The Troika’s Policy in Greece: Rob the Greek people and give the money to private banks, the ECB, the IMF and the dominant States of the Eurozone
On
20 August 2018, the Greek government of Alexis Tsipras, the IMF and
the European leaders celebrated the end of the Third Memorandum.
On
this occasion, the major media and those in power spread the
following message: Greece has regained its freedom, its economy is
improving, unemployment is on the decline, Europe has lent Greece 300
billion and the Greeks will have to start repaying that debt in 2022
or in 2032.
The
main claims are completely unfounded as Greece remains under the
control of its creditors. In compliance with the accords that the
Alexis Tsipras government signed, the country must imperatively
achieve a primary budgetary surplus of 3.5% which will force it to
continue brutal policies of reduction of public spending in the
social sector and in investment. Contrary to the dominant message
that Greece will not begin to repay its debt until some time in the
future, it should be clearly understood that Greece has been repaying
considerable amounts constantly all along to the ECB, the IMF and to
private creditors, and this prevents it from responding to the needs
of its population.
by
Eric Toussaint
Part
1 - 2005-2008: A very high increase in foreign bank credit in the
Greek private sector
The
complicit silence that conceals the situation of the majority of
Greek people is scandalous: very serious studies indicate a sharp
rise in the child mortality rate since 2010, and also in the
mortality rate for the elderly (see
https://dental.washington.edu/study-shows-how-austerity-devastated-greeces-health/.
See also, in French, “Grèce : Le démantèlement méthodique et
tragique des institutions de santé publique” (Greece: the
systematic and tragic dismembering of the public health
institutions),
http://www.cadtm.org/Greeke-Le-demantelement-methodique).
There are three times as many suicides as before.
In
reality, the results have been utterly devastating for the Greek
people in terms of the degradation of their living conditions and
violation of their civic and political rights. If you look at it from
the point of view of Greece as a State, there is no escaping that the
successive governments since 2010 have abandoned the country’s
political leadership to its creditors. Greece has become a
protectorate of the dominant powers of the Eurozone, which behave as
though in conquered territory.
It is
also a flagrant economic fiasco, if you consider the official
objectives of the three Memoranda imposed on the Greek people since
2010.
And
lastly, it is also a failure for a large part of the international
left who had placed all their hopes on the possibility that a
left-wing government might succeed in bringing its country out of
austerity and freeing it from subjection to the laws of Capital.
The
present article will review some of the key moments of the Memoranda
period and the one that preceded it.
From
2005, French, German, Dutch, Belgian, Italian, Austrian and British
banks, (henceforth referred to in this text as banks of the Centre –
as opposed to the Periphery, which consists of Greece, Portugal,
Ireland, Cyprus, Spain, Slovenia and other countries of Central
Europe and the Balkans), have greatly increased their credit to the
Greek private sector. Between March 2005 and September 2009, loans
from foreign banks to the Greek private sector were multiplied by
about four. Between 2002 and 2009, Greek bank borrowings from foreign
banks multiplied by 6.5. At the same time, foreign bank loans to the
Greek government remained stable.
Which
Western European banks lend so massively to the Greek private sector?
They are mainly Hypo Real Estate (Ger.), BNP Paribas (Fr.), Société
Générale (Fr.), the Crédit Agricole (Fr.), BPCE (Fr.), Commerzbank
(Ger.), Deutsche Bank (Ger.), Royal Bank of Scotland (UK), ING (NL),
RaboBank (NL), Intesa SanPaolo (Italy), Unicredit (Italy), Dexia
(Belg.), KBC (Belg.), KA Finanz (Austria) and Erste Bank (Austria).
In a
book published in 2016, Yanis Varoufakis, former Minister of Finance
in the Tsipras government, describes the motivations of French,
German (etc.) banks that lend massively within the Eurozone to
countries of the European Periphery with their governments’
support. There follows an excerpt:
“Once
markets had come to believe that no one would ever leave the
Eurozone, German and French bankers began to look at an Irish or a
Greek banker as equivalent to a German customer of the same
creditworthiness. It made sense. If the Portuguese, Austrian and
Maltese borrowers all made their income in euros, why should they be
treated differently? And if the risk involved in lending to
particular individuals, firms or governments did not matter, as the
loans would be dispersed throughout the known universe immediately
after being granted, why treat differently prospective debtors across
the Eurozone?
Now
that the Greeks and the Italians earned money that could never be
devalued again vis-à-vis German money, lending to them appeared to
the German and to the French banks as equivalent to lending to a
Dutch or German entity. Indeed, once the euro was invented, it was
more lucrative to lend to persons, companies and banks of deficit
member-states than to German or Austrian customers.
This
is because in places like Greece, Spain and southern Italy, private
indebtedness was extremely low. People were of course poorer than
Northern Europeans, lived in humbler homes, drove older cars and so
on, but nevertheless they owned their homes outright, had no car loan
and, generally, displayed the deep-seated aversion to debt that
recent memories of poverty engender. Bankers love customers with a
low level of indebtedness and some collateral, in the form of a
farmhouse or an apartment in Napoli, Athens or Andalusia.”
Source,
links, references:
http://www.cadtm.org/The-Troika-s-Policy-in-Greece-Rob-the-Greek-people-and-give-the-money-to
[2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21]
[2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] [13] [14] [15] [16] [17] [18] [19] [20] [21]
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