Ukraine gets debt reduction and additional loans from IMF while Greece gets further squeezed, in a despicable demonstration of the geo-strategic games being played
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Story Transcript
SHARMINI PERIES, EXEC. PRODUCER, TRNN: This is The Real News Network. I’m Sharmini Peries coming to you from Baltimore, and welcome to this edition of the Leo Panitch report.
Last week the Group of 7 met in Bavaria, and the main items on the agenda was the Greek debt crisis, Ukraine, and how to rein in Russia. This week the Russians are having their own economic summit in St. Petersburg, and Alexis Tsipras is among the leaders speaking at it. He arrived at the meeting following the failed talks with the European finance ministers to address the current Greek banking crisis.
Here to discuss the meaning of all of this is our regular guest, Leo Panitch. Leo is a distinguished research professor of political science at York University in Toronto, and he’s the author of the UK Deutsche Book Prize winner for The Making of Global Capitalism: The Political Economy of American Empire.
Leo, thanks for joining us on The Real News Network.
LEO PANITCH, PROF. OF POLITICAL SCIENCE, YORK UNIVERSITY: Hi, Sharmini.
PERIES: So Leo, give us a sense of your take on all these new developments, starting with Greece.
PANITCH: Well, it certainly is heating up and getting interesting in all kinds of ways. I’ve said previously in interviews with you that when I was in Greece in mid-May it felt like it was a state of suspended animation. The movement seemed immobilized, to quote the minister of education, when I talked to him. And what’s happened in the last few days is that people are in the streets. You’ve seen the demonstration first by the communist militants, then the last days by the anti-communist militants. We don’t want a Stalinist state, was some of the placards I saw. And then most recently by the Syriza Youth, saying, with placards saying, better chaos than continued austerity.
And I think all of that is obviously a product of the way things are coming to a head, and the way in which the Greek leadership, the Syriza leadership, has called out publicly the IMF in particular, but generally the interlocutors in Europe as well, for their appalling intransigence. They’ve done that publicly, and I think that has had the effect of dispelling this state of immobilization inside the country.
That said, the negotiations continue. Since we last talked, there was a lot of rumors about a run on the banks. It looked like, I said and so did our fellow guest Dimitri, say that they ought to be replacing the head of the Central Bank of Greece, who’s a former mainstream finance minister in previous governments. And the bank came out with a statement a couple of days ago which made things worse, and spoke about how fragile things were. That helped trigger what looked like was going to be a bank run, although as I said, all the big depositors have taken their money out. It’s now relatively small ones.
So what’s very interesting is that the European Central Bank put money in overnight. A significant amount, a good number of billions of Euros. It’s not exactly clear how much.
PERIES: FT is reporting that it’s just under 2 billion.
PANITCH: Two billion. Well you know, it’s not enough to offset the amount that’s been taken out, but it is a clear attempt to ensure that the Greek banks won’t be closed, that capital controls won’t be introduced.
And it’s part of my fear that since the Greek leadership doesn’t want to go further than the Europeans will let them, they’re pressing the Europeans very hard to give them more room for maneuver and to respond in a more progressive rather than reactionary way to the continuing crisis and the requirement they pay their debts.
PERIES: And so Leo, Alexis Tsipras, the prime minister of Greece, is actually in St. Petersburg as we speak. Give us a sense of what that means in terms–.
PANITCH: I don’t think it means much. I think people are misunderstanding this. This is an annual conference like Davos. His invitation would have been issued a year ago. He had it in his calendar. I was invited to that conference once, four or five years ago. It’s the attempt by the Russians in their Potemkin village kind of way to showcase what a modern city St. Petersburg now is. That’s the former Leningrad, of course. And it looks very modern. It has all the Gap stores, et cetera, that you’d see in any European city, until you go to the streets behind which look very shabby.
And you will find that those conferences, as at Davos, bankers from the Western world who are paying tens of thousands of dollars to be there and work out contracts. Even in the face of the sanctions. So I don’t think that Tsipras arranged this. I mean, he might not have gone if he didn’t want to put some pressure on the Europeans in terms of saying, you know, there’s other sources, perhaps, of support. But I don’t think it should be looked upon as a special visit.
Nor do I think that’s particularly a good outcome. It’s not the image that Syriza wants to I think purvey in the world of itself inside Greece, that it is becoming dependent on authoritarian statists like Putin.
PERIES: But there was one-on-one meetings with Tsipras and Putin.
PANITCH: No leader of a country will not have a one-on-one meeting with the prime minister or the president, or–even I met with the guy who’s now deputy prime minister, when I was invited for the usual three, four minutes.
But that’s not to say that this isn’t part of the international negotiations and wrangling that’s going on. I’m just saying let’s not make too much of this.
PERIES: One of the reasons we had booked you for this interview was also to talk about Ukraine.
PANITCH: You’re quite right to be connecting these things. I don’t mean to make light of that. I just think that some of the international media is kind of treating this like what Castro did after the Bay of Pigs. You know, he went off and became a satellite of Khrushchev, Khrushchev’s Soviet Union. No. I mean, that’s all I’m trying to say. Things are, I think that’s a misinterpretation of what this meeting’s all about.
But there’s no question the geostrategic implications of all this. And the geostrategic worries that the major players have, and the geostrategic games that they’re playing are very much at work here. So we saw last week a haircut being given to the Ukrainians on their debt. And the IMF stumping up additional support to the Ukraine while the squeeze is being put on the Syriza government. And the despicable thing about this of course is that people even equate in terms of democracy these very suspicious Ukrainian nationalists and their supporters with the ultra-democratic leftists that Syriza represents. And that’s appalling.
So the hypocrisy here is obvious. It’s despicable. But even on a larger scale there’s a bigger hypocrisy, and that is that the European Central Bank is engaged in quantitative easing in a big way, finally following what the Federal Reserve did to contain the crisis in the United States. Which means it’s buying the bad debt from banks, both state debt and private debt from banks. Especially private debt from banks, all over Europe. It’s not buying the bad debt off the Greek banks. Greek is being, and Varoufakis pointed to this explicitly at the meetings this week, it’s not being allowed to partake in quantitative easing, and that’s a much bigger thing than the discrimination that’s taking place between the Ukraine and Greece.
PERIES: Why is that happening?
PANITCH: Well, it’s just the attempt at keeping the pressure on. And as I said in our last interview, it’s part of the class struggle. They want Greece to increase the VAT on food, on books, et cetera, and to decrease the income of pensioners rather than raise taxes on corporations and on luxury consumption, which is what Syriza’s proposing. And they will squeeze Greece until they do that.
I think that what the ECB did today is what they’ll continue doing. They will keep on, as we’ve said before, drip-feeding them. Not letting, not pushing them to a situation where the banks will collapse and they’ll have to pull out of the Euro or be pushed out of the Euro. Perhaps keep on postponing when they need to pay the debt in the hope that–but not give them the investment funds, access to investment funds, what Varoufakis called for in his proposal two days ago. The third big leg of that was for investment bonds to be issued and invested in Greece, is what he’s called for since 2008. And even though he’s promising privatizations along with this.
And I don’t think that’s going to happen, and I think therefore we may see this continuing crisis in a way that would keep Greece in but not allow it to recover. And the strategy there is to make things so impossible for the Syriza government that they’ll become unpopular.
PERIES: And Leo, finally, the European leaders are meeting in an emergency meeting to talk about Greece on Monday. If you were at that table on Monday, how would you be advising them?
PANITCH: You know, I think we ought to be very modest. I’ve said this again. I think anybody in this situation, any of us, would not find it an easy one. So I find it very, very difficult to blithely give advice, and I think we all ought to be very modest about doing so.
That said, I think that in a sense, the worst situation would be for this to keep on being dragged out. And unless they can stare them down and get the kind of deal that would get new investment into Greece–I must say, of a kind that would allow the Greeks to make it investment in progressive rather than reactionary kinds of production, unless that’s the case then I think that I might go the way of trying to find an alternate route. To introduce capital controls, and to try to encourage and animate a reconstruction of the Greek economy to have a democratic form of economic planning which would reconvert the economy in a way that would provide people with employment.
That’s a massive challenge, however. And it’s not just a problem of the Greek government doing it. It’s a matter of, do all those people who voted for Syriza, even those who were activists with Syriza and in the movement, do they have the commitment and the talent to begin to do that?
PERIES: Leo Panitch, thank you so much for joining us today, and we hope to have you back next week.
PANITCH: Okay, Sharmini. Have a good weekend.
PERIES: Thank you. And thank you for joining us on The Real News Network.
End
DISCLAIMER: Please note that transcripts for The Real News Network are typed from a recording of the program. TRNN cannot guarantee their complete accuracy.
