The human cost of the Euro ‘dream’

There are times when political discussion can based purely on ideology and principles, and there are times when it can’t. So while the Greek bailout is being debated in the German parliament and endlessly analysed elsewhere, I thought I would have a quick recap on the human costs of Greek austerity.
Healthcare is an obvious place to start and the stats are damning. According to CNN, “the country’s health care system is on the brink of collapse. Government health spending fell 25% between 2009 and 2012, after the country’s 2010 bailout package capped such spending.

Spending on drugs dropped by 32% since 2010. And the country owes international drug makers 1.1 billion euros ($1.2 billion), according to the European Federation of Pharmaceutical Industries and Associations.

Evangelisimos is the biggest hospital in Greece. With 1,000 beds, it is constantly running 10% to 20% over capacity. “There is just too many patients and not enough rooms,” trainee nurse Anastasia Karkasina said. Karkasina is three months away from becoming fully qualified. She is worried about getting a job.

“There are no available positions, because there is no money to pay for them,” she said while taking a short break with fellow trainee Anna Karafoti in the sizzling heat outside the hospital. If the two manage to get jobs, they can expect monthly salaries of about 700 euros ($780).”

A public health tragedy is surely looming, with under-staffed hospitals running at over-capacity.

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Greece: A single story

A few days ago I found myself watching a TED talk by the Nigerian author, Chimamanda Ngozi Adichie. Adichie is as engaging a speaker as she is a writer and she took to the TED stage to discuss what she calls the notion of a ‘single story’. The idea is a simple one: a single story is created by showing a nation (or continent) and its people as one thing, and only one thing, over and over again until that is what people believe them to be. To illustrate the point, Adichie uses an example close to her heart, that of the poor, sick and war ravaged Africa, crying out for the help of the benevolent white man; a narrative that treats Africans as unfit to control their own destinies. She also points to the stereotype of the lazy Mexican immigrant, any US Republican voter’s worst nightmare. In both cases, the story is blind to the realities of the individuals and communities tarnished by this lazy stereotyping. But within this critique lies the purpose of this single story. Whoever writes the past can control the present, and whoever illustrates the characters can also define the plot. The single story of the Mexican immigrant may be a depressing generalisation but it is also a powerful weapon for the American far right.

As events unfolded in the seemingly never ending Greek ‘crisis’ over the last few days I kept coming back to this idea of the single story. Since the crisis began we have been constantly told that the bloated Greek public sector must pay the price for years of mismanagement; that the Greek people must stop shirking blame and face the full consequences of living beyond their means; that the Greek government must not expect something for nothing from its friends and partners at the eurozone negotiating table; and, most importantly, that the responsibility for the entire mess lies in Athens. While a quick glance on social media sites will of course show that many people have seen beyond this myopic version of events, it is still the voice of the mainstream media that holds influence in the majority of countries. Controlling the narrative is the key to political success.

tsipras

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Syriza’s defeat deals a blow to the European Left

“Orderly debt restructuring has been done hundreds of times, hundreds, like with Germany in 1953”.

 Pablo Iglesias

As the leader of Podemos has rightly pointed out on many occasions, sovereign debt restructuring is nothing new. Why, we may ask, should post-war Germany be helped to meet its financial commitments and rebuild its shattered economies, but Greece and other southern European states should not? Well, the standard narrative on the right is that after an initial helping hand, German productivity and fiscal acumen allowed it to become a regional manufacturing powerhouse. After West Germany had sufficiently re-established itself as a responsible and affluent member of the international community, it was then helped to reunite with its crumbling, post-communist sibling. The beauty of this simplistic version of events is that it is essentially a story of redemption and triumph over adversity, and so lends moral weight to Germany’s central role in contemporary European affairs. It does not, however, hold up to scrutiny of the facts. It was Germany’s central position in the cold war, as well as its divisive position in post-war Europe that made the USA aggressively promote it as a new capitalist powerhouse on the continent. By promoting the European Coal and Steel Community (the precursor to the modern EU) with German participation, the USA embarked on a project to strengthen the Deutschmark as an additional pillar of capitalist strength, and work towards the creation of a vast trading block. Nowhere is the commitment to rebuilding the German economy clearer than in the details of the 1953 debt restructuring, where debt repayment was tied to export revenue. Creditor nations therefore had a vested interest in buying German exports, thus allowing the indebted nation to repay its debts and become ultra-competitive on the global scene.

But in the 62 years that have passed since, the rules of the game have changed beyond recognition. The European project has boomed into a vast bureaucracy overseeing a continental marketplace. With the advent of the single currency at the beginning of the century, the Eurozone members committed themselves to the observance of strict financial rules in exchange for the so-called stability of a single unit of currency designed to reduce transaction costs and promote financial security within the bloc. It is now widely known that countries, including Greece, failed miserably to meet the requirements of euro entry but were admitted anyway through a combination of financial fraud and European bonhomie. Although this may look like a tragic mistake in hindsight, it was crucial to the project that the southern European countries join the single currency in an irreversible manner. As soon as Greece, Italy and Spain were locked into a currency position which did not allow for default, they had sacrificed their only effective means of making their economies more competitive in the face of German exports (which, as I previously discussed here, are made so competitive by breaking Eurozone rules). In short, they were therefore doomed to run current account deficits vis-à-vis Germany ad infinitum. But to make matters even worse, the lack of mechanism for fiscal transfer within the Eurozone (with the original rules explicitly removing this possibility) meant that there has never been any way for the German surplus to be recycled within the union in the interest of stability and balanced growth. The single currency has been deeply flawed from the start.

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Syriza, Greek debt, and the Ottoman Empire: History has a way of repeating itself

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Big countries have a history of making small countries pay their debts. Historically it does not matter whether loans were taken out voluntarily or whether they were imposed via some imperial gunboat diplomacy, but there should be no doubt that economic giants like to uphold a contract. When the once powerful Ottoman Empire defaulted on its obligations to French and British bondholders in the 19th century, the two great European powers promptly set up an Ottoman tax collection agency and effectively launched a financial coup d’etat on the Sultan and his flagging empire. The new Ottoman Public Debt Administration (OPDA) was launched in 1881 to ensure that foreign creditors would receive their dues, and grew into a vast bureaucracy of almost 10,000 employees. In addition to debt collection the OPDA also branched out into wider financial affairs and became an important intermediary for European companies looking to invest in the Empire. Due to its vast reach in the Ottoman public service, the OPDA guaranteed both financial security and favourable commercial opportunities for its partners. What began as a debt default morphed into an imperial occupation in all but name, with contractual obligation and trade opportunity being the core principles. It mattered little that much of the Ottoman Empire’s public debt had been acquired through its role in the Crimean War, a conflict in which it fought side by side with both the British and the French. A deal was a deal, and when the Ottoman Empire ultimately defaulted on its debt, its ‘allies’ swooped in to enforce repayment.

I was reminded of this financial colonisation last week with Wolfgang Schäuble’s offer to send 500 German tax collectors to Greece. The circumstances are obviously different but perhaps there are still parallels we can draw. Greece entered the Eurozone in collaboration with its European partners in celebration of the collective vision of European integration. Countries across the continent came together to become firm economic allies, united by a shared currency. It has subsequently become clear to all however that Greece did not meet the original economic requirements for euro membership. Allegations arose that the Greeks had cooked the books and worked with Goldman Sachs on a deal which involved cross-currency swaps at fictional exchange rates. This enabled them to circumvent the Maastricht rules and ‘meet’ the Eurozone requirements. Military and healthcare expenditures were often left off the balance sheets over the years as accounting fraud helped to maintain the illusion of financial stability. None of this is anything new of course and Angela Merkel has expressed her belief on multiple occasions that Greek euro membership should never have been approved.

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Time to change our priorities: improving society should be about more than supporting business

With capitalism in the doldrums and a general election nearly upon us it is the season to reflect on how we might manage to convert the neoliberal, market-driven free-for-all of our current society into something we might actually like to live in. Will Hutton set the ball rolling in the Guardian yesterday with a lengthy promotion of his new book, which lays out a new framework for building “smart societies.” Hutton’s critique of the existing  order raises some salient points and only those living on the moon over the last generation or three could have failed to notice that “problems in the British economy and society run deep.”  He is also right in asserting that, if “there are no networks of reciprocal obligation, and no acknowledgement that human beings associate in a society they can construct, redesign and reform around those principles, then we are all reduced to atomistic consumers and workers – serfs who are no more than notations in the spreadsheets of companies and public bodies alike.”

Do businesses really deserve to be at the centre of society?
Do businesses really deserve to be at the centre of society?

The problem with Hutton’s analysis, however, is that he still puts business and wealth creation at the heart of society. “The aim of any manifesto for change” says Hutton “must be to create the smartest economy for Britain – it is the only route to prosperity in the decades ahead.” Refining the mechanisms of wealth generation is all very well but surely this should not take precedence over the social and human fabric of the world we live in. Unfortunately, Hutton is a little sketchy on this issue and even though he is adamant that businesses should not solely tools of stock market speculation, he also declares that “companies are organisations of genius, solving problems, innovating and delivering great goods and services.” ICI, GEC and Rolls Royce are all used to show Britain’s great industrial tradition but he conveniently forgets recent allegations of corruption and bribery in the latter.

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Crunch time in Greek debt crisis: time for compromise?

It is well and truly crunch time and this week will be pivotal in defining the future of Greece and the Eurozone. It was interesting to read criticism this morning of Syriza’s approach to negotiations over the last couple of weeks, with at least one commentator pointing out that Varoufakis’ negotiating actions have not matched his academic knowledge of game theory. Let’s not forget though that at least he is showing willingness to resolve the situation in a way that will keep Greece solvent and avoid disaster. This is more than can be said for his Eurogroup partners.

Later today Syriza faces a vote of confidence in the Greek Parliament. Although it is likely to gain enough votes, this is just a precursor to tomorrow’s meeting in Brussels of EU finance ministers which could be one of the last opportunities to take steps towards a compromise before things start to unravel. After the ECB stopped accepting Greek bonds as collateral on loans last week, the National Bank of Greece has been forced to increase its operations through the Emergency Liquidity Assistance (ELA) in order to prop up the Greek banks. This is essentially a form of credit sanctioned by the ECB but with the proviso that it can be cut off at any moment if the ECB feels it is excessive. The end of Greek ELA would be the point of no return, leading to a run on Greek banks, bankruptcy and a certain exit from euro. Even now, Greek bank deposits continue to plummet at an alarming rate, adding to the likelihood of a run on the banks. Unless things change dramatically Greece will surely have to institute capital controls very soon to hang on to what’s left in their financial system. According to the ECB, Greek banks have lost around 21 billion euros since December, amounting to unsustainable losses. Although capital controls would break the European Union Treaty, this is not without precedent, and Cyprus was allowed to introduce this measure, with some success, in 2013. However, this will be an unpopular measure within Greece and is likely to be a severe test for Tsipras and his government.

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5 reasons why a Greek euro exit is unlikely (for now)

Yanis Varoufakis (right) with Wolfgang Schaeuble.
Yanis Varoufakis (right) with Wolfgang Schaeuble.

I had originally intended to write today about something a little bit more abstract and theoretical as a tonic to the political commotions of the last few days. However, after Yanis Varoufakis’ whistlestop tour of Europe in support of Syriza’s electoral promise of Greek debt reduction, now seems like a good time to reflect on developments.

There were encouraging noises from unexpected quarters early in the week with George Osborne and Barak Obama both joining the calls for a review of the crushing austerity policies currently proscribed by the troika. “You cannot keep on squeezing countries that are in the midst of depression”, said Obama. Very true indeed. As the Greek delegation arrived in Germany, however, things predictably took a turn for the worse. The ECB’s announcement that it would no longer accept Greek bonds as collateral for additional funds was inevitable but still something of a surprise. Although Greek banks will still have access to the Emergency Liquidity Assistance, this was a setback, and one the markets did not take kindly to. After a meeting with ECB chief Mario Draghi, Varoufakis met his German counterpart, Wolfgang Schaeuble, in a much anticipated showdown. The fact that they couldn’t even agree that they had agreed to disagree speaks volumes on the lack of progress made.

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The Inner Class Divide (Part 3)

To round things off after Part 2 yesterday, here is the third and final part of this essay looking at our internal class conflict and its implications for radical left-wing political alternatives in Europe and beyond…

The Inner Class Divide

That we as individuals are subject to various stimuli contributing to development is nothing new. Much has been written on child development and much of this can extend also into adult life in terms of continuous learning and development. Where things have changed in recent years is in the increased intensity and aggression of stimuli relating to late stage capitalism. On the one hand we possess a social brain, allowing us to feel empathy and make emotional connections, and a character forged through a myriad of social connections and interactions. Many of us experience a fundamental need to share our lives with friends, family and community. But on the other hand, we are bombarded with advertising signals and media messages telling us that consumption is the ultimate goal and that this must be driven by aggressive, competitive activity in the market place. Much of what we experience through advertising relates to consumption or the adoption of an idealised version of self to which we should aspire. We are told that that we can have everything as long as we consume. In a ‘post-religious’ world it is salvation through consumption. Our participation in society can be bought instead of fostered through genuine social interaction.

But we are the recipients of contradictory messages. Identity formation through the solitary pursuit of commodities in order to satisfy a conditioned super ego is at odds with our more basic needs as social animals. Capitalism relies on competition whereas our early development engenders the value of cooperation. The (cultural) super ego tells us that to succeed at life we need to compete in the market place, earn money as efficiently as possible, and construct our idealised identities. But our innate characteristics and our basic human needs show us the importance of people over the market. This is class warfare in every sense, with the mind being the battleground. Many individuals therefore experience a subconscious, inner class tension, with a consuming, competitive, aspirational self striving to keep up in the market, and a social self yearning for cooperation and interaction. This ideological battle is internalised and fought daily in a way that has far greater implications than the debate in the political arena.

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