I twittered yesterday on the idea mooted in Europe that Greece might be forced to privatise national assets with proceeds forcibly passed to EU creditor nations. But it seems so shocking that it is worthy of further comment.
As the FT notes:
European leaders are pushing to impose measures that would ensure the Greek government lives up to its promise to deliver €50bn ($70bn) in privatisation proceeds, amid scepticism that Athens can carry out the sell-offs.
Officials involved in the discussions believe far more than €50bn could be raised in sales of state-owned assets, with estimates ranging from €250bn to €300bn — or almost all of Greece's outstanding debt.
But several diplomats and officials said repeated failures by Athens to start such sell-offs have convinced them of the need to impose new conditions on the programme, including the possibility of an international agency running the divestments. “The state is not functioning,” said one senior European diplomat.
Let's correct that: the Greek state is functioning (although it does need to collect tax). What is failing is the Euro, and the ECB and other's approach to sanctioning states that are in recession - a process of sanctions designed to ensure that the country subject to them has no prospect whatsoever of repaying its debt.
And now we see the real purpose: the neoliberals driving this policy are happily using their positions of power to seek the destruction of smaller states with the proceeds passed to larger ones. The idea of corporate bankruptcy - of effectively appointing a receiver to sell assets at what is invariably an under value to destroy any chance that the entity remains viable and with the only consideration being the realisation of short term cash for the benefit of secured creditors irrespective of the long term destruction in value that results - is to be applied to a nation state: Greece.
I am not being melodramatic when I say wars have been fought over lesser issues. Claims over assets are almost always the starting points for wars. And this new policy proposal, that shows complete contempt for the state of Greece, those who live in it and their long term well being, all promoted in the interests of bankers, has the indifference inherent in it that leads to war.
I find this profoundly troubling: the success of the EU has been in promoting stability in Europe (Yugoslavia, which was not in membership, being the notable exception). But if this attitude prevails I cannot see that surviving. The resentment that leads to hostility will be fuelled by policies such as this where nationhood is stripped from a place; a place with a weak history of recent democracy at that.
The bankers really are going mad.
I just hope they don't drag the rest of us down with them.
This feels eerily 1911 Balkans-ish. Have we learned nothing?
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I shalln’t be shedding tears for Greece. Greece is where it is because it systematically lied, at he highest level, to its European parters about the state of its own finances, and it systematically failed to collect taxes from its own ruling elite (a continuing issue).
Greece may not be innocent, and I am not arguing that they are. Quite clearly that were major deficiencies in its management of its economy. But that does not excuse the destruction of Greece as an effective state, or the removal of its right to manage its own affairs. The EU willingly went into monetary agreement with Greece without checking whether there was sufficient fiscal stability in the first place. It does have to bear the consequence
Indeed it did, Rod, and they are significant and fundamental failings that need to be addressed and perhaps are. And the EU should be doing all it can to help Greece address those systemic failings.
But the point here is does that justify a pan European institution – albeit one that Greece is party to – attempting to take control of an independent nation state and run it (through the imposition of sanctions and their control and management) in the interests not of the citizens of that state but of outside interests. This is, to put it bluntly, tantamount to annexing Greece and running it as what used to be called a protectorate.
I for one think that a very, very dangerous precendent.
You are right to be alarmed by these moves, Richard, as I am. To be honest I never thought the EU would go this far in it’s demands on a independent democractic nation state, further than was ever considered feasible or necessary for the South American and other countries that have been in similar situations over the years. And of course, if this applies to Greece then it applies also to Ireland, Portugal and Spain – in that order.
It seems to me this is the tipping point, when we actually see whether a nation state can be consumed by corporate interests: the interests of citizens placed a poor second to the interests of creditors/shareholders. Whatever the rights and wrongs are of Greeece’s current predicament one cannot ignore that this threat is being directed at a country recognised as the cradle of democracy.
War? Who knows. But in the interests of its citizens Greece certainly has defualt and walk away from the Euro. As do Eire and Portugal. Not to do so now means the destruction of those states as independent democratic entities.
I might be quoting that middle paragraph! You’re right
if you really remember 1911 then either your photo is well out of date, or a good demonstration for photoshop!
Richard – You are right, this does appear to be a repeat of historical events. In WW2 the Germans removed gold reserves from the central bank vaults in Greece and this has never been returned. While it is true that Germany made reparations to Greece after the war, to compensate for damage and loss of life, this capital is still outstanding.
Financial intelligence reports indicate that the gold was taken from Germany to BIS, Basel, so it would appear that the bankers are after a second slice of the Greek cake.
Sorry, I don’t see the problem here. If someone or something can’t pay their debts their creditors come in to get their money back. If it can apply to an individual or a company, why not to a government?
What else do you propose when a country cannot repay its debts? And Greece patently can’t.
I find a comment such as this almost staggeringly stupid. that is not meant to cause offence. It is a statement of fact. It is a staggeringly stupid comments that you have made.
Of course Greece has been mismanaged: no one disputes it. But are you quite so indifferent to the plight of the Greek people that you would have them plunged into complete poverty, destroy their healthcare system, plunder all their assets, create resentment sufficient to destabilise the region and the EU, and all because our bankers demand their money back, money that they should not have lent in the first place? Money which if they had undertaken sufficient due diligence they would have realised could not have been repaid?
That is what you were saying. I trust you realise how utterly callous and politically inept such a comment is
The alternative is, of course, structured default. This has happened numerous times before, it will happen again, and it needs to happen to Greece, because the process of reconciliation, the banks to their loss and Greek people to the reality of the situation that will govern their future, is a necessary process for taking forward the lessons from this debacle. Precipitating international crises, potentially leading to war, is not a process of reconciliation.
Please engage your brain before commenting here
Your talk of Balkans c.1911 is most amusing.
Do you seriously think Greece would be able to win a war it precipitates against other EU countries?
No…but that has never stopped revolt – and modern war is not trench warfare
Richard,
Have you ever done business in Greece? Every company has enshrined lieing, cheating, and stealing into it’s corporate charter. Management lies to shareholders, employees lie to management, marketing lies to customers, customer service lies to end-users.
Ofcom? Ad Standards Council? These types of things don’t exist in Greece, or rather they do, but their operators can be easily bribed.
Bribery, Corruption, these are national sports in Greece. From top to bottom. Why do you think that pound of shellfish you ordered while on holiday came up a little big short?
Long story short, corruption is so systemic in Greece, what exactly do you propose their creditors should do? Trust the same crooked dogs who got them into this mess to liquidate assets and get them out?
Sadly, the outside creditors have been burned so many times, they know that the auctions will be faked, and sold to buddies at a low price.
In a sense, if they’re going to privitize things, it’s BETTER for the Greek people that an independant third-party auctions the assets off. That way the shareholders (citizens), can be sure that they’re getting the maximum bang for their dollar.
Unless you’re proposing that the auctioneer Vigeli, and his cousin have an ‘auction’ at 3 am and only invite their best friends to buy state assets for 10 cents on the dollar?
I’m not saying Greece is great
I’m saying that to treat it like a corporation we can dismember is not just dangerous – it’s a fundamental assault on the right of self determination and we go there only when we have abandoned belief in democracy and the right of the state
To put it another way – when we believe in the corporate state
And that’s fascism by another name
“it’s a fundamental assault on the right of self determination”
Honestly, what right of self-determination? When were the Greek people asked whether to support government borrowing? When were they asked whether to increase tat borrowing to unsustainable levels? When were they told the likely effects of joining the Euro?
You criticise people who believe in the wisdom of markets because you say the idea of people having full information is absurd. The same thing applies in politics. Self-determination is more than a periodic choice between a number of lies.
In Jersey, as we well know, you don’t even offer that
And your whole economy is based on a desire to undermine democracy
I don’t think you have many grounds for commenting
This is far from simplistic, but it shows that monetary union can only work in times of stress with a political and fiscal transferunion. It’s a mess caused by politicians forcing the pace of the EU superstate with a Euro first policy. So unless the fiscal pain is unbearable a compromise will be reached by the controlling elite. Of course the people may choose otherwise, that’s nation states for you and the danger of current policy drift without popular and real democratic choice and support.
The EU accepted Greece into the Euro, they accepted its numbers. The private sector loaned to Greece. The EU continues to provide loans and ECB liquidity. The EU/ECB funds are probably replacing private debt as it comes to refinancing and as private money as capital flees. Eventually all the debt will become non-private as this continues.
When do you think the restructure is likely?
Daniel Cohn-Bendit (english subtitles) about Greece’s financial woes
http://www.youtube.com/watch?v=dQGkP68AVTI&annotation_id=annotation_971859&feature=iv
I suspect the Germans will walk away from the Euro its impossible without massive EU solidarity and or changes in Greece. The political and democratic union has to come first is it there?
If you’re going to use language like “annexation”, “protectorate”, “fascism”, “war”, “Balkans 1911” (all of which by the way I think is hyperbolic nonsense) then you might wish to consider that Greece has in fact taken other people’s assets. By failing to repay its debts, Greece has appropriated other people’s assets unlawfully. These creditors are now coming in to take the assets which would never have existed but for their lending to Greece.
If you think the bankers should be punished by suffering heavy losses then you are misguided. The bankers are merely agents for us little people. The banks might write off Greek loans but it won’t make a blind bit of difference to their individual standard of living. Instead it will be us consumer who foot the bill by higher interest rates.
Respectfully Rod – and leaving aside your hyperbole – your notion of banking is quaint but so far from the truth it’s really just wrong
The reality is that the bulk of this money is owed to the ECB, the ECB lent it to them for political reasons and is now in big trouble as it is not really possible for the Greeks ever to pay it back especially at market rates, which I believe are around 25%, the issue is they are saddled with a very strong currency as a result of the German Export machine they are joined at the hip to.
Selling the countries assets for a few months oxygen is not in the Greek public interest, the problem needs to be put into the court of the ECB, we owe you this money and we cant pay it back, the exporting nations have made the Euro too strong for us to pay it back, we can only pay you back 25% of it and we are going to keep our assets thank you.
The value of these assets is also minimal especially in this environment, really its the Germans who want to see the Greeks humiliated and as such calls for asset sales should be.
The Greek government should be asking the UK government for details of all the Greeks who have bought multi million pound London properties recently ( and there are many ) , those are the assets they should be trying to sell …..
Your last suggestion makes a lot of sense
that’s not an answer Richard.
The concept of national self-determination is simply absurd. Look at the last election – you voted LibDem. Is therefore any attempt to stop the coalition cutting an assault on the concept of national self-determination. Or is the truth – whether in Jersey, the UK or Greece -that most of us don’t like any of the choices that we are faced with and choose the one that we dislike the least?
Politicians everywhere have become a self-serving class who cannot be held to account. Do not ennoble them by saying that they are the embodiement of “national self-determination”. The only thing that determines how they act is their own personal career progression.
So all those who fought for democracy have wasted their time then?
Those who believe that there is something called nationhood are wrong?
And the right to vote can be cast aside?
And there have never been principled politicians?
I’m sorry – but you’re wrong on all counts
But you’ll continue to get on just fine in Jersey
“If you think the bankers should be punished by suffering heavy losses then you are misguided. The bankers are merely agents for us little people”
With respect, what planet are you living on to think that bankers are agents to the little people? I tjhink quite a few small businesses that have gone under for want of a loan might slightly disagree with you there (to say the least)!
It takes rather warped values to think a few rich bankers should be saved with taxpayers money for their own greed and stupidity and yet think the people of a whole country should be punished for the perceived misdomeanors of its government.
Especially when they impose conditions that gives them zero chance of paying back what they owe.