With great fanfare at the end of June, the 19 EU Eurozone finance ministers announced the end to the eight-year-long Greek debt crisis that brought the entire Euro structure into its deepest crisis to date. The exercise is a deep deception. The EU ministers refused to write off any Greek state debt. Instead they did a destructive interest capitalization of the existing debt, similar to what Washington did to Latin America in the 1980’s. What in fact is going on we might justifiably ask.
Under the new scheme, the due date for loan repayments will be extended by 10 years. With loan write-offs off the table, Eurozone ministers agreed to extend maturities by 10 years on major parts of its total debt obligations, on a public debt still equal to 180% of GDP or €340 billion, despite cutbacks and reforms. The EU loaned an added 15 billion euros ($17.5 billion) in new debt to “ease” the exit.
As a part of the agreement, the IMF and EU-friendly Alexis Tsipras government has agreed to even more austerity in the form of more taxes and more pension cuts by yearend. Greece already has the highest official unemployment in the entire EU after 8 years of IMF and EU mandated austerity. Since onset of the crisis, owing to strict Brüning-like austerity demands of Germany and the EU, the economy has contracted by 25%. Unemployment is at 20% and youth unemployment above 40%. Pensions and social welfare programs have been cut by fully 70%.
Greece’s previous €86-billion “rescue” program was agreed in 2015 which took total lending received by Athens to 273.7 billion euros since 2010. Now it is over €300 billion.
Another day poorer and deeper in debt
Under demands by the EU, ECB and IMF, the aptly-named troika, Greece has passed anti-union laws suspending comprehensive collective bargaining, all but banned industrial strike action and enabling mass dismissals. This national wage dumping, decreed from outside, is complemented by the sale of the Greek family silver, an extensive privatization program from electricity supply to infrastructure – airports, harbors, public services such as hospitals, schools and public transport.
The money however is not going to invest in needed infrastructure to make more needed jobs to increase the productive tax base.