If the Greek government is holding further talks with its creditors, it is because the IMF and the Eurozone are afraid – not Alexis Tsipras.
The IMF, the European Central Bank and the European Union have a lot riding on their attempt to get Greece to give in and submit meekly to further austerity measures that are designed to keep that country in a debt-servicing economy rather than help get it back in the black.
The idea – as This Blog has reported before – was to create a debt trap, similar to that created for the so-called Developing Nations – and keep Greece in it.
Greece could continue receiving financial support if it sold off nationally-owned assets, privatised services and increased taxes – thereby insuring that it could never actually repay the loans; the profit-making facilities would all have been sold off and the tax burden on citizens would be so great that they could never pay their way out.
But Tsipras came into government on a promise to end austerity measures like this. His sticking-point, it seems, is that this may mean defaulting on the nation’s debts and dropping out of the Euro – returning to a currency unique to Greece – and the electorate doesn’t seem to want that.
Defaulting on loans isn’t as bad for a nation as it may seem. It means all those involved have to agree that the loan won’t be repaid under current conditions and new conditions must be negotiated. The Troika opposes this because its debt trap relies on presenting an illusion that the loans can be honoured. It is only an illusion; Tsipras knows that.
It seems to This Writer that he would be better-off taking a leaf out of Germany’s (history) book. When Gustav Streseman became the new Chancellor of the Republic in the 1920s, debt repayments had crippled that country. Inflation was out of control and industry had ground to a halt due to strike action.
Streseman abandoned Germany’s old currency and introduced a brand new version which was given a very high, stable starting value through the backing of US gold. Similar options are open to Greece, if it abandons the Euro.
Streseman negotiated a new, more realistic arrangement with his country’s creditors, cutting the reparations to be paid by Germany for World War I down from a wildly-punitive £2 billion to the more reasonable £50 million. He also ended the strike and ordered a full- scale return to work, making it possible to pay off this amount. This also is possible for Greece, if it refuses the austerity being proposed by the Troika.
Greece’s creditors will do everything they can to stop this from happening. They want Greece to join the Developing World countries who – as recently as 2011 – were paying back nearly $5 for every $1 lent to them by the western banks. They don’t want Greece to become another Germany; that would profit Greece – not them.
Here in the UK, it is in our interest to hope that Tsipras doesn’t blow it. He could find himself leading the way out of the neoliberal debt trap – not just for Greece, but for many other nations as well.
All that is required is the political will.
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