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By William Pfaff
When the first international effort to impose an economic austerity regime upon Greece was completed, George Papandreou, the prime minister, surprised and infuriated the negotiators from the IMF,
Mr. Papandreou was hustled out of the limelight, and foreign leaders, the EU, international financial officials, and right-thinking commentators in Europe and the United States all deplored his proposal, since democracy was not part of the deal.
If it had been, some 45 buildings would not have burned in Athens last Sunday night, and some hundred thousand or so Greeks would not have taken to the streets, smashing the marble walls of banks and shop windows. If they couldn't express their opinions one way, then they would do it in another.
This gives reason to doubt that the international austerity plan, or the Diktat, as the Greeks prefer to call it, which was presented in Athens and reluctantly voted on, will actually be carried out. (The vote was 199 members of the
In Greece, the opinion is widespread that once again, as in 1917, 1940 and 1947, when, as they are convinced, they were ill-used by the great Western powers, they once again are victims of Western Europe, and especially of Germany. They cannot deny the reproaches of economic mismanagement and corruption since joining the EU, but they did not need a German official to propose that an EU-appointed commissioner, who angry Greeks are calling a German gauleiter, be sent to take charge of Greece's economy -- which, after all, is only 2 percent of the European economy. Another German was overheard confiding to a Portuguese official that if Portugal, also in grave difficulties, needs help, there would be no trouble providing it -- implying that a certain "racial" hierarchy prevails in European and international economic circles.
He told the foreign press that "everybody knows there is no rebound of growth in Europe or in Greece, and that Greece will never reach the results" set for it by the weekend negotiations. What is being forced upon Greece, Mr. Hollande said, is "a purge." Greece's situation, he said, has been the result of a failure in Greek governance, but also is "a failure of European governance."
His argument is that the austerity program (and every other delinquent loan in Europe) makes growth impossible. "Who is paying taxes today in Greece? It's a real question. The wealthiest people -- there are plenty in Greece -- have taken to their escape boats; they've left. And the poorest people are in the underground economy."
He did not go into the question of ultimate responsibility for this international economic debacle, which might have led to accusations of anti-Americanism. Crime on Wall Street is a culprit, obviously, but so is the economic doctrine that has dominated the international economy since the 1970s, monetarism, the basis of the so-called "Washington Consensus," to which the U.S. Treasury, the IMF, the
As neo-Keynesians have pointed out, the monetarists' fundamental principle that markets automatically seek equilibrium and are therefore self-regulating (that labor markets, for example, always operate so as to move the economy towards full employment) is not true in Greece's circumstances. Therefore, the European and IMF plan is to force them to recover a roughly 40 percent disadvantage in competitiveness (compared to Germany) through imposed austerity.
George Papandreou understood that the people had to be asked -- democratically -- to make such a sacrifice. The other Europeans and the international agencies thought otherwise. No wonder the Greeks are angry.
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