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Rejecting Austerity, Greece Squares Off with Its Creditors & Risks Future in Eurozone

February 18, 2015
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Paul Mason

economics editor at Channel 4 News. He covered the Greek elections and is working on a documentary called Greece: Dreams Take Revenge. His most recent blog for Channel 4 is headlined "Leak and Counter-Leak: How Not to Achieve a Greek Deal."

Less than a month after the anti-austerity Syriza party swept to victory in Greece, a major dispute has broken out between Greece’s new leaders and European finance ministers. On Monday, talks between Greece and its European creditors collapsed amid disagreement over the future of German-backed austerity. Greek negotiators rejected a deal to extend the terms of the current bailout scheme with no alterations to the austerity terms. Greece is reportedly now planning to submit a request to the eurozone to extend a "loan agreement" for up to six months, but Germany says no such deal is being offered and that Athens must stick to the terms of its existing international bailout. Lawmakers from the ruling Syriza party say Greek voters had rejected the terms of the bailout and that Greece would not be intimidated into accepting them. The breakdown in talks has raised fears Greece may be on the verge of leaving the eurozone. We are joined by British journalist Paul Mason, who has closely covered Greece’s economic crisis for years.


TRANSCRIPT

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Less than a month after the anti-austerity Syriza party swept to victory in Greece, a major dispute has broken out between Greece’s new leaders and European finance ministers. On Monday, talks between Greece and its European creditors collapsed amidst disagreement over the future of German-backed austerity. At talks in Brussels, Greek negotiators rejected a deal to extend the terms of the current bailout scheme with no alterations to the austerity terms. Greece is reportedly now planning to submit a request to the eurozone to extend a loan agreement for up to six months, but Germany says no such deal is being offered and that Athens must stick to the terms of its existing international bailout. Greek Finance Minister Yanis Varoufakis spoke in Brussels on Monday.

YANIS VAROUFAKIS: We were offering to refrain from effectively implementing our own program, the program that we were elected to implement, for a period of six months. And all we were getting back was a nebulous promise of some flexibility that was never specified. Under those circumstances, ladies and gentlemen, it proved impossible for the Greek government, despite our infinite goodwill, to sign the offered communiqué. And so the discussions continue.

AMY GOODMAN: Lawmakers from the ruling Syriza party say Greek voters had rejected the terms of the bailout and that Greece would not be intimidated into accepting them. Dimitris Stratoulis is Greece’s new Deputy Social Security Minister.

DIMITRIS STRATOULIS: [translated] The government remains unyielding to its position. They won’t accept an extension of the bailout. The Greek people have rejected this with their vote and with their presence in the streets, as have the people of Europe, who have openly and steadily expressed their solidarity to our own people.

AMY GOODMAN: The breakdown in talks has raised fears Greece may be on the verge of leaving the eurozone. The talks in Brussels came after some 20,000 people rallied in Athens to support Syriza’s stance against austerity.

To find out more about the significance of these negotiations, we’re going to London to speak with Paul Mason, the economics editor at Channel 4 News. He covered the Greek elections and is working on a documentary called Greece: Dreams Take Revenge. His most recent blog for Channel 4 was headlined "Leak and Counter-Leak: How Not to Achieve a Greek Deal."

Welcome to Democracy Now!, Paul. Well, how don’t you achieve a Greek deal?

PAUL MASON: Right now, Amy, as we speak, there are phone calls and briefings going backwards and forward between Athens, Brussels, even here in London, because the Greek government has, today, requested this six-month extension to the loan, but has not put forward any conditions that it might accept to get that loan. It’s like having a loan from your bank and saying, "You know what? We’re going to extend it by six months, and any conditions you attach to it, we’re not going to obey." I read that right now as a kind of delaying tactic, because this afternoon the European Central Bank—well, it’s meeting right now, and they’ll break up from that meeting this afternoon. Every meeting in the European Central Bank holds over Greece the possibility that they just pull the plug on Greece’s effectively busted banking system.

So, it’s really tense stuff, and this is how not to do it. The Greeks elected a government that wants to cancel austerity, but they owe the rest of the world 320 billion euros, and it’s very difficult to see how they get what they want without a confrontation. And time is running out, because all the emergency extensions to loans and bank—bank liquidity facilities run out at the end of this month.

AMY GOODMAN: Explain, Paul, what austerity means.

PAUL MASON: Well, austerity in Greece means something like a 50 percent measurable increase in male suicides. It means real wages fell by 25 percent in five years. It means that the economy lost a quarter of its capacity: It has shrunk by 25 percent. And on the—if you sit at a coffee table, sit in a café in Athens, talk to the person who’s serving you, they’ll be a graduate, they’ll be living probably more than one person to a room, and their income will be on—the average income is about 500 to 600 euros a month, so think the same in dollars. But you talk to people, they’ll be earning 400 a month, so a hundred euros a week. And that’s for graduates. That is austerity. And then you’ve got the 300,000 families who can’t afford electricity. And something like—you know, something like sort of 15 percent of people now are on the edge of or have lost their healthcare. And Greece has a healthcare system based on insurance. When you lose it, you join the queue with the undocumented migrants at the Red Cross.

AMY GOODMAN: Speaking on Tuesday after the talks collapsed, the German finance minister said it was unclear whether Greece wanted a bailout program. He also said he wanted the eurozone to remain intact.

WOLFGANG SCHÄUBLE: [translated] Greece needs to decide whether they want the program or not. Nobody among my colleagues understands what Greece wants in the end. And if Greece knows what it wants is also a question. An extension of the program is only possible when the goal is to end the program. We all want the Eurogroup to stay together. We have worked for years on it. I am the one who has been here the longest of all the finance ministers, but everybody has to do its bit, and the decision is now only in Athens.

AMY GOODMAN: The German finance minister also expressed skepticism regarding his counterpart, the new Greek finance minister, Yanis Varoufakis.

WOLFGANG SCHÄUBLE: [translated] He is not so efficient in trying to convince others. That is what I can say from observing him. I know my colleague, and I know a bit about how he reacts. And there is room for improvement.

AMY GOODMAN: Paul, you wrote in a piece in The Guardian recently, that was headlined "Germany v Greece is a Fight to the Death, a Cultural and Economic Clash of Wills," you said, "Germany is eating itself over Greece. It is eroding its moral authority, and seems prepared to destroy the eurozone’s integrity just to make a point." Explain what you mean.

PAUL MASON: Well, look, inside German decision-making circles, there is a culture of extreme parsimony towards public spending. They passed their own law that said they couldn’t run a budget deficit. They regard the rest of southern Europe—Spain, Italy, Portugal—as profligate, as just big spendthrift, inefficient. That’s the general feeling.

But with Greece, it’s personal, because Greece just elected a government led by a party that about a third of which are, you know, far-left Marxists, and the rest of which are—belong to that new left tradition in Europe that would put them way, way to the left of any Democrat politician. So, we’ve got—this is just about more than money. It’s about a cultural and political clash. The Greeks are going to be sending to the European institutions people who indeed have been trained as Marxists, so Marxist lawyers. There is a Marxist criminologist in charge of the police force. This is something that nobody in Europe expected, least of all the Germans. And the Germans just basically now—I think that Schäuble there and the German political class just can’t get their head around the idea that a party has been elected that wants to do something so radically different, that they can’t do it without breaking the rules that the eurozone has been formed around. So it’s becoming cultural.

And remember, of course, the oldest member of the European Parliament for Syriza, this left-wing party that now runs Greece, is Manolis Glezos. He’s 94. And in World War II, he was jailed by the Nazis for ripping the swastika down from the Acropolis. So, this is living memory stuff. And you bet, in the mountain villages of Greece, there are people still alive who remember when the Germans occupied their village. That’s how cultural and personal it is getting.

AMY GOODMAN: So, explain why Germany should help Greece.

PAUL MASON: Many Germans believe they shouldn’t help Greece. The rational case for Europe giving debt relief is quite simply that that debt is not repayable. It’s at 320 billion euros. It’s 175 percent of GDP. And even to service the debt, the government has to run a 4 percent primary surplus. Now, imagine if America could run itself in surplus for year after year. It would have to slash public spending. Greece, for example, has—it’s one of the few Western countries that meets its NATO commitment to spend 2 percent of GDP on its army, navy and air force. Now, this is only possible because the debt is being rolled over and rolled over. The conservative government that was defeated—the conservative-led coalition that was defeated in the January election also needed to roll those debts over, but it wanted to do it in a kind of euphemistic way, where they—effectively, the demand was to roll them over 'til 2060, the year 2060. I don't expect to be alive then, but those debts would eventually be paid back then.

The current government is saying, "Look, the country is bust. And you’re in denial. We need to write them off, as you do with all countries that are bust. We take the hit. We’ve taken a 25 percent of GDP hit to our—you know, to the size of our economy. We are"—the Greek government is running a surplus. That is, it doesn’t need to borrow, because so much has been cut. But what they want is a kind of radical debt relief, of the kind that Latin American countries sought in the 1980s, and of the kind given to some heavily indebted, poor countries under the Millennium Development Goals. But right now, it doesn’t look like they’re going to get it. What we’re fighting for now, what the two sides are looking at now, is a four-month stay of execution, because the execution is really clear: You pull the emergency lending from the European Central Bank, and goodbye to the four major Greek banks.

AMY GOODMAN: Speaking after the breakdown of the talks on Tuesday, Greek Prime Minister Alexis Tsipras criticized the German finance minister’s attitude toward the Greek people. This is part of what the Greek prime minister said.

PRIME MINISTER ALEXIS TSIPRAS: [translated] The German finance minister, Mr. Schäuble, yesterday lost his cool, not because he spoke against the Greek government—that is his right—but because he expressed himself in a derogatory manner about the Greek people. I would like, with all due respect, in the spirit of friendship, to point out to him that it would be better to pity those that walk with their heads bowed low and not to pity those who held their heads probably high.

AMY GOODMAN: That’s the Greek prime minister, Alexis Tsipras. If you could talk, Paul Mason, about further what he’s saying, and also where he comes from? Again, for those who aren’t following Greek politics, the significance of his being prime minister right now?

PAUL MASON: The significance of Tsipras being prime minister is that this is a guy who was a far-left communist in the 1980s. And although he has moderated his positions and the government is only really trying to run a kind of Swedish-style or Scandinavian-style social democracy right now, the background of these guys is Marxism. OK? So that’s the first thing to get your head around. We haven’t had a government of the far left in Europe since the 1920s or ’30s in an elected democracy.

The next thing is to understand what people in Greece feel. The sort of 36 percent who voted for this party, plus the other 10—maybe 10 percent who voted for other left parties, are feeling like there is a social and psychological revolution going on. This is not just about the election. My day job is to be a news reporter on networks, and every day I sit down when I’m in Athens and I look at rushes from cameramen who are shooting what looks like a crisis. Working on the documentary with some young independent Greek filmmakers, I look at their rushes, and it’s like they’re shooting a dream. And I mean not as in their dreams come true, but like "Pinch me. Wake me up. Is this really happening?" They’re going on demonstrations, which usually end in riot charges, tear gas, baton charges, dogs and the lot, where the cops suddenly have to—they’re appearing with empty holsters, they’re appearing unarmed. The barricades around the Parliament have been removed. And I think this is removing a lot of barricades in people’s minds, as well.

So when all the—everybody is focused on Tsipras. Varoufakis is very photogenic, West—Texas University economist. And while we’re focusing on them, ordinary Greeks are seeing not yet real change economically, because we’re only two, three weeks into the government, but they’re feeling an atmosphere change. And so, as a result, Tsipras, who won the election with 36 percent and was able to form the government, is now riding, in terms of his popularity, on 70 percent. And even the party, if there was an election now, they’d get 45 percent. And all the difference between the election result of January 25th and now comes from members of the Greek equivalent of the Republicans, so the New Democracy conservative party, switching their support, in opinion polls, to the current left government. That’s how weird, how crazy and, if you’re Greek, how disorientating the situation is.

And that’s what the pressure is on Tsipras. That’s why he says, "We’re in no hurry. We’re going to fight for what we were elected to do." And make—I’ve spoken to Tsipras at length. I did two big interviews with him, and Varoufakis, at length. These are not people who came into politics to compromise. They can quite happily go—they were a tiny group on 4 percent 15 years ago. They’re talented people who thought they would spend their days in universities. They’re in power now, and they’re not going to stay in power by massive compromise. They’d rather—as was put to me, if they’re forced out of the euro, they’ll slam the door so hard, the building falls down.

AMY GOODMAN: I’d like to go to a clip from the short documentary, Paul, that you’ve been working on called Greece: The End of Austerity?, which is part of a larger, ongoing film project on Syriza. I want to go to the clip which features Syriza member Polymeris Voglis, but first we hear from Avaaz member Spyros Limneos.

SPYROS LIMNEOS: I think the problem is that people don’t see any hope anymore in the austerity that is imposed to Greece. They can’t see this solving their problems. They’ve been told for five years now that this is the only way to solve our problems, but I think more and more people are waking up to the fact that that’s not the solution.

POLYMERIS VOGLIS: When you have a family and you suddenly lose your job, you come to a place that you can’t pay for your electricity bill. You come to a place that you can’t even buy your food from the supermarket. And even worse, the house that you have bought, the bank takes it away from you. So, the despair is the worst thing that we faced through the crisis, and I believe that the most big win for us in the society is that we brought hope to the people.

AMY GOODMAN: That is a clip from Paul Mason’s film that he’s working on called Greece: The End of Austerity? If you’d like to add to that, and then talk, Paul, about what it would mean if Greece left the eurozone, and in that case, start by explaining what the eurozone is.

PAUL MASON: Well, look, the documentary I’m working on, I’m basically mentoring a team of young Greek journalists who want to tell the story from the grassroots up. And what you saw there was just two—the latter guy was a Syriza candidate, the other guy is an NGO member. But they’re people who, in America or in this country, England, would probably not naturally end up supporting or being members of a far-left party, still less a far-left government. But what’s happened is that the center-left got smashed and vacated. The center-left did the austerity. And so, the Greek equivalent of the Labour Party, the Greek equivalent of the—say, the Elizabeth Warren Democrats, has disappeared. It doesn’t exist. It gets 4 percent in elections. So people sort of from that technocratic, networked, trendy generation, who want democracy—and they’re not—they want a decent life, and, you know, the ability to start a small business, maybe. They are voting for this far-left party in the droves. And when we’re working on the documentary, we’re going out into rural areas, onto the waterfront, and what you see is just ordinary people, who have had enough, switching. Now, this is just the start. We don’t know where this goes. This is why I’m so keen to document the outcome of it. This could go all the way through to a social phenomenon as we saw in Spain in the 1930s, where people begin taking control. So that’s where we are.

The eurozone, well, eurozone is an alliance of 19 countries which pooled their currencies and pooled their central banks, without pooling their tax system. So, you know, you can have one country like Germany growing rapidly, quite rich, and a country like Greece bankrupt, but the euro has to fit both ends, as it were, of the spectrum. And it doesn’t. Greece, I think it’s still 50/50, and I could revise that in an hour when the European Central Bank comes out of its meeting, but 50/50 whether they stay in. If they leave, after the shock and the disruption and a new currency and capital controls, I think there is a possibility that it will be better for them economically.

But the Greeks didn’t sign up to the euro as an economic project. For them, as a young democracy, recent dictatorship, they signed up to it as a kind of guarantee that they would always be part of the European family. And they’ve been treated, they believe, so harshly by that European family that many of them now are starting to say—and I mean since the election. Since the election, there’s been a big nationalist feeling, a big feeling of, you know, "Germany and the eurozone are kind of kicking us, while we did everything we could to try and elect a kind of a young, kind of forward-looking, anti-corruption government, and then we get kicked." That’s changing their view of things. And even in here, you see behind me, you see Westminster. Westminster is now engaged in a debate about whether we, the Brits, should leave Europe, let alone the—we’re not in the eurozone. And Greece is playing very, very hard into that debate, because people are looking at Germany and thinking, "Hold on a minute." And I know it’s distasteful to say this, but there are people who remember World War II. "Did we fight World War II so that Germany could destroy democracy in Greece?" is being said in that building behind me.

AMY GOODMAN: Well, Paul Mason, I want to thank you for being with us, economics editor at Channel 4 News, covered the Greek elections, is working on a documentary called Greece: Dreams Take Revenge. His most recent blog for Channel 4 we’ll link to, "Leak and Counter-Leak: How Not to Achieve a Greek Deal." And, of course, we’ll continue to follow this story, as well as following what’s happening in Spain with Podemos, very much like the Syriza party in Greece. You can go to our democracynow.org website to see our interview with Pablo Iglesias, the young 36-year-old political science professor who heads up Podemos. Some polls predict it could take the next national elections in Spain. This is Democracy Now! We’ll be back in a minute.


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