board members had noticed the two sentences tucked into the text on Greece’s overall adherence to the exceptional access criteria, few recognized the implications of the language until one of them raised the issue during the meeting. Otherwise, the decision would have been approved without the Board’s full knowledge «! This incident refutes the allegation of equal participation of Member States’ representatives in the IMF. Instead it reveals that the reins of the organization holds a small team that discusses and decides in secret, using the official bodies of the IMF only to validate the decisions that  legitimize its action. Sometimes even in retrospect, as happened in this case.

A special mention deserves on the role of the European Central Bank which is described as «highly controversial» (page 44, paragraph 107). The Independent Evaluation Office highlights the conflict interest implicit in the decision of the ECB to sit on the same side of the table with the IMF, as it was one of the creditors of Greece. The report, indirectly but clearly, criticizes the ECB’s decision to exclude the Greek bonds that it held by the Frankfurt haircut imposed through the restructuring of Greek bonds on 2012, which is known as PSI.

And this is just the tip of the thread…  Other interesting points of the report includes the reveal of the authors about …nonexistent documents! Writes verbatim (paragraph 10, page 5): «The IEO did not have full access to confidential IMF documents in a timely manner. IMF staff cooperated in providing a large volume of internal documents to the IEO, but it was learned that many documents were prepared outside the regular, established channels (and sometimes retained in personal files); written documentation on some sensitive matters, even with the help of generous staff resources, could not be located». IMF, the kingdom of secret diplomacy and dirty secrets…

Despite of all the aforementioned, the report of the Independent Evaluation Office ultimately legitimizes and does not deconstructs the underlying rationale of its functioning that was reflected in the Memoranda. IEO’s rationale is far behind even from criticisms that for instance were put forward by Professor Olivier Blanchard, in July 2015, the then Economic Counselor of the Fund, who has had highlighted three aspects: First, that the “Greek programs’ only served to raise debt and demanded excessive fiscal adjustment”. Second, that “the financing was used to repay foreign banks” and last but not least, that “growth-killing structural reforms, together with fiscal austerity have led to an economic crisis».

Today, the complaints of Prof. Blanchard, sounds much more reasonable than ever. Nothing proved him right better that the cumulative decline in investment from 2007 to 2015 by 40 billion euro or 66%, which predicts the further extension of the current recession. The interpretative factors of this decline are the raising taxes, the increasing capital costs and reduced funding. Three reasons that are the immediate result of the Memoranda’s policies. Another proof of his theory is the reduction of exports (excluding fuel) by 6.4% in May 2016 compared to the previous’ year which depicts the weakness of the international markets to act as counterbalance to declining domestic demand. Last proof but not least, is the plunge of the public revenues in July, creating a gap in relation to the provisions of half a billion euro, just a few days after the new reduction of pensions.

The Evaluation Office report has nothing to say about the social effects of the measures proposed by the IMF, like the increase of the unemployment to 25% (which is a European record) or the immigration of 500.000 youth well-educated scientists by majority, or the explosion of poverty. IOE criticizes the delay in the implementation of its policies. Thus, in the last chapter, the first recommendation is: «The Executive Board and management should develop procedures to minimize the room for political intervention in the IMF’s technical analysis.» On the same wavelength and moves the second recommendation too, declaring the further autonomy of the Fund: «The Executive Board and management should strengthen existing processes to ensure that agreed policies are followed and they are not changed without careful deliberation.» Within the report there are numerous references to «little progress» made in privatization (before the recent sell-off of ports and airports from the government of Syriza which has been transformed to the exemplary pupil of IMF) and reforming the labor market (paragraph 70), due to the «strong domestic opposition and social and political instability» ( paragraph 83).

In fact, the resistance to the neoliberal agenda of IMF and EU came from parts of society which were invited to pay the price of a policy that had no legitimacy and transferred the cost of fiscal adjustment on the weakest. This policy was also turned out to be extremely inefficient, at least on the basis of what it promised, eg solving financial crisis. For instance, the Greek sovereign debt on 2015 increased since 2012 in absolute numbers (from 305 bn. euros to 311 bn.) and as a percentage too (from 160% of GDP to 177%)! It’s an epic failure in terms of nominal aims but it’s a triumph while it achieved the demolition of the post-war welfare state.

As a conclusion, the principle aim of the Independent Evaluation Office report was to consecrate the IMF austerity policy and not to reveal its organic weaknesses and inconsistencies or the huge social cost…

Third memorandum, worse than the previous ones!

tsiprBy Leonidas Vatikiotis

It is not only the new austerity measures, which among others include VAT increase, reduction of pensions, reintroduction of the zero deficit clause, Sunday shop opening and implementation of the liberalization measures included in the OECD’s famous toolkit! The deeply unpopular agreement, signed by Tsipras government in the early hours of July 13th, after 17 hours negotiations between the eurozone Heads of State, (here is the full text) introduces for the first time commitments that guarantee the impoverishment of workers in perpetuity and even attempts to eliminate syndicalism, turning Greece into a second or third class capitalist country for the benefit of the German Fourth Reich! Four specific measures make the difference compared to the previous memoranda. More specifically:

First, the «introduction of quasi-automatic spending cuts in case of deviations from ambitious primary surplus » -which is one of the four measures that ought to be voted by Wednesday, July 15-, eliminates the possibility of divergence from the targets set. Practically, this means that by the time there is a deviation from the forecasts, a school, a clinic of the National Hospital of Nicaea will be shut down or a whole sector will be sacked in order to reduce the costs and achieve the surplus which will service the debt and satisfy the creditors.

Secondly, another safety valve is also included in the privatization program so that the overambitious target of 50 billion EUR revenue is reached and not just remain on paper. The prospect that the 50% or 25 bn. EUR will be returned to the ESM for the recapitalization of the banks and from the remaining 25 bn. euro half will be given away for reducing the debt and the rest for investments, connects the sellout of public property with real interests, paving the way to even convey to the banks public companies and real estate for privatization so that the selling off to achieve the best possible terms and on their own responsibility. But it needs to be done… and not cancelled in practice as happened in the past.

The tremendous implications of the 50 billion EUR privatization program, which also includes the selling off of the Independent Transmission Operator (ITSO) are revealed if we compare the target of 50 billion euros with the revenues from the so far privatizations. For instance, the 2015 government budget reports that in 2013 there were received only 86 million euros, in 2014 230 million, while for this year the (inflated as usual) budget estimate was 474 million euro. The loot that will follow, with the sellout of all traces of public property (Municipalities, Universities, public entities), will be sweeping, in order to manage to gather such a large amount, as the best «pieces» of public property (OTE Olympic Airways etc.) have already been sold.

Third, the «program under the auspices of the European Commission, for de-politicizing the public administration» will attempt to eliminate trade unionism in the public sector and – something far more important – reform the public administration, by abolishing current hierarchies and launching a new generation of managers in the state machine, fully subjugated to the limited sovereignty regime that the new, third, Memorandum de facto establishes, with predictions such as the «unilateral» amend of “roll-back” legislation adopted in 2015. In practice, this means annulment of any populist law: from the reinstatement of the cleaning ladies to the school guards … and it also remains to see if they will include the opening of ERT. Therefore, the strong resistance of the state machine -that was put forward since 2010- will not only surrender to the demands of Memoranda but also, Troika returns reinforced, with its own people in every key position, ready to encapsulate and implement even and the most reactionary measures, by violating laws and ethics. The arbitrariness of Georgiou in ELSTAT, which becomes further independent, is indicative of the morals they wish to impose on public administration and services.

Fourth, the political targeting of the left Memorandum signed by Tsipras is reflected on the commitment for «rigorous review and modernisation of collective bargaining, labor mobilisations and collective redundancies.» No longer do they target the collective-bargaining rights and strikes, but also the protests themselves. «First time left»… first time that the right to protest is put into question!

Furthermore, even the enactment of these measures by 15 and July 22, as explicitly described, does not prejudice the happy ending for the government’s negotiations. Clear statements such as «the opening of negotiations do not prejudice any potential final agreement» or «the Greek offer of reform measures needs to be seriously strengthened to take into account the strongly deteriorated economic and fiscal position of the country during the last year», guarantee that we are at the beginning of a long and painful process, involving continuous adoption of unpopular laws, that will ensure the approve of the new 82-86 bn. euro loan and the release of the instalments, as happened in the previous five years.While with other humiliating formalities like «the dangers of non-rapid conclusion of the negotiations fully borne Greece»gives the creditors the right to ask for … their mother and father, whenever they wish, from any government, obliging Greece to immediately comply and without objections.

Moreover, the fact that the banks will not open (as explicitly stated by the term «rapid decision on the new program is a condition to allow banks toreopen”)implies that the EU will keep sending ultimatums until its requirements are met in full, such as «decisive action for non-performing loans”, which means that thousands of houses, even first residences will soon go under the hammer… Even if this is about a blackmail that was explicitly rejected by the grand ‘No’ of the Greek people on the a referendum of July 5th.

The third memorandum, which signals the complete humiliation of SYRIZA, puts the last nail in the coffin of the request the public debt cancellation, as claimed by the people and was grounded by the recent findings of the Parliament’s Truth Committee on Public Debt. The clear reference on the penultimate page of the decision that «the Euro Summit stresses that nominal haircuts on the debt cannot be undertaken» in conjunction with the reference»the Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and in a timely manner”, import -fully and completely- the current government of Alexis Tsipras to the camp of the enemies of the people and society, who from 2010 until today use the debt in order to circumvent rights and conquests of decades!

Translation: Foula Farmakides

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