• Monthly
  • $25
  • $50
  • $100
  • $other
  • use PayPal

CounterPunch needs you. piggybank-icon You need us. The cost of keeping the site alive and running is growing fast, as more and more readers visit. We want you to stick around, but it eats up bandwidth and costs us a bundle. Help us reach our modest goal (we are half way there!) so we can keep CounterPunch going. Donate today!
FacebookTwitterRedditEmail

Are EU Officials Plotting Regime Change in Greece?

There are various narratives for what is happening to Greece as another deadline looms – the April 24 gathering of finance ministers in Riga — and European officials show no sign of compromise. The most common is that this is a game of brinkmanship, with the Germans and their allies pushing for “reforms” that the Syriza government in Greece doesn’t want to adopt. Most of the media seems more partial to the European officials than to Greece.  But even among those who are more neutral or sympathetic to Greece, it is still a story about hardline European officials threatening to use their control over funding to the Greek government and banking system in order to bring Greece to its knees.

But this narrative misses the elephant on the middle of the negotiating table. While the Greek government cannot do anything to replace its negotiating partners with people more to their liking, the European officials on the other side seem to believe they can do exactly that. And it is becoming increasingly clear that this is their current strategy.

The idea is to do enough damage to the Greek economy during the negotiating process so as to undermine support for the current government, and ultimately replace it. The destabilization actually began before the January 25 election, when officials from the then-ruling New Democracy Party announced that if Syriza won the election, Greece would leave the euro and people would not be able to get money from their bank accounts. In a nasty breach of protocol, they were supported by important European officials.

As I have noted previously, the European Central Bank (ECB) not only trained their guns on the new government but started firing on February 4, just nine days after the election. That is when they cut off the main line of credit to the Greek government even though they had weeks to make this decision. This was followed by limits on the amount that Greek banks could lend to the government – limits that the ECB did not impose on the previous government.

These moves and repeated destabilizing statements from European officials (and the IMF) have had an enormous impact on the Greek economy. Bank deposits have fled the country; they hit a 10-year low in February, with about 24 billion euros having left since early December. As Greek finance minister Yanis Varoufakis pointed out last week during a visit to Washington during the IMF/World Bank spring meetings, the ECB is cutting off liquidity to the banking system at the same time that they are increasing demand for liquidity by encouraging people to sell off domestic assets and take their money out of the banking system. On Monday, some Greek sovereign bonds hit record yields and the government ordered local governments to place their cash reserves at the central bank. The financial turmoil is also affecting the real economy, and could push the economy back into recession this year if it continues.

If all this seems like foul and malevolent behavior on the part of European authorities, that’s because it is. Greece has already lost a quarter of its national income over the past six years and put more than 25 percent of its labor force and the majority of its youth out of work. Whatever anyone might say about the responsibility of prior governments for the initial recession (one that the United States and almost all of Europe shared), it was the troika (the ECB, European Commission, and IMF) that turned it into a Great Depression for Greece. They really should accept some responsibility for the current situation, instead of simply insisting that the Greek government continue with a failed program as if there had been no election.

Since 2008, I have debated IMF economists at their spring or fall meetings numerous times [PDF] about their policies in Europe, and they increasingly appeared not to believe in what the IMF was doing in Greece and the eurozone. At the meetings this past week they declined to send anyone to a panel discussion. I doubt very much that any economist from the Fund would want to defend the 4.5 percent of GDP primary budget surpluses, to be run indefinitely, that are part of the IMF’s agreement with the prior Greek government.  And as Reza Moghadam, the former head of the IMF European department, wrote in the Financial Times two weeks ago, “Europe is demanding implementation, in the next few weeks, of a long and comprehensive list of actions that previous governments were unable to deliver in the space of a few years.”

Is “Europe” making impossible demands of the current Greek government as part of a strategy to get rid of it? Varoufakis met with President Obama last week and there were press reports that he asked the president to encourage European officials to negotiate in good faith. In early February, President Obama appeared to be doing this, stating “You cannot keep on squeezing countries that are in the midst of depression.”  But he has not said anything similar since then.

Obama very much does not want Greece to leave the euro, and neither does Chancellor Angela Merkel of Germany. So despite a number of catastrophic predictions this week – many of them probably politically motivated — it is very unlikely to happen. But the strategy of trying to destabilize the Greek economy and government without forcing Greece out of the euro has its risks. It is also profoundly anti-democratic and wrong.

Mark Weisbrot is co-director of the Center for Economic and Policy Research in Washington, D.C. and president of Just Foreign Policy. He is also the author of the forthcoming book “Failed: What the ‘Experts’ Got Wrong abou the Global Economy.

This article originally appeared on Al Jazeera.

 

 

More articles by:

Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. and president of Just Foreign Policy. He is also the author of  Failed: What the “Experts” Got Wrong About the Global Economy (Oxford University Press, 2015).

bernie-the-sandernistas-cover-344x550

May 22, 2019
T.J. Coles
Vicious Cycle: The Pentagon Creates Tech Giants and Then Buys their Services
Thomas Knapp
A US War on Iran Would be Evil, Stupid, and Self-Damaging
Johnny Hazard
Down in Juárez
Mark Ashwill
Albright & Powell to Speak at Major International Education Conference: What Were They Thinking?
Binoy Kampmark
The Victory of Small Visions: Morrison Retains Power in Australia
Laura Flanders
Can It Happen Here?
Dean Baker
The Money in the Trump/Kushner Middle East Peace Plan
Manuel Perez-Rocha – Jen Moore
How Mining Companies Use Excessive Legal Powers to Gamble with Latin American Lives
George Ochenski
Playing Politics With Coal Plants
Ted Rall
Why Joe Biden is the Least Electable Democrat
May 21, 2019
Jeremy Kuzmarov
Locked in a Cold War Time Warp
Roger Harris
Venezuela: Amnesty International in Service of Empire
Patrick Cockburn
Trump is Making the Same Mistakes in the Middle East the US Always Makes
Robert Hunziker
Custer’s Last Stand Meets Global Warming
Lance Olsen
Renewable Energy: the Switch From Drill, Baby, Drill to Mine, Baby, Mine
Dean Baker
Ady Barkan, the Fed and the Liberal Funder Industry
Manuel E. Yepe
Maduro Gives Trump a Lesson in Ethics and Morality
Jan Oberg
Trump’s Iran Trap
David D’Amato
What is Anarchism?
Nicky Reid
Trump’s War In Venezuela Could Be Che’s Revenge
Elliot Sperber
Springtime in New York
May 20, 2019
Richard Greeman
The Yellow Vests of France: Six Months of Struggle
Manuel García, Jr.
Abortion: White Panic Over Demographic Dilution?
Robert Fisk
From the Middle East to Northern Ireland, Western States are All Too Happy to Avoid Culpability for War Crimes
Tom Clifford
From the Gulf of Tonkin to the Persian Gulf
Chandra Muzaffar
Targeting Iran
Valerie Reynoso
The Violent History of the Venezuelan Opposition
Howard Lisnoff
They’re Just About Ready to Destroy Roe v. Wade
Eileen Appelbaum
Private Equity is a Driving Force Behind Devious Surprise Billings
Binoy Kampmark
Bob Hawke: Misunderstood in Memoriam
J.P. Linstroth
End of an era for ETA?: May Basque Peace Continue
Weekend Edition
May 17, 2019
Friday - Sunday
Melvin Goodman
Trump and the Middle East: a Long Record of Personal Failure
Joan Roelofs
“Get Your Endangered Species Off My Bombing Range!”
Jeffrey St. Clair
Roaming Charges: Slouching Towards Tehran
Paul Street
It’s Even More Terrible Than You Thought
Rob Urie
Grabby Joe and the Problem of Environmental Decline
Ajamu Baraka
2020 Elections: It’s Militarism and the Military Budget Stupid!
Andrew Levine
Springtime for Biden and Democrats
Richard Moser
The Interlocking Crises: War and Climate Chaos
Ron Jacobs
Uncle Sam Needs Our Help Again?
Eric Draitser
Elizabeth Warren Was Smart to Tell FOX to Go to Hell
Peter Bolton
The Washington Post’s “Cartel of the Suns” Theory is the Latest Desperate Excuse for Why the Coup Attempt in Venezuela has Failed
Doug Johnson Hatlem
Analysis of Undecideds Suggests Biden’s Support May be Exaggerated
Peter Lackowski
Eyewitness in Venezuela: a 14-year Perspective
Karl Grossman
Can Jerry Nadler Take Down Trump?
FacebookTwitterRedditEmail