Monday, April 13, 2015

Tuesday, March 24, 2015

Poland : The Good Fight of the Polish Farmers by F William Engdahl

Poland’s farmers are in a very important and very good fight with their government and with their parliament. They are literally fighting for the future health and safety of their families, their grandchildren’s generation, their countrymen and even for the health and safety of the rest of the European Union that believes they have a right to enjoy eating healthy, nutritious food.


In the week of February 12, all across Poland, thousands of farmers with tractors protested the right-wing Polish government’s planned farm legislation. Many were organized by the farmers’ arm of the Solidarność trade union organization. More than 150 tractors have blockaded the A2 motorway into Warsaw since February 3, hundreds more have closed roads and are picketing governmental offices in other regions. The farmers are vowing to continue the struggle until the government agrees to enter talks with the union and commit to addressing what they see as a crisis in Polish agriculture. And they are right.

ICPPC directors, Jadwiga Lopata and Julian Rose, joined more than 200 farmers at a Solidarity protest in Kielce, South East Poland. The actions represent a dramatic escalation of protests that have been taking place on a smaller scale across the country over the last year. Edward Kosmal, chairman of the farmers protest committee for West-Pomeranian Region said: “We are ready for dialogue. We look forward to meeting with you Prime Minister and beginning a comprehensive government commitment to solving the problems of Polish agriculture. If you do not enter into a dialogue with the Union, we would be forced to tighten our forms of protest.”

What is of vital importance are the demands of the farmers to the new government of Prime Minister Ewa Kopacz. They are four:

Land rights: implement regulation to prevent land-grabs by Western companies and to protect family farmers’ rights to land.

Beginning 2016 the government plans to allow foreign buyers to buy Polish farmland for the first time.

Legalize direct sales of farm produce: the government must take action to improve farmers’ position in the market, including the adoption of a law enabling direct sales of processed and unprocessed farm products (Right now Poland has the most exclusionary policies in Europe around on-farm processing of food products and direct sales, making it impossible for family farmers to compete with bigger food companies. Oppressive ‘food hygiene’ and other regulations effectively prevent small scale farmers from selling their produce on-farm and in local markets, where their mostly organic but ‘uncertified’ produce is widely respected as of higher quality than food gown on modern industrial agribusiness farms.

Ban the cultivation and sale of Genetically Modified Organisms in Poland. A new EU rule passed in the European Parliament in January essentially leaves it up to national governments to permit GMO planting or not. Poland

Extend inheritance laws to include land under lease as a fully legal form of land use.

Defending honest agriculture

In an official statement Solidarność declared, “We demand a legal ban on GMO crops in Poland. The value of Polish agriculture, unique in Europe, is the unpolluted environment and high quality food production. That’s decisive concerning our competitiveness in global markets.”

Following a meeting with Poland’s Minister of Agriculture, Marek Sawicki, on February 11, the protesting farmers widened their protest to demand Sawicki’s resignation when he refused point blank to entertain any change of policy. Significantly, the protesting farmers, who vowed to bring 100,000 to the streets of Warsaw in the next days to continue the pressure, claimed the Polish government was spending money on senseless aid to Ukraine that should in fact be going into supporting Poland’s agriculture. The farmer protests to date are the largest and longest in modern Polish history.

At stake is more than the survival of small family farmers in Poland. Aside from the soils of Russia and of Ukraine, Poland is one of the few places in Europe with highest quality soil that has not been destroyed by massive dosages of chemical fertilizers, herbicides and pesticides. Ukraine’s rich agriculture land, as part of the rape of the country by the IMF and western agribusiness will soon be sold off for the first time to foreign corporations like Monsanto, Cargill, ADM and others where cultivation of GMO crops will proceed unhindered. That makes the battle for Poland’s farm culture even more vital to the future of food security in Europe.

Poland’s “pro-business” government is eager to lure foreign agribusiness giants into the country, something the Polish farmers know well will destroy them as well as the high-quality traditional Polish family farm. Already, Smithfield Farms of the USA, the world’s biggest pig producer, bought Poland’s Animex SA in 1999. Smithfield now runs a string of 16 or more huge hog farms where conditions have been described as “horrendous.” With growing environmental pollution pressures in the US against the massive fecal pollution of its factory farms that typically house tens of thousands of hogs in tight cages until they are slaughtered, Smithfield has sought countries where pollution laws are more lax such as Mexico.

As well, Aviagen, one of the world’s largest industrial factory farm producers of chickens, has moved into Poland. Their German parent company, PHW Group of Lower Saxony and its daughter, Lohmann/Aviagen Cuxhaven, were fined for massive violations of the German animal welfare protection laws in their facilities where day-old chicklings are run on assembly belts in the thousands, sorted, thrown out, feet cut off, others run through meat grinding machines live with feathers.

Such is the nature of agribusiness today, a project of the Harvard Business School and the Rockefeller Foundation begun in the USA in the 1950’s to do to agriculture what the Rockefellers did to oil—create a global agribusiness cartel of a handful of companies so powerful they run over national health and food safety laws with impunity.

The new laws that are slated to take effect in 2016 would open Poland’s doors wide to destruction of one of the highest-quality food production in Europe. That would be a ridiculous thing.

Indeed, Poland’s NATO-loyal Prime Minister and Agriculture Minister are rather stupid.

With neighbor Ukraine about to destroy the rich soils of Ukraine by allowing Monsanto and western agribusiness to rape the land with their chemicals like glyphosate and GMO, if Poland’s government goes ahead as they say, Russia stands to be the big winner in the long term.

On February 4 the Russian Government submitted a bill to Parliament that would ban cultivation and breeding of genetically modified organisms (GMO). The bill bans “the cultivation and breeding of genetically modified plants and animals on the territory of the Russian Federation, except for the use in expertise and scientific research.” Further, importers of GMOs would have to register and the government would be enabled to prohibit the import of such products to Russia after monitoring their effects on humans and the environment.

Source: http://katehon.com/topic/society/298-the-good-fight-of-the-polish-farmers.html

Wednesday, March 18, 2015

Costas Lapavitsas : The Syriza Strategy has come to an End


In a joint interview with German daily Der Tagesspiegel and ThePressProject International, Syriza MP and economist Costas Lapavitsas says that the time has come for Greece and its partners to understand that “they are flogging a dead horse”.
Instead, they should work together on “an exit that will be negotiated and consensual”. The first step? “After 5 years of scaremongering and misinformation, there has to be at last a genuine public debate”.

By Elisa Simantke and Nikolas Leontopoulos

It is not new that Costas Lapavitsas, professor at SOAS in London, has been actively advocating Grexit – though this is the first time he does so since he was elected MP with Syriza in January 2015. His views were once again shunned not only by political opponents but also by ministers of his own party.

However, even if one disagrees with Lapavitsas’s ideas about the currency, it’s hard to dismiss his assessment - confirmed from developments in the past few weeks - that the Eurozone doesn’t seem to allow any real middle way between austerity and a Grexit: “The leadership of the party knows that it has a very tough choice ahead of it: Do we persevere with the programme that we proclaimed to the Greek people? Or do we submit to what the institutions, the Brussels Group, the troika, whatever you want to call it, want us to do? These two things are incompatible.”

His two recent interviews with ‘Bild’ newspaper in Germany and ‘Jacobin ’ magazine in the US triggered a flurry of reactions in Greece: «Α plan of folly with drachma and gas rationing!» (link in Greek ) titled ‘moderate’ TOC, followed by similar headlines in country’s most media.

How wise is it for a debate that has been dominating the columns of the world’s newspapers and the plenaries of the continent’s parliaments to remain a taboo in the country it mostly concerns? No matter whether Grexit would ultimately be a catastrophic strategy or “the only logical solution”, the point conveyed through this joint interview to Berlin daily Der Tagesspiegel and ThePressProject International is that, “there has to be a genuine public debate at last”.


What’s your opinion on the negotiations so far? How is the government doing?

The Syriza strategy has been - and it remains - that a change in the political alignment of forces in Greece, in Europe, or generally, would act as a catalyst in the Eurozone. This strategy has now come to an end. The real question is how long it will be before people understand it.

I was always extremely skeptical of it. I always argued that it isn’t just about political alignment, there are institutional mechanisms and the logic of the monetary union. And those who believe that a simple change of politics is enough to transform this, were mistaken and I think this has been confirmed.

What we’ve seen is that the institutional framework of the Eurozone and the ideological machinery attached to it are not susceptible to arguments that come from electoral realignments. So the agreement of the 20th of February at the Eurogroup reflects that.

Do your party members notice that this strategy has come to an end?

Syriza is a big organization which has grown very rapidly. It reflects society. It isn’t some kind of traditional party of the left, and therefore there is a variety of opinions and of political conscience.

I think that the leadership of the party knows that it has a very tough choice ahead of it: Do we persevere with the programme that we proclaimed to the Greek people? Or do we submit to what the institutions, the Brussels Group, the troika, whatever you want to call it, want us to do? These two things are incompatible.

So there is no middle way?

There is no middle way. The Eurozone will not allow it. Do I think the leadership was surprised? Yes, I suspect they were to a certain extent. Because my reading of the situation is that the leadership genuinely believed that you could change the political alignments, you could change electoral arithmetic, and on this basis change Europe, change European policies.

So what should the Greek government do in your opinion?

Greece needs to consider the true alternative path which is to leave this failed monetary union. It is clearly the only way that was there from the beginning – which is basically exit. If you are going to apply such a programme, as Syriza has proclaimed, which is not radical – Syriza’s programme is just moderate Keynesianism -, you need to think seriously of how you are going to get out of the confines of the Eurozone.

Do you think Syriza has the mandate for it?

A straight answer is no. Syriza has a mandate to fulfil its programme. Indirectly, not directly, it has a mandate to keep the country in the Eurozone. But this question was never openly posed to the Greek people.

Is the solution a referendum?

The first thing to do is not so much discuss the idea of a referendum but actually that of the alternative strategy. There has to be a genuine public debate at last. That’s not easy because for five years this country has been subjected to the most incredible misinformation and scaremongering campaigns. So the atmosphere has been very badly poisoned. It is not impossible to have this debate now but it is much more difficult than a few years back.

In my judgement, the best strategy right now is what I call a consensual and orderly exit. Not a contested exit.

 Can you elaborate on that?

I think Greece should set a target for itself to negotiate an exit basically without rupture, without falling out, without fighting, without unilateral actions. This would mean: Exit takes place and Greece seeks deep debt restructuring.

Q: Why would the EU-partners accept? This exit has two elements that the EZ doesn’t want: the exit itself and the debt restructuring.

I am not entirely certain the EZ doesn’t want exit. I suspect that it does. And in my judgement if a country asked for a negotiated way out, it might as well receive in it. Germany, Schauble, back in 2011 was in favor of a negotiated exit.

The price for the EZ should be debt restructuring. But they are two more very important elements: the protection of the exchange rate and protection of the banks. These are essentially costless for the ECB because Greece is a small country.

What would Europe win out of it?

Peace and quiet. (Pause…) For a period.

Why only for a period?

Because the monetary union in my judgement is a major historical failure. It’s Europe’s biggest failure in decades. And it will not last. But obviously it might last long enough for Greece to be dead. Of course the EZ proponents believe it is going to last forever. It is a historical delusion. Monetary unions don’t last this long. Let them believe it. Fine.

Would the EU as a political construction survive if countries exit the monetary union?

In 15 years the monetary union has undone all the goodwill generated in Europe by the EU. The state of relations in the European countries today is probably worse than it’s been for decades. The state of affairs between Germany and Greece is appalling, absolutely atrocious. And this because of the euro.

This is proof that this money doesn’t generate solidarity, this money creates divisions. And this is again the biggest evidence of its failure. Now stubbornness, unwillingness to recognize the failure of it in the last five years is making things worse. What the EU has done in the last 5 years is to tie itself even more closely around the common currency instead of deeply restructuring it. It has actually made it harder. So yes if now the common currency fails, which I think it will, then the EU will be in question, that’s the price to pay for the historical mistake of the common currency.

So for Greece, does leaving the EZ also mean leaving the EU?

The most important is to differentiate between the EU and the EZ. In this country, and in most of Europe, a sustained confusion has been going on for years. That the membership of one equals the membership of the other. It’s of course absurd because there are members of the EU which are not members of the European monetary union. If Greece leaves the euro, it doesn’t have to leave the EU at the same time. If the Greek people want to leave the EU, let them leave the EU. But that’s a separate question. This conflation has been deadly and it’s been used ideologically...


GERMANY IS THE MOST DELINQUENT COUNTRY

There were binding mechanisms even before the monetary union...

The previous regimes were not successful but, compared to the disaster the common currency has been, the previous regimes were beacons of success. The bottom line: Europe needs a monetary system that allows for monetary flexibility. It is complete nonsense to impose a system of monetary inflexibility and at the same time to create flexibility through labour markets and the private sector. But the most profound reason for the failure of the euro is of course German policy.

Why that?

Germany is the country that is the most delinquent in Europe. Not Greece, not Spain, not Italy. And certainly not France. France is playing far more by the book than Germany. Germany has been not keeping the rules and I can make it very simple for you: Germany often accuses Greece - Schauble for instance does - that Greece has been living beyond its means. It’s true. But Germany has also been systematically living below its means, and this is how exports are generated, not because of technology, productivity and all that. That’s why it is so successful.

But when you are in a monetary union it cannot be a bad thing to live above your means and a good thing to live below. The real rule must be to live by your means. So Germany has not kept the rules and the price is paid by the German people. I understand full well how the German people live. I know very well that wages have not risen for years, that one third of the labor force lives under precarious conditions. Precarious employment, wages below productivity...,

So what you are saying is that the euro has not been good for the German people either...

This also explains why the German people are annoyed and angry when it comes to sending money abroad, paying for others. Of course, I would be angry too in that position: you live in a very tight way, you count your beans and then somebody comes and tells you, you have to pay.

On the other hand, German exporting business, the German banks, this is a different story. They ‘ve done very well. But that’s for the German people to sort out.

Do you think the Germans are kept in fear with a purpose? If you are a German you are always told “things will get worse”. Germany – we are told- is not performing as it could, Europe is not performing as it could, there is China, there is India, the globalization...

Globalization is one of those words that means all and nothing. There has been a consistent policy on the part of the German establishment to scare the German public and the German workers, to keep them in fear of tomorrow and of unemployment in particular, there is no doubt. The original idea back in 1998-1999 when unemployment was high is that we accept low wages to restore employment within the confines of a monetary union. Now the argument seems to be ‘we accept low wages to compete with the Chinese’. There is no end to this. The truth is low wages are not good for Germany. Germany needs a policy of boosting domestic demand. This is neo-mercantilism, the belief that growth comes from abroad only, that the only wealth is exports.

 A THREE-STAGE PLAN FOR GREECE

Are you making the same point about Greece? Is domestic demand the key to return to growth? How should Greece get back on its feet?

There are three stages. First, as I said, is the negotiated, consensual, orderly exit.

Second stage is recovery and that would depend very much on recovery of domestic demand which is very heavily repressed in this country. There are vast resources lying unused. Small and medium enterprises would be reactivated, that’s what would really restart the Greek economy. Not exports - this worship of exports is nonsense.

But obviously that is not really a path for sustainable growth. What Greece would need after that would be an industrial policy to restructure its productive base, to integrate itself in the world economy on a different basis. That would take a few years.

But Greece would be still part of a common market, as a member of the EU. So it is not so easy to go back to domestic demand and to the SMEs, because it would have to kick out the big companies that could still sell cheaper.

I believe that Greece could out-compete imports very easily. Unfortunately, wages have been destroyed during the last 5 years due to bailout policies. A devaluation of 15-20% (but no more since as I said the ECB would defend the exchange rate) would give a tremendous competitive advantage. Wages would then gradually rise again.

What are the chances for that to happen? For Greece to choose that path?

At 2010 I said there are 3 possible solutions. Austerity, ‘the good euro’ and exit. I said that the most likely solution would be austerity and this would be a disaster. As for the good euro strategy (i.e., that you achieve Keynesian policy within the confines of the euro – the strategy of Syriza), I said that the chances of this occurring were close to zero. The strategy of exit is the only logical one. The real issue is will it be contested or orderly? I don’t know. But exit there will be at some point.

THE POISONOUS IDEOLOGY OF ‘EUROPEANISM’

Q: How can it be orderly when now even implying that the negotiations are not going well brings panics and fear of a bank run?

The first thing to happen is for the EU and Greece to understand that they are flogging a dead horse. After 5 years of torture, it is time to finish. This strategy has come to an end. Some sense please. So when I say a strategic aim this is what I mean. People have to come to terms with it. And those who refuse to see, it is because of ideological reasons, because this ideology is poisoning the debate.

What is this ideology?

It is not neoliberalism, it is Europeanism. The idea of Europe as this transcendental entity which is good for all of us and we all belong to it. This great fiction that has emerged in the dominant countries and has come to penetrate the weaker countries.

I am socialist, old style, with the old meaning of the word, the idea of the United States of Europe and of European solidarity is a socialist idea and I share it. Obviously it has also been a Nazi idea, used by Hitler. No one has the monopoly of the idea of a unified Europe.

I don’t believe in a single European people, there is no European demos, and there shouldn’t be. Europe is about plurality, many different languages, cultures. Since when was it desirable for all of us to be just European, to be one thing?

These are illusions and ideologies. I don’t see a political convergence, I see the rise of fascism, the rise of the extreme right, I see extreme tension. Front National in France is at 30% of the vote, and the way things are going, I would not be surprised if the next president of France were a fascist.

If the euro was such a bad idea, why is there this “stubbornness” - as you called it - across Europe to support it? What are the interests behind the idea?

Money is the embodiment of non-economic relations as well. It embodies social relations, it has identity attached to it. This often means national identity. The Americans are the dollar, the British are the pound, the Germans used to be the Deutsche Mark. The euro particularly in the countries of the periphery has come to mean being European. You see it also in the Baltic countries. So there is an element of identity and an element of international policy.

But why the core countries of the EU are so much attached to the idea of the common currency?

I think the core doesn’t know how to get out. A bad mistake was made 15 years ago, and the risks of getting out are perceived as very high. At the same time, some special interests, the exporting sector, the banking sector, are strongly defending it because it has served their strategy.

A shorter version of this interview was published in German in the Berlin daily Der Tagesspiegel.
 

Wednesday, March 4, 2015

Can a Bitcoin-style virtual currency solve the Greek financial crisis? by Paul Mason


  
     

In orthodox economics, money barely figures. It’s just there, acting as a lubricant to supply and demand. The assumption is: markets create money, and the state’s role is to make sure it’s not fake or diluted.

Bitcoin is an audacious attempt to create money beyond the control of any state. It is a digital currency, in the form of a limited number of tokens. It is championed by people who would, if they could, return to a gold standard – where states are obliged to limit the amount of money in the economy. What these money fundamentalists worry about is states creating so much money that booms and busts become inevitable and inflation erodes wealth. In this sense, Bitcoin’s aim is to function as “digital gold”.

If things go badly for Greece, finance minister Yanis Varoufakis has said he would consider creating a parallel digital currency, using Bitcoin’s digital security and transparency, but doing the exact opposite of what the money fundamentalists intend.

Let’s recap the problem. The Greek debt is unpayable; the austerity required to pay it down is socially unbearable. So whether it’s this week or in six months’ time, there will come a point when Athens cannot meet conditions acceptable to the European Central Bank. Then, the normal sequence would be: bank closures, capital controls, an angry standoff and ultimately a Greek default.
 
If you insert a parallel currency into this sequence, you can delay the moment of default and gain a lot of leeway.

Varoufakis outlined, in a detailed blog post 12 months ago, how a Bitcoin-like virtual currency could be used to get around the ECB’s refusal to boost demand through quantitative easing. Just like Bitcoin, it would be exchangeable one for one with euros. But it would be issued by the state – and if you were prepared to hold it for two years, you would earn a profit paid for by taxes. For this reason, Varoufakis called it “future-tax coin”.

If the Greek government issued a parallel digital currency, and forced banks and businesses to use it, this would boost the money supply in defiance of the policy of the European Central Bank, said Varoufakis. In addition, he predicted, the currency would provide “a source of liquidity for the governments that is outside the bond markets, which does not involve the banks and which lies outside any of the restrictions imposed by Brussels or the various troikas”.

It would create an extra call on the nation’s tax revenues, so would have to be capped. If you issued future-tax coins worth 10% of GDP, in two years’ time, you would lose a sizeable chunk of your tax bill, warned Varoufakis.

So another way of thinking about a parallel second currency is: it’s a way of borrowing from tax receipts tomorrow to fund a monetary stimulus today. Which, if you reduce it even further, is like getting a fiscal stimulus for free. If used in crisis mode, it would also allow Greece to survive, for a time, its banks being sunk by the withdrawal of ECB emergency aid.

If a parallel currency ever happens (I am writing this on Friday: anything could happen by Monday), it will dramatise one of the key arguments of anti-establishment economists like Varoufakis: that states – not markets – create money.

Money only has value, say these economists, because states decree it. Furthermore, the state is not just standing above the market, regulating the currency: the act of taxing and spending is what creates money, not the act of buying and selling in a marketplace. It’s called “modern monetary theory”, but it’s no mere theory.

If it is right, the obvious practical conclusion is that a state with its own currency is always solvent. It can always create more money and pay people in that money. Therefore, it can always run a deficit – always use state spending to suppress unemployment. The only condition is that people must believe the state will exist in future.

And this is where it gets dicey for both the eurozone and Greece. If the Germans kick Greece out of the euro, that raises a big question mark over whether the euro quasi-state will permanently stand behind the currency as designed. The euro might come under speculative attack, as investors seek to pick off the next Greece, and place bets on the value of any new currencies that might emerge.
But the risks are even higher for Greece, should it start issuing a parallel, digital euro. Because Varoufakis’s digital currency is only redeemable against future tax revenues, you would have to believe the Greek state could not collapse.

Given these doubts, another of Syriza’s big-hitter economists turned politicians, Costas Lapavitsas of Soas, points out, the use of a digital currency would have to be just a transition phase to euro exit and a new Greek currency.

Bizarre and mind-boggling as the parallel currency idea is, my experience in the eurocrisis makes me think it’s likely to happen at some point. So, as you observe me and my fellow eurocrisis tribespeople eking out our lives in dank hotels and lobbies, do not pity us. All the shouting and the whispering only looks like mental torture. It is, in fact, a grand philosophical debate about the nature of money.

Paul Mason is economics editor at Channel 4 News.
Follow him @paulmasonnews

Monday, March 2, 2015

To beat austerity Greece must break free from the euro : Costas Lapavitsas




The agreement signed between Greece and the EU after three weeks of lively negotiations is a compromise reached under economic duress. Its only merit for Greece is that it has kept the Syriza government alive and able to fight another day.

That day is not far off. Greece will have to negotiate a long-term financing agreement in June, and has substantial debt repayments to make in July and August. In the coming four months the government will have to get its act together to negotiate those hurdles and implement its radical programme.

The European left has a stake in Greek success, if it is to beat back the forces of austerity that are currently strangling the continent.

In February the Greek negotiating team fell into a trap of two parts. The first was the reliance of Greek banks on the European Central Bank for liquidity, without which they would stop functioning. Mario Draghi, president of the European Central Bank, ratcheted up the pressure by tightening the terms of liquidity provision. Worried by developments, depositors withdrew funds; towards the end of negotiations Greek banks were losing a billion euros of liquidity a day.
The second was the Greek state’s need for finance to service debts and pay wages. As negotiations proceeded, funds became tighter. The EU, led by Germany, cynically waited until the pressure on Greek banks had reached fever pitch. By the evening of Friday 20 February the Syriza government had to accept a deal or face chaotic financial conditions the following week, for which it was not prepared at all.

The resulting deal has extended the loan agreement, giving Greece four months of guaranteed finance, subject to regular review by the “institutions”, ie the European Commission, the ECB and the IMF. The country was forced to declare that it will meet all obligations to its creditors “fully and timely”.

Furthermore, it will aim to achieve “appropriate” primary surpluses; desist from unilateral actions that would “negatively impact fiscal targets”; and undertake “reforms” that run counter to Syriza pledges to lower taxes, raise the minimum wage, reverse privatisations, and relieve the humanitarian crisis.


The most worrying indication, however, is the fall in prices by 2.8% in January. This is an economy in a deflationary spiral with little or no drive left to it. Against this background, insisting on austerity and primary balances is vindictive madness.

The coming four months will be a period of constant struggle for Syriza. There is little doubt that the government will face major difficulties in passing the April review conducted by the “institutions” to secure the release of much-needed funds. Indeed, so grave is the fiscal situation that events might unravel even faster. Tax income is collapsing, partly because the economy is frozen and partly because people are withholding payment in the expectation of relief from the extraordinary tax burden imposed over the last few years. The public purse will come under considerable strain already in March, when there are sizeable debt repayments to be made.

But even assuming that the government successfully navigates these straits, in June Greece will have to re-enter negotiations with the EU for a long-term financing agreement. The February trap is still very much there, and ready to be sprung again.

What should we as Syriza do and how could the left across Europe help? The most vital step is to realise that the strategy of hoping to achieve radical change within the institutional framework of the common currency has come to an end. The strategy has given us electoral success by promising to release the Greek people from austerity without having to endure a major falling-out with the eurozone. Unfortunately, events have shown beyond doubt that this is impossible, and it is time that we acknowledged reality.

For Syriza to avoid collapse or total surrender, we must be truly radical. Our strength lies exclusively in the tremendous popular support we still enjoy. The government should rapidly implement measures relieving working people from the tremendous pressures of the last few years: forbid house foreclosures, write off domestic debt, reconnect families to the electricity network, raise the minimum wage, stop privatisations.

This is the programme we were elected on. Fiscal targets and monitoring by the “institutions” should take a back seat in our calculations, if we are to maintain our popular support.

At the same time, our government must approach the looming June negotiations with a very different frame of mind from February. The eurozone cannot be reformed and it will not become a “friendly” monetary union that supports working people. Greece must bring a full array of options to the table, and it must be prepared for extraordinary liquidity measures in the knowledge that all eventualities could be managed, if its people were ready. After all, the EU has already wrought disaster on the country.

Syriza could gain succour from the European left, but only if the left shakes off its own illusions and begins to propose sensible policies that might at last rid Europe of the absurdity that the common currency has become.

There might then be a chance of properly lifting austerity across the continent. Time is indeed very short for all of us.

SOURCE: http://www.theguardian.com/commentisfree/2015/mar/02/austerity-greece-euro-currency-syriza

Retrospective : Max Keiser and Yanis Varoufakis


Yanis Varoufakis: All the good stuff that cannot be measured


Tuesday, February 24, 2015

Costas Lapavitsas - Scathing letter addressed to his party Syriza

 



Five questions that demand an answer (by Costas Lapavitsas)

The Eurogroup agreement has not been concluded, in part because we do not yet know what ‘reforms’ will be proposed by the Greek government today (Monday 23 February) and which ones of those will eventually be accepted. However, those of us that have been elected based on the program of Syriza, and see the announcements made at Thessaloniki [i.e. the ‘Thessaloniki Program’] as pledges that we have promised to the Greek people, we have deep concerns. It is our duty to write them down.

The general program of the agreement has as follows:

  1. Greece asks for the extension of the current loan support agreement, which is based on a series of commitments.
  2. The goal of this extension is to allow for the conclusion of the assessment of the current agreement and to give time for a possible new agreement.
  3. Greece will immediately submit a list of ‘reforms,’ which will be assessed by the ‘institutions’ and which will eventually be agreed on April. If the assessment is positive, then money that have not yet been given by the current agreement will be released, together with the returns from the earnings of the ECB.
  4. The current funds of the HFSF will be used exclusively for the needs of the banks and will be out of Greek control.
  5. Greece commits to fulfill fully and swiftly all of its financial obligations towards its partners.
  6. Greece commits to ensure ‘adequate’ primary surpluses in order to guarantee the sustainability of the debt on the basis of the Eurogroup decisions in November 2012. The surplus for 2015 will take into consideration the economic circumstances of 2015.
  7. Greece will not withdraw measures, will not commit any unilateral changes that may have a negative effect on the fiscal targets, the economic recovery, or the financial stability, as they will be assessed by the ‘institutions.’
On this basis, Eurogroup will begin the national procedures for the 4-month extension of the current agreement and it asks from the Greek government to begin quickly the procedure for the successful completion of its evaluation. 

It is difficult for anyone to see how the announcements made in Thessaloniki – which include the write-off of the biggest part of the debt and the direct replacement of the Memoranda of Understanding (MoUs) – can be implemented through this agreement. Those of us who got elected with Syriza pledged that we would continue with the implementation of the National Plan regardless of the negotiations for the debt, because we deem it necessary for the restart of the economy and the relief of the society. It is necessary, therefore, to explain how these will be implemented and how the new government will be able to change the tragic situation that it inherited.

In order to be more specific, the National Plan included four pillars with the following costs for the first year:

  1. Addressing the humanitarian crisis (1.9bn euros)
  2. Restarting of the economy with tax breaks, adjustment of “red loans,” creation of a Growth Bank, increase of the minimum wage to 751 euros (total of 6.5bn euros).
  3. Program of Public Employment for 300,000 new jobs (3bn euros for the first year, and 2bn euros for the second).
  4. Transformation of the political system with interventions in the local government and in the parliament.
 The sources of funding, again, for the first year had been calculated as follows:

  1. Clearing outstanding debts towards the tax authority (3bn euros)
  2. Combatting tax-evasion and smuggling (3bn euros)
  3. HFSF (3bn euros)
  4. ESPA and other European programs (3bn euros)
Given now the Eurogroup announcement, I ask: 

National Plan for Reconstruction

How will the National Plan for Reconstruction be funded, when the 3bn euros of the HFSF are now out of the control of the Greek government? Taking away these funds makes the collection of large sums of money from tax evasion and debt-clearing even more necessary, in a very short period of time. How realistic is such a prospect?

Debt Write-off

How will the debt cut-off proceed, when Greece pledges to complete fully and swiftly all of its financial obligations towards its partners?

End of Austerity

How will the end of austerity come about, when Greece pledges to succeed in achieving ‘appropriate’ primary surpluses in order for the current humongous debt to be made ‘sustainable’? The ‘sustainability’ of the debt – as it used to be estimated by the TROIKA – was exactly the cause for this unreasonable hunt of primary surpluses. Since the debt will not be lowered substantially how will there stop being primary surpluses that are catastrophic for the Greek economy and constitute the essence of austerity? 

Monitoring and fiscal cost

How will any progressive change proceed in the country, when the ‘institutions’ will be exercising a harsh monitoring and will forbid unilateral moves? Will the ‘institutions’ allow for the implementation of the ‘Thessaloniki’ pillars, given that they have an direct, or indirect budgetary cost? 

The future negotiation

What exactly will change in the next four months of this ‘extension,’ such that the new negotiation with our partners will happen under a better position? What will put a stop in the worsening of the political, economic, and social situation in our country?

These moments are absolutely crucial for the society, the nation, and of course the Left. The democratic legitimization of the government is based on Syriza’s program. The least that is needed is for us to have an open discussion within the party and in the Parliamentary Group.

It is necessary to give substantial answers immediately to these questions, in order to retain the large support and the dynamism given to us by the Greek people. The answers that will be given in the upcoming time period will decide the future of the country and of the society.