Skip to main content

What Greece Wants

As a European, I am just a detached observer of Asian affairs. But when it comes to the destiny of the European Union, I feel I am personally involved. Although this is a blog about Asia, I cannot ignore what is happening in Europe, and I want to write a few words about it. 

On the statement he published this morning on his own blog, Greece's former Minister of Finance, Jiannis Varoufakis, explained that what the Greek government wants is simply:

an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms

They are not asking for their debt to be written off, as some media has argued; they just want their debt to be sustainable. As Varoufakis said in one interview (as I can speak Greek, I am following the actual debates in Greece), he thinks that the austerity policies of the troika are not viable for Greece, because they hinder growth and create a situation of instability that makes the recovery of Greece impossible. 

Without growth, employment, investments and fairer taxation (the troika has objected to taxing the rich more heavily than retirees and the middle class, as Tsipras said in an interview), Greece will never be able to get back to its feet and actually repay its debt. The policy of the EU has created a vicious circle that is damaging not only Greece, but the whole continent.

The obtuse and absurdly neoliberal attitude of some European governments and technocrats is condemning the EU to instability and poverty. It is deliberately destroying Greece to make up for the debt of European banks (chiefly German and French banks). In fact, as 'The Guardian' explained, around 90% of the money received by Greece from the bailout programmes "went to the banks that lent Greece funds before the crash". Less then 10% was used to finance reforms, investments or welfare services. De facto, the Greek people were squeezed in exchange for money that went to private banks. 

After 2008 Germany reacted to the crisis through more state intervention. Among the measures adopted by the government there was the so-called "Conjucture Package II", which included an eco subsidy for cars, reduction of the income tax, subsidies for companies that did not lay off workers but offered them courses to upgrade their skills and qualifications, and many other reforms. Moreover, Germany bailed out its banks and bailed out bankrupt automaker Opel. 


Whereas Germany overcame the crisis through more state intervention, the mainstream neoliberal narrative ignores this fact. Surprisingly, the German government, while adopting state-led measures at home, has preached neoliberal 'free market' reforms in the rest of Europe: dismantling the welfare state, scaling down government investments, focusing exclusively on debt reduction, etc. 

I do not know of any country in history which has been able to develop by NOT investing in education, infrastructure, industry etc. While it is certainly a good thing to avoid wasting money, an economy cannot work if there is no investment and no growth. What Greece needs are policies that can develop its economy. But Europe has become so incompetent that it has unlearnt how to create growth. 

People who say that Greece is corrupt should remember that corruption is no hindrance to wealth. China is corrupt. The USA in the 19th century was corrupt. Taiwan under martial law was corrupt. Hong Kong was so corrupt that British Governor Murray MacLehose created the Independent Commission Against Corruption in 1974. The list could go on. As Oxford economist Chang Ha-joon has argued in his book 23 Things They Don't Tell You About Capitalism, it is actually more difficult to fight against corruption in poor countries. Paradoxically, the poorer the country, the easier for corrupt elites to embezzle public funds, blackmail and squeeze the weak. 

People talk about a 'Grexit' as the best solution for all. This is an illusion, and we will all pay a high price if this is implemented. First, Greece will plunge into chaos, and it will be unable to repay its debt. Currency devaluation won't help Greece because the country has not enough goods to export, while imports (raw materials, electronics, cars, clothes etc.) will become more expensive. 

The EU will be destabilised, the markets will lose their faith in the ability of the European institutions to handle the continent's problems. And, most importantly, the Grexit will once again allow Europe's politicians to avoid the most important questions: how to create growth, raise the people's standard of living, maintain a sustainable welfare state, reduce trade deficits and promote industry. These questions have been systematically obliterated from public debates over the last four decades; the only thing European leaders and parties do is to preach poverty for all and self-regulating markets for their own sake.

I am certain that the EU's reaction to the Greek debt crisis will go down in history as the biggest failure of European economic policy after 1929. 

If China should succeed in stabilising its stock markets trough government intervention, we will have yet another example of European stupidity versus Chinese shrewdness. Who would have thought that 26 years after the collapse of the Soviet-led bloc of Communist states and the Tiananmen Square protests, the European Union would be more divided and incompetent than a Communist one-party state?  

  

Comments

Popular posts from this blog

Taipei Walking Tours - A Guide To Taipei In 6 Days

Taiwan is one of the most underrated tourist destinations in Asia. With about 10.74 million tourists in 2017, it lags behind Asian neighbours like Thailand (35 million), Hong Kong (58 million), Japan (28.7 million), or Indonesia (14 million).
Nevertheless, Taiwan is a great place to visit due to its amazing food, fascinating history, traditional Chinese culture, friendly atmosphere, safety, and natural attractions. Moreover, Taiwan has a very convenient visa policy. Citizens of many countries, including the United States and most European Union members, can travel to Taiwan without a visa and stay there for up to 90 days. You can literally buy a plane ticket and go to Taiwan without doing any paperwork.    
If you travel to Taiwan, your first destination will probably be the capital and largest city: Taipei.




Taipei is the political and economic centre of the island, with lots of attractions ranging from modern skyscrapers and shopping centres to night markets, colonial Japanese architect…

Will The Huawei Case Finally Awaken Democrats To The China Threat And The Danger Of Faux Free Trade Rhetoric?

On January 28 the Department of Justice of the United States unsealed two cases against Huawei, China's largest telecommunications company, and its chief financial officer, Meng Wanzhou. 
Huawei has been accused of trying to steal trade secrets, committing bank fraud, breaking confidentiality agreements and violating sanctions against Iran. One indictment claims that Huawei attempted to steal trade secrets from T-Mobile by promising bonuses to employees who collected confidential information.
Huawei is not a company like any other. Over the years it has benefited enormously from the support of the Chinese Communist regime. The founder of Huawei, Ren Zhengfei, joined China's army during the Cultural Revolution. In 1978 he also joined the Chinese Communist Party (CCP). 
In the early years Huawei's sources of capital were high-interest loans (20%-30%) from Chinese state-owned enterprises. Ren also secured soft loans from the local government of Shenzhen thanks to his personal co…

Chinese Dissident Zhang Jilin Detained By Police In Chongqing After Calling On Xi Jinping To Resign

Chinese dissident Zhang Jilin (张吉林) has been detained by police in the city of Chongqing after publicly saying that President Xi Jinping should be removed from office.
According to Taiwan-based Apple Daily, on January 17 Zhang talked about China's current affairs on a WeChat group. His ideas received praise from the group members, and he later told friends that he wanted to give a public speech based on the thoughts he had expressed online.
Other dissidents urged him to be careful, but he insisted that he had "the right to free speech." On January 19 Zhang went to Guanyinqiao Square, in the city of Chongqing, and delivered a speech about China's political situation, calling on Xi Jinping to be removed from office.
"I think it's time for Xi Jinping to be removed from office," Zhang told a crowd according to an audio recording. "The Chinese Communist Party will not do anything to the people. If you don't believe me, look, I have been giving a speech…