How the IMF Broke Greece

by V N Gelis

  A clear case of how an entire production sector has effectively been dismantled, as a result of the opening and liberalisation of markets under EU rules, is the Greek agricultural sector, which, for almost every Winter in the last few years, has been in turmoil, with farmers blockading the main Greek roads ―the last time in January of this year.

  Thus, while the agricultural sector until Greece‘s accession to the EEC, in 1981, had been employing 31% of the active population[42] (against an average of 6% in the metropolitan centres of the EEC), following the accession, a general stagnation of agricultural production was recorded, despite the much-advertised subsidies through the CAP (Community Agricultural Policy). In fact, the agricultural population suffered a dramatic decline between 1981 and 2006, with the proportion of farmers in the total working population dropping by more than half in this period (from 31% in 1981 to 13% in 2006). The same of course happened in metropolitan countries as well, but while in these countries we talk about an approximately 3% of the active population which had to find (and basically found) employment in the expanding modern service sector, in Greece we talk about an 18% of the population, which had to turn to a parasitic ―services‖ sector [43] to find employment. Moreover, while the reduction of the rural population in metropolitan centres did not prevent their agricultural production to continue growing rapidly (because of its greater productivity), in Greece it has completely stagnated. Thus, while the average annual growth rate of agricultural production in metropolitan centres in the period 1990-2006 was about 0.9%, the corresponding Greek rate was negative (―0.9%)(―0.9%) 81) Greek agricultural production was increasing at an average annual rate of 2.7%![45] Similar conclusions can be drawn about the effective dismantlement of the manufacturing sector following Greek entry to EU and EMU.

  However, the above findings should not lead us to utopian conclusions and wishful thinking on the need for ―self-organization‖ of farmers and the ―regeneration of local communities,‖ that supposedly would create ―the conditions for establishing models of direct democracy‖. Self-organization by itself, within the existing institutions of the internationalised market economy and representative ―democracy,‖ either would lead to stagnation and eventual failure, or to integration in the system (see e.g. the case of Mondragon in Spain), since there cannot exist viable ―islands‖ of an alternative organisation of production and society in general within an economy, such as the Greek one, that is fully integrated into the globalised market economy, through the EU. For instance, at what prices will the selforganized farmers dispose of their products when, in today‘s open and liberalised markets, on the one hand, the prices of their output (i.e. of their products) are determined by the lower cost of production which, ultimately, means the cheaper labour cost, and on the other, the prices of their ―inputs‖ (i.e. of fertilizers, machinery, technology, etc.) are controlled by the multinationals? How can the ―self-organized‖ farmers compete without ―protection‖ against the agricultural products produced by India, China or Egypt, with their starvation wages, or even those produced by other EU countries or the US, with their higher productivity?

  Is there an alternative solution to EU colonisation? The predatory measures imposed on Greece by the Directorate of the EU, expressing the Eurozone‘s political and economic elites, clearly give the impression of a complete colonisation of the country by the transnational elite. This is not just about the implementation of neoliberal prescriptions of the EU in Greece, as claimed by some in the Left. It is one thing to implement similar measures by formal consensus of the people (as in Britain, Holland, Sweden, etc.) and quite another to enforce compliance with such measures, as it happens now in Greece. Especially when these measures do not have any popular legitimacy, given that the ruling party was elected on a program that provided for measures entirely different from those imposed now on the Greek people. This, despite the fact that the leadership of the ruling party (just as that of the New Democracy) was fully aware of the crisis—which is basically chronic— and deliberately deceived the electorate with the help of the political and economic elites controlling the media, assuming (rightly) that only a ―socialist‖ party could have a chance to impose such measures, because of its comprehensive control of trade unions. And of course, no one can take seriously opinion polls paid for by private companies or parties, claiming strong political support for these measures. When ―Greek statistics‖ is considered a kind of a joke in the Eurozone (as it is obvious now that they were compiled according to the wishes of the particular fraction of the Greek political elite in power at the time of compiling), it is clearly a kind of a bad joke to refer to the supposedly impartial findings of opinion polls, especially on such a crucial issue for the elites who finance these polls as the popular approval of the barbarous measures being imposed at the moment. The very fact that some polls have been published lately, which not only overturn the conclusions of the above fake polls but also show an overwhelming rejection of these measures, is a clear indication of this.

  The enforced measures are presented, in a massive brainwashing by the elites and their acolytes in the media, as unavoidable. This however is true only if we take for granted the present institutional framework of today‘s globalisation, namely, open and liberalised markets, which are the ultimate cause along with the consequential treaties of Maastricht, Lisbon and the Stability Pact. In this context, competitiveness plays indeed a crucial role with respect to an exporting economy that bases its development on the free movement of commodities and capital (like Germany or China!). At the same time, competitiveness itself is related to low production costs which, in turn, are a function of wages, productivity, price stability, and also employers‘ contributions/taxes. The euro, therefore, cannot be separated from the Stability Pact, as is imprudently proposed by the reformist Left, because it is only when the common currency is complemented by criteria like those prescribed by the Stability Pact that, in the given institutional framework, monetary stability and the competitiveness of developed economies in the Eurozone can be achieved. In other words, without the policies of squeezing wages, prices and the associated deficits, the EU could not indeed survive in any competition with USA, China, etc. Therefore, the Eurozone was formulated on the basis of the needs of economies such as Germany‘s, which have little to do with the needs of countries like Greece, or other countries in the ―European South‖.

  So, the slogan ―abolish the Stability Pact‖ is misleading, because it means, in fact, transferring the issue to be resolved within the EMU countries, something that presupposes a dramatic change in the overall balance of power within it and therefore postpones the implementation of this proposal to the indefinite future (if ever!). In the meantime, the Greek people will have gone down on their knees through an imposed neoliberal state of poverty and unemployment—something which nowadays usually leads to conservatism and apathy, as, for instance, in Britain. Similarly, the slogan of ―disobedience to the EU‖ becomes rhetoric when the ruling party controls the main trade unions, out of which usually the future professional politicians in the party are selected!

  On the other hand, however, an alternative ―package‖ of measures could be proposed, which, even within the existing system of market economy and representative ―democracy,‖ would provide for:

  • an exit from the current financial crisis (albeit not from the chronic economic crisis, which is associated with long term radical changes in the production and consumption structure of the country) without the current attack against social conquests and a consequent massive unemployment and poverty for decades to come,

  • a genuine social justice (no relation to the one invoked by the government) for transcending the crisis, by forcing those, who have mainly benefited over the years by the massive borrowing, either directly (through the huge fortunes they have amassed by tax evasion, profiteering, etc.) or indirectly (through the huge increase in the value of their properties, as a result of the growth bubble that public borrowing made pos
sible). On the other hand, the kind of social justice invoked by the EMU elites and the PASOK government involves the Governors of the European Central Bank and the Bank of Greece, who demanded (and got it!) the severe cuts on wages and salaries ― including the trifling salaries paid to the young in their first job (the socalled in Greece ―generation of 700 Euros‖), whereas at the same time they themselves pocket 345,252 and 362,500 Euros respectively![46], and

  • the creation of the preconditions for economic self-reliance (not selfsufficiency) and overcoming unnecessary consumerism in the future.[47] The fundamental precondition for a similar ―package‖ of measures is the recovery of national sovereignty that has now disappeared completely, even formally. Of course, Greece was never a fully sovereign country, as the modern Greek state that was established at the beginning of the 19th century, following a revolution against the Ottoman rule (a rule which lasted for almost four centuries), was in fact an informal protectorate of the powers that helped the Greek liberation (Tsarist Russia, Britain, France) and, following the demise of the Tsarist regime and the decline of French influence, it came under the political and economic tutelage of Britain. This was until the decline of the British empire and the rise of the American ―empire,‖ following the second world war and the defeat of the Left in the civil war (with the decisive military and economic help to the Right given by the Americans), created a new US protectorate (in all but its name) in Greece.

  The political and economic elites in post-war Greece were completely dependent on the American elites, which did not have any qualms even to give the green light for the imposition of a military dictatorship in 1967, when a strong popular movement from below in the mid-1960s questioned the very political institutions on which American domination (centred around the Palace) was based. The military junta had further integrated the Greek economy into the internationalised market economy, relying on foreign investments and the foreign markets to boost an economic development of a purely dependent type.[48] It was during the military dictatorship period (1967-74) that a consumerist society was created in Greece, which, however, was based on an economic growth bubble, as the degree of self-reliance of the Greek economy was effectively being undermined with the gradual opening of the markets, which had led to an ever increasing gap between what the country could produce and what it was consuming, as it was shown by the fact that the trade deficit as a proportion of GDP has almost doubled from 9% in the 1950s to 16% in the 1970s.[49] This gap was initially covered by the remittances of millions of Greeks who were forced in the 1960s to emigrate to Germany, Australia, etc. to avoid unemployment and poverty at home, the shipping remittances (the Greek economic elites have always excelled in the shipping industry) and finally tourism, which was the emerging ―heavy industry‖ for countries in the periphery and semi-periphery in the 1970s and 1980s. However, the first two sources began drying up in the 1980s when the demand for immigrants in the host countries was drastically reduced and Greek shipowners began transferring their ships under various flags of convenience, reducing drastically Greek personnel in the process.

  At the same time, Greece‘s integration into the internationalised market economy was sped up as a result of Greece‘s entry into the EEC, which not only led to the complete opening of its markets and a further loss of economic sovereignty through the loss of its right to protect its own agricultural and manufacturing sectors (leading to the inevitable effective dismantling of both!) but also led, when it joined the Euro at the beginning of last decade, to the formal end of a Greek monetary policy, which was determined since then by the European Central Bank (i.e. the economic elites of the Eurozone). Furthermore the Stability Pact of the Maastricht and Lisbon Treaties imposed strict controls on fiscal policy (the total debt level should not be higher than 60% of the GDP and the state budget deficit should not exceed 3% of it). In fact, as it has now been revealed, the Greek elites achieved these entry criteria only through ―creative accounting,‖ although Greece was not alone on this as other countries among the PIGS did the same to secure their entry, and most probably the European economic elites looked the other way, in order to expand the Eurozone.

  So, the present takeover by the EU elites of even the last remnants of economic policy-making within Greece represents the completion of a long process, which presently formalises the transformation of Greece into an EU protectorate. Therefore, the first step in any attempt to recover economic sovereignty, which is a fundamental precondition for any restructuring of the Greek economic structure in a way that would make possible the control of the economic process by the Greek people themselves rather than by the foreign economic and political elites in collaboration with the local ones, is the immediate exit from the Eurozone, as a first step in the exit from the EU itself. In fact, an exit of Greece from the Eurozone ―usually as a temporary measure and of course with a different rationale and a very different packet to complement it― is proposed presently also by distinguished orthodox or reformist economists like Martin Feldstein of Harvard University,[50] Erik Jones of Johns Hopkins University at Bologna,[51] or Dirk Meyer of Hamburg University,[52] contrary to Greek economists of the Left (Marxists and nonMarxists alike) who, following the establishment‘s line, predict a Greek economic catastrophe in case we exit from the Eurozone, usually without any serious arguments to support this view—something that creates a reasonable suspicion for those of them who are also academics that they have also vested economic interests in taking such a stand, given the heavy involvement of many of them in various research and teaching programs financed by the EU!

  The first step, therefore, to be taken is an immediate referendum on whether the Greek people approve the predatory measures imposed on it by the Greek political elite on behalf of the Eurozone elite. This is actually the only way to legitimise these measures given that PASOK had blatantly deceived the Greek people in being elected on a program which promised exactly the opposite measures of the ones it now tries to implement. The centre-right New Democracy party was in fact more frank than the ―socialists‖ of PASOK, as they did not hide their determination to freezing salaries, wages, etc., at the very moment when Papandreou and his clan were shamelessly lying to the people that they will proceed with increases in wages and salaries, in full knowledge of the size of the crisis they were facing (as I had revealed in my fortnight column at the Athens daily Eleftherotypia at the time[53]) and with the full support of the media controlled by the elites, which wanted at all cost to have a ―socialist‖ government elected with the aim to deceive the people into submission— as they have succeeded so far in doing! The very fact that millions of people all over Greece are now taking part in repeated general strikes against the government measures and thousands take part in almost daily demonstrations against them, the conflicts which have already been created between the trade union bureaucrats controlled by PASOK (who desperately try to keep the social dissent controlled until it fizzles out) and the rank and file (which demands tougher union action to prevent the implementation of measures) are clear indications that the present brainwashing by the mass media is failing—a fact that is also confirmed by several ―true‖ polls in contrast to the suspicious polls I mentioned above.

  If, therefore, the political elite is interested even in keeping up the appearance of ―democracy,‖ it should proceed directly to a referendum for the approval or rejection of the predatory measures, so that the alternative proposals be publicly discussed ―provided of course that conditions of absolute equality of the rights of participants in the media discussions are fully guaranteed. On the other hand, if the government continues imposing such measures without any legitimisation, then, it will not be any more a kindof ―democratic‖ government of the usual Western representative ―democracy‖ kind; it will be a pure ―parliamentary junta‖ and will be treated correspondingly by the Greek people.

  But, assuming a democratic referendum does take place and the present so called ―stability program‖ implemented by the local el
ites on behalf of their foreign collaborator elites is rejected, what next? The next step, as I proposed above, is the immediate exit from the Eurozone but then the issue is: how the new currency to replace the euro would not be devalued significantly in foreign exchange markets under heavy speculation, and Greek capital will not move en mass out of Greece ―possibilities that, if materialised, will force the lower social strata to pay an even higher price than before and possibly terrorise them to return to the present situation, marking a full circle?

  Immediate measures following the rejection of the present elites‘ measures In fact, however, there are ways to avoid, or at least minimise any such harmful side-effects. I would therefore propose a complementary ―package‖ of measures, which could be implemented following a Greek exit from the EMU and the consequent release of Greece from the Stability Pact stipulations. These are measures that could be taken immediately following the rejection of the present ones by a referendum, which can be taken within the existing system of the capitalist market economy, and could set the preconditions for a self-reliant development in the future that could lead to an inclusive democracy in the long term. Such measures are: