Friday, February 27, 2015

Yanis Varoufakis Bloomberg interview

What Greeks Want Most Is `Dignity,' Varoufakis Says

Feb. 26 -- The Greek people want "dignity first" before money and jobs, Finance Minister Yanis Varoufakis said. He discussed prospects for the Greek economy and debt repayment in a wide-ranging interview with Bloomberg Television's Erik Schatzker in Athens Wednesday.

Wednesday, February 25, 2015

Impressive documentary: Power without control - The Troika

Troika members visiting Greece

Macht ohne Kontrolle - Die Troika

Yesterday evening I saw on Arte television a very good documentary about the uncontrolled power of the Troika (European Commission, ECB and IMF). The original title is "Macht ohne Kontrolle - Die Troika".During a week you can see the documentary on internet by clicking HERE. (I noticed the link did not work anymore; HERE is another link.

I don't know if there is a subtitled version in English, Spanish of French. The narrator of the film is investigative journalist Harald Schumann and it is directed by Arpad Bondy.

PS: I found a French version - click HERE

PS2: And I found an English version - clich HERE

Tuesday, February 24, 2015

Greece's debt strategy - democratic politics should be reinstated in Europe

In Analyze Greece appeared on 22 February 2015 an interesting article by Manolis Melissaris that sheds light on the strategy of the new Greek government in its debt talks with European finance ministers. One of its aims was to change the terms of the debate. According to Melissaris the Greek government has succeeded in introducing a democratic and social agenda in the technocratic discussions.

The Greek negotiation strategy as democratic disruption

Manolis Melissaris
February 22, 2015

So a Eurogroup deal has been struck and the hatchets are buried under a thin coat of dust for now. What are we to make of this?

SYRIZA’s top realistic priorities seem to have been, or at least should always have been, the following. First, to relax austerity to the highest degree possible and thus address the humanitarian crisis. Secondly, to get some breathing space which would allow the government to implement its fiscally neutral (though of course not fiscally indifferent) social agenda. Thirdly, to push mainstream political discourse in Europe in a new direction.

The deal does not fully achieve the first aim and being overjoyed about the deal in this respect is probably ill advised. Austerity will still have to be practiced and many of the measures might still be largely at the expense of the lower and middle social strata. This is not the whole story though. That the Greek government can now autonomously determine reforms, unlike any other government of the crisis years, means that it can redirect reforms in a way that shifts burdens towards those who have remained unaffected both by the crisis itself and the policies of the past five years. At the time of writing this brief comment the proposed reforms have not been announced so the jury’s still out on this.

The aim of implementing the social agenda must still be pursued and it must be achieved. The government’s mandate is not exhausted in the immediately urgent issue of debt. This may have, disappointingly, monopolised political discourse in Greece for a long time, but it is only part of the picture. Immigration, security and penal policy, human rights, the structure of political discourse, the regulation of media ownership, the restoration of the rule of law, institutional design and maintenance and many other issues are just as pressing and significant. For example, a day after the deal, protesters outside the illegal immigrant concentration camp of Amygdaleza were dealt with very heavy-handedly by the police. It is of the utmost urgency that such practices change.

But what I would like to focus on is the third aim. Many, from the New Yorker to the Guardian, seem to believe that Greece overplayed its hand during the Eurogroup negotiations. They say that its initial demands were maximalistic. Therefore, under the pressure of the blackmail openly exercised by the German government and its satellites, the inevitable retreat became a bigger defeat than it could have been.

We should not be too quick to buy into that reading of events and I’ll explain why. From the very outset, the Greek government emphasised the predicament of the Greek people caused by the years of austerity. It highlighted how counterproductive the inequality generated by the post-crisis economic policy has been. It proposed concrete measures, which would not have aggravated the fiscal situation. It also unfailingly flagged up the unequivocal mandate that it had so recently been given by the Greek people.

When arguing against, and rejecting, the ‘maximalistic’ Greek requests Germany and its satellites inevitably faced all these claims too. Much was disclosed in this process. Here are only a few of many examples. As it was reported, the Spanish and Portuguese governments tried to undermine the whole deal. They were concerned with things back home. They did not want to appear to accept that there may be an alternative to the policies that they have been following, a concession which would be wind in the sails of domestic opposition. Wolfgang Schäuble tried to intervene in domestic Greek politics on a number of occasions (feeling ‘sorry’ for the Greek people for having elected an ‘irresponsible’ government and then apparently feeling sorry for the Greek government for the difficulties it would face explaining the deal to the Greek people). His move is transparent. He tried openly to blackmail not just the Greeks but all European peoples and governments and to appear domestically tough with those who do not share the ‘right’ vision of Europe. On a deeper level, he was trying to establish that vision of Europe as the only alternative, therefore one that remains unaffected by democratic or principled tests. Jeroen Dijsselbloem lost his cool when Paul Mason, the Economics Editor of Channel 4 News in the UK, asked him what he says to the Greek people “whose democracy you’ve just trashed”.

What is significant about all this is that it happened within a European institutional setting. Whereas the same arguments have been made in civil society and the public sphere at large numerous times in the past, the Greek negotiation strategy disrupted technocratic discourse with democratic politics for the first time ever. It forced on the institutional table the antinomy between democratic legitimacy and economic power. It highlighted the deepest contradiction of the European institutional structure: on the one hand distributive policies presuppose popular sovereignty and, on the other, this is made impossible by the economic governance of the EU.

This democratic disruption will eventually have systemic effects. Perhaps through the emergence of the language of democracy and social justice in official documents, a language which can then play a part in determining the interpretation and implementation of European policies. Perhaps through the implementation of the social justice oriented policies that are not incompatible with the terms of the deal. Perhaps through the fiscally neutral social agenda, which can at the very least re-frame the fiscally onerous measures.

But it can also have a short-term, external effect. It can reveal to the people of Europe that the clash is not between them and the Greeks or other European peoples but rather between two visions of Europe, one of which leaves them out of the picture altogether. It can disclose that domestic democratic politics is not sufficient to counter global economic forces and that isolationism cannot be the answer. It can make the need for a European political sphere felt more strongly than ever. It is telling that, as soon as Schäuble and the rest realised that this is the way things are going, they engaged in a last minute attempt at character assassination, at discrediting the Greek government and presenting its representatives as irresponsible and incompetent. This was quite obviously an attempt at dragging Greece back into the technocratic game of efficiency and number-crunching. But it was already too late for that.

In his address to the Greek people the day after the deal Alexis Tsipras said that a battle was won but the war is still waging. If this is really a war, its central theatre is political and the main stake is to reinstate democratic politics in the heart of Europe. The EU does not currently have the appropriate institutional structure for the voice of the people of Europe, now re-animated by the institutional democratic disruption, to be translated directly into norm-determination. But it can be heard through social movements, in civil society, in the public sphere. And this can only strengthen the disruption until it becomes a rupture.

Manolis Melissaris teaches and writes on legal and political philosophy and criminal law (@EMelissaris)

Tuesday, February 17, 2015

Europe's lack of wisdom in dealing with Greece's debt

A month ago the Greeks voted against the continuation of the current EU debt 'rescue' programme for Greece and wanted to replace it with a more sensible recovery programme for their country. But the other European governments of the eurozone do not allow the new Greek government to respect the wish of its voters.

As Paul Krugman wrote yesterday on his blog
"OK, this is amazing, and not in a good way. Greek talks with finance ministers have broken up over this draft statement, which the Greeks have described as “absurd.” It’s certainly remarkable. On my reading, here’s the key sentence:
The Greek authorities committed to ensure appropriate primary fiscal surpluses and financing in order to guarantee debt sustainability in line with the targets agreed in the November 2012 Eurogroup statement. Moreover, any new measures should be funded, and not endanger financial stability.
Translation (if you look back at that Eurogroup statement): no give whatsoever on the primary surplus of 4.5 percent of GDP.
There was absolutely no way Tsipras and company could sign on to such a statement, which makes you wonder what the Eurogroup ministers think they’re doing.
I guess it’s possible that they’re just fools — that they don’t understand that Greece 2015 is not Ireland 2010, and that this kind of bullying won’t work.
Alternatively, and I guess more likely, they’ve decided to push Greece over the edge. Rather than give any ground, they prefer to see Greece forced into default and probably out of the euro, with the presumed economic wreckage as an object lesson to anyone else thinking of asking for relief. That is, they’re setting out to impose the economic equivalent of the “Carthaginian peace” France sought to impose on Germany after World War I.
Either way, the lack of wisdom is astonishing and appalling." 

Greece's finance minister Yanis Varoufakis wrote yesterday in an op-ed in The New York Times:

"The great difference between this government and previous Greek governments is twofold: We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must. The principle of the greatest austerity for the most depressed economy would be quaint if it did not cause so much unnecessary suffering.
I am often asked: What if the only way you can secure funding is to cross your red lines and accept measures that you consider to be part of the problem, rather than of its solution? Faithful to the principle that I have no right to bluff, my answer is: The lines that we have presented as red will not be crossed. Otherwise, they would not be truly red, but merely a bluff.
But what if this brings your people much pain? I am asked. Surely you must be bluffing.
The problem with this line of argument is that it presumes, along with game theory, that we live in a tyranny of consequences. That there are no circumstances when we must do what is right not as a strategy but simply because it is ... right.
Against such cynicism the new Greek government will innovate. We shall desist, whatever the consequences, from deals that are wrong for Greece and wrong for Europe. The “extend and pretend” game that began after Greece’s public debt became unserviceable in 2010 will end. No more loans — not until we have a credible plan for growing the economy in order to repay those loans, help the middle class get back on its feet and address the hideous humanitarian crisis. No more “reform” programs that target poor pensioners and family-owned pharmacies while leaving large-scale corruption untouched.
Our government is not asking our partners for a way out of repaying our debts. We are asking for a few months of financial stability that will allow us to embark upon the task of reforms that the broad Greek population can own and support, so we can bring back growth and end our inability to pay our dues."

Friday, February 6, 2015

Greece needs debt restructuring

On January 30th, Paul Krugman wrote in his NYT column: "In the five years (!) that have passed since the euro crisis began, clear thinking has been in notably short supply. But that fuzziness must now end. Recent events in Greece pose a fundamental challenge for Europe: Can it get past the myths and the moralizing, and deal with reality in a way that respects the Continent’s core values? If not, the whole European project — the attempt to build peace and democracy through shared prosperity — will suffer a terrible, perhaps mortal blow."

Krugman discusses the myth that Athens has used the rescue package of EU and IMF loans for itself. "The truth, however, is," he says, "that the great bulk of the money lent to Greece has been used simply to pay interest and principal on debt. In fact, (...) to oversimplify things a bit, you can think of European policy as involving a bailout, not of Greece, but of creditor-country banks, with the Greek government simply acting as the middleman — and with the Greek public, which has seen a catastrophic fall in living standards, required to make further sacrifices so that it, too, can contribute funds to that bailout."

Another myth Krugman tackles is that Greece would fully repay its debt. "Now, the truth is," he says, "that nobody believes that Greece can fully repay. So why not recognize that reality and reduce the payments to a level that doesn’t impose endless suffering? Is the goal to make Greece an example for other borrowers? If so, how is that consistent with the values of what is supposed to be an association of sovereign, democratic nations?"

Debt reduction would be rational, argues Krugman. "Let Greece run smaller but still positive surpluses, which would relieve Greek suffering, and let the new government claim success, defusing the anti-democratic forces waiting in the wings. Meanwhile, the cost to creditor-nation taxpayers — who were never going to get the full value of the debt — would be minimal. Doing the right thing would, however, require that other Europeans, Germans in particular, abandon self-serving myths and stop substituting moralizing for analysis."

Krugman's hope has not been fulfilled these past days, when both Greek finance minister Yanis Varoufakis and prime minister Alexis Tsipras asked in European capitals for support to Greece's plan to restructure debt and end austerity. 

“The only thing we ask for is not to be put under pressure by means of an ultimatum. To give us time until the end of May or the beginning of summer to be able to put our suggestions for a solution on the table so we can talk about them with our partners,” said, Greek Finance Minister Yanis Varoufakis in an interview with German public broadcaster ARD - See more at:
“The only thing we ask for is not to be put under pressure by means of an ultimatum. To give us time until the end of May or the beginning of summer to be able to put our suggestions for a solution on the table so we can talk about them with our partners,” said, Greek Finance Minister Yanis Varoufakis in an interview with German public broadcaster ARD - See more at:
"The only thing we ask for," said Varoufakis in an interview with German public broadcaster ARD on February 4, 2015, "is to give us time until th end of May or the beginning of summer to be able to put our suggestions for a solution on the table so we can talk about them with our partners."
“The only thing we ask for is not to be put under pressure by means of an ultimatum. To give us time until the end of May or the beginning of summer to be able to put our suggestions for a solution on the table so we can talk about them with our partners,” said, Greek Finance Minister Yanis Varoufakis in an interview with German public broadcaster ARD - See more at:
“The only thing we ask for is not to be put under pressure by means of an ultimatum. To give us time until the end of May or the beginning of summer to be able to put our suggestions for a solution on the table so we can talk about them with our partners,” said, Greek Finance Minister Yanis Varoufakis in an interview with German public broadcaster ARD - See more at:

Wednesday, February 4, 2015

German journal Die Zeit interviewed Yanis Varoufakis

German journal "Die Zeit" published today an interesting interview with Yanis Varoufakis:

"I'm the finance minister of a bankrupt country"

The Germans need not trust the Greeks, but should listen to them, says Yanis Varoufakis. In an interview with ZEIT and ZEIT ONLINE he promises a big reform programme. Interview:  und
Yanis Varoufakis
Yanis Varoufakis  |  © Simela Pantzartzki/EPA/dpa

ZEIT ONLINE: Mr. Varoufakis, in just a few days, you’ve antagonized half of Europe. Was that your plan?
Yanis Varoufakis: I think that’s normal. It will take some time before it’s been understood everywhere that a very fundamental change has taken place in the EU.
ZEIT ONLINE: Which change?
Varoufakis: Europe wasn’t prepared for the crisis in Greece and made decisions that just made everything worse. Now the EU resembles a gambling addict throwing good money after bad. We can’t say: "Stop! Did we do something wrong? Did we perhaps understand this crisis wrong?"
ZEIT ONLINE: Did we? After all, the Greek economy has recently been back on a growth course.
Varoufakis: Perhaps if you look at things in purely statistical terms. But, in reality, incomes and prices are falling. The existing crisis policies have strengthened political forces on the far right all over Europe – in Greece, in France, in Italy. We need a change of course.
ZEIT ONLINE: Many Germans fear this is an excuse to dial back reforms.
Varoufakis: Germans have to understand that it doesn’t mean we’re turning away from the reform path if we give an additional €300 a year to a pensioner living on €300 a month. When we talk about reforms, we should talk about cartels, about rich Greeks who hardly pay any taxes. Why does a kilometer of freeway cost three times as much where we are as it does in Germany?
Varoufakis: Because we’re dealing with a system of cronyism and corruption. That’s what we have to tackle. But, instead, we’re debating pharmacy opening times.
ZEIT ONLINE: Many governments have promised to do something to counter these problems. But little has happened. So why should people trust you?
Varoufakis: You need not trust us. But you should listen to us. Listen to what we have to say, and let us then discuss it with an open mind.
ZEIT ONLINE: You are new to your office, and most cabinet members do not have any experience in government. How do you intend to accomplish everything?
Varoufakis: We may be inexperienced, but we aren’t part of the system. And we will get some expert advice. We’ve approached José Ángel Gurría, the secretary-general of the OECD, the organization of industrialized countries. He is supposed to help us put together a reform programme.
ZEIT ONLINE: Your government has rehired thousands of civil servants. Is that the new Greece?
Varoufakis: We haven’t hired anyone at all yet. We have announced that we want to have a look at a series of public-sector dismissals that were pronounced under questionable circumstances. If we rehire these people, it will be because the justification for their dismissal was unconvincing.
ZEIT ONLINE: The justification was lack of money.
Varoufakis: That doesn’t convince me. For example, our schools were plundered because the security people lost their jobs. Is that a sensible cost-cutting measure? We fire the security staff, and the school’s computers are stolen at night.
ZEIT ONLINE: Can these problems not be solved without bloating the state apparatus?
Varoufakis: We aren’t bloating it. If we notice that we have too many people, we will change course and no longer fill positions when they become empty, for example. When I was still working at the University of Athens, there was a cleaning lady there named Anthoula. We often had to work until midnight. Although her workday had ended much earlier, Anthoula cleaned up after us and unlocked the rooms for us the next morning. Guess who was let go first as part of the austerity program? Anthoula.
ZEIT ONLINE: Can politics let such individual fates determine its direction?
Varoufakis: No. But the example of Anthoula is emblematic of the situation in Greece. The reforms have been inefficient and unfair. That is why I’ve also ordered that the cleaning ladies in my ministry be rehired.
ZEIT ONLINE: In other words, those women who have been protesting their dismissals in Athens for months and have become a symbol of the crisis?
Varoufakis: Exactly. In my ministry, the representatives of the troika...
ZEIT ONLINE: … the EU inspectors...
Varoufakis: … have been devising the so-called reforms. These people haven’t dismissed highly paid consultants, for example, but rather cleaning ladies who cleaned the rooms and toilets at night. Women over 50 who went home with €500 a month. This decision is morally reprehensible. And before you ask about it: We will save money in other places – by not extending the consultants’ contracts.
ZEIT ONLINE: During the campaign, Syriza announced a spending programme worth billions. Can it be implemented without new debts?

Varoufakis: It has to. I can promise you: Excluding interest payments, Greece will never present a budget deficit again. Never, never, never!
ZEIT ONLINE: Why did you have to throw the EU troika out of your country?
Varoufakis: What’s the troika? A group of technocrats who monitor the implementation of the reform programme. We were elected because we no longer accept the logic of their programmes. They have ruined our country. The troika doesn’t have a mandate to negotiate another policy with us. But that does not mean we will no longer work together with our partners.
ZEIT ONLINE: Greece has accepted the conditions of its lenders. The attitude in Berlin is that deals must be kept.
Varoufakis: When I hear something like that, I sometimes think that Europe hasn’t learned anything from history. After World War I, Germany signed the Treaty of Versailles. But this was a bad treaty. Europe could have spared itself a lot of suffering if it had been broken. John Maynard Keynes...
ZEIT ONLINE: … the famous British economist...
Varoufakis: ...already warned at that time that driving a country into ruin wasn’t a sustainable strategy. If we believe that the bailout policies have been a mistake, we have to change them.
ZEIT ONLINE: Have they been a mistake?
Varoufakis: A huge mistake. Greece collapsed under its debts. How did we deal with that? We gave even more loans to an over-indebted state. Imagine one of your friends loses his job and can no longer pay his mortgage. Would you give him another loan so he can make payments on his house? That cannot work. I’m the finance minister of a bankrupt country!
ZEIT ONLINE: So, where does that lead us?
Varoufakis: We should approach the problems with the eyes of an insolvency administrator. And what does an insolvency administrator do? He tries to reduce the debts.
ZEIT ONLINE: Germany’s federal government has ruled out a debt haircut.
Varoufakis: I understand there are terms that have been discredited in certain countries. But we can also lower the debt burden without touching the amount of money owed itself. My proposal is to peg the amount of interest payments to economic growth.
ZEIT ONLINE: So, if the Greek economy didn’t grow, creditors would have to waive the interest. You’ve been quoted in German newspapers as having said: "No matter what happens, Germany will still pay."
Varoufakis: The quotation has been ripped from its context. I did not say that the Germans will pay and that this is a good thing. I said that they have already paid far too much. And that they will pay even more if we do not solve the debt problem. Only then can we refund the money that people have loaned us in the first place.
ZEIT ONLINE: Do you believe you’ve been deliberately misunderstood?
Varoufakis: I hope it’s only a misunderstanding.
ZEIT ONLINE: Immediately after the election, Alexis Tsipras visited a memorial to those who resisted Nazi Germany. That has also been understood as a provocation. Is that a misunderstanding, as well?
Varoufakis: The Golden Dawn party has risen to become the third-strongest force in our parliament. They aren’t neo-Nazis; they are Nazis. We must fight them, always and everywhere. Laying down roses on the monument was a message to the Nazis in my country. It was not a signal directed toward Germany.
ZEIT ONLINE: In your view, has Germany become too powerful in Europe?
Varoufakis: Germany is the most powerful country in Europe. I believe the EU would benefit if Germany conceived of itself as a hegemon. But a hegemon must shoulder responsibility for others. That was the approach of the United States after World War II.
ZEIT ONLINE: What could Germany do?
Varoufakis: I imagine a Merkel Plan based on the model of the Marshall Plan. Germany would use its power to unite Europe. That would be a wonderful legacy for Germany’s federal chancellor.
ZEIT ONLINE: Merkel would say she has a plan.
Varoufakis: What kind of plan is that? A Europe in which we get even more loans that we will never be able to pay back? Back then, the United States forgave the lion’s share of Germany’s debts. From the ongoing EU aid programme, there are now €7 billion lying on the table that I can take just like that. All I have to do is quickly sign a document. But I wouldn’t be able to sleep well if I did because it wouldn’t solve the problem.
ZEIT ONLINE: As a result, you have another problem: Your money could run out in a few weeks.
Varoufakis: That’s why we need a bridging loan. The European Central Bank should support our banks so that we can keep ourselves above water by issuing short-term government bonds.
ZEIT ONLINE: In doing so, the ECB would be acting on the fringes of legality.
Varoufakis: But it wouldn’t be the first time that it took up such a task. And it’s also not about a long-term solution. We will have our plan ready at the beginning of June.
ZEIT ONLINE: Will you ask Russia for help?
Varoufakis: I can give a clear answer to that: That is not up for debate. We will never ask for financial assistance in Moscow.
This interview has been edited and condensed for length and clarity. This is the English translation of the original German version.