The Greek gust

Problems with unity of capitals have been exposed by the Greece tension. Seeds of a European crisis are there in the Greek crisis as other governments adopt similar measures. The Greek crisis is an indicator of the situation in a number of European countries. After Greece, a number of countries are waiting to take their turns, writes Farooque Chowdhury

THE current turmoil in Greece shows that economy and politics does not reside in air-tight chambers despite a few local pundits’ regretful propagation at times: ‘Politics has infiltrated economy.’ Reality stands as opposite witness to the sorrowful propaganda of those pundits, and shows that neither economy is devoid of politics nor politics is devoid of economy. The two tied and twisted together influence each other and all in society. The stormy wind with deaths, fire and riot now blowing over Greece once again is the evidence as were the related events and incidents since the ‘great financial crisis’ stared on speculators’ face that economy shapes, among others, political developments.
   The gust has also jettisoned the wisdom of calling the period the ‘great stabilisation’ as The Economist hoped on December 17, 2009 (actually, The Economist said of the year in which the global economy suffered, not of a period). The protests and riot through the streets of Athens made the stock market tumble in Europe and America sending the euro to a fresh one-year low. Persistent worries have overwhelmed the financial world that Europe’s debt crisis would spread.
   Developments, tragic and dramatic, in the land of the Olympus show ‘things’ are not moving smoothly to the dreamland of ‘great stabilisation’. People in Athens tried to storm parliament building, and set on fire bank building as they were protesting the Greek government announced austerity measures including freezes in public sector salaries, cuts in civil service pensions, the abolition of 13th and 14th month salary payments, a guaranteed bonus, and higher sales taxes. Three deaths followed.
   The New York Times, The Wall Street Journal, and London Times, photographs show naval officers joined protest march along with civil servants, rubbish collectors, pensioners, public sector workers, hospital employees, teachers, building workers, journalists and many others, as they began strike Tuesday. The nationwide general strike on Wednesday turned to violent riot. People fought police. Working people assembled in front of the Greece-mark Acropolis and unfurled banners in front of the Parthenon in Athens inscribed with a call: ‘Peoples of Europe Rise Up.’
   ‘Popular anger will rattle imperialist organisations,’ said a Greek MP. Demonstrators in front of parliament waved banners marked ‘Tax the rich’. They shouted: ‘Never! We will never pay for the EU and the IMF!’ ‘We’ve lost everything overnight,’ said a 56-year old teacher. ‘I’m begging them not to take my earnings. I’ve worked 30 years for this money.’ Another teacher carried a crucifix with the image of an owl on it to symbolise the death of education in Greece. Ministries, tax offices, schools, hospitals and public services were shut down for the rally. Analysts have predicted that more strikes would be held later in the month, and it is the ‘beginning of a long hot summer of social unrest.’
   Multi-trillion-dollar public cash and guarantees, the biggest, broadest and fastest government response in history, spread over teetering banks appeared saviour of the world financial system. Latvia, Ireland and a few more went to the brink of collapse. Despite a seeming recovering appearance the inner core is fragile and full with seeds of volatility: ‘sovereign-debt crises (a Greek default?) to reckless protectionism (American tariffs against China’s ‘unfair’ currency, say). More likely is a plethora of lesser problems,’ … including ‘short-sighted fiscal decisions (a financial-transactions tax) to strikes over pay cuts,’ as The Economist pointed out (‘The Great Stabilisation’, December 17, 2009). These appear like underbelly. The main trouble spot – stagnation, recession, and financialisation – are there. Greece also had problems with trade.
   Greece, now in the dock of the present world system, is accused of a corrupt and bloated public sector, a budget deficit of 13 per cent and public debt of 125 per cent of GDP, an economy void of competitiveness, high rate of underemployment, unreliable or near to manipulated statistics, education in need of reform. But the problem is not only limited within the realm of public finances. It goes far beyond. Standard & Poor’s downgrading Greek debt to junk status, or below investment grade shook markets a few days back.
   The German cabinet approved up to 22.4 billion euros in loans for Greece over three years. The stake behind the loan was bigger than Greece. It is not only for saving Greece. It is also for saving euro. It tells about the state of German capital. Headline of an article (run by MRzine) by Heiner Flassbeck, director of the Division on Globalisation and Development Strategies at UNCTAD, and former deputy finance minister of Germany at the beginning of the European Monetary Union was: ‘The Greek Tragedy and the European Crisis, Made in Germany’. German presence or absence carries significance. Chancellor Angela Merkel said: ‘It is about underpinning the stability of the euro.’ The International Monetary Fund and other EU countries approved a 110 billion-euro rescue plan for Greece, now at the centre of European politics, which made the financial markets continue its speculation on the rescue package.
   Greece has shown the inner-weakness of the 27-state group – European Union, and a sceptic cloud has been spread on the success of the euro. Timothy Heritage wrote in The New York Times (May 3): ‘The unity of the European Union is being sorely tested by a debt crisis in Greece and by the economic fragility of other countries. … Gloomy predictions suggest that the Union is in perpetual decline…’ This is in essence the failure of the capitals concerned to galvanise political, economic and monetary union, and this in turn shows: competitions between these capitals champion. Germany, now Europe’s most powerful state and the continent’s biggest economy, has increasingly been criticised.
   The ‘great financial crisis’ has already exposed competitions between selfish capitals. Even, capitals within border are not free from competition sometimes. Nowadays there are talks on ‘German euro-nationalism’, ‘a new kind of German economic unilateralism’, ‘a German Europe’. These inner-voices tell inner-yearnings of sections of capitals.
   The issues being raised – Germany has to be more European or Europe has to live within means – are not the real issues. The issues are capitals’ choice and preference, capitals’ rivalry, one competition feeding the other. It is being told of the Paris-Berlin disagreement that it is a clash of culture between ‘a federal Germany with its Prussian attachment to rules and a republican France with its tradition of state intervention and a more Mediterranean attitude toward public debt.’ But the fact is rivalry between two econo-political elites representing interests of two competing capitals. It is old. In 2004, the tug over a takeover by Siemens of Alstom, the French train maker was witnessed. The differences over economic governance, central bank independence and budgetary discipline, the so-called French view of ‘budgetary, financial and currency stability is a means to an end’, and the Germans seeing ‘it is an end in itself’ are reflections of competing interests.
   Problems with unity of capitals have been exposed by the Greece tension. Seeds of a European crisis are there in the Greek crisis as other governments adopt similar measures. The Greek crisis is an indicator of the situation in a number of European countries.  After Greece, a number of countries are waiting to take their turns.
   A new Greek summer now going to dominate Europe has implications for countries dependent on export to the continent.
   Farooque Chowdhury contributes on socio-economic issues. The Age of Crisis is his latest book.

This editorial taken form The New Age, http://www.newagebd.com/2010/may/07/edit.html