The big fat Greek debt divorce
Successful deal-making is largely predicated on a “win win.” As is their wont, the EU has morphed this principle via their ‘third way’ delusion to one of “lose lose.”
The resounding Greek No vote repudiating debt servitude has liberally smeared egg across the various faces of the EU’s many Presidents. That probably won’t stop them agitating for regime change but Mr. Tsipras has clearly won his referendum. Unlike other referenda in the EU crisis canon, there won’t be another vote to ensure Greeks deliver the answer Brussels demands.
Obsequious apparatchiks such as Euro Parliament speaker Martin Schulz have been humiliated for their self-righteous scaremongering and assorted threats. Nevertheless the outlook is far from easy for Mr. Tsipras. A wounded EU is incapable of delivering the required debt forgiveness. Greece is a de facto former eurozone member - the question is merely which day and by which process. Syriza may prefer expulsion to maintain their stance as beacons of freedom against the totalitarian diktats of German led Euro Imperialists. That Germany was the largest beneficiary of 20th century debt write-offs, has, for now at least, been broadly ignored. Sometime (probably this week) before July government salaries fall due, Greece must start issuing IOUs to cover payments they cannot afford in euro. Moreover, banks will require imminent surgery and injection of new currency which is unlikely to be in euro.
Tragically, the Greek people have suffered five fruitless years propping up some French and German banks, holding the Euro’s stitching together with duct tape. The bailouts were a cynical deception to extend, an act of reckless endangerment to accept. This referendum has ruptured the suffocating status quo.
Any future negotiations will prove difficult. Trust has evaporated. National politicians won’t support debt relief; the Germans are even reluctant to return to Berlin to debate it during the summer. Expect growing citizen indignation at the wanton waste of their cash on the toxic Troika tango. Meanwhile, Syriza, emboldened by a clear mandate to end austerity are unlikely to give ground to the hated Troika.
An immovable post has hit an unbreakable cannon ball - the referendum was simply the final evidence of this Oxi-moron. Somebody must bend but neither party can.
Since the 2010 bailout, contagion risks of an immediate hammer blow to the world economy have reduced. Nonetheless this is a watershed moment in EU history. Former European Commission chief Romano Prodi remarked: "If the EU cannot resolve a small problem the size of Greece, what is the point of Europe?" While a very stressful sixth default since 1826 for Greece, this is a catastrophe for Brussels which has been proven manifestly incapable, incoherent and incompetent. The EU’s ‘ever greater union’ (sic) risks being utterly inconsequential in world affairs while its economy continues to decline in global relevance.
True, Greece represents barely 1.8 percent of the eurozone economy. However, the eurozone has always been sacrosanct according to the Europhiles. Yet ‘Grexit’ is inevitable. De La Rue will soon be printing new Drachma alongside 150 other currencies while we can expect extended bank holidays as the financial system is replenished with new money...
In this Troika engineered ‘lose lose’ framework, at least Greece has a road to redemption and growth post EU austerity and debt default (following Iceland’s recent example). Their pariah status will wear off when they convince international lenders they have made some sensible reforms to collect taxes, reducing the grasp of the oligarchy which dominates their economy and created an honest, vibrant, new democracy which is a direct result of this referendum. If not, Greece will disappear into that unfortunate Balkan malaise of talent and economic promise which has been perpetually unfilled since their zenith in antiquity.
The future of Greece does not have to be a Sisyphean debt struggle. The ramifications for the Troika will be considerable. An internal war within the IMF has broken out in frustration at their Europhile political bosses manipulating the rules to save the euro at all costs. The EU will bluster with its traditional hubristic self-delusion. Having been exposed as impotent and irrelevant in the face of 10 million Greeks, how will the EU fare when the debt crisis eventually reaches Italy, or France?
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.