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

From Washington to Berlin Consensus (Brussels, March 8, 2014)

DEU Europa Verfassungsgericht ReformvertragI ‘ll try to answer the subject of the panel (“Who profits from debt and the debt crisis?”) using the dramatic experience of Greece of the last years.

  • The first who benefits from debt crisis and the restructuring of debt is the financial system which caused this crisis, both Greek and financial banks. I stress three different facts:

    • According to data from the Bank of International Settlements, investements of European banks (especially German and French) on greek bonds on 31 of December 2009, were 122,6 bn. euros. Two years after, and two months before the haircut, those banks were holding 65 bn. In other words, they used the first two years of rescue to get rid of the greek bonds, knowing that at the end of the day haircut was unavoidable or a matter of time. Meanwhile, the greek bonds were bought by the ECB, helping in this way: first, speculation and second, the transfer of the burden to the official side, the side of EU tax-payers, which a bit later refused the haircut for these titles.

    • Greek banks have been compensated for 100% of their investments on Greek bonds, while greek public pension schemes, universities and even hospitals lost up to 95% of their mandatory deposits in Bank of Greece. Social security schemes alone lost 14 bn. Euros. Consequently, the bailouts to the countries are really back door bailouts to the big banks. The bailouts werenot about sustainability of sovereign debt but of banks.

    • The biggest achievement of financial sector was the nationalization of sovereign debt. In 2009, a much smaller debt of 299 bn euros (or 129% of GDP) was owned by private sector by a percentage of 75%. Now after the restructuring of 2012, which was the biggest one in recent history (bigger than that of Argentina), public debt has not only increased, reaching 321 bn euros (or 175% of GDP) but, the most serious is that a share of 76% is on the hands of official sector (EU governments, IMF, ECB, national central banks, EFSF, ESM).

  • The second factor who has been benefited from debt restructuring is the ruling – not financial – capitalist class who keeps producing, selling, etc. A strict term of the second memorandum (which accompanied the second “rescue” loan of 2012) was the horizontal reduction of wages by 22%. According to official statistics, these four years of crisis, available income has been shrinked by 34%. By another term of Memorandum, the collective bargaining system between trade unions and employers unions has been dismantled. Now, government decides and announces the height of salaries. It’s obvious that these violent changes have been proved the last nail in the coffin of trade unions.

  • The second way the capitalist class has been benefited by debt crisis and restructuring is privatizations. The sell-off of public property (from real estate and airports to water and energy companies) was included in every Memorandum as an aim to reduce public debt because the revenues are going directly, by law, to the servicing of debt. Profitable opportunities are created for European corporations to take over vital infrastructures and Greek businessmen to join as minor partners.

  • Among those who have been benefited from debt crisis are also the hegemonic states of European Union, or core countries of eurozone and most of all, Germany. They have earned in two ways. First, economically because, among others, since 2009 they are borrowing in much better terms. According to an answer of Finance minister Wolfgang Schauble these earnings (of “fly to the quality” as they called) were 41 bn. Euros. Also, EU governmnets profit from bailouts because they lend money with an interest rate that is two – three times higher than what they borrow at. The second way is political. The typical equality among the member states belongs definitively to the past, while Germany shows again its imperialistic, hegemonic face, transforming the crisis-hit periphery to rogue states. Economic governance and banking union provisions are very telling on this respect.

All these reasons, in my opinion, justify the demand of imminent and unilateral cessation of payments of public debt. An audit of the public debt can help to legalize its abolition. In this struggle we have nothing to wait from ECB, or EU, which have been proved much more aggressive than IMF, servicing creditors’ interests.

Greek debt audit believes that cancellation of debt must begin from Troika’s debts, which are a percentage of 66% of total debt. Loans of mechanism are a very clear case of “odious debt”, as Eric Toussaint has shown. Following Alexander Shakh’s definition, first, the two greek governments of Papandreou and Papademos that signed the two loan agreements (5.2010 and 3.2010) had no legitimacy to do it. Second, those loans don’t serve Greek people’s interests. According to a recent report of Attac 77% of Troika’s money has gone to creditors for the servicing of debt and financial institutions, only 23% went to state budget. Third, creditors knew about all those. Consequently, “rescue mechanism’s” loans can be characterised as odious, as a means to cancel them. It’s a matter of political willing.

From another point of view the above-mentioned are confirmed, answering another question: “Who has lost the last years from debt crisis and restructuring?”. Well, who have lost:

  • Greek taxpayers who have seen every kind of tax burden to be increased. Only real estate taxes have been increased by more than 700%. At the same time Troika and Greek political elite agree to tax reductions on capital.

  • Greek working class who is payed with wages of 480 euros a month, while 1 in 3 is unemployed, and among those who are lucky keep working 1 in 3 isn’t paid.

  • Cypriots normal citizens-depositors who lost even 47% of their bank accounts. The same will happen in Greece too, while EU in meantime decided officialy the bail-in on April of 2013.

  • Greek and Cypriot youth which immigrates massively to North Europe, USA and Middle East. As a result in the periphery of eurozone we observe the brain drain we saw on 80’s and 90’s in Latin America, with the only diference that in the seat of USA now sits Germany, The Netherlands, etc.

  • National sovereignty of periphery countries that is into question, like never before in the post war period.

  • Most permanently, on the camp of losers from debt crisis are the peoples of Europe who suffer from Stability Pact, Euro Plus Pact, two and six pack that form the cornerstones of Berlin Consensus. The most modern and dangerous version of Washington Consensus, that rised from the ashes of current debt crisis. 

(Speech at the conference, Alternative solutions to the debt crisis, organised by Rosa Luxemburg Stiftung and European Network on Debt and Development, 6-8 March 2014, Brussels)

PSI: Neo-colonial loan agreement (Prin, March 24 2012)

On Tuesday, March 20th, 2012 Greek Parliament voted 213 to 79 in favor of incorporating the new loan agreement, a purely neo-colonial document, into Greek law.  As long as this agreement is valid, Greece turns to a pariah state. When Greece defaults for the second time, terms and conditions described by this document will come into force, deepening the country’s submission.

A  characteristic of the unequal relationship forged by the loan agreement is that our creditors can claim their money back, in its entirety, at any moment.

 EFSF may, by written notice to the Beneficiary Member State, cancel the Facility and/or declare the aggregate principal amount of all Financial Assistance Amounts made and outstanding hereunder to be immediately due and payable, together with accrued interest, if:

the Beneficiary Member State or the Bank of Greece shall fail to pay any amount of principal or interest in relation to any Financial Assistance or any other amounts due under this Agreement on its due date, whether in whole or in part, in the manner and currency as agreed in this Agreement

Repayment of the new loan is granted absolute priority. Greece agrees “not to grant to any other creditor or holder of its sovereign debt any priority over EFSF”.

This means that Greece will never return to the markets. Since it is obvious to every investor that the official sector has absolute seniority, they will never lend their money to Greece, knowing that they will be the last to get repaid and the first to lose out.

The official Greek default of March 9th, a non-voluntary event involving the activation of Collective Action Clauses, caused exactly what used to be held out as a threat, whenever the left and the social movements called for unilateral payment halt: Risk averse markets shunning Greece.

Russia’s 1998 default and Argentina’s 2002 default may well prove quicker ways back to the markets than the Greek approach of letting creditors ensure public debt sustainability.

Firstly, the fact that individual bondholders were not compensated for their losses blocks internal lending. Secondly, official sector (EU member states, ECT, IMF) seniority blocks the way to the markets. This is unprecedented for a developed country and it turns Greece into a eurozone/Fourth Reich colony. A new “state bankruptcy law” is emerging, as tool of the modern day totalitarian capitalism, downgrading sovereign states to second class states.

Also, dramatic consequences will result from the fact that the new Greek bonds, valued at 46,5% of the nominal value of the previous bonds, will not be under Greek law. “This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and shall be construed in accordance with English law. (2) The Parties undertake to submit any dispute which may arise relating to the legality, validity, interpretation or performance of this Agreement to the exclusive jurisdiction of the courts of the Grand Duchy of Luxemburg.»

This will complicate any future attempt of the Greek state to change the terms of the bonds without full prior consent of the creditors. This is a suicidal term, preventing the government from using the legal tools that even the creditor friendly Papademos government activated in order to turn an insufficient voluntary participation to the bond swap into a coercive one.

The guarantee offered to creditors is in fact a contract hedging currency risk. “All payments to be made by the Beneficiary Member State shall be paid in euro” means Greek bonds are insulated from any future currency change in Greece, irrespective of whether change results from popular struggle or from a Berlin decision. Important legal struggles will ensue, contrary to what could happen with household or small business loans, which could be redenominated into the new currency with a simple government decision, so as to avoid the consequences of overvalued loans.

The aforementioned  negative changes do not take away the rights of a sovereign state on its bonds but they make exercising those rights more difficult.

What drives Greece into a corner is the term forcing the Greek government to waive sovereign immunity, thus allowing creditors to confiscate state assets.

The Beneficiary Member State and the Bank of Greece hereby irrevocably and unconditionally waive all immunity to which each of them is or may become entitled, in respect of itself or its assets, from legal proceedings in relation to this Agreement, including, without limitation, immunity from suit, judgment or other order, from attachment, arrest or injunction prior to judgment, and from execution and enforcement against its assets to the extent not prohibited by mandatory law.”

Based on this article, creditors can easily confiscate state assets, if not inside Greece, where decisions must still be based on national law, then easily abroad, wherever there are Greek assets- for example in the vaults of the British Central Bank or the Fed, where the Greek Central Bank stores most of its gold.

Αρέσει σε %d bloggers: