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Wednesday, May 23rd 2012

The Final Bullet for the Social Functions of the Greek State

Author: Michael Youlton of Irish Left Review

Published: December 7th, 2010

Section: Articles, Economy, Politics

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The new proposed budget for 2011 is the final bullet or the coup de grace for the already weakened social Greek State. It projects cut backs of €2.2 billion in health and education, € 700 million of which will hit hospitals, €1.4 billion welfare expenditure and €107 million third level institutions. Hard pressed hospital units will have to close, many tests and even operations cancelled and third level colleges will stop functioning.

The IMF, ECB and related EU troika will examine monthly the progression of State income and propose new measures in cases of gaps in projections. The backbone and basis of the budget is the projected decrease of the rate of recession from 5 to 3%, a reduction of the rate of inflation and the increase of the State income from €51.4 billion in 2010 to €55 billion in 2011. It is not clear how the situation on the ground will develop, as VAT on items of popular consumption is increased by 2%, the price of heating oil and diesel are brought up to the level of ordinary petrol, as wages in the public sector are reduced and jobs lost and the incomes of those on welfare slashed.


Any objective assessment of this budget must conclude that the projected target will not be reached and new drastic deflationary measures will be gradually imposed on the people in order for the fourth tranche of the bail out to be paid by next March. Paul Thompson who is in charge of the troika delegation in Greece has already been quoted as saying that the governmental projections are not realistic! So where are the country and its people being led to?

The only positive development in this respect is that the time for the payment back of the €110 billion bail out/loan has been increased by 12 months……To remind ourselves that George Papandreou, the Greek PM, was telling us last spring that the country would be able to reduce the debt by 8% in two years…..how exactly that would have been possible in a context of projected income deflation of 13% was never clarified and has not been repeated since.

It appears evident to me that this situation is going to create an environment of an inability to receive any further payments from the troika, something that would be a catastrophe for the middle and working classes - leading inexorably to a default!

***

Let us now look in more detail the background to this process - something that we in Ireland, are also experiencing.

Germany, in its attempt to solidify its control of Europe, is trying gradually to squeeze the economically weaker countries of the European periphery (Greece, Ireland, Portugal and possibly Spain). Using the process of a controlled and imposed default, it is attempting to restructure the European project, building step-by-step the old project of a two-tier Europe with the weaker tier fully controlled by Germany. In order to avoid possible defaults impacting on the major banks, including a significant number of German institutions, it is increasing the time-scale of the debt and exerting pressure for higher rates of payment - certainly higher than the usual IMF rates.

There is no question that this process would involve a significant loss of economic and political sovereignty - public assets will slowly be sold and pass into the hands of German companies, such as Siemens, Deutche Telecom etc, and political projects - such as the easing of tension between Greece and Turkey, sharing oil and gas from the Aegean sub-soil and the full acceptance by Cyprus of NATO prerogatives would have been achieved. It must be obvious that such a process finds the absolute majority of Greek people in full opposition. We will simply not accept a whole people to be led to poverty and economic degradation, having been successfully guilt-tripped with suggestions that we have been living beyond our means and we were all responsible for the mess.

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