He gives a great characterization of the current state of the negotiations between Greece and the institutions formerly known as the Troika (EU, ECB, IMF):
So the Greek talks remain at a stalemate. Actually, it is not quite a stalemate, since the Greeks are under extreme pressure. Either they concede to the creditors' positions, or they may find their banks closed and themselves forced out of the euro, with highly disruptive consequences at least in the short run. The creditors know this. So they keep backing the Greeks toward a wall—never changing their own position while complaining that the Greek side isn't working hard enough. And as the Greeks yield ground, inch by inch, the creditors simply press for more. [emphasis in original]Not unlike the pre-Iraq War position of the Cheney-Bush Administration toward Iraq over inspections for the non-existent "weapons of mass destruction."
In the agonizing standoff between the EU elite (and the EU oligarchs they serve) and the government of Greece - a genuinely "popular" government at the moment, one that represents the workers and the middle class and is willing to confront that corrupt oligarchs - the EU elite lead by German Chancellor Angela Merkel continually demand "reform" from Greece. And who's against "reform"? "Reform" always sounds forward-looking. Unless you look closely at what Merkel and the EU elite really mean by reform. Galbraith, like his former colleague, fellow economist and now Finance Minister of Greece Yanis Varoufakis, is calling on Merkel to exert better leadership at the moment and push for a realistic solution. (See Varoufakis' A Speech of Hope for Greece Project Syndicate 06/04/2015)
Yannis Ioannou (Ο Εντιμος συμβιβασμός και ... {The Upright Compromise and ...} 06/04/2015) depicts the Troika wishing farewell to Greece at the Eurostation, with Germany standing in for the EU as a whole:
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| "And to our honorable friends ..." |
Galbraith has a popular idea of what real reforms of a beneficial kind for Greece actually would be:
Reform in any true sense is a process that requires time, patience, planning, and money. Pension reform and social insurance, modern labor rights, sensible privatizations and effective tax collection are reforms. So are measures relating to public administration, the justice system, tax enforcement, statistical integrity and other matters, which are agreed in principle and which the Greeks would implement readily if the creditors would permit it—but for negotiating reasons they do not. So would be an investment program emphasizing the advanced services Greece is well-suited to provide, including in health care, elder-care, higher education, research, and the arts. It requires recognizing that Greece cannot succeed by being the same as other countries; it must be different—a country with small shops, small hotels, high culture, and open beaches. A debt restructuring that would bring Greece back to the markets (and yes, that could be done, and the Greeks have a proposal to do it) would also be, on any reasonable reckoning, a reform.
But those aren't the kind of "reforms" the Troika is demanding.
Reform in any true sense is a process that requires time, patience, planning, and money. Pension reform and social insurance, modern labor rights, sensible privatizations and effective tax collection are reforms. So are measures relating to public administration, the justice system, tax enforcement, statistical integrity and other matters, which are agreed in principle and which the Greeks would implement readily if the creditors would permit it—but for negotiating reasons they do not. So would be an investment program emphasizing the advanced services Greece is well-suited to provide, including in health care, elder-care, higher education, research, and the arts. It requires recognizing that Greece cannot succeed by being the same as other countries; it must be different—a country with small shops, small hotels, high culture, and open beaches. A debt restructuring that would bring Greece back to the markets (and yes, that could be done, and the Greeks have a proposal to do it) would also be, on any reasonable reckoning, a reform. [my emphasis]Better tax collection and fighting corruption are two items perennially on the neoliberal "reform" list, including that of the Troika. But oligarchs aren't serious about those reforms, for fairly obvious reasons. These wealthiest are the ones that benefit the most from them at the expense of the common good. If debt service and healthy public budgets were the primary goal of the Troika, better tax collection in particular would obviously serve that goal well.
It's worth noting that after years of Greek governments cooperating with the Herbert Hoover/Heinrich Brüning austericide policies demanded by Merkel and the Troika, tax collection and the fight against corruption are, uh, not very impressive. Varoufakis notes (Yanis Varoufakis interview: "We crossed a lot of our red lines" Tagesspiegel 06/09/2015): "We don’t even have tax officers. The salaries for the tax officers were reduced a lot, so a lot of them went into private practice. The first day I was in office I asked: how many tax inspectors do I have access to? You know what the answer was? One hundred. One hundred for whole of Greece."
Varoufakis also notes how adamant the Troika has been against real tax-collection and anti-corruption reforms:
The most frustrating part is that these negotiations are taking up all our energy and time. And moreover: the institutions are telling us, if we legislate before we reached a comprehensive agreement this will be seen as a unilateral action and it will blow up the negotiations. One of the very first things I said to my Eurogroup colleagues was: why don’t we push some of the legislation we agree on – the taxation system, the anti-corruption rules – through parliament and meanwhile continue the negotiations. And I was actually told a number of times if I dare to suggest this again this would constitute reason to settle the negotiations. [my emphasis]Merkel and the Troika have actually opposed meaningful actions in Greece for better tax collection and against corruption.
Galbraith summarizes what the Troika is really demanding and what it rally means:
What is missing from the creditors' demands is, well, reform. Cuts in pensions and VAT increases are not reform; they add nothing to economic activity or to competitiveness. Fire-sale privatization can lead to predatory private monopolies as anyone living in Latin America or Texas knows. Labor market deregulation is in the nature of an unethical experiment, the imposition of pain as therapy, something the internal records of the IMF as far back as 2010 confirm. No one can suggest that wage cuts can bring Greece into effective competition for jobs in traded goods with either Germany or Asia. Instead, what will happen is that anyone with competitive skills will leave. [emphasis in original]Galbraith's warning in his last paragraph will probably strike many readers as surprising and drastic: "Either the Greek government will concede too much, lose its support and collapse, in which case whether the end result is another receivership or {a boost in support for the overtly neo-Nazi Greek party} Golden Dawn, democracy is dead in Europe."
What I assume he refers to as the death of democracy in Europe includes several things. But mainly it means that in the European Union ("Europe"), radical neoliberal economic policies will have been decisively prioritized over democratic elections and democratic decision-making and democratic culture. A country like Greece that wants to escape the grim consequences of Hoover/Brüning policies will have to leave "Europe" (the EU) or give up on democracy in deference to the practical rule of an unelected economic oligarchy. It's very notable in this regard that while the Troika has been overriding democracy in Greece in order to impose neoliberal economic policies, the EU has tolerated the authoritarian turn that Hungary has made. (See Katin Marton, Hungary’s Authoritarian Descent New York Times 11/03/2014: "Hungary is a member of both NATO and the European Union — and blatantly defies the core values of both. Having announced that an 'illiberal democracy' is his goal for Hungary, {Hungarian Prime Minister} Mr. {Viktor} Orban defies the European Union, even though it accounts for 95 percent of Hungary’s public investments. So far, European governments’ reaction to Mr. Orban’s policies have been muted.")
If Merkel and the EU elite sink the European Union as a democratic union, it will be a major historical tragedy. To sink it over a petty-minded, oligarchic approach to the Greek depression and debt crisis is entirely unnecessary.
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