Sep 232017
 

By Michael Nevradakis, 99GetSmart

Originally published at MintPressNews

Protesters hold a banner during a rally in Athens, Thursday, Dec. 8, 2016. A nationwide 24-hour general strike called by unions against austerity measures disrupted public services across Greece on Thursday, while thousands marched in protest in central Athens. (AP Photo/Yorgos Karahalis)

Protesters hold a banner during a rally in Athens, Thursday, Dec. 8, 2016. A nationwide 24-hour general strike called by unions against austerity measures disrupted public services across Greece on Thursday, while thousands marched in protest in central Athens. (AP Photo/Yorgos Karahalis)

With the Greek psyche itself the victim of a relentless shaming campaign, the idea of Greece “going it alone” begins to seem outlandish and quixotic. It is not. But it is as much tied to a revival of spirit and self-esteem as to the nuts and bolts of economic transformation.

Eight years into the deepest economic depression that an industrialized country has ever experienced, we are now being told that Greece is a “success story.” Having accepted the “bitter medicine” prescribed by the “troika”—the European Commission, the European Central Bank, and the International Monetary Fund—the storyline today is that Greece is on the road to recovery, firmly within the European Union and the eurozone.

This narrative was recently echoed by Greek Prime Minister Alexis Tsipras in his annual speech at the Thessaloniki Trade Fair, Greece’s equivalent to the State of the Union address. In this speech, Tsipras triumphantly declared that talk of “Grexit”—or a Greek departure from the eurozone and the EU—has been replaced by that of “Grinvest.”

Within such a context, there is seemingly no room for discussions about whether it is in Greece’s best interest, even after so many years of implementing the troika’s austerity diktats, to consider a departure from the eurozone and the EU. Indeed, the narrative is that the people of Greece overwhelmingly have never supported the prospect of “Grexit.”

All throughout the economic crisis in Greece, it has been reported that polls have consistently shown clear majorities favoring the country’s “European trajectory” and rejecting the possibility of a departure from the eurozone and EU.

So the Greeks want the euro at all costs, even if it means more harsh austerity measures and cuts to wages, pensions and social services. Or so we are told. These claims would be believable if they were the product of robust public debate and deliberation on the respective pros and cons of remaining within the “European family” or departing. But in Greece, and in most of the global mainstream media, there is no such debate and never has been.

Instead, what has taken place in Greece during the economic crisis has been the complete elimination from public debate of opponents of the prevalent economic and political doctrines. Those who oppose the eurozone, the EU, or simply the austerity measures, are stamped with the “scarlet letter” of being “nationalists,” “xenophobes,” or “fascists.” Such rhetoric became even more polarized following the Brexit referendum result. The Brexit result and the rise of “populism” have themselves been demonized, while poll results that contradict the mainstream narrative are habitually buried by the supposedly “objective” major media outlets.

Following the first installment of this series – in which the less-than-democratic roots of the EU, the zeal with which the EU is lionized by the global media today, the EU’s present-day democratic deficit and hypocrisy, and the attempts to discredit opponents of the EU and neoliberalism were analyzed — this piece will focus on what has long been the “elephant in the room” in Europe: the possibility of departure from the eurozone and from the EU, and why it must, at the very least, be debated on equal terms in economically suffering countries such as Greece.

Fostering fear and lies

French president Emmanuel Macron, right, Greek Prime Minister Alexis Tsipras, left, and Vlasia Pavlopoulou wife of the Greek President toast their drinks at the Presidential Palace in Athens, Thursday, Sept. 7, 2017. Standing at a Greek site where democracy was conceived, French President Emmanuel Macron called on members of the European Union to reboot the 60-year-old bloc with sweeping political reforms or risk a "slow disintegration. (AP/Charalambos Gikas)

French president Emmanuel Macron, right, Greek Prime Minister Alexis Tsipras, left, and Vlasia Pavlopoulou wife of the Greek President toast their drinks at the Presidential Palace in Athens, Thursday, Sept. 7, 2017. Standing at a Greek site where democracy was conceived, French President Emmanuel Macron called on members of the European Union to reboot the 60-year-old bloc with sweeping political reforms or risk a “slow disintegration. (AP/Charalambos Gikas)

Throughout the crisis, the austerity measures that have been imposed on Greece, the arguments in favor of the necessity of remaining “in Europe,” the mythos surrounding the “European dream,” and the horror that would result from “Grexit” have been propped up by a series of lies and scare tactics that have been repeatedly propagated by politicians and media outlets alike.

This has fostered a form of learned helplessness in Greece, a belief that the country is incapable of surviving outside the eurozone and EU and therefore must remain, even if the preconditions for doing so are harsh.

One such myth pertains to the idea that Greece “doesn’t produce anything” and is therefore reliant on imports. These imports must, of course, be paid for with hard currency; therefore, the conventional line of thinking suggests that Greece would be unable to import vital necessities with its own “soft” currency.

Case in point: a 2012 Eurobarometer survey found that 94 percent of Greeks were concerned about national food security, the highest level in the EU. In addition, Greece was the only EU member-state where a majority (61 percent) expressed concern with national food production. Moreover, 79 percent of Greeks expressed the belief that Greece does not produce enough food to meet domestic needs. Again, this was the highest percentage recorded in the EU.

The claim that Greece doesn’t produce anything and is not nutritionally self-sufficient is constantly repeated by the media and used to justify remaining in the common market, but is it true? As of 2010, the most recent year for which complete statistics seem to be available, Greece met, exceeded, or came close to meeting domestic demand for staples such as eggs, meat and milk derived from sheep and goats, olive oil, several crops (including oranges, peaches, tomatoes, cucumbers, apricots, potatoes, and grapes), honey, whole grains, and poultry.

Furthermore, according to data from 2012, Greece is second worldwide in the production of sheep’s milk, third in olive and olive oil production, fourth in the production of pears, fifth in the production of peaches and nectarines, sixth in pistachio production, and in the top ten in goat’s milk, chestnuts, cantaloupes, cherries, and cotton. It is also just outside the top ten in the production of almonds, cottonseed, asparagus, figs, and other legumes. Greece is third in the world in the production of saffron and sixteenth in the world in the production of cheese products.

Outside of food production, Greece is a strong producer of such resources as aluminum and bauxite (first in Europe), magnesium (meeting 46 percent of Western Europe’s production), second in the world behind the United States in the production of smectite clay, and is the only European country with significant nickel deposits. Greece is also a significant producer of laterite and marble, as well as steel and cement.

Outside of production, Greece possesses one of the world’s largest shipping fleets, ranking second worldwide in total tonnage, while the Greek flag fleet and merchant fleet rank second in the EU and seventh globally. In addition, Greece is fourteenth in the world in tourist arrivals (but twenty-third in tourist revenue).

It is these three sectors — agriculture, shipping, and tourism — that have traditionally sustained the Greek economy, alongside domestic small businesses, which themselves have suffered during the crisis under the weight of decreased spending and increased taxation. Prior to the euro, the agricultural, shipping, and tourism sectors provided Greece with the hard currency with which it financed imports.

Indeed, it is membership in the EU that has led to a sharp decline in the domestic production of numerous staples in Greece. In 1961, twenty years before joining the EU, “impoverished” Greece produced 169,200 tons of figs, 6,374 tons of sesame, 52,000 tons of dry beans, 13,365 tons of chickpeas, and 19,246 tons of quince. In 2011, the respective figures were 9,400 tons of figs, 33 tons of sesame, 22,744 tons of dry beans, 2,200 tons of chickpeas, and 3,432 tons of quince.

In 1981, the year Greece joined the EU, production of fresh vegetables was at 123,298 tons, lemon production was at 216,874 tons, apple production was at 337,091 tons, almond production at 73,181 tons, tobacco production at 130,900 tons, tomato production at 1,884,600 tons, and potato production at 1,056,000 tons.

Thirty years later, the figures for each of these crops had sharply declined: 74,393 tons of fresh vegetables, 70,314 tons of lemons, 255,800 tons of apples, 29,800 tons of almonds, 20,287 tons of tobacco, 1,169,900 tons of tomatoes, and 757,820 tons of potatoes.

A major factor in this decline is the EU’s common agricultural policy, which sets production quotas for each country and each sector of production, and dictates to each country what to produce and which crop varieties to cultivate, what not to produce, where to export, where not to export, how much to export and at what price.

For example, until 2005 Greece’s sugar production sector was profitable and met a large part of domestic demand. In a 2006 deal with the EU, however, Greece agreed to reduce its domestic sugar production and increase imports. In 1980, the year before Greece ascended to the EU, pork meat production met 84 percent of domestic needs, while beef production met 66 percent of domestic demand. Those figures have declined to 38 and 13 percent, respectively.

The decline in beef production has also impacted the dairy sector. The EU’s influence is evident here as well: in 2000, Greece was fined 2.5 billion drachmas (over 7.3 million euros) for exceeding EU-imposed quotas for the production of cow’s milk.

And yet the myth persists: Greece “cannot survive” outside of the eurozone and EU. And while the lack of production—whether imagined or real—is one of the main arguments used by proponents of remaining in the EU, the lies do not stop there.

Greece wants to stay in the eurozone and EU — or does it?

A man walks past a graffiti made by street artist N_Grams that read ''NO'' in German but also ''YES, IN'' in Greek language in Athens, June 28, 2015. (AP/Petros Giannakouris)

A man walks past a graffiti made by street artist N_Grams that read ”NO” in German but also ”YES, IN” in Greek language in Athens, June 28, 2015. (AP/Petros Giannakouris)

One of the most prevalent and recurring myths to come out of crisis-stricken Greece is that despite the austerity measures and cuts that the Greek people have been faced with, the overwhelming majority wishes to remain in the EU “at all costs.”

This exact wording has been used in numerous public opinion polls, such as one published on July 5, 2015, the day of the Greek referendum on whether to accept or reject a new troika-backed austerity proposal. According to this poll, conducted by polling firm GPO on behalf of one of Greece’s most notoriously pro-austerity TV stations, Mega Channel, 74.1 percent of respondents wished to remain in the EU at all costs.

Is this really the case? It is worth considering that in Greece, there are no polling firms which conduct public opinion polls independently. Surveys are conducted on behalf of large media outlets which are, without exception, favorable to the policies of austerity and continued membership in the eurozone and the EU. The polling firms themselves also belong to similarly entrenched interests. The aforementioned GPO, for instance, was co-founded by construction and publishing magnate Christos Kalogritsas, who is said to still maintain a close friendship with GPO’s main shareholder, Takis Theodorikakos.

Further limiting their independence, Greece’s major public opinion polling firms are all recipients of state funding. Between 2010-2013, Kapa Research received 3,126,900 euros, MRB received 877,423 euros, GPO received 395,003 euros, Metron Analysis received 273,574 euros, Marc received 82,650 euros, VPRC received 55,500 euros, and ALCO received 50,677 euros.

Despite this though, the question remains: are the polling results accurate? What has been evident throughout the crisis is that poll results have often been woefully inaccurate. For example, prior to the 2015 referendum, major public opinion polls showed “yes” and “no” in a statistical dead heat. In reality, over 61 percent of voters rejected the EU’s austerity proposal, even if this result was itself overturned by Greece’s subservient SYRIZA-led government, which itself seemingly wishes to keep Greece inside the eurozone and EU “at all costs.”

More evidence can be found from the results of the few relatively independent public opinion polls which have taken place in Greece in recent years. For example, in a pan-European survey conducted by the Gallup International polling firm in December 2014, 52 percent of Greeks favored a return to a domestic currency, while only 32 percent favored remaining in the eurozone. Notably, Gallup International’s respective 2016 end-of-year poll found less than overwhelming support in Greece for remaining in the EU: while 54 percent of respondents stated that in a hypothetical referendum they’d vote to remain, 46 percent would vote to leave.

Furthermore, a March 2015 poll by Bridging Europe—an upstart polling firm which has since openly and unabashedly supported SYRIZA—found that 53 percent of respondents favored a return to a domestic currency. Together, these results contradict polling results which claim that overwhelming majorities of Greeks wish to remain, and at all costs to boot. However, these poll results have never been reported by either the Greek or the international media.

What the mainstream public opinion survey results in Greece aim to accomplish is threefold. First, they seek to impact public opinion in Greece by making it seem like there is such an overwhelming majority in favor of continued EU and eurozone membership that resistance is futile—and the product of “fringe” elements of society. Secondly, it impacts the international media in their reporting on Greece and the crisis, as they regurgitate these poll results without question.

Third, it reinforces the pro-EU, pro-euro, pro-austerity politics enforced by Greece’s current and previous governments, and the respective pro-EU and pro-euro positions of the entirety of the political spectrum that is represented in parliament.

Varoufakis: more blatant lies and pro-EU propaganda

Former Greek Finance Minister Yanis Varoufakis speaks during a parliamentary session in Athens, Friday, Aug. 14, 2015. (AP/Yannis Liakos)

Former Greek Finance Minister Yanis Varoufakis speaks during a parliamentary session in Athens, Friday, Aug. 14, 2015. (AP/Yannis Liakos)

When concealing inconvenient public opinion survey results isn’t enough, more blatant lies are employed. A characteristic example comes from the statements made by former finance minister and “heroic” celebrity economist Yanis Varoufakis, who in an interview with ABC Radio in Australia in 2015 stated that even if Greece wanted to return to a domestic currency, its printing presses were destroyed in 2000 prior to joining the eurozone. In reality, Greece’s mint is still in operation in the Athens suburb of Holargos and prints euro banknotes today.

In the minds of many Greeks, the old drachma is also associated with crippling inflation and economic instability, a perspective which the major media outlets have done nothing to dispel. Listening to certain Greeks discussing the pre-2002 era, one would think that prior to the euro Greeks must have lived in caves, without electricity, automobiles, or running water—and that such days will swiftly return if Greece dares to depart from the common currency.

Particular fears are expressed about inflation. However, this ignores the fact that from the 1950s through the early 1970s, inflation in “impoverished” Greece hovered at or below 5 percent. In the late 1990s, as Greece prepared to meet Maastricht criteria to join the eurozone, inflation once again fell into the single digits. Throughout the 1970s, 1980s, and 1990s, other southern European countries, such as Italy and Spain, also frequently attained double-digit inflation levels similar to those seen in Greece.

When all else fails, stereotypes and collective guilt are employed to great effect. Greece lied in order to enter the eurozone, we are told, and therefore is reaping its just rewards. But as was pointed out in the first installment of this series, other countries such as Spain and Italy performed similar accounting tricks, but no similar calls to “punish” these countries have been heard.

What is heard though, by both the Greek and international media, is that the Greek people “lived beyond their means.” This viewpoint is consistent, whether you consult with the “leftist” Guardian, the right-wing Daily Telegraph, German finance minister-for-life Wolfgang Schäuble, or former EU economy commissioner Ollie Rehn. The head of the Eurogroup—the committee of eurozone finance ministers—and member of Holland’s Labour Party Jeroen Dijsselbloem stated earlier this year that Greeks spent their money on “drinks and women.” In turn, Dutch “eurosceptic” politician Geert Wilders claimed that Greeks spent their money “on souvlaki and ouzo.”

Never mind that Greece’s private sector debt has consistently ranked at the lowest levels among OECD countries and still does today. This has not stopped the Greek media and Greece’s politicians from repeating such claims, ascribing collective blame to the entire populace when it was a small cohort of politicians and crony capitalists who largely benefited from the public spending bonanza and augmentation of Greece’s public debt.

"Swindlers in the euro family:" A controversial cover has come back to haunt Germany's Focus magazine.

“Swindlers in the euro family:” The controversial cover of Germany’s Focus magazine.

Nevertheless, such statements are coupled with heavy doses of racism from Greece’s “European partners.” In 2010, the “reputable” German magazine Der Spiegel published, on its front cover, an image of the goddess Aphrodite, cloaked in a Greek flag, giving the finger to Europe, accompanied by the headline “Swindlers in the euro family.” Two studies, commissioned by the Hans Böckler Foundation and by the German newspaper Suddeutsche Zeitung, have found that German media coverage of Greece’s crisis has been rife with stereotypes, bias, and superficial reporting.

The Feb. 13, 2010 edition of the Wall Street Journal featured a parody of ancient Greek art—now well-concealed on the Internet—displaying an ancient god begging for change. The Telegraph has referred to the crisis in Greece as the “ouzo crisis” while referring to the suffering economies of southern Europe as “Club Med.”

One of the many end results of this constant barrage of disparagement and insults towards the Greek people is that they have become ingrained in the national psyche. A common refrain heard in Greece in reference to anything negative occurring within the country is that “this is who we are.” Greece lied and therefore it must be punished. Greeks lived beyond their means and are now getting their just dues. Greeks were corrupt and “ate it all together,” in the words of ex-politician Theodoros Pangalos, and therefore collectively must share the blame.

Herein lies a paradox: on the one hand, Greeks are consistently ranked as among the unhappiest people in the world. Greece ranked fourth in this year’s Bloomberg misery index, and has been found to be the unhappiest country in Europe by both the Eurobarometer survey and by Gallup International. In such a toxic environment, the prevailing policies of economic austerity, cuts, and privatization are therefore met with tacit acceptance.

Collective guilt has set in for Greece’s supposed sins, and these painful austerity measures—and the misery they bring—are considered an inevitable result of these “sins.” On the other hand, the actors in large part responsible for the austerity that has delivered such misery, such as the EU, continue to receive support from a significant percentage of the population.

As for those who dare to openly speak out against austerity and in opposition to the EU and the eurozone? They are swiftly labeled. A favorite retort in Greece concerns the supposed existence of a “conspiracy of the drachma” in which diaspora Greeks and wealthy Greeks who have moved their money offshore favor a return to the drachma. As this line of thinking goes, these individuals would then move their money back to Greece and take advantage of a sharply devalued local currency, getting wealthier in the process.

Other attacks are simpler, often branding opponents of the prevailing European order as “fascists,” “xenophobes,” “nationalists” and “populists”—the latter two, of course, being rather dirty words in the present-day context.

When insults and labels don’t do the job, fear is effective. According to a European Commission adviser and as reported by Newsweek in 2015, Greece would promptly find itself out of oil and medical supplies once it leaves the eurozone and EU. In the lead-up to the 2015 referendum, both Greek and international media outlets, including the Washington Post—which later replaced the image on this article—circulated untrue and undated photos of supermarket shelves devoid of food. Greece’s Mega Channel broadcast images of senior citizens using ATMs in fear—images which actually were from South Africa.

Greek tabloid newspaper Press Star published a “heartbreaking” photo of an elderly man in tears while holding a solitary loaf of bread—even though the photo was actually from the aftermath of the Istanbul earthquake of 1999. The photo was shamelessly recycled one more time earlier this year, in the aftermath of an earthquake on the Greek island of Lesvos.

Another national TV broadcaster, Antenna TV, reported that in the 2015 referendum, Greeks were choosing between a future “as Europe” or “as Zimbabwe.” The same station, prior to the June 2012 parliamentary elections, circumvented a pre-election freeze on political broadcasts by airing, on the eve of the polls, a “documentary” on the (obviously adverse) impacts of “Grexit,” laughably insinuating that a SYRIZA victory would result in “Grexit.”

Never mind that Greek domestic production and industry have been decimated during the years of EU and eurozone membership. Never mind that the EU allowed for the debt of Greece’s national railway to be waived in order to facilitate its privatization—but refuses to allow the same for Greece’s national debt. Never mind that 92 percent of the “bailouts” (loans) Greece has received during the crisis have gone right back to its lenders. Never mind that even EU monies for major infrastructure projects often went right back to European contractors or consultants, in a process of crony capitalism described by former “economic hitman” John Perkins. Never mind that the austerity regime itself has been found to violate the fundamental human rights of the people of Greece. As the title of part one of this series suggested, for the Greek and international media and a substantial portion of the Greek populace, it is “EU über alles”—Europe or bust—even if Greece is the one that goes bust in the process.

The argument for leaving the eurozone and the EU

Pedestrians pass a poster depicting a map of Greece with the letter E being replaced by Euro symbols in Athens, Tuesday, May 2, 2017. (AP/Thanassis Stavrakis)

Pedestrians pass a poster depicting a map of Greece with the letter E being replaced by Euro symbols in Athens, Tuesday, May 2, 2017. (AP/Thanassis Stavrakis)

If we truly support and believe in open and robust public debate, then the discussion as to whether Greece (or any other EU member-state) will be better served by departing from the EU or eurozone must be a part of that dialogue. So far, however, it has largely been excluded from the public sphere and from anything resembling equal footing in public discourse—whether that discussion is occurring in the media, in academia, or in the political arena.

Even if one is not a proponent of leaving the eurozone or the EU, the fiscally and politically prudent thing to do would be to have a plan in place for such a possibility. If, for instance, there is a collapse of the Italian banking system—which is presently teetering on the edge—or some other large-scale economic disaster in the eurozone, it’s not outside the realm of possibility for a domino effect to impact the entirety of Europe, forcing out some eurozone member states or resulting in the collapse of the eurozone system itself.

If this sounds far-fetched, consider the following: there are several examples of currency unions breaking apart, such as that of the Austro-Hungarian empire, or more recently the cases of the breakup of the Czech-Slovak union or Latvia leaving what was essentially a currency union with Russia in 1992.

While not exactly like the eurozone today, in the 19th and early 20th century, the Latin Monetary Union and the Scandinavian Monetary Union attempted to create a currency peg across multiple countries—which also occurred more recently in the lead-up to the launch of the eurozone via the creation of the European Monetary Union. For different reasons, both monetary unions ended up dissolving, with member-states eliminating currency pegs between them.

More recently, the United Kingdom departed the EMU in 1992 amidst doom-and-gloom scenarios highly similar to those heard today about departing the eurozone. Instead, what followed was one of the strongest periods of economic growth in the UK’s history.

Further precedent exists in the well-known examples of Argentina, which repudiated the IMF’s austerity diktats and declared a stoppage of payments on its public debt in 1999. What followed was over a decade of economic growth which exceeded the global average, and indeed even the eventual repayment of much of its previous debt at new terms that it negotiated with most of its creditors.

Iceland, following its banking collapse in 2008 which was, proportionally, the largest collapse sustained by the banking sector in a developed country in history, enacted policies which were in direct opposition to those being recommended by the IMF. Banks were allowed to collapse, foreign creditors were initially not repaid, bankers were jailed. The economy soon boomed, with GDP growthexceeding EU and eurozone averages and Iceland’s GDP eventually eclipsing pre-collapse levels. Meanwhile, a devalued currency led to a tourism and export boom. Eventually, creditors were repaid as well.

While Iceland and Argentina were not a part of a common currency bloc, their examples highlight how a nation can reject the austerity demands of institutions such as the IMF, can declare a stoppage of payments on its debt, roll back austerity, devalue its currency, and swiftly return to economic growth. Moreover, Argentina broke its 1:1 currency peg to the U.S. dollar — which, while not the equivalent to departing a currency union, had the result of restoring the Argentine government’s ability to enact monetary policy instead of being reliant on U.S. policy.

Therefore, even the most vociferous supporter of “remain” would be well advised to support the development of an exit plan in preparation for a worst-case scenario which may well emerge from outside the country’s borders. Unlike the “heroic” Yanis Varoufakis, who negotiated so fiercely as finance minister in 2015 that he openly stated he had no “plan B” and would not place “Grexit” on the table even as a negotiating tool, such a plan would be the most prudent option even for the most enthusiastically pro-EU regime.

The paragraphs which follow will outline why a country like Greece must consider leaving the eurozone and the EU, the various proposals which have been put forth as to how this could be accomplished, and how a departure could occur.

Why leave?

Protesting hospital staff sit in front of a wall that they built at the entrance of the Greek Finance Ministry with a banner depicting Greek Prime Minister Alexis Thipras , Deputy Health Minister Pavlos Polakis and Greek Finance Minister Euclid Tsakalotos wearing ties reading in Greek ''Ministry of broken promises" and " We drown in debt and bailouts" in central Athens. (AP/Petros Giannakouris)

Protesting hospital staff sit in front of a wall that they built at the entrance of the Greek Finance Ministry with a banner depicting Greek Prime Minister Alexis Thipras , Deputy Health Minister Pavlos Polakis and Greek Finance Minister Euclid Tsakalotos wearing ties reading in Greek ”Ministry of broken promises” and ” We drown in debt and bailouts” in central Athens, June 16, 2017. (AP/Petros Giannakouris)

The euro is essentially a debt instrument: According to economist and former central banker Spiros Lavdiotis, the European Central Bank does not lend directly to its members—i.e. the member states of the eurozone. It instead lends to the private sector, at interest. In turn, the private sector lends to states who seek to borrow money, at higher interest. This perpetuates the debt cycle, while the higher interest is often financed in the form of budget cuts or higher taxes.

Restoring monetary sovereignty – external devaluation instead of internal devaluation: What has taken place during the years of the economic crisis in Greece is essentially a process of “internal devaluation.” This means that the cost of labor in Greece—that is, wages, insurance contributions and the like—have been slashed, purportedly in an attempt to boost the country’s competitiveness.

Traditionally, however, many countries have employed a different remedy for responding to an economic downturn: external devaluation. Instead of cutting wages and pensions at home, the value of the national currency would be devalued, immediately making the country’s exports, services, and labor cheaper and more competitive on a global level, compared to other stronger currencies.

External devaluation also helped foster much-vaunted foreign investment (as the cost of investment would decrease) in economic sectors such as tourism, as the country proceeding with an external devaluation would automatically become cheaper for foreign visitors. With domestic wages, pensions, and social services unaffected, quality of life was largely not impacted by an external devaluation.

The main disadvantage with external devaluation is that the cost of imports rises. This, however, was traditionally offset in two ways: paying for imports with foreign hard currency reserves (which can indeed increase if foreign tourism and investment in the economy increases), and by increasing domestic production, where possible, to alleviate the need for imports. This promoted domestic industry and a policy of full employment.

But today, countries such as Greece are saddled with a hard currency that is overvalued for the needs of the domestic economy, and where there is no level of control on monetary policy. If this seems like a mere unfortunate consequence of the euro, think again: Roger Mundell, the Nobel Prize-winning economist and architect of the euro, foresaw precisely this eventuality.

In Mundell’s vision, as eurozone economies were squeezed with the first sign of an economic downturn, all of the traditional monetary policy tools would be unavailable in their policy-making toolkit. Unable to devalue the currency or to increase deficit spending due to EU rules, governments would be left with one choice: austerity. Cut wages, cut pensions, slash social services to the bone. It’s a neoliberal wet dream—and it is the European “dream” today.

Escaping stifling EU fiscal rules: Currently, EU member-states must abide to strict EU fiscal rules as part of its Stability and Growth Pact. The main rules are that total government debt must not be more than 60 percent of GDP, and government deficits must not exceed 3 percent of GDP.

At face value, this sounds reasonable and prudent. However, the problem with these rules is that they eliminate many of the traditional tools that were available in the fiscal policy toolkit during times of economic recession. Deficit spending, for instance, has enabled many sputtering economies to get back on track, as cash re-enters the economy, encouraging consumer and business spending and private lending. Limiting this ability handicaps countries which are stuck in a recession.

Indeed, one of the primary ideas behind such rules is, quite cynically, to reduce the political cost of what would otherwise be unpopular policies: cuts to social services and pensions and the like.

A man stands in front of a banner during an anti-austerity rally by workers in the health sector outside the Labour ministry in Athens, March 2, 2017. Monitors from Greece's European Union creditors and the International Monetary Fund re-launched talks in Athens on Tuesday on the country's stumbling bailout program. The banner reads : "Medical Association of Athens, We demand the immediate withdraw of the pension bill". (AP/Yorgos Karahalis)

A man stands in front of a banner during an anti-austerity rally by workers in the health sector outside the Labour ministry in Athens, March 2, 2017. The banner reads : “Medical Association of Athens, We demand the immediate withdraw of the pension bill”. (AP/Yorgos Karahalis)

It should be noted here that leaving the eurozone or even the EU does not mean an automatic green light to act recklessly. But it will afford a country like Greece the freedom to take control of its fiscal and economic policy. Notably, for Greece, the EU has determined that the aforementioned strict rules do not go far enough. Greece’s current “leftist” SYRIZA-led government, entirely subservient to Brussels and Berlin, agreed earlier this year to achieve a primary budget surplus of 3.5 percent annually each year through 2023, and primary budget surpluses of 2 percent annually through 2060.

This certainly contradicts Prime Minister Alexis Tsipras’ current rhetoric regarding the official end of the crisis coming sometime in 2018. A primary budget surplus means that the state spends less than it takes in. For a country with a stagnant or shrinking GDP such as Greece, this means spending an ever-shrinking amount of money. And as government revenues dry up, the surplus target is met by further cutting spending, creating a perpetual austerity death spiral. As of now, this is the economic future Greece faces, no matter what Tsipras, the EU, or the media claim.

Increased competitiveness on the global markets: Free of EU fiscal and monetary shackles, Greece will be free to enact its own policy, including future devaluations of its newly-restored domestic currency (more on devaluation below).

When a country such as Greece is ready to take this step and devalue its domestic currency, it will be able to better compete globally in its three cornerstone economic sectors: tourism, agriculture, and shipping. Greece will be a less expensive destination for foreign tourists, while Greek agricultural products and Greek services will be comparatively less expensive. And this will take place via a process of external devaluation, rather than cutting domestic wages and reducing the quality of life.

Greece has an educated and multilingual workforce, as well as lots of untapped or deprecated (due to EU) agricultural potential. Tourism, while increasing in raw numbers, has a lot of potential for growth, especially since average spending per visitor is far less than other countries.

An increase in foreign trade, exports, and tourism will, in turn, ensure that Greece will maintain the necessary foreign hard currency reserves with which it will import vital goods that it cannot produce domestically. This is how the Greek economy operated prior to entering the eurozone in 2002, and it is how even the poorest of states are able to import oil, automobiles, medicine, or other necessities.

Rolling back austerity: Every sector of the Greek economy has been impacted by the austerity measures that have been imposed by Greece’s lenders in the troika since 2010.

Free of a requirement to sustain a primary budget surplus, Greece would have the ability to increase spending in vital social sectors such as healthcare and education, to at least partially restore pensions and salaries that have been repeatedly slashed, and to cut taxes, such as the heating oil tax which has resulted in most Greek households not being able to afford to heat their homes in the winter. Other cuts could be applied to the value-added tax (VAT), which even for many staple items is a hefty 24 percent, as well as high business taxes that are choking the life out of Greece’s traditional economic base of small businesses.

Even without funding coming from the EU, the ability to increase spending could also allow the state to jump-start infrastructure projects or to continue existing public works. Measures could also be financed to reverse the country’s “brain drain” and to attract some of the 600,000 Greeks who have emigrated back to Greece.

Protecting and promoting industry: Free of the requirements of participating in the European common market, a country like Greece will be less exposed to unequal or unfair competition from industrial powerhouses such as Germany, which has flooded domestic markets with cheap imports, while domestic industries have been shuttered or bought out.

Furthermore, liberated from the requirement of enforcing production quotas under such policy frameworks as the EU’s common agricultural policy, Greece will be able to enact measures to return agricultural production to its much higher pre-EU levels, thereby alleviating many of the concerns regarding the country’s self-sufficiency and “dependence” on Europe for its survival.

Think people don’t want it? Think again: As was shown earlier, public opinion poll results which claim that overwhelming majorities of Greeks wish to remain in the eurozone and EU at all costs are likely “fake news”—meant to influence public opinion and marginalize opposition. What independent polls have indicated is that, at the very least, a departure from the EU and, in particular, the eurozone will not be nearly as unpopular as claimed—and may perhaps even enjoy the support of a small majority.

Leaving the “Hotel California”?

Yanis Varoufakis has famously uttered that the EU (and by extension, the Eurozone) are like the Hotel California: you can check out any time you like, but you can never leave. It’s one thing, of course, to understand why a country like Greece—and its economy—may be at a disadvantage within the Eurozone and the EU. It’s another thing, however, to actually leave these institutions.

In the next and final installment of this piece, it is the very process of leaving that will be analyzed. Contrary to a commonly-expressed sentiment that no coherent plan for a country to depart from the Eurozone has ever been presented, the third and final part of this series will present some of the proposals that have been developed by economists and scholars for an orderly departure from the Eurozone–and how some of the challenges and obstacles, which will inevitably be faced, may be overcome.

Sep 082017
 

By Michael Nevradakis, 99GetSmart

Originally published at MintPressNews

A pro-remain supporter of Britain staying in the EU, wears an EU flag mask whilst taking part in a protest to coincide with politicians returning to work after the summer recess, outside the Houses of Parliament in London, Sept. 5, 2017. (AP/Matt Dunham)

A pro-remain supporter of Britain staying in the EU, wears an EU flag mask whilst taking part in a protest to coincide with politicians returning to work after the summer recess, outside the Houses of Parliament in London, Sept. 5, 2017. (AP/Matt Dunham)

The unflinching support for the EU and its institutions is not about preventing European countries from becoming “Afghanistan.” Not about preventing collapse. Not about the inconvenience of long lines at passport control. It is about promoting an ideology, a specific worldview, a vision for the way the world should work.

ATHENS, Greece & LIMASSOL, Cyprus (Analysis) It was way back in the ancient 1990s, when protesting crippling economic austerity measures, the economic imperialism of the International Monetary Fund (IMF) and the World Bank, and free trade deals such as NAFTA and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), was a mainstay of the progressive or left-wing political agenda and worldview.

Today, that same worldview apparently makes one a “nationalist” or a “fascist,” in the eyes of self-described leftists and progressives. Oh, the irony!

Opposition to free trade agreements or open borders is now a surefire way to be branded with the modern-day scarlet letter, that of being a “nationalist.” Opposing unchecked migration—and the war and conflict that spur mass waves of migration in the first place—apparently makes one a “xenophobe.” Standing up to the crippling austerity prescribed by the open-borders project known as the European Union towards some of its own member-states makes one a “fascist.” Independence and sovereignty are bad, open borders and unrestricted free trade benefiting certain industrial powerhouses and large multinational corporations are good.

In another irony, the anti-colonial independence movements of the 1950s and 1960s were by and large nationalist movements, and were supported by many progressive forces around the world. But at the time, the “n-word” (nationalism, of course) was not the dirty word that it is today.

Back in the distant 1990s, the United States was described by western commentators as the leader of the free world, the beacon of liberty and democracy. This worldview continued unabated up through the end of the term of President Barack Obama. The election of President Donald Trump in November on a populist platform — on the heels of the British referendum result in favor of Brexit, which also drew heavy support from populist political elements — put an end to this worldview.

In yet another irony of ironies, it is now the “iron lady” of one such industrial powerhouse, Chancellor Angela Merkel of Germany, who is widely viewed as the global beacon of liberal democracy and freedom. According to Politico, it is Merkel who is now the “leader of the free world,” anointed as “global savior.” Online feminist publication Jezebel has dubbed Merkel the “last pillar of liberal democracy in Europe.” And Kati Marton, wife of the late U.S. Ambassador and Assistant Secretary of State Richard Holbrooke, described Merkel as “the last real democratic leader standing” and “the most powerful woman in the world,” in a highly laudatory profile piece written for fashion and lifestyle magazine Vogue.

The aforementioned sources are quite varied in style and substance, but they all adhere to the same worldview: neoliberalism, or if you prefer, globalism. And it is “free” trade, “open borders,” and the dominance of supranational institutions such as the EU that are some of globalism’s basic tenets. In the eyes of Politico, Jezebel, Vogue and their ilk, leaders like Merkel — among the staunchest supporters of open borders, and of economic austerity for suffering EU member-states such as Greece, towards which the EU supposedly displays “solidarity” — epitomize the ideal global leader, in the mold of other globalist favorites such as former Secretary of State Hillary Clinton.

This tacit, blinding acceptance of institutions such as the EU, the World Bank, and the IMF and their policies and practices is a slap in the face to all those—whether they are in Greece, Mexico, Argentina, Tanzania, Indonesia, or elsewhere—that have suffered as a result of the economic doctrines that these institutions have imposed upon their countries. And no criticism or opposition shall be brooked by the purportedly tolerant supporters and backers of such institutions!

Case in point: Naomi Klein. The out-of-nowhere celebrity author and “activist” with a hazy biography first became widely known in the late 1990s for her anti-corporate globalization treatise No Logo, though the pinnacle of her anti-economic globalization work is her 2007 book, The Shock Doctrine. Following the election of the supposedly “radical leftist” SYRIZA in Greece on January 25, 2015, Klein could barely contain herself, gushing like a teenage schoolgirl over its victory in social media postings that now seem to have been scrubbed—although some evidence of Klein’s enthusiasm still remains. As SYRIZA and Greek Prime Minister Alexis Tsipras have sold Greece and its people down the river, overturning the July 5, 2015 referendum result and enacting a third (and since then, a fourth) memorandum agreement, Klein has remained conspicuously silent.

To be clear, this is not an argument in favor of political figures such as Trump (more on this later). Instead, using the EU as a case study, neoliberal doctrine and the prevailing orthodoxy observed in the overwhelming majority of the world’s mainstream media outlets—and in such sectors as business and academia—will be deconstructed. By examining what a supranational institution such as the EU actually is, how it was created and how it operates today — as well as by analyzing why so many entities have a vested interest in maintaining the status quo and how they attempt to discredit any opposition to it — readers will (I hope) come away with a clearer understanding of the purpose such institutions serve in the global order today, and why they are not quite what they seem.

A Case Study In Neoliberalism: What The EU Actually Is

The signing, March 25, 1957, of the Treaty of Rome, creating the European Economic Community, forerunner of today's European Union. (AP Photo)

The signing, March 25, 1957, of the Treaty of Rome, creating the European Economic Community, forerunner of today’s European Union. (AP Photo)

The EU’s not so humble beginnings:

The EU’s innumerable backers in government, the press and mass media, academia, the intelligentsia, and the general public describe the supranational institution as a force for peace, indeed as the sole and exclusive reason why there supposedly has been no war or conflict—itself a false claim—in Europe since the end of World War II. The EU was awarded the Nobel Peace Prize in 2012 based on this argument, that “for over six decades [it had] contributed to the advancement of peace and reconciliation, democracy and human rights in Europe.”

For its proponents, the EU signifies the beginnings of a “brave new world” without war and indeed without borders, a force for peace where capital—including “human capital”—can travel freely. An entity where millennials hop aboard their favorite budget airline and travel from Berlin to Milan to enjoy some prosecco without having to lose precious minutes standing on line at passport control or to exchange currency.

The EU’s beginnings, however, are hardly as benign as the official propaganda. Indeed, there exists significant evidence indicating that, at the very least, the foundations of the European Economic Community (EEC), as it was first known, may have been inspired by Third Reich plans for European “integration” and German hegemony.

At a public meeting at the British House of Commons on February 26, 2008, author, political economist, former British Ministerial Adviser and then-lecturer at Germany’s University of Mainz Rodney Atkinson described the backgrounds of Nazis and fascists who became key founding members of the EEC. In this speech, Atkinson highlighted the backgrounds of such prominent figures as Walter Hallstein and Walther Funk.

Who were Hallstein and Funk? Hallstein was one of the twelve signatories of the Treaty of Rome, the founding document of the EEC, and was the first president of the non-elected European Commission, the EU’s executive branch, between 1958 and 1967. EU proponents describe Hallstein as a “visionary,” while mainstream biographies of Hallstein note that while he was a member of some “nominally” Nazi organizations, he was not a Nazi Party member or part of the SA.

Let’s look at these “nominally” Nazi organizations. Hallstein was a member of the Association of National Socialist German Legal Professionals, which later morphed into the National Socialist Association of Legal Professionals (or “Law Protectors”), membership in which was restricted to only those who displayed the most unwavering and active support for Nazi ideology. Indeed, in 1933 Hitler purged Jews and socialists from the organization. Hallstein, in a memo to Nazi administrators, confirmed in 1935 that he was a member of both of these organizations.

Following Hitler’s official state visit to Italy and meeting with Mussolini in May 1938 in the lead-up to World War II, a bi-national commission was established to create the framework for the European dictatorship that was to be achieved. Soon thereafter, the first meeting of this commission’s legal team was held, with Hallstein representing Nazi Germany.

The following year, just before the outbreak of the war, Hallstein gave an infamous speech—the handwritten manuscript of which is available online. In this speech Hallstein referred, among other things, to “the creation of the Greater German Reich” and “legal Germanization of the new territories,” via the “link up” of Austria and much of Czechoslovakia with Germany and creation of a “unified legal system” for this new territory — citing the failure to create such as system as one of the “unfinished tasks” of the Second Reich. Most egregiously, in this same speech Hallstein also advocated in favor of a “law for the protection of the German blood and the German honor,” or what were to become the Nuremberg Race Laws.

On to Walther Funk. Funk served in the Nazi Propaganda Ministry under Goebbels, and later as Nazi Germany’s minister of economics, president of the Reichsbank, and president of the Bank of International Settlements, he was responsible for dispossessing Jews of their assets, for which he was later convicted at the Nuremberg trials. Released from prison in 1957—the year the Treaty of Rome was signed—he served in Lower Saxony’s ministry of education between 1957 and 1960. To state it differently, just over a decade after the war, one of the founding member-states of the EEC offered a significant position in public administration to a convicted Nazi criminal.

Funk’s direct relevance to the EEC, however, is evident through a report produced in 1942 under his watch as economics minister and president of the Reichsbank, titled “Europaische Wirtschaftsgemeinschaft,” or “European Economic Community.” Indeed, this term was apparently first introduced by the Nazi regime. This report presented a plan for how Germany would administer the economies of conquered post-war Europe, and encompassed sections on currency, trade and economic agreements, agriculture, industry, and more. More specifically, the report called for the “harmonization” of Europe’s currencies. A uniform planning and management system that would erode the economic sovereignty of individual European states—shades of the EU and such things as the “Common Agricultural Policy” today—was foreseen. And, foreshadowing today’s “identity politics” and “freedom of mobility,” national sovereignty was to be displaced by the so-called “sovereignty of the people.”

When Gerard Batten, a member of the European parliament with the UK Independence Party (UKIP), referred to Funk’s past in a posting on his blog, Labour Party MP Chuka Umunna described these claims as “crackpot conspiracy theories.” But are they? “Europaische Wirtschaftsgemeinschaft,” with Funk as one of the co-authors, is readily locatable today. Daniel J. Beddowes and Flavio Cipollini, who together authored a book titled The EU: The Truth About the Fourth Reich – How Hitler Won the Second World War, argue that Funk put the finishing touches on the plans for what is today the EU.

According to Beddowes and Cipollini, “[i]t was Funk who predicted the coming of European economic unity. Funk was also Adolf Hitler’s economics minister and his key economics advisor.” The authors indicate that Hitler’s post-war plans foresaw a federalized, economically integrated European Union free of “the clutter of small nations,” and that these plans were themselves based on a belief held by Lenin, that “federation is a transitional form towards complete union of all nations.” Therefore, argue the authors, it is not by chance that the EU closely resembles Hitler’s blueprint for a unified Europe, and that most EU member-states are getting poorer while Germany is continuously getting richer.

An alleged U.S. military intelligence report, EW-Pa 128 — also known as the “Red House Report” and said to have been written in November 1944 — describes the proceedings of a secret meeting that took place earlier that year where Nazi officials, recognizing that defeat and the end of the war were near, ordered German industrialists to plan for the post-war future and to lay the groundwork for a new “strong German empire.” The secret report was said to have been copied to British officials and to have made its way to the U.S. Secretary of State. The industrialists, including representatives of such companies as Volkswagen, were joined by representatives of the German Navy and the Nazi ministry of armaments.

This report, if indeed legitimate, describes a post-war Europe that would eventually come to be dominated by Germany, but with this domination being economic rather than military. The economic reserves of German front companies located abroad would be exploited, and this money would later be funneled to German industrialists via other front companies in “neutral” Switzerland. These overseas front companies would maintain a direct line of communication with the top political echelons of Germany, with the goal of eventually reasserting their dominance over Germany—and over Europe.

This report dredges up memories of the infamous Merten affair, involving Dr. Max Merten, who had been installed as a Nazi administrator in the city of Thessaloniki. Infamous for having looted Thessaloniki’s substantial Jewish community of their wealth and jewels in exchange for protection—before betraying their trust—Merten maintained close ties with prominent Greek politicians, particularly the inner circle of Konstantinos Karamanlis, who in the 1950s became Greece’s Western-supported prime minister.

Merten, wishing to recover his hidden booty, returned to Greece in 1957 under the assumption that no warrant existed for his arrest. Merten was arrested, however, and served some months in prison before being amnestied by Karamanlis. Merten had been threatening the Karamanlis government with evidence that Merten was said to have in his possession, proving that Karamanlis and key ministers of his government had collaborated with the Nazis during the war.

One of Karamanlis’ closest allies, Konstantinos Gertsos, appears in the declassified intelligence files on the Merten affair. Gertsos headed a German front corporation, landing a lucrative mining concession on behalf of German businessmen. He later became Greece’s ambassador to Switzerland, where he participated in investment schemes with Karamanlis, and later was named honorary ambassador of Greece. Serving again as Greece’s first post-junta prime minister, Karamanlis himself oversaw the negotiations for Greece’s accession to the European Community in the late 1970s. His nephew, also named Konstantinos Karamanlis, served as prime minister between 2004-2009, the years that led up to Greece’s catastrophic economic crisis.

On the topic of industry, there is the example of Hermann Abs, founder of the pro-integration European League for Economic Cooperation (still in existence), a board member of Deutsche Bank, and also a board member of I.G. Farben, a union of German industrial titans such as BASF and Bayer. This consortium sought to obtain control of the global marketplace in such sectors as pharmaceuticals and petrochemicals. In 1933, it also became the largest financier of the Nazis’ rise to power, and continued to collaborate with the Nazis thereafter, to the tune of over 80 million Reichsmark during the war. In exchange, I.G. Farben took over key industries in each Nazi-occupied country.

What was I.G. Farben’s endgame? A letter presented at the Nuremberg War Crimes tribunal, which had been written by I.G. Farben director August von Knieriem and addressed to the Nazi government, foresaw a common European currency, legal system, and judicial system—not unlike today’s EU and Eurozone.

The Nazi foreign ministry itself crafted a draft blueprint for a “united Europe,” which—in shades of today’s hysterical anti-Russian sentiment in the West—called for a European mobilization against the USSR through the implementation of a “European image of German foreign policy” and the formation of a confederation of 14 European states that would be led by Germany and ultimately promote German interests.

None other than celebrity economist and former Greek finance minister Yanis Varoufakis himself has pointed outseveral quotations that could fairly describe today’s EU, including: “There must be a readiness to subordinate one’s own interests in certain cases to that of the European Community;” and “The solution to economic problems … with the eventual object of a European customs union and a free European market, a European clearing system and stable exchange rates in Europe, looking towards a European currency union.” Oddly enough, or perhaps not so oddly, these striking similarities with Nazi rhetoric do not lead to any hesitation on Varoufakis’ part to wholly and enthusiastically support EU institutions.

“There is no alternative”

A protester take part in a rally against the proposed privatization of the state-run water utility, in the Thessaloniki, Greece’s second largest city, on Wednesday, May 28, 2014. Greece’s highest administrative court has ruled against the sale, arguing that the sale could affect water quality. (AP Photo/Nikolas Giakoumidis)

A protester take part in a rally against the proposed privatization of the state-run water utility, in the Thessaloniki, Greece’s second largest city, on Wednesday, May 28, 2014. Greece’s highest administrative court has ruled against the sale, arguing that the sale could affect water quality. (AP Photo/Nikolas Giakoumidis)

Just as with opposition to international “free” trade and the policies of institutions such as the IMF and the World Bank, there was a time where the left and progressive forces were opposed to the politics of TINA—“there is no alternative,” exemplified by the original iron lady, former British Prime Minister Margaret Thatcher. Today though, we are told by a wide range of voices, including purported leftists such as Varoufakis, that for countries such as Greece there is no alternative to EU and Eurozone membership, categorically ruling out any thoughts of departure.

But Greece lied by presenting false economic data to enter the Eurozone, did it not? And therefore it must accept “bitter medicine,” should it not? That’s what many “well-meaning” leftists and progressives retort when the topic of the EU and IMF’s cruelty towards Greece is brought up. But this also exposes what could, depending on one’s perspective, be described as either the EU’s incompetence or its insidious nature. If Greece lied and the EU did not perform due diligence and was fooled, then it is incompetent. If it knew what was going on and went along, then it is complicit in what has followed.

Furthermore, Greece wasn’t alone in its “creative accounting:” countries like Italy and Spain also brokered deals with the likes of Goldman Sachs and J.P. Morgan to massage the numbers in order to meet the Maastricht criteria to qualify for Eurozone membership. Even Varoufakis, in a 2012 Dialogos Radio interview, has suggested that many other Eurozone members fudged the numbers.

Membership in the EU and the Eurozone provided an ephemeral economic boom and a period of false prosperity for Greece. The negative impacts, however, are more long-lasting, if indeed not permanent, in nature. Privatizations, which began in earnest in the early 1990s and did nothing to prevent the crisis, resulted in the wholesale sell-off of strategic state assets, resources, and public utilities that were often profitable. Introduction of a “hard” currency, overvalued for the Greek economy, made Greek exports and tourism uncompetitive compared to lower-priced alternatives in the region. Greece’s previously modest industrial base was decimated while agricultural production has dropped sharply since 1981, the year Greece joined the EU, due in large part to the EU’s common agricultural policy.

Greece, as did several other countries, may have presented questionable data in order to enter the Eurozone. In yet another biting irony though, similarly “fudged” numbers may have been presented, very much on purpose, in order to drag Greece into the IMF-EU austerity mechanism. Whistleblowers such as Zoe Georganta have made allegations and presented evidence indicating that Greece’s debt and deficit figures were purposely worsened in order to drag Greece under the austerity mechanism.

Fueling these allegations is the revelation that former IMF chief Dominique Strauss-Kahn had met with then-opposition leader George Papandreou in April 2009, months before Papandreou was elected as Greece’s prime minister. The allegedly augmented deficit and debt figures were revealed soon after Papandreou’s election, signifying the start of the economic crisis.

We might ask, why sabotage a national economy? The corrected question, though, should be, why not? The austerity regime enabled the EU and successive subservient regimes in Greece to impose unpopular and socially harmful measures that would never have had a chance of being enacted under ordinary conditions — including harsh cuts to social services, wages, and pensions, plus fast-tracking the privatization of key national assets.

Notably, the Greek economy was subject to EU audits and oversight during the 2004-2007 time period. For some unexplained reason, this oversight did nothing to prevent the crisis that followed. And while the international press has habitually focused on Greece’s falsifying of its economic data to join the Eurozone (without focusing on other countries which also engaged in this practice), any discussion of the allegations made by whistleblowers about the alleged augmentation of Greece’s deficit and debt figures is denounced as conspiracy theory. Indeed, the chief statistician who oversaw this possible falsification of the data is lauded in the press.

The EU’s democratic deficit, hypocrisy, and the human cost

A man looks on a pile of trash as he walks behind a flower pot in Kaminia neighborhood of Piraeus, near Athens, June 27, 2017. Striking garbage collectors who fear job losses from EU-imposed regulations governing short-term contract workers in the public sector, were on the 11th-day of protest that left huge piles of trash around Athens. (AP/Petros Giannakouris)The austerity regime in Greece has been far from victimless. Repeated reports from the United Nations and the Office of the High Commissioner of Human Rights (OHCHR) have found that the austerity measures imposed in Greece are in violation of international law and the basic human rights of the Greek people, who have increasingly been impoverished during the crisis as a result of the successive pension and wage cuts and reductions to social services that have been imposed.

For a while, the “European family” demonstrated “solidarity” with Greece and its people. Such “solidarity” movements cropped up in early 2015 in particular—movements that were fully supportive of the SYRIZA-led coalition government, notwithstanding the signs that were evident from the very beginning that SYRIZA was not the leftist, anti-austerity force it was portrayed as being. Instead, their “solidarity” protests in European and North American cities, replete with SYRIZA flags, and their accompanying social media hashtag #ThisIsACoup, gently chastised the “bad Europeans” for “blackmailing” the well-intentioned “leftist” government of Greece.

Peculiarly, these mild protestations against the “bad Europeans” were never, ever accompanied by suggestions that Greece consider a departure from the EU or the Eurozone, even as a negotiating tactic. Instead, the Greek people have, by the very same people who displayed “solidarity,” often been lectured about Greece’s responsibility towards the rest of the “European family” and chastised for such matters as the petty corruption of not issuing a receipt for small purchases.

Indeed, it has often been Greece that has been called upon to display “solidarity” without reciprocation. With Greece beset by many dozens of destructive forest fires in recent weeks, the EU obliged Greece to send two firefighting airplanes to Albania—itself not a EU member-state—but France refused a request to send planes to help Greece’s overextended fire brigades extinguish the Greek blazes.

This mentality has made its way into the Greek political psyche. Prime Minister Tsipras’ victory speech on January 25, 2015 was full of pro-EU zeal, featuring many references to saving Europe, but none to saving Greece. The main opposition party, New Democracy, has helped organize several “remain in Europe” rallies since 2015 and has repeatedly positioned itself as a “responsible” and “outward-looking” alternative to the “leftist” SYRIZA.

Nary a word is mentioned, however, about the EU’s apparent disdain for democracy. As mentioned earlier, its executive branch, the European Commission, is wholly non-elected. Nor, for that matter, are the EU commissioners themselves. One such commissioner, EU trade commissioner Cecilia Malmström of Sweden, has said quite accurately that she “does not receive her mandate from the European people.”

The non-elected president of the Commission, Jean-Claude Juncker, himself embattled by the LuxLeaks scandals in the recent past, has stated that “there can be no democratic choice against the European treaties.” Sadly though, he hasn’t addressed the hypocrisy of lecturing Greece about “reform” whilst being embroiled in scandals of his own.

In turn, Germany’s apparent finance minister-for-life, Wolfgang Schäuble, who apparently also acts as finance minister of Greece and Spain and Italy and Portugal, has said “[e]lections change nothing. There are rules.” The sovereign judicial institutions of an EU member-state have also been openly questioned when decisions don’t go the EU’s way, as was the case recently in Greece. Solidaridad!

This author received an in-your-face taste of the EU’s brand of democracy in a 2013 visit to EU institutions in Brussels and Luxembourg. During this visit, a succession of technocrats shed all pretense and demonstrated their disdain for democracy and the very concept of the nation-state. Their talks were peppered with such quotes as “The labor force should be ‘flexible’ and should ‘diversify;’” “Mussolini dealt with the situation;” “There are regions of Italy which we wish Brussels could govern directly;” and “We believe in a single European consciousness.” Compare these with the Nazi quotations presented earlier in this piece.

During this series of talks, the technocrats and their partners in academia arrogantly attributed the EU’s economic perils to three simple factors: “Bad design. Bad luck. Bad decisions: Greece.” Revealing the EU’s possible endgame, we were further told that “the nation-state is a 19th-century construct, and nothing lasts forever.”

Further demonstrating the utter lack of democracy and accountability in the Nobel Prize-winning EU, it should be noted that the European Central Bank (ECB), which holds the economic fate of the EU’s member-states in its hands, has only one mandate in its governing documents: maintaining price stability — reflecting a longstanding German aversion to inflation of any sort. Nothing in the ECB’s constitution requires it to enact policy with social mandates, such as full employment, in mind. Indeed, the ECB itself does not lend directly to member-states but exclusively to private banks, from which states are then obliged to borrow at higher interest rates.

Perhaps best demonstrating the contempt with which the EU elite and its supporters view democracy and popular will, numerous parliamentary votes and referendum results that have not gone the EU’s way have systematically been subject to re-dos and overturned. For instance, Ireland rejected the EU’s Lisbon Treaty by referendum in 2008. A “relatively small member state” daring to “hold up” attempts at further EU integration was considered intolerable by the powers that be, and a new vote was called. Amidst tremendous pressure, voters wilted and accepted the treaty in the new referendum.

Similarly, Irish voters rejected the EU’s Treaty of Nice in 2001. This surprise result was also deemed unacceptable. A new referendum was scheduled in 2002, the usual pressure on voters piled on, and the Treaty approved by Irish voters the second time around.

In 2013, Cyprus’ newly-elected government of President Nikos Anastasiadis rejected an EU-proposed “bailout” that would have resulted in a “haircut” of bank deposits ranging from 6.6 percent to 9.9 percent. Indeed, not one vote in favor was cast in parliament. De facto EU boss Germany was not impressed. Under stifling pressure and amidst threats of “imminent” bankruptcy, the parliament caved and passed a modified, but still onerous, “bailout” bill and haircut in a second vote.

In Greece, of course, the “leftist” SYRIZA government felt no obligation to even pretend to show resistance, despite the absurd “#ThisIsACoup” rhetoric that it tacitly supported behind the scenes. The July 2015 popular referendum overwhelmingly rejecting the EU’s austerity proposals was swiftly overturned and replaced by an even more severe austerity package, all in the name of keeping Greece “in Europe” (as if it would float away to Antarctica otherwise).

Following the Brexit referendum in the United Kingdom, elitist, pro-EU scholars from such “safe space” institutions as the London School of Economics recoiled in disgust at the “tyranny of the majority.” Clearly, voters were not as well-informed as pro-EU ivory tower intellectuals. This sentiment is not a recent phenomenon, however: similar views were expressed over a decade ago following the rejection of the proposed EU “constitution” by French and Dutch voters in 2005.

Therefore, it is no surprise that in the EU today, non-elected authorities are the ones who, for instance, tell countries what to grow and what not to grow (EU common agricultural policy), or whether or not a state-owned national air carrier can be allowed to continue to operate. A private and high-cost quasi-monopoly (Aegean Airlines) along with a smattering of low-cost airlines with a limited range of destinations has replaced Greece’s Olympic Airlines, which undoubtedly had been mismanaged but nevertheless connected Greece to North America and Australia.  In neighboring Turkey, Turkish Airlines—unimpeded by EU “competition” regulations and half-owned by the Turkish state—flies to the most countries and fourth most destinations in the world.

Why the fear of losing the EU?

A man looks up at a model of a pigeon on top of a banner as anti Brexit campaigners gather at Hyde Park Corner in London, March 25, 2017, before they march towards Britain's parliament. (AP/Kirsty Wigglesworth)

A man looks up at a model of a pigeon on top of a banner as anti Brexit campaigners gather at Hyde Park Corner in London, March 25, 2017, before they march towards Britain’s parliament. (AP/Kirsty Wigglesworth)

For some of those who favor the EU, their support often approaches levels of blind dogmatism. The main issue to contend with here though is why do such large segments of the political, business, and media elite so strongly support the EU, the Eurozone, and all of its associated institutions and policies?

In a word, the reason is neoliberalism. Based in part on “third way” politics, which burst to the political forefront in the 1990s with the likes of Bill Clinton and Tony Blair, it is the idea that capital, including “human capital,” should be able to flow freely across borders—or better yet, that borders should be abolished altogether. It is an idea that pays lip service to democracy and social justice but that preserves the primacy of international financial capital and so-called “free trade” über alles.

Greek Prime Minister Tsipras, defending his government’s policy of maintaining Greek membership in the Eurozone, argued in a recent interview that Greece would turn “into Afghanistan” if it left the common currency bloc. However, as evidenced by Tsipras’ aforementioned victory speech, the end goal is preserving the idea of “Europe”—as conceptualized by today’s European Union—at all costs, even if it means breaking campaign promises (or outright lying, if you prefer) and implementing policies that are toxic for the country and its people.

Some of the more laughable defenses that have been heard in favor of EU membership—as exemplified by the heated pre- and post-Brexit referendum rhetoric, concern such awful inconveniences as having to wait on line at customs control or at currency exchange. Somewhat more serious arguments concern the loss of the right to seek employment in other European countries. Doom-and-gloom scenarios, such as the one put forth by Tsipras and also much of the press and mass media, predict economic failure and catastrophe for those who dare depart from the Eurozone or the EU.

This unflinching support for the EU and its institutions, though, is not in reality about preventing European countries from being transformed into “Afghanistan.” It is not about preventing collapse. It is not about the laughable inconvenience of waiting on long lines at passport control. It is about promoting an ideology, a specific worldview, a vision for the way the world should work.

How exactly does this new, visionary world work in reality? What is the end goal? Let’s take the “free movement of labor” as an example. The positive spin that is often placed on this issue points out the advantages of being able to seek work in 28 EU member-states, increasing options for those seeking jobs and the pool of potential workers for employers.

In actuality though, such policies promote a “brain drain” from poorer EU member-states towards those that are wealthier. This perpetuates a spiral of impoverishment in countries such as Greece, from which an estimated 600,000 people have emigrated just during the years of the economic crisis, draining the country of a significant percentage of its educated professionals, the know-how and innovation they could provide, and the contributions their employment would make to the national tax base and pension system–further perpetuating the vicious economic cycle.

Indeed, it can be surmised that a portion of the still significant levels of support for EU membership in Greece stems from individuals who do not view EU membership in terms of the country’s best interest but in terms of self-interest — such as the opportunity to escape the “hellhole” that is Greece and to move to other, wealthier countries that are deemed more “civilized.” Motivated self-interest can also be seen in certain professional categories, such as academics for instance, who fear losing such benefits as EU-provided or EU-supported financial grants.

On their end, employers do not wish to lose what amounts to a pool of surplus labor. This has nothing to do with meritocracy, competition, or finding the best candidate to fill available positions. It has much more to do with increasing labor supply and lowering wages accordingly, essentially pitting labor against itself. As an ancillary benefit, the impoverishment of EU member-states such as Greece creates an internal bloc of countries with educated working populations, proximity to the rest of Europe, free trade and the same currency, and labor conditions and wages rapidly approaching third-world levels. This leads to “investments” (including the aforementioned privatizations) in these nouveau-poor nations, while “free” trade allows cheaply-made imports from economic powerhouses such as Germany to be dumped on local markets.

The same holds true for economic migrants and refugees, for whom we are often told there must be “no borders.” But what this influx of peoples actually represents from an economic point of view is further surplus labor, including labor willing to perform undesirable jobs at pitifully low wages. It represents a new labor pool which is, in essence, pitted against the domestic labor of European countries, suppressing wages across the board. As an additional bonus for employers, those migrants and refugees who are undocumented are far more likely to be amenable to long workdays, extremely low wages, and employment without insurance, benefits, or union membership — essentially held hostage by fear of deportation or starvation.

In other words, these migrants and refugees are exploited, and this exploitation occurs under the guise of “open borders” and “solidarity.” As this exploitation takes place, the true causes of the mass waves of migration and outflows of refugees from these countries are ignored. These, in turn, are closely related to the geopolitical ambitions and activities of Western actors, including the EU and Brussels-based NATO.

While many of those who are opposed to unchecked migration are indeed racist and xenophobic, there also exist those who oppose such migration on the aforementioned grounds, while further recognizing that states already battered by domestic unemployment are in no position to absorb a new labor pool. There are obviously non-racist and non-xenophobic grounds for  opposition to the destruction, impoverishment and exploitation of these countries in the first place There are then equally sound and benignant grounds for further opposition to the exploitation of the migrant workers and the suppression of wages and elimination of jobs for the domestic workforce, especially at a time when double-digit unemployment already officially exists in much of Europe and the Eurozone.

The way this induced “free” movement operates, a significant percentage of the labor force within “united” Europe is exploited or driven out of work and forced into internal migration within the “common market,” while migrants from outside Europe add to the pool of surplus labor and drive down wages even further. Both categories of workers are exploited by the “big fish,” namely economic and industrial giants such as Germany, and by international financial capital, which together benefit quite handsomely from this situation. This is as far from a xenophobic argument as one can get.

If this all sounds far-fetched, consider the following remarks made by British Labour Party MP John Reid on the BBC’s “Sunday Politics” television program on April 14, 2013: “The Treasury insisted in having a free flow of labor because they thought it would have brought down the cost of labor.” Reid further noted that he was attacked by members of his own party for suggesting that it was not racist to discuss the issue of immigration.

This is the prevalent ideology: “open borders” under a veil of “humanism” but with the goal of the economic exploitation of workers and entire countries alike. War and conflict is fomented in some countries, economic oppression in others. The migrants fleeing these countries in search of survival and employment are then exploited by the wealthier countries, which benefit and profit off of their work and very presence in these countries, such as through the broadening of the tax base. Conversely, the countries that raised these individuals and invested in their education are left largely empty-handed, at best awaiting remittances from abroad. And all of this is couched in pseudo-humanitarian terms: open borders, free movement, and “free” trade.

Discrediting the EU’s opponents

Guest speaker British politician George Galloway makes a speech at a rally held by the Grassroots Out (GO), anti-EU campaign group at the Queen Elizabeth II conference centre in London, held to coincide with the EU summit in Brussels, Feb. 19, 2016. (AP/Matt Dunham)

Guest speaker British politician George Galloway makes a speech at a rally held by the Grassroots Out (GO), anti-EU campaign group at the Queen Elizabeth II conference centre in London, held to coincide with the EU summit in Brussels, Feb. 19, 2016. (AP/Matt Dunham)

As I conclude this piece, I find myself at a fascinating conference on journalism and digital media taking place on the divided island of Cyprus. Notably, Cyprus, just like the United Kingdom, is not yet part of the Schengen Zone, which allows for passport- and visa-free travel. This means long lines at passport control—the horror! Interestingly enough, despite the U.K.’s having been exempted from participation in the Schengen Zone, “freedom to travel” was one of the arguments put forth to oppose “Brexit.”

But back to the conference: I’ve attended fascinating panel discussions and talks by brilliant academic colleagues from all across the world. But there is one problem: the prevailing viewpoint seems openly in favor of all of the institutions and beliefs that are shared by those who could be described as proponents of neoliberalism: pro-EU, anti-Brexit, vilification of the type of so-called “fake news” (i.e., news that does not fit a globalist agenda) allegedly practiced by outlets such as MintPress News, as well as heaps of shock and horror at the election of Donald Trump in the United States. All of this reflects prevailing viewpoints in the media, in the business world, and in academia.

So, Trump and Brexit. These electoral results have been blamed, sometimes in their entirety, on racism and xenophobia and “nationalism” and the ever-evil “populism.” But academia, and particularly the liberal arts and humanities, for all of their lofty talk of “interrogating hegemony,” do not question why populism is successful, and whether there are factors other than poorly-informed and racist voters taking advantage of democratic processes to, believe it or not, vote for their preferred candidate!

Earlier, the example of voters in Missouri counties that had previously voted solidly in favor of Barack Obama but who supported Trump in last year’s election, was used to question the idea that all voters who perhaps supported “populism” or who wished to “make America great again” were racists and xenophobes. Similarly, while the mass media has heaped attention on the racist and xenophobic element of the Brexit referendum result, left-wing campaigns for Brexit, such as “Lexit” and “Left Leave” and prominent left-wing and decidedly non-racist, non-xenophobic figures such as Tariq Ali, are habitually ignored—by journalists, by the media, by academia. In turn, any political development that contradicts the long march towards further neoliberalism and globalism is conflated with the likes of Donald Trump, Steve Bannon, Nigel Farage, and Marine Le Pen among others.

What seems increasingly apparent is that these aforementioned populist political figures are being used—though not entirely incorrectly—as weapons to discredit any policies that are not favorable to the neoliberal status quo. What isn’t clear is whether this was the plan all along — for the likes of Trump to be anointed for this purpose as a real-life “manchurian candidate” and for the Brexit referendum to take place smack in the midst of Europe’s refugee and migrant crisis — or if it simply represents a strategic response by the establishment to an inconvenient situation. But the disgust that has accompanied some of the few actual positive developments of the Trump presidency — such as the elimination of TPP and TTIP (also opposed by Bernie Sanders amidst censorship), the types of “free trade” agreements once vigorously opposed by progressive forces — perhaps elucidates the true nature of opposition to “populism.”

One of the end results of such a divisive and often extreme political climate is the occurrence of horrible, unfortunate, and tragic events that directly reflect this emerging polarization. The recent occurrence in Charlottesville is a case in point. Once they have taken place, such incidents — driven by extremists and pent-up anger on either side — are further used as weapons to discredit any argument against the prevailing political and economic order.

International cooperation and repairing what’s broken

A man stands in front of a banner during an anti-austerity rally by workers in the health sector outside the Labour ministry in Athens, March 2, 2017. Monitors from Greece's European Union creditors and the International Monetary Fund re-launched talks in Athens on Tuesday on the country's stumbling bailout program. The banner reads : "Medical Association of Athens, We demand the immediate withdraw of the pension bill". (AP/Yorgos Karahalis)

A man stands in front of a banner during an anti-austerity rally by workers in the health sector outside the Labour ministry in Athens, March 2, 2017. Monitors from Greece’s European Union creditors and the International Monetary Fund re-launched talks in Athens on Tuesday on the country’s stumbling bailout program. The banner reads : “Medical Association of Athens, We demand the immediate withdraw of the pension bill”. (AP/Yorgos Karahalis)

A lack of willingness to question the aforementioned political and economic order may help explain why even those individuals who expressed “solidarity” with Greece—at least up until Greece and its crisis were largely forgotten following the July 2015 referendum—nevertheless refused to question the very core issues of the EU, its policies in Greece and other crisis-stricken countries, and continued membership in the EU and the Eurozone. Even during the “#ThisIsACoup” phase of “solidarity” towards Greece, the “bad” Europeans who were said to be blackmailing the Greek government were apparently never considered quite bad enough to necessitate “Grexit”—or to later support Brexit. At worst, the Greek situation could be said to be viewed by these elements as merely a momentary hiccup on the path towards a borderless European—or global—utopia.

It seems to be the case that questioning the project in purported European “unity” that is the EU is enough for ordinary individuals to be branded “racists” and “xenophobes,” “isolationists” and “reactionaries.” I suppose then that Tariq Ali, who also questioned SYRIZA when it was not yet fashionable to do so, is a racist and a regressive force—as are Glenn Greenwald, Julian Assange, and George Galloway, who also adopted positions in favor of Brexit.

So why not simply fix the EU if it is broken? That’s what the likes of Yanis Varoufakis have repeatedly argued. But if Grexit is unreasonable and unrealistic, is it more reasonable and more realistic to presume that entrenched institutional structures — such as a non-elected European Commission, an unaccountable European justice system, and thousands upon thousands of regulations and directives dictating many aspects of life and economic activity in Europe, right down to the shape of bananas sold for human consumption (regulations which do in fact exist despite insistence to the contrary by the EU’s supporters) — can simply be changed or eliminated? Or that the issue of surplus labor and downward pressures on wages can be solved within such an institutional and regulatory context? I have not heard a satisfactory answer to these questions, not even from Varoufakis himself. Can an institution that is rotten and undemocratic to the core be salvaged?

Having mentioned Varoufakis, it bears noting that he has, on several occasions, openly praised Mrs. TINA herself, Margaret Thatcher (see also here, here, here, and here). This should come as no surprise, as it is Varoufakis who told us that There Is No Alternative to the euro for Greece, refused to even bring the Grexit option to the negotiating table as Greece’s finance minister, and accepted all of the EU’s austerity demands in the name of keeping Greece in the Eurozone at all costs.

It’s quite ironic that “anti-establishment” leftists and anarchists find themselves precisely on the same side as much of the establishment itself when it comes to the existence of institutions such as the EU, in the name of “open borders”—or no borders whatsoever. The very same establishment that praises one of the harshest prescribers of austerity, Angela Merkel, as a bastion of liberal democracy and as the newly anointed leader of the “free” world.

Those who do not conform to this orthodoxy often do not go unpunished. In various ways, three other purportedly “leftist” or “progressive” publications made it clear that this author’s contributions were no longer welcome. Ditto a radio station and Voice of America affiliate in Thessaloniki, Greece’s second-largest city, which once carried my radio program. So much for tolerance.

Yet, in the name of journalistic integrity — and in the face of injustice, hypocrisy and intolerance — there are things that must be said, if we are to engage in the type of healthy, robust and open democratic dialogue that we’d like to believe we stand for. For this, and as I prepare to begin a professional career in my chosen field, shall I expect to be confronted with a dressing-down akin to that seen in the classic 1976 film Network, where journalist Howard Beale was kindly informed that he had meddled with the primal forces of nature and that he will atone? Perhaps!

The lecture to which Beale was subjected in Network, whether intentionally or not, was accurate: by and large there is no left or right. There are no Democrats or Republicans. There is a prevailing globalist, neoliberal worldview, and there is a smattering of various elements from a wide range of sharply different and often incongruent belief systems that, each for its own reasons, oppose this prevailing trend. And because of the actions of fringe groups that truly are racist and violent, anyone who even so much as simply questions the orthodox worldview is lumped together with such genuinely reactionary elements.

There is true beauty in diversity and cultural difference. But what is diversity and what is cultural difference? I don’t wish to see the same Starbucks in Los Angeles, Lisbon, Lima, and Lesotho. I don’t desire to see one global “lingua franca” prevail while “unimportant” languages (like Greek) die out. I would not like to see the same corporations and the same lifestyle imposed worldwide via the process of globalization. When I am privileged enough to travel, I’d like to enjoy the local food and music and culture, to hear the local language and learn a few words (or more), to appreciate a way of life and a worldview different from my own. That’s diversity, and it is endangered by the homogenizing process of globalization, which is itself brought further along by the elimination of national sovereignty.

If I am a Greek voter, I want my elected prime minister, whether it is Alexis Tsipras or anyone else, to talk about the country that they were elected to govern and to represent me, my children and my family, not to discuss some abstract entity known as “Europe” which he or she was not elected to represent. Democracy works at a local level, while imperialism and empire are what prevail at the global, supranational level. And if the price of that democracy is waiting in a queue to exchange currency (which preferably would be in physical form) then so be it.

The idea of unity is often treated as a zero-sum game with the idea of the nation, that only one or the other is possible. But is this truly the case? International cooperation and understanding can and does exist across nations and peoples in an astounding myriad of ways. These could include trade agreements that are not parasitic or based on exploitation, visa-free travel regimes across countries, and academic exchange programs that help foster cultural mixing and collaboration. Those academics who are also EU backers and are worried about losing, say, the Erasmus+ exchange program, may wish to consider that it is open to non-EU citizens, just as the United States’ Fulbright exchange program is open to participants from all around the world. Those are concrete examples of international cooperation and cultural bridging in action which can exist, should exist, and often times do exist without the necessity of a bloated supranational behemoth micromanaging every aspect of life and serving the interests of a select few.

Nation-states and borders do not necessarily mean isolationism. They don’t necessarily mean hatred, nor do they mean a lack of cooperation. Indeed these elements can and do exist even absent of borders, such as within societies or within supranational entities. We are told that the EU has served as a force for peace and that the nation-state as an institution promotes war. But the EU and EU member-states allied with NATO have participated in countless conflicts, both on the European continent and elsewhere, and have no problem allying themselves with oppressive, violent, authoritarian and genocidal regimes for reasons of economic or geopolitical expediency. War itself has existed since prehistoric times, long before the advent of the nation-state. It has also indeed contributed to the breakup of larger supranational entities. And as demonstrated earlier, whether due to conspiracy or coincidence, the idea of European economic and political unity is not necessarily incompatible with fascist and extremist ideology.

So what of the EU and Eurozone? A commonly heard retort is that no one has suggested any practical alternatives or a course of action that would allow a country such as, say, Greece, to depart from these institutions without a catastrophic meltdown taking place. This therefore raises the question: should a country like Greece depart and, if so, how can it accomplish this? What are the alternatives, and are they viable? Will Greece be transformed into Afghanistan, as Tsipras suggests? The next installment of this series will address these questions—and more—in detail. Stay tuned.

Apr 282017
 

By Michael Nevradakis99GetSmart

Originally published at MintPressNews:

According to economist Roger Bootle, the EU has grown unsustainable and due to various factors, is about to burst. (AP/Francisco Seco)

According to economist Roger Bootle, the EU has grown unsustainable and due to various factors, is about to burst. (AP/Francisco Seco)

Britain’s departure from the EU, a process that will take about two years, has formally gone into motion. MintPress News had the opportunity to speak with prize-winning economist Roger Bootle about what Brexit will ultimately mean for the country’s economy, as well as the European Union as a whole.

LONDON– The recent triggering of Article 50 of the European Union’s Lisbon Treaty by the United Kingdom has formally set into motion the process of Britain’s departure from the EU, an action that is in line with the result of last June’s referendum, where 52 percent of British voters chose to leave the union.

Europe is now faced with the prospect of a turbulent period ahead, with the upcoming French presidential elections and the possibility of a victory for populist candidate Marine Le Pen, as well as snap parliamentary elections declared in the UK, German elections in September, a rising tide of Euroscepticism across the continent and the process of Brexit now formally put into motion.

Economist Roger Bootle, chairman of Capital Economics in London and specialist adviser to the British House of Commons Treasury Committee, is the lead author of the report “Leaving the euro: a practical guide,” which was awarded the prestigious Wolfson Prize in Economics in 2012. The report presents a comprehensive proposal for how any eurozone member could depart the zone in an orderly fashion. Bootle discussed his findings extensively in a March 2015 interview with Dialogos Radio.

MintPress News recently had the opportunity to speak with Bootle, in an interview that also aired on Dialogos Radio, about the prospects of the British economy following Brexit and the future of the EU and eurozone following Britain’s upcoming departure.

MintPress News (MPN): The British government has recently gone ahead and invoked Article 50, formally triggering the process for Great Britain’s departure from the European Union. Many doom-and-gloom scenarios have been voiced, particularly by media pundits, regarding the adverse impacts of “Brexit” on Great Britain’s economy. In reality, how has the British economy performed since the referendum vote and, more recently, since Article 50 was invoked, and what are its prospects going forward?

Roger Bootle (RB): The British economy has done extremely well since the referendum. In fact, you can’t really see any adverse effects at all. It’s just bowled along much as before. In the immediate weeks and months after the referendum, there was some hesitation and some business sectors undoubtedly felt a bit of a slowdown, but that didn’t last long.

As things are at the moment, they’re looking really very strong. Surveys suggest that economic growth will continue roughly at the level we’ve seen recently. Of course, the pound has dropped quite considerably, and that’s helped British exports. They are looking very strong. Even if there’s a bit of a squeeze on consumers, which there may well be, I think all the signs are that the British economy is going to sail through this period.

MPN: From an economic point of view, what are the next steps in the Brexit process for Great Britain? For instance, do you believe that Great Britain will still maintain access to the European common market, and more so, do you believe that Great Britain should maintain access to the European common market?

RB: Now of course we are in a difficult phase, which could go on for up to two years because the Lisbon Treaty allows for a period of up to two years for negotiations for a country leaving. Of course, there’s been no country apart from Greenland, a long time before, that’s actually left the European Union, so we’re in uncharted territory really.

I think that what we’re going to see, what I hope we’re going to see, is some sort of free trade deal hammered out between Britain and the EU. Now if that doesn’t happen, it’s very important that this word “access” is nobbled, that Britain needs “access.” I think it really is very misleading, this word.

Every country in the world has got access to the single market – the United States, India, China, Japan, all these countries trade with the single market, they’ve got access to it, it’s just that not being part of the single market, not having a free trade deal with the European Union, they have to pay the

European Union common external tariff, and of course they have to meet all the standards and certificates and so on that the EU demands.

Now, if Britain doesn’t reach some sort of free trade agreement with the EU during this two-year negotiating period, then we’re effectively going to be in the same sort of situation that the United States, China, Japan and India are all in. That doesn’t sound to me to be too bad.

MPN: There have been many rumors and many press reports regarding the pound of flesh, if you will, that the European Union will demand from Great Britain as an exit bill for leaving the EU. Do you view this as a distinct possibility, or does Great Britain have bargaining chips of its own to possibly avoid this as it navigates the exit process?

RB: Various figures have suggested bills as high as 60 billion euros that the UK will have to hand over to the EU. I think the chances of the EU being able to secure anything like that are vanishingly small, next to zero. There was a report by the British House of Lords recently which obtained expert legal opinion, and the result of that expert legal opinion was that Britain was obliged to pay nothing at all. That is to say, the common sense interpretation of this would apply, that once you leave the club you’re no longer asked to carry on paying your membership dues.

Now, I suspect that there might be reasons of political and economic self-interest such that Britain might end up paying rather more than zero, but 60 billion euros, well they’ll have to whistle for that. I think there’s plenty of room for some sort of reasonable deal.

MPN: Part of the exit process, from what I understand, would have to do with Great Britain’s share of the European Central Bank’s cash reserves, which amount to 16 percent of the ECB’s total cash reserves. Can these cash reserves be returned to Great Britain as part of the Brexit process?

RB: I don’t see that as being a factor to be taken on its own. As a shareholder in the ECB, we do have a claim on the ECB’s net assets. The ECB’s got liabilities as well, so it isn’t reasonable to just look at the cash the ECB holds, you have to look at the balance sheet as a whole, and then you’ve got to put that into the context of the whole position of the EU. I can’t see the UK walking away with 16 percent of the ECB’s cash holdings. I think there’s going to be some overall totting-up of assets and liabilities and whatever the EU thinks are the UK’s continuing obligations after it’s actually left the club, and that’s something that’s going to be a major argument. These ECB cash reserves will be just one factor among very many that will affect this question of how much the UK has to hand over.

MPN: What are the possibilities that Great Britain has on the table as it prepares to depart the European Union, in terms of new trade deals or other beneficial agreements outside of the European Union?

RB: We’ve heard President [Donald] Trump say that he’s keen on a prospective U.S.-UK trade deal, and he’s made it pretty clear that he thinks that can be accomplished very quickly. There’s a whole series of other countries that are interested, including former members of the British Empire that are now members of the British Commonwealth: Canada, Australia, New Zealand, India. Countries outside, such as Japan and China, I think will be able to secure some sort of agreement pretty soon.

I think it’s very important not to overplay the significance of trade deals. Britain trades all around the world with all sorts of countries with which it does not have a trade deal, the United States being one of them, Britain’s biggest single export market. The UK does not have a trade agreement with the United States, and the reason it doesn’t have one is because at the moment it can’t make its own trade policy! It’s the EU that has to do that, and the EU hasn’t been able to make a trade deal with the United States!

I think very much [that as] a result of “euro-brainwashing,” in the European Union most people seem to think that prosperity emerges at the end of the fountain pens of these wonderful official trade negotiators in Brussels and elsewhere, and that all our futures depend on these people. This is complete hogwash. It’s a fairy tale. Around the world, all sorts of countries do extremely well and trade with each other without having anything to do with these panjandrums in Brussels. Britain could be in exactly the same position.

MPN: How does the City of London and the business community in Great Britain view the prospects of the British economy following Brexit?

RB: In the run-up to the referendum, there was a majority of the leaders of big business in Britain, including in the City of London, the financial interests, in favor of Britain staying in. That hasn’t changed very much, and accordingly there’s a preponderance of voices, although it’s less strident than before, worried about exactly what sort of arrangement Britain is going to put in place.

But even before the referendum vote, this description of the state of business opinion was far from uniform. There were a lot of businesspeople who were in favor of Britain leaving. A lot of people in the City were in favor of Britain leaving. On the whole, it was the more entrepreneurial City firms that were in favor of Britain leaving, as opposed to the big established banks and brokerage houses and so forth, who on balance were in favor of Britain staying.

I think that now the debate has moved on a lot. It’s been helped by some of Mrs. [British Prime Minister Theresa] May’s speeches and by the triggering of Article 50. It’s now pretty clear that we are leaving; accordingly, business opinion has switched from trying to operate as some sort of rear-guard action to realizing that it’s going to happen. Obviously, there’s a difference of opinion.

There are still some business leaders, including some in the City, who are a bit concerned and they want to make sure that we get the softest of soft Brexits. But a lot of business leaders are more optimistic than that. I think the mood, though, has changed. It’s changed towards, as I thought it would and hoped it would, towards making the most of Brexit, getting on with it, getting on with the job, getting the job of leaving the EU done and then making sure that Britain is best placed in the world that follows.

MPN: A recent survey of reserve managers at 80 central banks around the world found that there is a recent tendency for central banks to cut their euro exposure, while viewing British currency as a safer prospect for their banks’ portfolios. Is this a trend that you have observed in the markets and is this likely to continue?

RB: I don’t find it surprising that central bank reserve managers should find the prospect of having substantial amounts of their reserves in euros alarming. I don’t find that surprising at all, because there is a mega-crisis in the European Union. For the last year or so, the media has been obsessing about the so-called “British crisis” triggered by the fact that we voted to leave the European Union.

But fundamentally, putting aside for a moment the possible question of a second Scottish referendum — that is a big worry for the UK — that aside, the UK is a pretty stable place, and I think all the signs are that although there might be a few wobbles over Brexit, it can continue to be both successful and stable in the years ahead. And of course, famously it’s got extremely liquid financial markets. So I can see why international money managers, including central bank reserve managers, would find the UK fairly attractive.

By contrast, you can paint a scenario that’s deeply alarming for the countries of the EU. It’s still, I think, more than possible that another country is going to leave the euro over the next few years. The Italians remain very weak, the Greek economy is in a very, very serious state. Either one or both of those countries can leave. You’ve got a political crisis in France, with the possibility of far-right leader Marine Le Pen becoming president.

Even if that doesn’t happen, there’s no doubt over what way France is going over the next couple of years. So there are really fundamental questions about the integrity of the EU as a political unit, and the euro currency alongside that. Why would you want to expose substantial amounts of your reserves to that?

From a British point of view, there is a danger, I think, in all of this. I happen to think that the lower pound brought on by Brexit is a great boon for the British economy. I wanted the pound to be weaker for a long time. I think we needed it, it’s improved our competitiveness, so the last thing I would want to see is international capital holders becoming really worried about the euro and the EU, moving money into the pound with the result of the pound rising a lot in the exchanges. I think that would be extremely unhelpful for Britain.

MPN: Even though Great Britain was not in the eurozone, many people forget that it had been a part of the European Exchange Rate Mechanism, the ERM, before departing in 1992. This departure had, like Brexit, been accompanied by doom-and-gloom scenarios for what the impact on the British economy would be. In reality, how did exiting the ERM impact the British economy at the time?

RB: It’s very funny, this, because I remember extremely well that before Britain left — ”left” is too dignified a word, it sort of fell out of the ERM. What happened in September 1992, the UK Treasury was telling anyone who wanted to listen, and quite a few who didn’t, that we absolutely had to stay in the ERM, because otherwise inflation would soar, interest rates would soar and the economy would go down the tubes.

Various economists, myself included, said this was rubbish and that the opposite would happen, and dare I say it, after Sept. 16, 1992, the Treasury was proven wrong. That’s to say, the currency fell a long way, and exactly as a few of us had said, interest rates would not have to go up. Indeed they fell, inflation carried on falling too, and the economy recovered. After that, there were five years of very strong growth under the Conservatives before Labour won the election in 1997. So that was an earlier occasion where the Treasury forecasts of doom and gloom were proved comprehensively wrong.

MPN: Looking at economic and political developments in Europe, with an emphasis on the upcoming presidential elections in France and the candidacy of Marine Le Pen, who has delivered her own strong Eurosceptic message to French voters, do you believe we are seeing the beginning process of the breakup of the eurozone or the European Union, and how can Brexit serve as a catalyst for this process?

RB: I think we are seeing probably the beginnings of the breakup of the EU. The beginnings of the breakup of the euro were seen some time ago. Of course it hasn’t happened, but the signs are, I think, pretty clear, of the strains, very clear of course in Greece, but also I think more significantly in Italy. Less dramatic, of course, in Italy, but Italy is a much bigger economy, and I think this is more significant for the EU because Italy, of course, was a founding member of the EU. Greece didn’t join until much later.

If Greece ends up leaving the euro, then that is a hammerblow not just to the euro but, I think, to the institutions of the EU itself. Now, it may well be that one of these events, a country leaving the euro or the election of Marine Le Pen, could happen fairly soon, and that would still be early on in the Brexit process, because it will be almost two years until Britain leaves the EU.

But if Italy doesn’t leave the euro, and/or we don’t get Marine Le Pen as president of France, and both the euro and the EU hold together, then I think Brexit is going to play a major role, because then all eyes are going to be on seeing how the UK does outside the EU. Now of course, it’s going to take quite some time for this to be testable. We’ve got the up to two years of negotiations, and I suspect there will be some wobbles and difficulties and short-term problems associated with the business of exit, so it might be a year or two after exit before we can see how the UK is doing.

But if the UK is doing really pretty well after that period, we’re going to see a lot of pressure within the EU for other countries to leave, because then the UK will have gotten out of the free movement of labor, gotten out of the jurisdiction of the European courts without having to pay Brussels these huge annual subventions, and I think a lot of countries will look at this deal and think “oh gosh, I think I rather like that setup.”

MPN: A few years back, you were awarded the Wolfson Prize in Economics for your analysis that showed that any eurozone member state could safely depart the eurozone in an orderly fashion. Could you recap some of the highlights of this proposal for our listeners, and has anything changed in your analysis since then?

RB: I don’t think the essence of the situation or indeed my recommendations for what a country should do have changed at all, but there is a particular relevance to the French situation. What we said was, first of all, don’t be afraid of the fact that the exchange rate for the new currency falls, that the currency is weak immediately after the exit. That is part of the solution, not the problem. You shouldn’t try to stop it, indeed you should encourage it. It’s how you get the combination of reduced burden of debt and increased competitiveness.

We recommended that preparations for this exit should be conducted in secret. If this is not possible, then you have to impose capital controls. You might have to close the banks, which would be a serious worry. You don’t need to be able to issue new currency in order to leave. It takes quite some time for notes to be printed. You can do it without doing that in these days of electronic money. You could do without notes for a while, and indeed you could carry on using euros in the interim before your new notes are available.

You probably will need, in some sense, to default on some of your debt. The aim should be redenominate your national debt into the new currency, the one that’s depreciated, and depending on whether you can do that, it’s going to depend on the precise legal position of the debt. But insofar as you can, that’s what you should do, and the aim should be, through a combination of a reduced debt burden as a share of GDP, and the increased competitiveness, to get a period of economic growth, and from that of course, all sorts of good things will follow.

The connection with the French election is that Marine Le Pen has talked about having a referendum on ditching the euro and bringing back the franc, which is completely different from what we suggested in our Wolfson Prize-winning study. The significance of this is that Marine Le Pen’s proposal is going to cause an awful lot of financial instability. The financial markets aren’t going to wait for the result of the vote, they’re going to act with their feet straight away!

If Marine Le Pen wins, I think you’re going to see substantial capital flight from France even before she announces the referendum, and a lot of money leaving France. I could see a real banking crisis following from that, as people try to get their money out and to put it in, as it were, safer members of the eurozone, principally Germany. There might have to be some sort of capital controls imposed to stop that capital flight and to stop the French banking system from collapsing.

MPN: Looking at economic conditions in Europe today, and specifically in countries such as Greece that continue to enforce a regime of strict economic austerity as prescribed by its lenders, do you believe that exiting the eurozone is still an option for these countries?

RB: I don’t see how Greece can escape from its current situation without a much-devalued exchange rate. Spain is a country that is now recovering, and I think would probably be able to stay in the euro system, although not if Italy leaves and devalues. Italy, especially, and Greece, I don’t see any chance of emerging from their current economic torpor that doesn’t involve leaving the euro.

MPN: In Greece, there are various arguments that are heard against Grexit, ranging from claims that it’s too late and that it is something Greece should have done seven or eight years ago at the onset of the crisis, to arguments that a catastrophic devaluation of the new currency would follow, or that hyperinflation would result, or that Greece would be unable to import vital necessities. How do you respond to these arguments?

RB: There’s no doubt that it would be possible to do Grexit badly, and in the same vein, it’s possible to do Brexit badly. You could make a complete mess of it. There’s no doubt that’s possible. It’s very important, I think, not to let the perfect be the enemy of the good. Yes, there will be difficulties as a result of Grexit, but the most important thing is, it gives hope.

You have to ask yourself what you’re comparing your option with. A country that’s lost something like 25 percent of its GDP, that has a huge proportion of its workforce unemployed, there doesn’t seem to be much hope under the current situation. So I think it’s a bit extreme to say “oh gosh, if Greece left the euro, there would be hyperinflation.” Well, there wouldn’t be hyperinflation at all. If it’s managed properly, there wouldn’t be an uptick in inflation, and that wouldn’t necessarily be all bad, because it would help to devalue the real value of some of the debt.

You’d have to, though, keep this under control. It would have to be well-managed. You would need the effective management of the Bank of Greece and the Greek government to make sure that this was a fairly benign process. That doesn’t mean to say that you can avoid pain. You can’t avoid pain! You’ve had pain for the last how many years in Greece, and this is a country that’s lost 25 percent of its GDP!