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by Michael Krieger
April 02, 2015
from
LibertyBlitzkrieg Website
If the EMU powers persist
mechanically with their stale demands - even reverting to terms
that the previous pro-EMU government in Athens rejected in
December - they risk setting off a political chain-reaction that
can only eviscerate the EU Project as a motivating ideology in
Europe.
Forced Grexit would entrench a
pervasive suspicion that EU bodies are ultimately agents of
creditor enforcement. It would expose the Project's post-war
creed of solidarity as so much humbug.
Greece could not plausibly remain in
NATO if ejected from EMU in acrimonious circumstances. It would
drift into the Russian orbit, where Hungary's
Viktor Orban
already
lies.
The southeastern flank of Europe's
security system would fall apart.
Mr Tsipras is now playing the
Russian card with an icy ruthlessness, more or less threatening
to veto fresh EU measures against the Kremlin as the old set
expires.
"We disagree with sanctions. The new European security
architecture must include Russia," he told the TASS news
agency.
He offered to turn Greece into a
strategic bridge, linking the two Orthodox nations.
"Russian-Greek relations have very deep roots in history,"
he said, hitting all the right notes before his trip to
Moscow next week.
From Ambrose Evans Pritchard's
article in the Telegraph: Greek
Defiance Mounts as Alexis Tsipras Turns to Russia and China.
Over the past couple of months, I've at
times been a strong critic of Greek leadership's seeming
unwillingness to demonstrate the courage necessary to flip the bird
to EU bureaucrats and usher in paradigm level change for the long
suffering nation.
At the core of the problem seems the be
the mandate under which Syriza was elected - namely to end
austerity, but remain in the euro.
This presents a serious problem, since
the threat of leaving the euro is the only real leverage the Greeks
have. If they aren't willing to risk that, then they aren't really
willing to risk much of anything.
The key issue facing Tsipras and Varoufakis
seems to be how they can take bold action while at the same time
reducing the severity of the immediate pain certain to come in the
short-term. Surely EU bureaucrats and the U.S. would try to punish
Greece as severely as possible so as to ensure that other uppity
Southern European nations would never dare follow in their
footsteps.
This is where a pivot toward Russia and
China might provide a hedge and some leverage.
Ambrose Evans Pritchard discusses
this in his
excellent article published by the Telegraph.
Here are some excerpts:
Two months of EU
bluster and reproof have failed to cow Greece.
It is becoming clear that Europe's creditor
powers have misjudged the nature of the Greek crisis and can no
longer avoid facing the Morton's Fork in front of them.
Any deal that goes far enough to
assuage Greece's justly-aggrieved people must automatically blow
apart the austerity settlement already fraying in the rest of
southern Europe. The necessary concessions would embolden
populist defiance in Spain, Portugal and Italy, and bring German
euro-skepticism to the boil.
Emotional consent for monetary union is ebbing dangerously in
Bavaria and most of eastern Germany, even if formulaic surveys
do not fully catch the strength of the undercurrents.
Yet
if
the EMU powers persist mechanically with their stale demands
- even reverting to terms that the previous pro-EMU government
in Athens rejected in December - they risk setting off a
political chain-reaction that can only eviscerate the EU Project
as a motivating ideology in Europe.
Alexis Tsipras leads the first radical-Leftist government
elected in Europe since the Second World War.
His
Syriza movement is, in a sense, totemic for the European Left,
even if sympathizers despair over its chaotic twists and turns.
As such, it is a litmus test of whether progressives can pursue
anything resembling an autonomous economic policy within EMU.
We live in gentler times today, yet any decision
to eject Greece and its Syriza rebels from the Euro by cutting
off liquidity to the Greek banking system would amount to the
same thing, since the EU authorities do not have a credible
justification or a treaty basis for acting in such a way.
Rebuking Syriza
for lack of "reform" sticks in the craw, given the way the
EU-IMF Troika winked
at privatization deals that violated the EU's own
competition rules, and chiefly
enriched a politically-connected elite.
Forced Grexit would entrench a pervasive suspicion that EU
bodies are ultimately agents of creditor enforcement. It would
expose the Project's post-war creed of solidarity as so much
humbug.
Willem Buiter, Citigroup's chief economist, warns that Greece
faces an "economic show of horrors" if it returns to the
drachma, but it will not be a pleasant affair for Europe either.
"Monetary union is meant to be unbreakable and irrevocable.
If it is broken, and if it is revoked, the question will
arise over which country is next," he said.
What a clown. Nothing created by man is
unbreakable and irrevocable...
That is the one undisputed lesson from
history.
Greece could not plausibly remain in NATO if ejected from EMU in
acrimonious circumstances. It would drift into the Russian
orbit, where Hungary's Viktor Orban already lies. The
southeastern flank of Europe's security system would fall apart.
Rightly or wrongly, Mr Tsipras calculates that the EU powers
cannot allow any of this to happen, and therefore that
their bluff can be called.
"We are seeking an honest compromise, but don't expect an
unconditional agreement from us," he told the Greek
parliament this week.
Mr
Tsipras is now playing the Russian card with an icy
ruthlessness, more or less threatening to veto fresh EU measures
against the Kremlin as the old set expires.
"We disagree with sanctions. The new European security
architecture must include Russia," he told the TASS news
agency.
He
offered to turn Greece into a strategic bridge, linking the two
Orthodox nations.
"Russian-Greek relations have very deep roots in history,"
he said, hitting all the right notes before his trip to
Moscow next week.
Panagiotis Lafazanis,
Greece's energy minister and head of Syriza's Left Platform, was
in Moscow this week meeting Gazprom officials. He voiced a "keen
interest" in the Kremlin's new pipeline plan though Turkey,
known as "Turkish Stream".
Operating in parallel, Greece's deputy premier, Yannis
Drakasakis, vowed to throw open the Port of Piraeus to China's
shipping group Cosco, giving it priority in a joint-venture with
the Greek state's remaining 67pc stake in the ports.
On
cue, China has bought €100m of Greek T-bills, helping to plug a
funding shortfall as the ECB orders Greek banks to step back.
One
might righteously protest at what amounts to open blackmail by
Mr Tsipras, deeming such conduct to be a primary violation of EU
club rules. Yet this is to ignore what has been done to Greece
over the past four years, and why the Greek people are so
angry.
Leaked IMF minutes from 2010 confirm what Syriza
has always argued:
the country was already bankrupt and needed
debt relief rather than new loans.
This was
overruled in order to save the Euro and to save Europe's banking
system at a time when EMU had no defences against contagion.
Finance minister Yanis
Varoufakis rightly calls it,
"a cynical transfer of private losses from the banks' books
onto the shoulders of Greece's most vulnerable citizens".
A small fraction of the €240bn of
loans remained in the Greek economy.
Some 90pc was rotated back to banks
and financial creditors. The damage was compounded by austerity
overkill. The economy contracted so violently that the
debt-ratio rocketed instead of coming down, defeating the
purpose.
Marc
Chandler, from Brown Brothers Harriman, says the liabilities
incurred - pushing Greece's debt to 180pc of GDP - almost fit
the definition of "odious debt" under international law.
"The Greek people have not been bailed out. The economy has
contracted by a quarter. With deflation, nominal growth has
collapsed and continues to contract," he said.
The Greeks know this.
It is this clash of two
entirely different
and conflicting narratives
that makes the crisis so intractable.
Mr Tsipras told his own inner circle privately
before his election in January that if pushed to the wall by the
EMU creditor powers, he would tell them "to do their worst",
bringing the whole temple crashing down on their heads.
Everything he has done since suggests that he may just mean it.
Perhaps Greece is about to fool us all
and pull off a major power play.
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