Greece against a cast of contemptible characters

These images (taken from various news agencies) show how ordinary Greeks, but particularly elderly pensioners, have been tormented by EU politicians. This has been portrayed as a Greek debt crisis, but it is much more a crisis about what Europe is and stands for.

Update 11 July: The Greek parliament supported a so-called package of spending cuts, pension savings and tax increases with a majority of 251 votes in the 300-seat parliament. This is what the 61.3% ‘NO’ vote rejected six days ago! Naturally, this has set the stage for massive internal turmoil in Greece. Heavyweights of Syriza, parliament speaker Zoi Konstantopoulou and energy minister Panagiotis Lafazanis, and 15 other members either voted against the plan, abstained or were absent from the vote. Another 15 Syriza members of parliament said they also opposed the proposed measures and could reject them in future votes even though they supported prime minister Alexis Tsipras and his template of borrowed proposals. With breath-taking cynicism, the Syriza leader has presented this direct repudiation of the will of the Greek people as a “triumph of democracy”. Who is this man Tsipras working for?

The newest alumnus of the Transatlantic School of Austerity and Misery, with a special interest in ‘haircuts’

Beyond the beggaring calculations made by the economists and financiers of the Troika and the ahistorical stubbornness of the Berlin-Paris ruling cliques who will still not deviate from their ‘austerity’ prescription, is the legitimacy of Greece’s claim to autonomy. “Autonomy, the willingness and capacity to question and change our collective laws, is a universal principle and one that should be at the heart of the European project,” writes Giorgos Kallis. “Greece’s disobedience to the rule of the markets is a universalistic call for reclaiming democracy for all Europe, not a particularist protection of its own backyard. This is not a demand for the rest of Europe to obey to Greece’s will, but a plea to listen, reflect and genuinely co-decide.” Ah but Berlin cannot abide any other will than its own.

It is finanzpolitik, or perhaps the political economy of occupation by austerity. Whatever it is called in Eurolingua it has proved politically effective for European elites in general to present the Greek problem as their own debt problem. Doing so has provided a powerful ideological and moral justification for the brutal austerity policies prescribed to the countries of the European ‘periphery’ (and especially Greece) in recent years. And so, as Thomas Fazi has narrated, Euro-leaders’ “deeply moral interpretation of the euro crisis – which pitted the profligate, debt-ridden wrongdoers of the periphery against the virtuous, responsible countries of the core – rapidly became conventional wisdom among European politicians, commentators and bureaucrats”.

On Sunday 5 July 2015 Europe was shown to be imprisoned by its institutions. But the people of Greece chose with dignity and in solidarity to expose the prison, and walk away.

The landslide ‘no’ (or OXI) vote in the 5 July referendum on austerity in Greece is an overwhelming repudiation of the European Union and the austerity agenda pursued all over Europe since the 2008 economic crisis. The weapon of austerity is the euro, and it works by wiping out genuine economic and social progress through productive systems composed largely of small and medium enterprises, because this weapon pries open these local ‘markets’ (a despised term) to raids by financial monopolies.

Such raids have the sanction of the International Monetary Fund, the European Commission, and the European Central Bank – together known as the troika which has waged war on the Greeks. The troika has waged such war as punishment (in the words of European politicians such as Angela Merkel, Francois Hollande, Martin Schulz, Wolfgang Schäuble and David Cameron) to the Greeks for their own failed design of the Euro in a system that is economically unsustainable and socially perverse.

“Shame on all those who have accepted the idea that the troika represents the European peoples,” wrote Samir Amin. “Shame on the governments that have installed in the presidency of ‘their Europe’ a Luxembourgian functionary in the service of a tax haven; installed in the management of ‘their central bank’ a character who made a career at Goldman Sachs, the bank associated with all the financial villainies of the century.”

The ‘OXI’ (no) in the referendum means the Greeks voted for a socially just distribution of the burdens for the sustainable reforms necessary in their country to fight corruption and nepotism. They voted for sustainable reconstruction and growth of their economic structures, to reduce military spending and for mandatory negotiations on debt restructuring. Those who so voted on 5 July were 61.3% of the Greek people, drawn largely from the working class and poorer layers of the population.

But what happens now?

There is not much belief that the Syriza government will fulfil the ‘no’ vote mandate and bring austerity to an end. Reportage via independent media say that most people fear there will be new austerity measures, which the mass of the population can no longer take.

Should the Greek Parliament approve talks on the new proposal (it may be acceptable to the Eurozone’s negotiators but has will still have to be approved by the European Parliament) there will be a short period during which the people of Greece will reflect on what is being done. They may decide to tolerate more ‘negotiation’, or not. They could rise up against a government that has gone back on its promises and disregarded their will as expressed in the referendum.

On the other hand Germany will balk at offering any debt relief. The European financial press (such as it is) is carrying reports that a section of German capitalist strategists are calculating that it is now cheaper to kick Greece out of the euro (provide a ‘humanitarian relief aid’ dollop) than continue to negotiate a formal bailout. A French publication reported that the Greek negotiation team was asked by Schäuble, “how much money do you want to leave the euro”, underlining how execrable the Euro political class has become.

These have been disastrous times for people in Greece. Salaries have been cut by half, taxes have increased eight times (not by 8% or 80% but eight times more), there are 1.5 million people unemployed and that is a full third of the working class, those who have jobs have often not been paid in weeks or months. There is misery and 60 euros as pension for those who can find 60 euros to draw out, but the Greeks want to their overthrow of austerity to be historic and permanent.

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Greece checkmates the European Union

Syriza has said Greece will continue to make payments on the country’s massive debt, but will also negotiate relief. Most important, the Syriza programme is unmistakably left wing and will lead to a head-on collision with the EU institutions and big business. Image: Cartoon Movement / Gatis Sluka (Latvia, Riga)

The victory of Syriza in the 25 January 2015 general election in Greece has triggered off genuine hope in Europe that changes for the better are possible. There was, for the world to witness through television cameras and to read via social media channels, an outpouring of joy on the streets of Athens when the Coalition of the Radical Left (which is what the acronym ‘syriza’ stands for) won 37.5% of the votes polled and 146 seats in the parliament.

The Syriza that has now formed the new government brings together a group of 13 radical and left-wing political groups and factions ranging from democratic socialist and green-oriented to communist, trotskyist and maoist leftists and even some anti-European groups. Regardless of their often divergent political trajectories, their joint solidarity is a remarkable achievement, not only for Greece but for Europe.

Already, the new Greek government is stamping upon Euro-politics a new voice. Syriza has spoken out against the EU partners over the statement that blames Russia for the recent attack on the Ukrainian city of Mariupol (Hungary, Slovakia, and Austria had voiced similar objections earlier). The new government, headed by Prime Minister Alexis Tsipras, said bluntly that “… it is underlined that Greece does not consent to this statement”. The decisive ‘no’ from Syriza could inspire other countries to follow suit and oppose Brussels’ policies towards Russia on the Ukrainian crisis. Before the remarkable result in Greece, it was considered difficult in the EU to break ranks but now it is not unlikely that Hungary, Slovakia and Cyprus will find the courage to also say ‘no’ to the diktat from Brussels.

And that is one reason why Europe’s parties — conservative or socialist or some muddled admixture thereof – have become anxious at the electoral success of a genuine leftist party in one of the countries of the European Union. They see the success of Syriza as encouraging and emboldening growing leftist movements in larger countries, including Italy, Spain, France, Portugal and elsewhere, all countries whose citizens have been hurt by the iron heel of selective ‘austerity’ imposed by the European Parliament (in collaboration with the International Monetary Fund and Europe’s central banks). As does Syriza, these new movements in Europe reject the jaded and morally compromised parties that have been taking turns running European countries as adjuncts to the dictates of trans-national capital and the networks of global financiers.

The resounding victory in Greece has halted in its tracks the prevailing neo-liberal consensus in Europe that the way to ‘reform’ economies is to impose ‘austerity’, slash social programmes, hammer down wages, boost unemployment, and privatise functions that have long been public like transit, education, roads and and health care. This is after all a coalition whose manifesto stated, “The national debt is first and foremost a product of class relations, and is inhumane in its very essence. It is produced by the tax evasion of the wealthy, the looting of public funds, and the exorbitant procurement of military weapons and equipment.” Greece has spoken and all of Europe is changed.

World heritage and the agrarian trilogy

Agricultural landscapes have been honoured in the quarterly journal published by Unesco, ‘World Heritage’, which has dwelt (issue number 69) on the agro-pastoral landscapes created by human activity and serves to explain the major sites of this type now inscribed on the World Heritage List. The number has said: “The most impressive of these sites are perhaps the terraced fields found around the world, in the Far East, Africa, the Andes and all around the Mediterranean basin, with rice paddies and various wine-growing areas, some of which are also listed as World Heritage cultural landscapes.”

Stari Grad plain – ancient Greek farming in the Adriatic. The farming land is divided into regular sized parcels known as chora (Greek for landscape or countryside), bounded by drystone walls. All this, together with the cisterns and the little beehive-shaped toolsheds was first measured and marked out some 2,400 years ago and they have remained unaltered in their layout and in continuous use since the ancient Greeks created them. Photo: UNESCO World Heritage / Mark Gillespie

The introductory note has said that human civilisation, throughout its history, “has applied certain principles of adaptation to the environment that are sufficiently resilient to drive nature’s inherent and inexhaustible dynamism by adding a cultural dimension that endows it with uniqueness”. Culture and cultivation has become a reality in the agricultural landscapes, for their age and their continuous evolutionary aspect.

In these sites, the territories are structured by agro-pastoral practices known as the ‘agrarian trilogy’: the cultivation of fields – agriculture (from the Latin ager, fields); the cultivation of forests – silviculture (silva, forest); and husbandry – with the use of so-called uncultivated lands
such as sustenance pastures together with their pastoral routes, all of which, taken together, was termed saltus in Roman times.

The journal has found that most impressive of all these landscapes are those devoted to a single operation, “because the structure they impose upon the territory in terms of a single variable results in large expanses of land that are spectacularly homogenous”. This is seen in the various rice fields, in the impressive landscapes of Tequila (Mexico) where the blue agave is cultivated, and uniquely apparent in such vineyard landscapes as the Upper Middle Rhine Valley (Germany), Wachau (Austria), Saint Emilion (France), Tokaj (Hungary), Pico Island and Alto Douro (Portugal), and Lavaux (Switzerland).

The journal number also includes an interview with Parviz Koohafkan, the coordinator of the Globally Important Agricultural Heritage Systems (GIAHS) of the Food and Agriculture Organisation (FAO). In response to a question about the global evolution of this heritage category and recognition of the intrinsic interaction between people and nature, Koohafkhan replied that this category of World Heritage is gaining ground because of the importance of the landscape approach and the nature-culture relationship.

The area of the Konso, in Ethiopia, is characterised by extensive drystone agricultural terraces contouring the hills and giving the landscape its unique characteristics. After harvesting in September, the parallel lines of the terraces and their engineering and artistic workmanship can best be appreciated. Photo: UNESCO World Heritage / Vicki Brown (Solimar International)

“In addition, landscapes are evolving rapidly due to agricultural transformation and unless we plan and work with communities for the sustainability of their livelihoods, we will be unable to conserve this agriculture and landscape heritage. FAO, UNESCO and their partner organisations should set up further collaborative programmes to address issues of food and nutrition security within the context of the post-Rio sustainable development agenda and to recognise the important role of small-scale family farms and indigenous communities in providing multiple goods and services,” Koohafkhan has said.

The immense diversity of agricultural systems can be seen in the vegetable, animal and even mineral produce that they include, is a valuable point made in a short article from the International Scientific Committee on Cultural Landscapes (IFLA-ICOMOS). Discussing agricultural landscapes in a heritage context, the ingredients of the trilogy are well supplied: basic foods provided by cereals (wheat, rice, maize, etc.) or tubers (potatoes, manioc, taro, etc.), each of which forms the foundation of a major area of civilisation that subsequently spread around the world.

Then there are fruit-bearing plants (vines, olive and apple trees, citrus fruit, date and banana trees, etc.), the juice of which could be fermented (wine, cider, etc.); oleaginous plants (olives, sunflower, soya, colza, oil palms, coconut and argan trees, etc.), sugar-bearing plants (cane and beet); stimulant plants (coffee, tea, cocoa and tobacco, etc.), which produce alkaloids and undergo elaborate transformation (drying of leaves, roasting of grains, etc.); textile plants (flax, hemp, cotton, jute, etc.); ruminants, which provide milk, meat, wool and leather but are also used as beasts of burden in numerous agro-pastoral systems; equidae, camelids, pigs, poultry and so on.

An inequality chasm is fracturing Europe, warns the OECD

April in Berlin, Germany. A homeless man sat begging for euros or food in the entrance of an S-Bahn station.

Deepening inequalities in income between the richer and poorer families, greater relative income poverty in recent years compared with earlier, a greater burden borne by children and young people than before because of their being relatively poor – these are some of the stark conclusions contained in the OECD briefing, ‘New Results from the OECD Income Distribution Database’.

This is the picture of Europe today (and of the non-European members of the OECD). “Looking at the 17 OECD countries for which data are available over a long time period, market income inequality increased by more over the last three years than what was observed in the previous 12 years,” observed the new briefing, which is sub-titled ‘Crisis squeezes income and puts pressure on inequality and poverty’.

Annual percentage changes in household market income between 2007 and 2010, by income component. Chart: OECD

The figures and data show that many of the countries recording the most dramatic increases in inequality are European countries which have been subjected to punitive austerity measures by the European Union and International Monetary Fund. The OECD report singles out Spain and Italy, where the income of “the poorest 10 percent was much lower in 2010 than in 2007”.

Five percent falls in income (per year) amongst the poorest 10 percent were also recorded in Greece, Ireland, Estonia, and Iceland. The only non-European nation with a comparable level of income decline was Mexico. The report also stated that over the same period, poor families in the United States, Italy, France, Austria and Sweden all recorded income losses in excess of the OECD average.

Indeed the ‘New Results’ briefing has showed that across OECD countries, real household disposable income stagnated. Likewise, the average income of the top 10% in 2010 was similar to that in 2007. Meanwhile, the income of the bottom 10% in 2010 was lower than that in 2007 by 2% per year. Out of the 33 countries where data are available, the top 10% has done better than the poorest 10% in 21 countries.

This is the OECD picture till 2010. Since then, recession has been the companion of inequality. With an average growth of -0.2 per cent in the first quarter (against -0.1 per cent in the EU as a whole) and hardly better prospects for the whole rest of the year (-0.7 per cent), according to Eurostat, the dreaded “double dip” has become a reality. The press attributes the result largely to the austerity policies.

Gini coefficient of household disposable income and gap between richest and poorest 10%, 2010: Chart: OECD

“Eurozone sets bleak record of longest term in recession,” reported the Financial Times. The daily noted that “this latest dismal record came after unemployment hit 12.1 per cent in the bloc, its highest level,” and that this data “is likely to add to pressure on the European Central Bank to take further action after cutting interest rates this month, and to revise down its economic forecast predicting a recovery later in the year.”

Moreover, relative income poverty – the share of people having less income than half the national median income – affects around 11% of the population on average across OECD countries. Poverty rates range between 6% of the population in Denmark and the Czech Republic to between 18% and 21% in Chile, Turkey, Mexico and Israel. Over the two decades up to 2007, relative income poverty increased in most OECD countries, particularly in countries that had low levels of income poverty in the mid-1990s.

In Sweden, Finland, Luxembourg and the Czech Republic, the income poverty rate increased by 2 percentage points or more. In Sweden, the poverty rate in 2010 (9%) was more than twice what it was in 1995 (4%). Relative poverty also increased in some countries, such as Australia, Japan, Turkey and Israel, with middle and high levels of poverty.

The OECD briefing has stated bluntly: “Households with children were hit hard during the crisis. Since 2007, child poverty increased in 16 OECD countries, with increases exceeding 2 points in Turkey, Spain, Belgium, Slovenia and Hungary.” The ‘New Results’ briefing added: “Since 2007, youth poverty increased considerably in 19 OECD countries. In Estonia, Spain and Turkey, an additional 5% of young adults fell into poverty between 2007 and 2010. In the United Kingdom and Ireland, the increase was 4%, and in the Netherlands 3%.”

Annual percentage changes in household disposable income between 2007 and 2010, by income group. Chart: OECD

Between 2007 and 2010, average relative income poverty in the OECD countries rose from 12.8 to 13.4% among children and from 12.2 to 13.8% among youth. Meanwhile, relative income poverty fell from 15.1 to 12.5% among the elderly. This pattern confirms the trends described in previous OECD studies, with youth and children replacing the elderly as the group at greater risk of income poverty across the OECD countries.

These results only tell the beginning of the story about the consequences of austerity, growing unemployment, the burden on children and youth, and burden on immigrant wage labour. The OECD data describes the evolution of income inequality and relative poverty up to 2010. But “the economic recovery has been anaemic in a number of OECD countries and some have recently moved back into recession”, said the briefing.

Worse, since 2010, many people exhausted their rights to unemployment benefits. In such a situation, the briefing has warned, “the ability of the tax-benefit system to alleviate the high (and potentially increasing) levels of inequality and poverty of income from work and capital might be challenged”. These are unusually blunt words from the OECD and their use reflects the depth and persistence of the crisis of modern, reckless, destructive capitalism in Europe.

Across wintry Europe, the spectre of creeping poverty

An Europe darkened. The ESDE 2012 has said that the large unemployment shocks experienced at the beginning of the crisis and the rising shares of the long-term unemployed point towards serious risks of long-term exclusion faced by a significant share of the population.

Five years of economic crisis and the return of recession has pushed unemployment in Europe to new peaks not seen for almost twenty years. Household incomes have declined and the risk of poverty or exclusion is on the rise, especially in Southern and Eastern Europe, according to the 2012 edition of the Employment and Social Developments in Europe Review.

This, the second edition of the Employment and Social Developments in Europe (ESDE), has been released by the European Commission’s Directorate-General for Employment, Social Affairs and Inclusion. The 2012 Review builds on the integrated approach to employment and social analysis embarked upon in the first ESDE Review of 2011 which did very well to concentrate on cross-cutting themes covering employment, in-work poverty, wage polarisation and income inequalities.

In the Baltic States, Bulgaria, Greece, Hungary, Italy, Malta, Poland, Portugal and Romania the risk of entering into poverty among the population aged 16 to 64 is associated with few chances to get out again, meaning that individuals falling into poverty have limited chances to get back out of it in the following years. Among these countries, this situation is most worrying in Bulgaria, Romania, Estonia, Greece, Malta, Portugal and to a certain extent Italy. Graphic: EU-ESDE 2012

The ESDE 2012 has said that “impact of the crisis on the social situation has now become more acute as the initial protective effects of lower tax receipts and higher levels of spending on social benefits (so-called ‘automatic stabilisers’) have weakened”.

This means, the ESDE has added, that a new divide is emerging between countries that seem trapped in a downward spiral of falling output, fast rising unemployment and eroding disposable incomes and those that have so far shown good or at least some resilience. [The link to the full report [pdf 23 MB] is here.]

The situation has been described as “especially catastrophic in southern and eastern European countries” by the website of the International Committee of the Fourth International (ICFI). Previously, only wars have devastated national economies so thoroughly in such a short time as have the austerity measures of the European Union, the ICFI has observed.

This scene, as if from another age of blithe consumption in Europe, is now more likely to be found (instead of in Berlin where I took the picture) in the metropolises of Asia

Indeed the ESDE findings are a deep shade of gloom. The average EU unemployment rate climbed to almost 11%. The report confirms a new pattern of divergence, which is most striking between the North and the South of the eurozone. The unemployment rate gap between these two areas was 3.5 points in 2000, fell to zero in 2007 but then has widened fast to 7.5 points in 2011.

Despite the social catastrophe they have provoked with their austerity policies, European governments are intent on tightening the fiscal screws. They are no longer limiting themselves to the periphery of the euro zone, but are ever more ferociously attacking the working class in the core countries. In Greece and Spain, one in four is officially unemployed, and over half of all young people have no work.

Average household income has fallen by 17 percent in Greece over the past three years and by 8 percent in Spain. The health care, pension and social security systems face total collapse. And yet new, draconian austerity plans have been drawn up for Italy, France and Germany. In Britain, where almost a quarter of the population already lives in poverty, the Cameron government is systematically dismantling the National Health System, public education and social welfare.

Dear Angie, what part of ‘Nein’ do you not understand?

So says Le Monde Diplomatique about the rousing change of government in Greece: “From multiple divisions and meetings (from 1968) of the left and progressive reformer, Syriza [Greece’s Radical Left Coalition party] made the biggest breakthrough of these critical elections. By itself, this result could spell the end of bipartisanship.”

“One of the three major issues of the election,” the L M Diplo continued, “was precisely to determine if any of the leftist forces successfully secure a dominant position. Issue decided: with 16.8% of the votes, it definitely gets Syriza leadership status, rising even as the second political force – behind New Democracy (ND, right), with only two points difference. Among young people who voted for the first time, among the unemployed, and throughout the Athens area, Syriza tops.”

From the French original: “Issu de multiples divisions et réunions (à partir de 1968) de la gauche réformatrice et progressiste, Syriza a fait la plus importante percée de ces élections décisives. A lui seul, ce résultat pourrait sonner le glas du bipartisme.”

“L’un des trois enjeux majeurs du scrutin consistait précisément à déterminer si l’une des forces de gauche parviendrait à s’assurer une position dominante. Question tranchée : avec 16,8 % des suffrages, Syriza obtient incontestablement ce statut de leader, se hissant même au rang de deuxième force politique du pays – derrière Nouvelle Démocratie (ND, droite), avec seulement deux points d’écart. Chez les jeunes qui ont voté pour la première fois, chez les sans-emploi, et dans toute la région d’Athènes, Syriza arrive en tête.”

There’s an abundance of ferment in Greece, real ferment, with the Occupy zeal but with a solid political base and programme this time. This re-post from Links (International Journal of Socialist Renewal) has said that Antarsya, the Front of the Greek Anti-Capitalist Left, is a united front of left-wing groups. It is separate from Syriza. There are a number of political differences between Syriza and Antarsya — including on whether to demand immediate withdrawal from the European Union. Antarsya’s position statement before the 06 May 2012 election indicates how volatile this ferment is.

Those dour Germans seem not to have understood what it is that is happening in Greichenland (as Greece is known in Deutschland) and, being firmly stuck in wirtschaftswunder mode, the German ruling oligarchies are making disapproving noises. Der Spiegel has said that that “several German leaders voiced their demands Wednesday that the country stick with the austerity measures negotiated as part of the most recent bailout package”.

The Spiegel reported that Martin Schulz, President of the European Parliament and a member of Germany’s center-left Social Democratic Party, told the tabloid Bild: “The Greek parties should bear in mind that a stable government that holds to agreements is a basic prerequisite for further support from the euro-zone countries.”

Moreover, that Jörg Asmussen, European Central Bank board member, told the German business daily Handelsblatt: “Greece must know that there is no alternative to the agreed to restructuring arrangement, if it wants to stay a member of the euro zone.”

The Germans are deaf to the exceedingly loud “NO!” that is coming out of Greece. Alexis Tsipras, head of Greece’s Coalition of the Radical Left (Syriza), who has been charged with forming the new government, declared on Tuesday that his country’s agreement to the rescue package was null and void. “The pro-bailout parties no longer have a majority in parliament to vote in destructive measures for the Greek people,” Tsipras said. “The popular mandate clearly renders the bailout agreement invalid.”

Now, Angie, what part of “Nein” do you not understand?

Austerity and debt, the proletariat and protest – 1

Archbishop Ieronymos, the head of the Church of Greece. Photo: ekathimerini

A round-up of reports on austerity and debt:

‘Head of Greek Church questions austerity, troika’ – Archbishop Ieronymos, the head of the Church of Greece, has taken the rare step of writing to Prime Minister Lucas Papademos to express serious concerns about the effectiveness of the government’s fiscal policy and the effect it is having on Greek people. In his letter, Ieronymos also raises doubts about the role of the European Commission, European Central Bank and International Monetary Fund – or troika – in the country and whether Greece should agree to further austerity measures to receive its next bailout, suggesting that they are “larger doses of a medicine that is proving deadly.”

“Greeks’ unprecedented patience is running out, fear is giving way to rage and the danger of a social explosion cannot be ignored any more, neither by those who give orders nor by those who execute their deadly recipes,” he wrote. “It seems clear now that our homeland’s drama will not finish here but may take on new, uncontrollable, dimensions,” he wrote. “There are, at the moment, demands for even tougher, more painful and even more unfair measures along the same ineffective and unsuccessful lines as in our recent past. There are demands for even bigger doses of a medicine which is proving deadly. There are demands for commitments that do not solve the problem but only put off temporarily the foretold death of our economy. Meanwhile, the put our national sovereignty up for collateral.”

‘Greek debt audit campaign calls new agreements impoverishing’ – The new International Treaty and Memorandum, which accompany the ‘haircut’ of Greek public debt, push the Greek people further into impoverishment. They mean a dramatic drop in both living standards and working conditions, and enslave us to the state’s creditors. The reductions in pensions and wages, the abolition of collective bargaining legislation (contrary to Article 22 of our Constitution), and the 150 000 public sector redundancies lead to mass hunger and wages of 300 or 400 euros a month.

‘Tanzanian govt rejects IMF plan on minerals royalties’ – The government has rejected a proposal by the International Monetary Fund (IMF) to introduce a new system to calculate mining royalties because doing so would adversely affect tax collections. Had the government agreed to introduce the single royalty payment, the amount of tax the government collects from the mining firms would have dropped significantly.

‘Portugal unions slam IMF, EU’s “poverty agenda” ‘ – Thousands of protesters have taken to the streets of Lisbon to voice their opposition to government austerity policies. Unions organised the march in protest at spending cuts agreed in return for a seventy eight billion euro bailout. Armenio Carlos, the leader of the Confederation fo Portuguese Workers, said: “We are here to protest against exploitation, inequality and poverty. “That’s the agenda of the troika: the IMF, the EU and the European Central Bank.”

‘Hundreds of thousands rally in Portugal against austerity’ – Hundreds of thousands protested in Portugal Saturday against austerity measures ahead of next week’s talks with international creditors, with unions vowing to keep up the pressure. Officials from the so-called Troika — the European Union, European Central Bank and the International Monetary Fund — will next week evaluate progress on the country’s bailout programme. Demonstrators arrived in Lisbon from across the country in the rally described as one of the country’s biggest in three decades. Many were brandishing banners such as “The struggle continues” and “No to exploitation, no to inequality, no to impoverishment.”

‘Greece to pledge 20% cut in minimum wage, draft accord shows’ – Greece will pledge permanent spending cuts, including lower pension payments and a 20 percent reduction in the minimum wage, as the economy contracts this year at a faster pace than originally estimated, according to the draft of a new financing deal with the European Union and International Monetary Fund. “To restore competitiveness and growth, we will accelerate implementation of deep structural reforms in the labor, product and service markets,” according to the letter of intent addressed to IMF Managing Director Christine Lagarde in a document obtained by Bloomberg News.

[With thanks to the Bretton Woods Project for its compilation of these reports.]

Iran’s oil, Europe’s oil imports, many threats, upward prices

Iranian President Ahmadinejad punches the air in front of a banner of Iran's Supreme Leader Ali Khamenei during rally to mark the anniversary of Islamic Revolution in Tehran. With its threat to block the Strait of Hormuz, Iran is responding to the United States' decision to impose sanctions on financial institutions that deal with Iran's central bank. Photo: Der Spiegel / Reuters

The concern about the multi-bloc confrontation with Iran (the Islamic Republic of, to use the official name) has continued from December 2011 into January 2012. Oil prices and petroleum products markets have been affected. There have been oft-repeated and serious concerns that there could be some armed confrontation, especially involving Israel and Iran. There has also been speculation that Iran’s government would block the Strait of Hormuz, through which about a third of all crude oil shipped worldwide passes. Some of these concerns have abated in the last week, but only partially.

Now, Der Spiegel has reported that although the European Union embargo on Iranian oil will only come into effect in six months, the leadership in Tehran wants to act first: Exports to Europe are set to be halted immediately. It is a move which could mean added difficulties for struggling economies in southern Europe. The Iranian government wants to present a bill to parliament this weekend calling for an immediate halt to oil deliveries to Europe. The move, with most reports citing the Iranian news agency Mehr, has come about in response to the EU agreement to impose sanctions against Iran, which were announced earlier this week.

The sanctions banned any new contracts for buying oil from Iran, but allowed existing deals to continue until July in order to give countries time to find other sources. But that process is now at risk after the latest move from Tehran, a step the Iranian government had already threatened. “If this bill is passed, the government will be forced to stop selling oil to Europe before the actual implementation of their sanctions,” said Emad Hosseini, spokesman for the Iranian parliament’s energy commission, reportedly said. The bill is set to become law on Sunday.

An oil tanker is seen docked next to Iraq's vital al-Basra oil terminal, in Persian Gulf waters. Four decades after the 1973 oil shock, Iran and the West are once again embracing oil as a weapon. Tehran is threatening to block the Strait of Hormuz, while the industrialized countries are considering a boycott of Iranian oil. Photo: Der Spiegel / AP Photo/Kamran Jebreili

The EU sanctions allow for oil deliveries from Iran until July 1. Any pre-empting of this timescale by Tehran could prove problematic for countries like Italy, Greece and Spain, who would need to urgently find new suppliers. China, meanwhile, a major importer of Iranian oil, has also criticized the EU sanctions. The Xinhua news agency quoted the Chinese Foreign Ministry on Thursday as saying: “To blindly pressure and impose sanctions on Iran are not constructive approaches.” Many members of the EU are now heavily dependent on Iranian oil. Some 500,000 barrels arrive in Europe every day from Iran, with southern European countries consuming most of it. Greece is the most exposed, receiving a third of all its oil imports from Iran, but Italy too depends on Iran for 13 percent of its oil needs. If this source were to dry up abruptly, the economic conditions in the two struggling countries could become even worse.

Iran holds around 137 billion barrels of proven oil reserves, or nearly 10 percent of the world total, according to the BP Statistical Review of World Energy 2011. Despite sitting on the world’s second largest reserves of natural gas, Iran’s growing appetite for its own gas, combined with tightening international sanctions that have throttled its fledgling liquefied natural gas (LNG) programme, have made it a net gas importer for most of the last decade. Natural gas accounts for 54 percent of Iran’s total domestic energy consumption, while most of the remainder of energy consumption is attributable to oil, according to the U.S. Energy Information Administration (EIA).

Graphic: Der Spiegel / Reuters

The Gloria Center’s Barry Rubin has said that the claim of Israel being about to attack Iran repeatedly appears in the media (see his article, ‘Israel Isn’t Going to Attack Iran and Neither Will the United States’). “Some have criticized Israel for attacking Iran and turning the Middle East into a cauldron of turmoil (not as if the region needs any help in that department) despite the fact that it hasn’t even happened,” he said. “On the surface, of course, there is apparent evidence for such a thesis. Israel has talked about attacking Iran and, objectively, one can make a case for such an operation. Yet any serious consideration of this scenario—based on actual research and real analysis rather than what the uninformed assemble in their own heads—is this: It isn’t going to happen.”

Rubin said that the main leak from the Israeli government, by an ex-intelligence official who hates Prime Minister Benjamin Netanyahu, has been that the Israeli government already decided not to attack Iran. Israeli Defense Minister Ehud Barak has publicly denied plans for an imminent attack as have other senior government official. “Israel, like other countries, should be subject to rational analysis. Articles being written by others are being spun as saying Israel is going to attack when that’s not what they are saying.”

So why are Israelis talking about a potential attack on Iran’s nuclear facilities, Rubin has asked. Because that’s the only way Israel has to pressure Western countries to work harder on the issue, to increase sanction and diplomatic efforts, is his answer.

A satellite image of the Persian Gulf. About a third of all the crude oil shipped worldwide passes through the Strait of Hormuz between Iran and Oman. Photo: Der Spiegel / DPA / NASA / The Visible Earth

Bloomberg provided a round-up of Iran-related oil and prices news – oil declined a second day in New York as rising U.S. crude inventories countered data showing gasoline demand increased last week in the world’s largest oil consumer. Futures fell as much as 0.9 percent after dropping 0.6 percent yesterday. Crude stockpiles probably rose last week as imports rebounded, according to a Bloomberg News survey before an Energy Department report today. U.S. gasoline demand grew for a second week, MasterCard Inc. data showed yesterday. The European Union embargo on Iranian oil supplies will “bear bitter fruit,” Iran’s Foreign Affairs Ministry said this week.

Ria Novosti, the Russian news agtency, quoting a CNN report, said the United States will use all available options to prevent Iran from getting a nuclear weapon, President Barack Obama said in his State of the Union address on Tuesday. “Let there be no doubt: America is determined to prevent Iran from getting a nuclear weapon, and I will take no options off the table to achieve that goal,” Obama said.

The New York Times reported that as the Obama administration and its European allies toughened economic sanctions against Iran on Monday — blocking its access to the world financial system and undermining its critical oil and gas industry — officials on both sides of the Atlantic acknowledge that their last-ditch effort has only a limited chance of persuading Tehran to abandon what the West fears is its pursuit of nuclear weapons. “That leaves open this critical question: And then what?”

Fox Business has reported that the International Monetary Fund warned on Wednesday that global crude prices could rise as much as 30 percent if Iran halts oil exports as a result of U.S. and European Union sanctions. If Iran halts exports to countries without offsets from other sources it would likely trigger an “initial” oil price jump of 20 to 30 percent, or about $20 to $30 a barrel, the IMF said in its first public comment on a possible Iranian oil supply disruption.

Graphic: Der Spiegel / Reuters

Impacts on refining in Europe was reported by Bloomberg – the European Union’s embargo on Iranian oil threatens to accelerate refinery closures in Europe, the head of Italy’s refiners’ lobby said. “Asian countries not applying the embargo could buy the Iranian oil at a discount and sell cheap refined products back to us,” Piero De Simone, general manager of Unione Petrolifera, said in an interview in Rome. “Italy already risks the closure of five refineries and at a European level we’re talking about 70 possible shut downs.”

Brinksmanship over Iran’s threat to close the Strait of Hormuz sparked a rally in oil prices at the end of last year, The National of UAE reported, with sabre-rattling by Iran and the US sending the price of Brent crude futures to highs of US$111.11 per barrel. Saudi Arabia looks set to benefit from sanctions against Iran as the kingdom is one of the few oil producers with capacity to make up any shortfall they will cause. Meanwhile India’s oil minister said Wednesday the energy-hungry nation was continuing to import oil from Iran and was not bound by new sanctions imposed by the European Union.

Reuters provided a factbox about Iran’s oil exports as OPEC’s second largest producer. Iran sells large volumes of oil to China, India, South Korea, Japan and Italy. But Greece, Turkey, South Africa and Sri Lanka rely most heavily on Iranian oil as a percentage of imports. Sri Lanka imported 39,000 bpd in the first half of the year, IEA data shows. It is completely reliant on Iranian oil.

EU figures show imports of Iranian crude were up more than 7% in the third quarter of 2011 compared to the second quarter. The EU says it imported about 700,000 bpd of Iranian crude oil in the third quarter of 2011, compared to about 655,000 bpd in the second quarter.

The European Union agreed on Jan. 23 to ban Iranian oil imports, but the embargo will not be fully implemented until July 1, to avoid harming economies to whom Iran has been a major supplier. The EU move follows new financial sanctions signed into law by U.S. President Barack Obama on Dec. 31, which aim to make it difficult for countries to buy Iranian oil in an attempt to discourage Tehran’s nuclear programme.

Iran produces about 3.5 million barrels per day (bpd) of crude with another 500,000 bpd of condensate – light hydrocarbon liquids. Iran exports about 2.6 million bpd, of which about 50,000 bpd is refined products, the International Energy Agency (IEA) estimates. The top 10 buyers of Iranian crude last year were as follows:

An Iranian oil technician makes his way at the oil separator facilities in Azadegan oil field, near Ahvaz, Iran. Photo: Der Spiegel / AP Photo/Vahid Salemi

Country – Imports (bpd) – % Imports
1. China – 543,000 – 10
2. India – 341,000 – 11
3. Japan – 251,000 – 5.9
4. Italy – 204,000 – 13.2
5. South Korea – 239,000 – 7.4
6. Turkey – 217,000 – 30.6
7. Spain – 170,000 – 16.2
8. Greece – 158,000 – 53.1
9. S.Africa – 98,000 – 25
10.France – 75,000 – 6.0

[Figures for EU countries are from the bloc’s Eurostat office and are for the third quarter. Figures for other OECD countries are from the IEA and for the second quarter. Figures for China, India and South Africa are for the first half of 2011 from the U.S. Energy Information Administration (EIA).]

A two-speed Europe, chronic unemployment and the Euro experiment

Illustration: Presseurop / Chinese illustrator and cartoonist Luo Jie (William Luo) works for the Beijing English newspaper, China Daily.

There is worry in Europe about the euro, its ten-year-old currency, and about unemployment, which has stayed persistently high throughout 2011. The Euro press has reflected the worries and concerns of the salaried and the informal workers of Europe, and is now talking about whether there is already a ‘two-speed’ Europe. Presseurop has provided some insight:

In ‘Eurozone crisis – Will the EU end up like Yugoslavia?’ Serbian daily Politika remarks on the similarities with the years preceding the break-up of the federation founded by Tito. The Politika opinion said: “Seen from Belgrade, Zagreb or Sarajevo, the economic and institutional crisis that has struck the European Union has a certain air of déjà-vu. Relatively speaking, the European Union (EU) is beginning in many ways to resemble Tito’s Yugoslavia. As At a time when the EU is attempting to reinforce centralised control of its periphery, its foundations are being threatened by excessive nationalism and accumulated incompatibilities between member states.”

The “democratic deficit” suggests yet another parallel, according to the Serbian paper: in the one-party system in Yugoslavia, leaders were not elected by universal suffrage, just like the highly placed civil servants that manage today’s EU – in spite of the fact that all of the members of the Union have multi-party systems. In both cases, the fear that the more populous states would have too much influence has prevented the introduction of the principle of ‘one citizen, one vote’.

The 'La Tribune' front page on a 'two-speed' Europe

Presseurop also invokes the ‘two-speed Europe’ meme in ‘Employment – A two-speed Europe’. Mentioning the front-page headline ‘Europe split in two by unemployment’ of La Tribune, Presseurop has quoted the paper’s reporting on the growing gap between Southern and Northern Europe: “The rate in Germany has declined to a level not seen since 1991 while soaring to new high in Spain, where it is now almost 23%.”

The Paris business daily continued: “This European dichotomy is first and foremost a reflection of the state of the continent’s economies. While some countries have sunk into recession (Greece, Portugal, Spain), others have succeeded in maintaining growth, albeit modest.” Citing reforms undertaken before the crisis as one of the reasons for the healthier economies in the North, The Financial Times remarked that changes to labour legislation in Luxembourg, the Netherlands, Austria and Germany “have helped make the workers of these countries internationally competitive – a factor which is sorely lacking in the eurozone periphery”. Typically arrogant and dismissive opinionating from the British paper, which is notorious for kowtowing shamelessly before industry and American foreign policy dictates.

The Berlin leftish newspaper Tageszeitung (Taz) takes issue with this argument, and notes that the reforms undertaken by Berlin have not created new jobs, but simply redistributed them to a larger number of workers – a process that has resulted in the creation of a new low-pay sector. Reporting that 8.4 million Germans are ‘under-employed’, the Taz recalls that economic inequality in Germany has grown more rapidly than in other industrialised countries. Finally, the Berlin newspaper notes that to ‘celebrate’ the record of 41 million wage earners, the German government has spent 330,000 euros on a poster campaign ‘Danke Deutschland – Wirtschaft. Wachstum. Wohlstand.’ [“Thank you Germany – Economy. Growth. Prosperity”].

Taz is close to the truth, quite the opposite of what the feckless Financial Times, a speechwriter for predatory capitalism, would have us believe. Almost one in four people in the European Union was threatened with poverty or social deprivation in 2010. This is the conclusion of an official report by the European Commission presented in December. According to the report, 115 million people, or 23 percent of the EU population, were designated as poor or socially deprived. The main causes are unemployment, old age and low wages, with more than 8 percent of all employees in Europe now belonging to the “working poor”.

Single parents, immigrants and young people are worst affected. Among young people, unemployment is more than twice as high as among adults. Some 21.4 percent of all young people in the EU had no work in September 2011. Spain leads all other EU countries with a youth unemployment rate of 48 percent. In Greece, Italy, Ireland, Lithuania, Latvia and Slovakia youth unemployment is between 25 percent and 45 percent.

In countries such as Germany, the Netherlands and Austria, youth unemployment rates are lower only because training takes longer and many unemployed young people are ‘parked’ in all sorts of schemes that exclude them from the official statistics – so much for the crafty and misleading ‘Danke Deutschland’ campaign. But even in these countries the chance of getting a decent-paying job is diminishing. Some 50 percent of all new employment contracts in the EU are temporary work contracts. For workers aged 20 to 24, the proportion is 60 percent.

Of German wurst, French fries and an IMF bullet

A closed chips stall called 'La Reine des Fritures' ('The Queen of French Fries') in French Flanders. Photo: Stephan Vanfleteren / Panos Pictures

Le Monde Diplomatique, that fearless critic of globalisation and the tyranny of the multilateral lending institutions, has said in its 2011 December issue that in November, the Franco-German directorate of the European Union, the European Central Bank and the International Monetary Fund — the ‘troika’ — were furious when the Greek prime minister, George Papandreou, announced plans to hold a referendum.

Absolute oligarchs dislike referendums because the idea has a great deal to do with consultation – not a favourite subject for the IMF in the 67 years it has claimed to shape the global economy. That is why, summoned to Cannes for an interview during a summit that his country was too small to attend, kept waiting, and publicly upbraided by Angela Merkel and Nicolas Sarkozy (who were responsible for exacerbating the crisis), Papandreou was forced to abandon the plan for a referendum and resign. His successor, a former vice-president of the ECB, promptly decided to include in the Athens government a far-right organisation banned since the Greek colonels lost power in 1974.

In ‘Europe in crisis, rule by troika’, Serge Halimi has written in LMD that the European project was supposed to secure prosperity, strengthen democracy in states formerly ruled by juntas (Greece, Spain, Portugal), and defuse “nationalism as a source of war”. But it is having the opposite effect, with drastic cuts, puppet governments at the call of the brokers, and renewed strife between nations. Everything, in short, that the IMF and the World Bank have pursued since 1944 mostly successfully in Asia, Africa and South America.

Former bankers Lucas Papademos and Mario Monti have taken over in Athens and Rome, exploiting the threat of bankruptcy and the fear of chaos. They are not apolitical technicians but men of the right, members of the Trilateral Commission that blamed western societies for being too democratic. “Having crushed Greece and Italy, the EU and the IMF have now set their sights on Hungary and Spain,” Halimi has written, and it is a grim warning.

A ferris wheel runs in the centre of Brussels next to an old building advertising Martini and Zanussi. Photo: Stephan Vanfleteren / Panos Pictures

Red Pepper has more on the ways and means of the IMF.

“It’s stripped millions of people of their livelihoods, but the global economic crisis has brought one institution back from the dead: the International Monetary Fund. Two years ago, the IMF looked to be on its last legs. It had got to the stage where nobody wanted to borrow its money. Many developing countries started accumulating reserves to avoid ever having to go to the IMF loan shark. Developed countries in trouble would go just about anywhere – China, Russia, Saudi Arabia – to avoid the IMF.”

Then came the meltdown. “The IMF failed to see it coming – pretty damning for a body supposed to oversee global financial stability – but bankrupt countries suddenly had no choice but to come begging.” Exactly the point – the IMF did see it coming because this is what its prescriptions for the previous decade were aimed at in the first place. In April last year, the G20 pumped the organisation with £330 billion of new funds. Uruguayan writer Eduardo Galeano called the decision ‘black humour’, saying it would ‘rub salt in the wound’ of countries hit by a crisis they did not create. The IMF is now re-armed and doubly dangerous, with large new areas in what was formerly the Eurozone to subjugate.

Not quietly by any means. After all, the Greeks are Greeks first and then, perhaps, Europeans. Ditto with the Italians, Portuguese, Hungarians, Spaniards and Latvians. It is looking rather like the Germans and the French (elite, mind you, not the labour, the unemployed, the migrants and the armies of informal workers struggling on 25 euros a day) are the last Europeans left.

But this is why major protests have been convulsing Greece throughout the autumn with strikes, and occupations of the main squares in many towns. Civil servants blockaded their ministries, preventing ministers from accessing their departments in September and October. The early November surprise announcement of a popular referendum in Greece on the EU-IMF loan terms and conditions would have marked the first time an IMF lending package was subjected to a test of popular ownership. In the end the political pressure heaped on the Greek prime minister by other European countries, the Greek political opposition and factions from within his own government forced him to back down and resign as prime minister.

After the collapse of the Greek government, Elena Papadopoulou of the Athens-based Nicos Poulantzas Institute said: “Despite the proclaimed enthusiasm, there is no realistic reason to believe that the new coalition government – with the participation of the extreme right – will follow anything other than the socially destructive policies applied according to IMF recipes with the agreement of the European elites.”