Tsipras Has Just Destroyed Greece
This post’s headline comes from an assessment by the Australian website MacroBusiness of the proposal that Greece submitted to its creditors in the wee hours of the morning in Europe. Greece has capitulated, offering to implement more stringent austerity terms than those rejected by voters last weekend by a resounding margin in the Greek referendum. We are posting the full text of the Greek proposal at the end of this post.
As MacroBusiness sums up:
This is basically the same proposal as that was just rejected by the Greek people in the referendum…This makes absolutely no sense. The Tsipras Government has just:
If this deal gets through the Greek Parliament, and it could given everyone other than the ruling party and Golden Dawn are in favour of austerity, then Greece has just destroyed itself to no purpose.
- renegotiated itself into the same position it was in two months ago;
- set massively false expectations with the Greek public;
- destroyed the Greek banking system, and
- destroyed what was left of Greek political capital in EU.
Accepting the same proposal they had rejected previously after a referendum had the Grek people defeating that proposal 61%-39%?
Sounds like the vaunted UFT negotiating team has flown to Greece to help out with the negotiations.
More Yves Smith:
The Greek government faces a legitimacy crisis. Given the overwhelming Oxi vote, how can Tsipras sign up for a deal that is even worse? There is a real possibility that young people, particularly in Athens, which has the highest population density of any city outside of Asia, will take to the streets.
And even if there is no outburst of protests, how can any government that signs a creditor-acceptable memo be seen as anything other that a Vichy state? Politico points out that Tsipras is likely to fracture Syriza with the proposal and will need to enlist other parties who supported a “Yes” vote to get the parliamentary approval he needs. That should hardly be a surprise to Naked Capitalism readers; we pointed out the disconcerting move the morning after the referendum, in which Tsipras met with leaders of all the parties outside the government save Golden Dawn and asked for their support, and all agreed save the communist party KKE. Did FDR seek the support of the defeated Republicans in 1933? I struggle to think of a similar move (beyond a mere polite gesture) after a landslide win.
Syriza has thus managed to deliver to the neoliberals a victory more complete than they could ever have engineered on their own. This has been the basis of our criticism, that Syriza by engaging in an open war against an opponent it could never hope to vanquish, was doing not just itself but also the Greek people and the left, lasting damage.
The Greek negotiations are now being steered in large measure by the French, who are conceivably next in line if there is a Grexit, given Marine Le Pen’s rising star. If Greece and the lenders manage to reach an agreement, it’s hard to think that Greek citizens will see the ruling coalition as anything other that a creditor puppet state. If the two sides can’t agree and Greece falls into a Grexit, the economic devastation will be so large as again to discourage any state save Italy and France, from pursuing a Eurozone exit, and even in those two countries, it is likely to give Euroskeptics considerable pause.
The net effect is to give Germany, its retrograde ordoliberals, and its neoliberal allies freer rein to continue their destructive austerity policies. Despite how counterproductive austerity clearly is, Greece will be used as tangible proof that the cost of Euroexit is vastly higher. And that means that Germany will be able keep pursuing policies destined to destroy the Eurozone going well beyond their sell-by date: running large trade surpluses, refusing to finance its trade partners, and bucking all measures to move to meaningful Federal fiscal spending that might buffer national differences in performance and stealthily recycle some of the German trade surpluses. The end result will be more oppression, more suffering, and a more catastrophic eventual Eurozone breakup.
Syriza and Tsipras have given the neoliberals a victory more complete than they ever could have engineered on their own, the next effect will be more oppression, more suffering, and, in the end, catastrophe.
Sounds quite like Randi Weingarten, Mike Mulgrew, Karen Magee and the rest of the Vichyites in the AFT/UFT/NYSUT.
No wonder the neoliberals keep winning in.