Troika’s Greek Brinksmanship Breeds Old Continent Extremes

In the space of four days since the Greek parliament tumultuous yes vote for the austerity tainted Troika support package and the riotous outpouring of emotive resentment, the atmosphere inside Europe and Greece has been poisoned. The Greek political system lays in ruins as the lenders unilaterally change the goal posts. Instead of solidarity outrageous demands are being flouted to push Greece too far. Far enough to force the country out of the Euro and surreptitiously renege on every promise of help for pain.

Over the weekend 199 out of 300 deputies gave the green light to the second EU and IMF memorandum which incorporates a Euro 130 billion in liquidity support loans and the prospects of a “voluntary” but arm twisted Euro 100 billion debt reduction to fortify “solvency.” They reluctantly nodded yeah with deep regret since they know the first package has resulted in a devastating 15% real economic collapse. There were some tiny rays of hope beyond the despair and outrage, until of course the latest insulting Troika negotiation shenanigans.

The long awaited face to face Eurogroup rubber stamp meeting for Wednesday was cancelled because the Troika keeps demanding more pounds of sovereign flesh. And of course it is suggesting that democracy is a luxury Greeks can linger afford.

This second Memorandum is again depressingly inequitable, assuring the further destruction of living standards. Some are wondering just how much worse this scorched earth policy can be compared to an Argentinian style collapse? Cooler heads contend the later would be far worse for the vulnerable members of Greek society.

Insult to Greek Injury

This destabilization and insipid sabotage by “allies” is not the kind of assistance that Greece bargained for or expected. Distrust and insult has been piled onto poisonous policy injury which initially was designed to punish the profligate Mediterranean state and prevent contagion leading to an implosion of Euro-area banks. The local economy and populace was the last priority.

Today, Greece’s erstwhile EU and IMF lenders believe nothing any Athenian politician or representative says because of past failure to implement promised reforms. They are scared of throwing good money after bad into something of a black hole. They have also cornered themselves for lacking the courage since 2010 to explain to their domestic constituencies that this isn’t a free billion euro lunch for anyone – especially not the Greeks.

These tensions have come to the surface in the ugliest way this week amid public squabbles and name calling between EU states and the Hellenic Republic which needs about Euro 15 billion in low interest money to repay maturing bonds end of March – or else it will be in full legal default, on top of the subtle de facto domestic payment stop on anything other than destroyed pension and slashed salaries.

Essentially the Troika is doing a double take and running a deadly cost-benefit analysis as to what would costs the least – pushing Greece in an avoidable default and forcing the country into a return to a hyperinflationary Drachma return – or abiding by it bailout commitments now that all the prior conditions have been fulfilled by Athens. It’s not the Greeks breaking any promises this week.

There are few continently saints in this “expensive” and destabilizing blame game since it is entirely predatory to throw Greece to the wolves of a disorderly default. If they can’t ring fence the first small domino, why should the currency zone have any credibility with larger challenges like Spain and Italy?

Blame The Bad Blood

On Wednesday the elderly President Carolos Papoulias, who incidentally was a freedom fighter against the Third Reich, expressed the exasperation of this nation when he simply and passionately asked just who the hell these lenders think they are that they can treat Greece with colonizing arrogance.

The front line combatant in the fight to keep Greece afloat and in the common currency, portly Finance Minister Evangelos Venizelos, blistered that expelling Greece from the Europe was playing with fire. “Big Benny” angst at being bounced from the exclusive Euro-club may make summer homes and holiday drinks cheaper for other Europeans.

The most likely next Prime Minister, conservative leader Antonis Samaras, had done his unpleasant duty. He signed off on demanded assurances of keeping the faith with the Troika program if his party takes power. Hard to imagine a more electorally damaging signature for someone looking for an electoral victory just two months away. Unless of course the Troika decides to persist a little longer with Greece and force it to postpone such details like democratic elections, as if that were a footnote in a credit card contract.

Former Prime Minister George A. Papandreou also obliged and signed off on the demanded letter. No longer at the helm and ready to transfer socialist party leader, GAP can no longer be scapegoated for rolling over to the omnipotent Troika.

Meanwhile technocrat Prime Minister, Luca Papademos, whose legitimacy and effective power teeters on a splintering two-centrist party coalition, is playing “the fireman” trying to sooth rifts inside and outside the country. Accustomed to an apolitical role as former Vice President of the ECB, he is now in the firing line after volunteering for the mission impossible of keeping Greece inside the Eurozone. No one told him when he took the job that if his caretaker government obeyed then lenders would still pull the plug on a whim.

Bipartisan Bailout Decimation

This second memorandum has smashed centrist politic parties and benefitted the extremes. Now the center right and center left main parties, Pasok and New Democracy, face new internal dividing lines. Even though the legitimacy of any left-right dichotomy has evaporated in Greece amid mismanagement and in ability to pork barrel or vote buy any longer with borrowed cash, the discredited remnants are now redrawing the lines. The defining principles are to submit to the Troika for less immediate poverty and chaos, or to dare to capricious jump into the unknown of bankruptcy risking full implosion.

Some local political players are fermenting plans for new groupings, unafraid to betraying old allegiances amid this new dependence subservient reality. Now there are the existing “responsible” pro memorandum parties whose popularity is sagging, and “emerging ultra-patriotic” anti-Memorandum rebels are looming.

The failed two party carrels don’t muster more than a combined 35% of voter appeal, which may just barely enough to form a governing coalition post new elections. That is also due to the fact that they hermetically sealed to fresh faces and the machines allow few liberties outside the stilted party spin.

How times have change for bitter socialists and conservatives rivals after decade long recriminations and power based on patronage and stateism. Now with smaller dowries they are crawling in bed together and combining forces to do better deals with the devilish Troika.

The Sirens Call of Conspiracies

Memorandum 2.0 has polarized political life and is close to poisoning and the Troika has done wonders to the fortunes of the isolationist or bigoted clans. For the first time a fascist party called Golden Dawn is likely to enter parliament. The hard line communist party KKE, fans of Stalin’s hammer and sickle nightmares, also has a growing appeal. Both of these extremes attract disaffected Greeks because of their anti-European, anti-business and anti-money lenders critiques.

Worse still for local intellectual musing, all manner of conspiracy theories are now accepted urban legend. And becoming more obviously blackmailed and expendable as a people helps the rumor mill spin out of control. From treacherous rejections of Russian and Chinese white knights, incredible plots to deliver the country into the clutches of IMF religious fervor, and blaming global financier cabals and private central banks for launching dawn raids to cripple the country.

There is no longer a need to accept any responsibility ourselves in Hellas for the long standing nepotism, waste, corruption and bureaucratic paralysis that led us to the door of the Troika. Reasoned debate has been drowned out on when and how currency sovereignty should be pursued, or on the geo-strategically subtleties to overcome so we can move quickly on exploiting our considerable reserves of oil, gas, gold and rare earth deposits amid an unstable region.

It is sad that the answers Greeks are fed by extremists are that a country with a close to 10 million strong Diaspora on every continent, would be clean and safe if every foreigner was expelled. The Maoist dream of convincing the dwindling middle class into agrarian fields so we don’t have to import vegetables is gaining traction, even as fishing on pristine islands seems more palatable. No need for an evil banking system to store our savings since we can barter ouzo for medicines, and baklava for books. And how much better for the environment if we can longer afford imported fuel so we all ride bicycles around the country side?

The stirring call against submission to a foreign financial takeover has credence but is also be misused in the most populist local traditions. I doubt if we nationalize everything, appoint everyone to a permanent civil service position, produce nothing but print new Drachmas by the colossus load that Greece will return to some primeval lost paradise.

Bailout Rancor Costing Europe’s Soul

The most abrasive issue that may detonate the moral foundations of the European project, isn’t just the slow demise and dismantling of the Euro common currency, or the explosion of credit derivatives and an 100% default on Greek foreign owned debt wiping out local and international banks, as well as hard working folk’s pension funds.

It is the rise in nationalism and antagonism between the north-south European divide because some transfer union cannot be avoided given the sovereign crisis. Worse still in blaming Greece you can sweep under the EU carpet the fact that the common currency was never well thought through and has made weaker economies less competitive. Unfortunately, the Troika solution is destruction of individual incomes in the guise of reactionary arguments promoting a globalization of the lowest common denominator.

Of course, the hypocrisy of having a venerable central bank based in Frankfurt that can print trillions of dirt cheap loans for commercial banks but can’t lend directly to nation states is also ignored. No gifts, just blame the Greeks for European lacking the stomach to honor promises due to bailout fatigue.

Any sense of a multi-lateral EU with some federal coordinated aspects in the areas of defense, foreign policy and minimum welfare entitlements is being jeopardized by the myopia and political cowardice of triple-A rated countries. These unsurprisingly include Germany which proposed a budget Commissar for Greece, the Netherlands with a Finance Minister on the record as saying his patience has run out with Athens, and the extorting Finns again demanding collateral for their bailout contributions. All these countries and few more are bent on bullying.

A looming sense of a leveraged and hostile takeover of needy countries like Greece reminds many across the European periphery that what wartime boots on the ground could not accomplish in WWII, these days the structures of financial markets, fiat money and the lack of policy inspiration are subjugating proud peoples without a single shot being fired.

The trading of bailout insults and financial blackmail is a disharmonious boom for every Euro-skeptic with a divisive axe to grind against the ideals of a continent of peace and prosperity. And somewhat justified by the latest absurdity and insincerity.

The Greek Cradle Told Can’t Afford Democracy

It is one thing for lenders to a distressed nation to press for reasonable structural reforms, achieving budget surpluses over time, even sensible privatizations and a clamp down on tax evasion. Being held to verification audits on promises is one thing. It is quite another to dictate the form of its government – technocratic or politically representatives. Or whether its constitutional democratic order can be usurped by demands to abandon elections or supplant a Rome like Monti administration.

When some behaving like loan sharks start determine that democracy is prohibited due to debt, then civility or generosity are naked lies. It is an egregiously intervene in the domestic political affairs of a sovereign if indebted country as if holding a democratic ballot was a conditional clause in a credit card contract.

It may be that national elections may be destabilizing to Greece since they will heightening local uncertainty, but they may also offer a safety valve for the expression of legitimate voter discontent. In the end it should be a matter for Greeks to decide, not Germans, Dutch or Finns.

When a proud nation is illegitimately asked to sacrifice the freedoms and liberties millions died for just over the last two centuries, then what the lending Troika and its big members are doing is pouring gasoline on the fire of public disillusionment. And it is a fire and defiance that will spread across this continent.

Was the end game to rip off Greece with compound interest paying loans, steal its resource wealth and natural beauty, and crush its regional influence as the conspiracy theories postulate? Probably not since the Troika isn’t unified or capable of such complex medium term planning.

Is it just a realization of lenders that even blackmail has limits and since sovereignty resides in the whole of the people, and no Troika can enforce a liquidation of a nation’s sovereignty due to a bailout mortgage? Maybe it’s just petulant frustration at disobedient Greeks?

The truth probably will at some point reside in a much reformed and newly manned “center” and not in the malignantly spreading extremes.

By – Dr. Nick Skrekas
Ph. D. (Law), M.B.A., Master of Laws, Dip. Applied Finance, Bachelor of Laws (Honors), Bachelor of Economics.


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