By Sharmini Peries and Michael Hudson and cross-posted from Counterpunch.org
SHARMINI PERIES: Greece’s economic crisis has perhaps been eclipsed by Europe’s refugee crisis, terrorist attacks, and by the forthcoming Brexit referendum. But it has not gone away. Greece’s Syriza coalition faced violence on the streets and a 3 day general strike last week that had brought much of the country to a halt. In spite of the protests the government of Alexis Tsipras pushed through legislation to amend the country’s tax and pension system with the backing of 153 MPs, a measure required by the lenders in order to continue the debt negotiations. Addressing the 300 seat house, Prime Minister Alex Tsipras said we are determined to make Greece stand on its 2 feet at any cost.
To discuss these developments, I’m joined by Michael Hudson, a distinguished Research Professor of Economics at the University of Missouri-Kansas City. His latest book is Killing the Host: How Financial Parasites and Debt Bondage Destroyed the Global Economy.
Michael, the International Monetary Fund is pushing for comprehensive measures to tackle Greece’s debt burden. They want the lenders to get creative in terms of debt cancellation and the measure that they’’re proposing seems to be fairly progressive compared to what the lenders are talking about. Tell us more about the IMF’s proposal and how the lenders are reacting to it.
HUDSON: The IMF says it will not reduce Greece’s debt by a single penny. It will keep the debt in place. The problem is the way that the European central banks keep their balance sheets, if it breaks down Greece’s debt owed to the IMF, then the countries Germany, France and other countries whose banks are bailed out will have to take a loss and they refuse to lose a single penny. So the IMF has not made a creative proposal. It has repeated what it said a year ago without changing a single word. It says okay, we’re going to keep every penny of debt in place but we’re going to give you a fudging number. We’’e only going to charge you 1.5% interest and you won’t have to pay the debt for 25 years. So you don’t get a debt markdown, but you won’t have to pay interests for 25 years and we’ll charge you only a little bit of interest.
There’s only one kicker. You’re going to have to cancel your pensions, write them down, impose austerity, privatize your government, and you’re going to have to shrink your economy so that it will shrink by about 1, 2, 3% a year so that the 1.5% interest that we’re charging as little as it is, is going to absorb all the income growth you have. Every penny of growth of have from the next 25 years ,you’ll have to end up paying the German banks.
Now we know you can’t do it. We know that when you cancel the pensions you’re going to shrink. We know your labor’s on strike. We know they’re going to emigrate.
But there’s a way out. You can sell your ports, your land, your public utilities, your railroads, your airports, anything you have you can sell to the Germans and at the end of this time you won’t have a single thing and all we ask is that all you Greeks get out of our country, now that we own you. That’s what the IMF is saying. It’s not creative; it’s absolutely brutal. That’s why the Greeks are out on strike.
PERIES: Now why are the lenders then acting the way they are?
HUDSON: Because they’re using finance as the new means of war. There is a war going on in Europe but it’s not a military war anymore. They’re now using finance instead of war and
they’re using finance to say, we can grab your country. We can put you out of work. We can control you and we don’t have to kill you, we can just make you immigrate by taking away your pensions and taking all your money. There’s a land grab just as if it were an invasion to grab Greece’s ports, to grab Greece’s railroads, and to grab everything else. This is war…