The radical wing of Greece’s Syriza party is to table plans over coming days for an Icelandic-style default and a nationalisation of the Greek banking system, deeming it pointless to continue talks with Europe’s creditor powers.
Syriza sources say measures being drafted include capital controls and the establishment of a sovereign central bank able to stand behind a new financial system. While some form of dual currency might be possible in theory, such a structure would be incompatible with euro membership and would imply a rapid return to the drachma.
The confidential plans were circulating over the weekend and have the backing of 30 MPs from the Aristeri Platforma or ‘Left Platform’, as well as other hard-line groupings in Syriza’s spectrum. It is understood that the nationalist ANEL party in the ruling coalition is also willing to force a rupture with creditors, if need be.
“This goes well beyond the Left Platform. We are talking serious numbers,” said one Syriza MP involved in the draft.
The “creditors” believed and believe “there are no other options” but capitulation:
The creditors argue that ‘Grexit’ would be suicidal for Greece. They have been negotiating on the assumption that Syriza must be bluffing, and will ultimately capitulate. Little thought has gone into possibility that key figures in Athens may be thinking along entirely different lines.
I had been dismayed by Syriza’s apparent unwillingness to consider default and Grexit, while acknowledging that given their election campaign (premised on staying in the Euro) and Greek’s own preference for staying in the Euro, they might well be negotiating deliberately to make the case that Europe will offer an unacceptable deal. And if Europe did offer a good deal, well, excellent!
This is all coming to a head. The demands made by creditors are virtually all punitive, things like reducing pensions and decreasing pharmacy times and wages and so on. Austerity. The vast majority of Greece’s problems, other than its massive debt overhang, are not caused by ordinary citizens, they’re caused by Greece’s rich not paying their share.
But all our lords and masters can conceive of when money must be scrimped his hitting regular people harder, soaking them. They make mention of taxing Greece’s rich and ending corruption there, Syriza agrees, but they are never willing to acknowledge that that an unsustainable debt load is the real problem, let alone get serious about tracking down Greek money which has left the country.
That, of course, is the real problem. There is talk of capital controls, but most of the moveable money and assets left in 2010. It’s all gone. I’d still impose capital controls, but it has the taste of barn door slamming after the horses are gone.
Nonetheless, Greece still has its immovable capital, its land, and its people. While Greeks would have to eat quite a bit less meat and non-seasonal vegetables, if they’re willing to do that, they can certainly feed themselves. Deals can be made with Russia (whom Syriza is on good terms with) and, if necessary, Iran and Venezuela to get the oil they need.
Greece has options. They don’t need to be in the Euro for prosperity, in fact they need to be out of the Euro for it; and they definitely need to default. Now that the “institutions” have made the case for Syriza that no compromise, no deal, is possible, I hope they will do so now, then prosper (though it will take a few years.)
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V. Arnold
Pure and simple; Iceland showed the way! Just what exactly, do the collective “we” , not understand?
The stupid is strong and critical thinking is dead and gone.
May the god’s help the remaining idiots, for they are legion…
EmilianoZ
Once you eliminate the impossible, whatever remains, however improbable, must be the only way forward.
markfromireland
An Iceland option may well be the best of course of action. Should it come, to that I hope that it will be coupled with the Greek government pointing out that it can’t afford all the money it currently uses preventing refugees and other migrants from traversing Greece and moving north and declaring it will no longer spend a drachma doing so. Jailing some of the wealthier tax dodgers together with some of the said tax dodgers’ accountants and lawyers might also serve to concentrate minds wonderfully. It’s always a bad idea to make people believe they’ve nothing left to lose.
mfi
Ian Welsh
Ship the refugees to border town, and tell the border guards to ignore refugees heading north!
Yes, it’s important after default to make clear to Europe that Greece can make things much worse for Europe, because, to be sure Europe will be intent on making things worse for Greece and will need a countervailing threat. (Or promise, rather.)
markfromireland
@ Ian.
Yes pretty much and if possible coordinate with the Italians who are (rightly) of the opinion that the remainder of the EU has no interest in bearing any of the refugee burden. See for example this article from the Guardian. We will hurt EU if migrant crisis is not fixed, says Italian PM Matteo Renzi | World news | The Guardian. Not the first time Renzi has threatened to just let any refugees/migrants head north unimpeded.
mfi
jsn
The downside example out there is Haiti who’s incredible success in 1791 made it subject to punitive blockade for generations, pour encourager les autres…
The venality of the western elite has made Haiti the ongoing disaster it is today, let us hope modern communications saves Greece from a similar fate!
Ian Welsh
Fascinating article MFI. If I were Italy I wouldn’t accept returned immigrants. Might write a full article on the issue.
Socialist
jsn, yes economic blockade and vilification of a country can be extremely harmful (another good example is North Korea). However, I don’t think that Greece is in that kind of position. Its public image is of that as an ancient European culture and a brotherly state to other European nations, the vilification agenda would take decades to construct before organizing a completely failed state with our people buying into how they really deserve. Also, Greece has many options of setting up trade with China, Russia, Iran and other pariah state. Obviously, we know how dangerous that would be but they have a good chance of coming out of it better than doing what they are put through now.
However, my prediction is that they will come up with a solution to keep Greece in line and prop it up or somehow solve the crisis for as long as possible. Right now is not the right time for capitalists to start panicking about how messy this whole EU project is getting with the economy being in the shape it is in and Greece could become the first domino to fall. 2008 would seem like a joke in this scenario.
Greece will fall in line and continue ravaging its public services.
Stirling Newberry
What took so long?
mike
S.N.–I know you remember that, while Sam Adams and Tom Paine were prepping the ground for exit, Ben Franklin was in England presenting the union case almost to the last possible moment. The case had to be made both internally and externally that the colonies had no choice but to bail, as the Declaration spelled out in its less memorable sections. Had bloggers like Smith, Norman, Richter, Mitchell, and others who called out Greece’s Franklin-types with varying degrees of shrillness and disdain in recent months been around in 1774-1775, the idea that things could turn out as they did would have been branded just as preposterous. Smith would have said the colonies were lying back and letting the British tickle their tummies, as she did the Greek leadership. This still has to play out and some deal and even betrayal could still be made. But we who had never negotiated or been under the pressure faced here needed to be much more circumspect and respectful. This is and has been an existential situation for more than just Greece and we should wait for the final act, still months and maybe a year or more away, before we declare victory or failure for anyone.
S Brennan
It’s a little off the subject, but in today’s world of electronic funds the idea of a single currency [Euro] is anachronistic. I traveled Greece/Crete last in 1998, it was easy enough with a credit card and cash stations…I still have a few Drachmas, if Greece leaves Euro, I plan a much overdue return.
*If Greece stays in, I hope Crete has the common sense to leave it’s federation with Greece behind.
Mandos
Can I be so forward as to ditto mike above? I still can’t believe that Yves Smith is pushing the line that Greece ought to have brought all of this to a head right at the outset. That has nothing to do with any actual politics that I’ve heard of. Might work with corporate boardrooms, but not with nations and peoples. Did you see that absurd post about the hypothetical negotiation with the troika she approvingly put up?
This isn’t about what policy details Greece gets to push in its favour or not — everyone knows what the final status under an accord ought to look like, even if they aren’t willing to admit it. This is about whether neoliberalism can be outvoted.
Many of the “technocrats” are openly telling Greece (see Daniel Davies’ twitter feed @dsquareddigest) to just accept any old stupid thing, and what will “really” happen will be worked out later, and probably be more realistic — what is important is that Greece be either seen to capitulate or be seen as the author of its own destruction. There was therefore no option but to bring it to this point. This way, the damage to the “institutions” was much greater. If you’re going to be crucified anyway, let it at least have a smidgen of salvific purpose.
Stirling Newberry
off topic:
called your member of Congress about voting no for TAA
Pelham
If Greece exits and if the country appears to have a chance of struggling toward back toward some semblance of prosperity, won’t the creditors have incentives to try to undermine that progress?
After all, the intransigence on the creditor side seems to be motivated by a determination to punish the Greeks for their defiance — however mild — in a bid to set an example for Spain and others. And that in turn may be motivated by God knows what, maybe hopes of snatching up public assets at fire-sale prices, or whatever.
In any event, what are everyone’s thoughts on this? Are the creditors likely to do whatever they can, perhaps behind the scenes, to further damage Greece if it defaults and leaves the single currency?
Nadai
@markfromireland, @Ian
I wonder what would happen if Greece, Spain and Italy just granted full citizenship to all migrants. As I understand it, most migrants don’t actually want to stay in Greece/Spain/Italy because of the poor economies, but with actual citizenship, they could go anywhere in the EU and the other, richer EU countries couldn’t legally block or deport them. Or am I misunderstanding EU law?
guest
I doubt they could so easily grant citizenship like that. For one thing, plenty of people would find Italian or Spanish citizenship a pretty good consolation prize if they can’t make it to Sweden.
For another, part of the whole EU process was harmonizing things like immigration, so countries that had some quirky laws allowing more liberal immigration for distant descendants of their emigrants (like Ireland sort of had) had to get rid of those laws.
As for Grexit, a great deal of the badly suffering Greeks still think the Euro is something that is important for them, as do most Finns and Irish etc. Even the Scots think it would be a good alternative if they left the UK, even at this late date. Most people are dumb as dirt, and it will take a lot more suffering before they figure out that the Euro is the source of their biggest problems, not the solution.
Mandos
The most recent polls show that 60% of Greeks do not want a Grexit and, more specifically, are willing to take an “unfair” compromise — ie., capitulating to the memorandum — if it prevents a Grexit, even if, likewise, a majority of Greeks blame the troika for the prolongation of the negotiation. The percentage isn’t surprising — 40% of Greeks have consistently supported the coalition.
It isn’t exactly being “dumb as dirt” — there are a lot of Greeks who think that their country would be better off if they could somehow import German management. If you’re a frustrated professional or small business person, it is easy to fall into a dream that someone will swoop down and clear away what you think are the useless time-serving bureaucrats. A Grexit is the end of the (false) dream of right away constructing a German-style export powerhouse.
However, right now, no one can argue that Syriza didn’t try to stay in the Eurozone and come to an “honourable compromise”.
V. Arnoldv
Why dos Greece need to play this IMF/WTO/US game?
Iceland escaped the vast, all encompassing web of international collusion/corruption/inclusion of the worlds financial entrapment.
Fuck the international bullshit! There is life outside of the corrupt new world order; all it takes is a pair of balls…
Mandos
Greece and Iceland are not the same. Greece gave up its foreign currency reserves to join the Euro, but it imports food and energy. So the level of hardship for a Grexit is going to be greater in the short term. And: most of the public is not explicitly willing to shoulder the short-term consequences (implicitly preferring a continued extend-and-pretend game until some magical phase shift occurs in EU politics as a whole).
That’s why Greece needed to play this game. Syriza won on promising a solution inside the EU. Now the “institutions” have shown that for Syriza to keep *that* promise, every other promise must be retracted. A physical object lesson of the hollowness of democracy under the Euro rules was, despite the cost, a salutary development.
Ian Welsh
I took a hard look at the Greek food production numbers. Greece imports a lot of food, yes, BUT, they can feed themselves: they’re just going to eat a lot less meat and so on. Oil is the larger concern, but there are oil pariah nations which deals can be made with, and making those deals (or sincerely threatening to), makes the case that the powers that be can’t “punish” Greece without consequences.
guest
It isn’t exactly being “dumb as dirt” — there are a lot of Greeks who think that their country would be better off if they could somehow import German management. If you’re a frustrated professional or small business person, it is easy to fall into a dream that someone will swoop down and clear away what you think are the useless time-serving bureaucrats.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
So there is a wishful thinking exemption from the dumb as dirt definition? Or does that wishful thinking exception only apply to frustrated professionals and small business persons? I have encountered more than my fair share of easily frustrated professionals and SBPs in the USA (they usually have Rush L on the radion in the office), and I always thought that sort of exceptionalist thinking was was almost a defining characteristic of their dirt-dumbassery.
Mandos
Oh, I don’t doubt that these things can be arranged. There are two other issues though:
1. Many Greeks have very little trust in their institutions to be able to handle an emergency transition well, rightly or wrongly — another way of stating what I was saying about some Greeks welcoming German fiscal domination.
2. It’s not clear to me that this transition can be managed in the short term. Many Greeks still have something to lose. I was talking to a couple of Greek academics recently, and they told me a horror story of deep retroactive pay cuts. And they wonder that there’s a brain drain! But these people still had something to lose, they were still a little nostalgic for the days of PASOK, etc, etc.
Mandos
By that last point, I meant to say, that it all seems relatively clear in the medium term, that such solutions are reasonably possible — it’s the hardship of the (1-2 year?) transition to new supply chains, etc, that are potentially a problem and the cliff over which many may balk, who do not have revolutionary fervor. Which you really can’t demand from someone, it must be there. À la volonté du peuple, et à la santé du progrès, rempli ton cœur d’un vin rebelle… etc etc.
Mandos
Yes and no. Rightly or wrongly, many Greeks feel that they are being asked to choose between being shot or hung, and that their governance leaves much to be desired compared to that of Northern European and English-speaking countries. It is a sentiment shared among a lot of people who live in Southern European countries, and it is not wholly wrong — even left-wingers I know who live in, say, Italy, long for the kind of bureaucracy that they have in Sweden.
Some of these countries, Greece especially included, are countries caught in a kind of mid-revolutionary compromise that is very hard to dislodge. On the one side, there is a class of oligarchs who are bought off with various privileges, and on the other, they stand in an uneasy truce with a class of public employees who are rightly or wrongly viewed as at best dilatory and superfluous if not obstructionist and incompetent. This truce is seen to prevent the construction of efficient administration and a more open, flexible economy.
I realize that many would immediately say: but some of that is true of even countries like Germany. I’d say that it’s a matter of degree and perception.
S Brennan
I don’t think it’s fair to blame the Greeks for how e’ffed up their government is…and how it’s designed for the upper/fascist/fascist-leaning class, that dysfunction was “engineered” by England’s support of Nazi Collaborators when the Nazis were defeated. And much later, the American support for the 1967 coup.
The sad truth be told, outside of FDR & acolytes, the worlds powerful loved the Nazis until they started getting a “little out of control”…that’s why FDR was so wary of Churchill’s embrace. The English love to diss the US for being “Johny come latelys”, but somehow neglect to mention how infatuated the upper class of England was with Nazism. It’s no surprise that Churchill, once Britain’s safety was secured, returned to the warm womb of fascism.
http://www.theguardian.com/world/2014/nov/30/athens-1944-britains-dirty-secret
jump
Bamm, bamm!!
Yes, impose capital controls. You cannot draw the line without making the preparations. But know it can be a line too far.
There has been no real negotiation, just the threat of lashings if Greece does not tow the line. This is a wake-up call for the troika, but they will think themselves above this mess and in complete control.
We’ll see how that works. Hubris, we’re too big for that! (credit to someone like Chris Hedges or Tom Dispatch)
Pluto
The Greek drama is a geopolitical oracle.
Greece has one of the most geopolitically significant locations, in the world. And now, gas for Europe is being rerouted away from Ukraine, carried by Russia’s new major pipeline (the Turkish Stream) to Greece, making it the distribution center for energy in Europe.
Crimea shares the waters, making Greece an ideal location for Russian shipping and expanded military docking. And, soon, Greece may have an empty NATO base for rent.
I am mystified by the self-destructive spectacle of the deranged US State Department who precipitated the Ukraine catastrophe — they singlehandedly gave Russia and China the boost they needed to kill the Petrodollar, launch the rise of Eurasia, and map the pipelines, transportation, and land-based trade of the future. At the same time they caused a deep recession across Europe from the absurd sanctions against Russia that backfired on them. In killing the Petrodollar dead, the US State Department will have caused the early demise of the US Dollar, which is increasingly shunned in trade.
But now, they’ve actually outdone themselves. The Neocons and neoliberal bankers are essentially handing Greece over to Russia, so it can become part of the BRICS and the geopolitical center of the entire Eastern Hemisphere.
Pivot to Russia
I can easily see this outcome.
V. Arnold
Say what you will; Greece is at an historic opportunity to gain genuine independence from the grip of neo-liberalism.
The Icelandic option is in fact their only true salvation.
Currency can be printed by any number of printers within or without the country.
Drachmas can live again easily.
As is the norm; humans revel in what cannot be done; the gods revel in what is possible…
Stirling Newberry
http://www.bbc.com/news/business-33164924
Woe is me! ( insert a few times as needed and to spare your conscience) What the Greeks do not seem to get is that no one in the euro zone really cares. since that is the case ( and it truly is) they should get on with things, and thus be able to enjoy life more when it is over. But they still want the woe is business for a while, and unfortunately, it’s better in the ancient Greek original. Antigone for example.
DMC
Pluto raises an intersting and increasingly plausible scenario, especially when one considers that Putin has been actively “courting” the Greeks for some years now, along the lines of “We’re all one big happy Orthodox family and those others don’t understand you like we do”. Richard Bartholomew and some other international religion watchers have noted the activities of some of the Putin connected organizations (notably featuring the Foundation of St. Andrew the First-Called and its Chair, Vladimir Yakunin) on this front. It would be easy as falling out of bed for Russia to play the white knight here(and sorry about that mixed metaphor).
jump
Hmmmm.
Tit,
http://www.theglobeandmail.com/report-on-business/international-business/european-business/russia-says-it-is-willing-to-help-as-greeces-tsipras-pleads-for-eu-leniency/article25034465/
Tat,
http://www.bbc.com/news/world-europe-33197782
I am sure it is only a coincidence 🙂