Greece: ‘third world’ aid and debt

One of the cruel ironies of the last minute deal between the Eurogroup and the Greek government for a four month extension to the existing ‘aid’ programme monitored by the Troika is that in any sane meaning it is not aid at all.

In return for staying in the Troika programme for another four months to end-June and keeping to the still to be agreed conditions on fiscal targets, government spending and privatisations, the Eurogroup, the ECB and the IMF will disburse the outstanding tranches of loans under the existing programme. The FT might call this “aid” but it is nothing of the kind. It is not even bailout money for Greek banks. The €11bn funding for that has been returned by the Greeks to the Troika who are keeping it for ‘security’.

Between the beginning of March and the end of June, the financing institution of the Eurogroup, the EFSF, will release €1.8bn, while the ECB will return profits that it has made on maturing Greek government bonds that it purchased in 2014 worth €1.9bn and the IMF will disburse another €3.6bn in funds under its programme of ‘aid’ that lasts until April 2016. That’s €7.2bn.

But most of that will be immediately recycled back to the Troika as repayments of debt and interest for previous loans and government bonds that are maturing. In the upcoming four months, the IMF must be paid back €5.3bn while the Greeks must also roll over short-term T-bills bought by the Greek banks worth about €11bn. So the Troika ‘aid’ will just disappear and the Greek people will see none of it to help with government spending.

Greek debt redemptions

And what happens after the end of June? Any new programme with the Troika (if that is what Syriza decides to do) will involve yet more repayments, including €6.7bn to be paid back to the ECB on maturing government bonds in July alone, and with more to the IMF. It is never ending.

This is just like ‘Third World’ aid that used to be distributed by the World Bank and other international agencies back in the 1980s and 1990s. Most of this ‘aid’ ended up in corrupt dictators’ pockets or in repaying previous debt. The people never saw it. And the debt levels stayed where they were, as they do for Greece now.

Back then, eventually the international agencies agreed what was called a Brady debt swap that wrote off a portion of the debt that could never be repaid. No such plan is available to Greece, although Syriza asked for it in their negotiations with the Eurogroup.

The debt to the Troika remains fully on the books and, as a share of Greek GDP, is set to rise. Sure, the cost of servicing this debt is relatively low with repayments on the EU part of the loans put off until the next decade and interest on these loans at very low rates. But the debt liability is there forever – like the proverbial albatross on the back.

39 thoughts on “Greece: ‘third world’ aid and debt

  1. The albatross wasn’t on his back, it was on his chest where “the cross” would be hung (“instead of the cross the albatross about my neck was hung.”) And it wasn’t there forever–it fell off at the simple act of blessing the humble sea creatures [the peoples of Europe] when they finally came to the ship.

  2. Good post. The only chance is to default. Some major revolutionary spirit would’t hurt either. White collar crime with no repercussions is the biggest problem. Despite major criminal activity. We haven’t seen the end of this yet!

      1. No working class can DO anything at all until it becomes a class für sich (for itself), And that is not possible within national boundaries. What is possible within a national boundary is a people’s (populist) movement. When such a movement is forming it is always pulled toward a nationalist dérive (deviation), whose most powerful support is leftist “evolutionary” abstentionism.

      2. Wonderful…another theorist whose “Marxism” consists of “proving” that workers can’t do anything until ALL workers do the same thing, and therefore rationalizes support for “populism.” Just what the doctor ordered, no?

      3. Workers can do many things. They do them as individual agents or groups of individual agents. But you said not “workers” but “working class”–and that is a singular, not plural concept. Workers, as individuals and groups of individuals, constitute a class *an sich*. But unless that class attains *fürsichsein” as a cohesive political agent, it can DO nothing AS A CLASS. If the workers conceive of themselves as a “Greek” or “American” or “Great Russian” class, they have a dual–class and national–consciousness that restricts them to *ansichsein*. “The working class has no fatherland”–this is no propagandistic (and easily debunked” slogan. This is a scientific fact– the reality of capitalism as a world system, a system visibly destroying itself but which cannot be overthrown (in any positive sense) except by the working class seizing power on a world scale.

  3. What’s the hurry? The Germans can force Greece into default at will but at the cost of a humungous TARGET payment. Vartoufakis called their bluff and got the four months needed to prepare politically and economically for a real showdown.

    1. He called their bluff? He agreed to the very terms he said he would not agree to, had control of certain emergency liquidity funds removed from the control the national bank of Greece and restored to the ECB, and all he got was an agreement to review proposals over the next four months. Yeah he called their bluff all right, and they had the cards and the money. He folded, because he had nothing.

      1. Well, on Monday they make their proposal. It should concentrate on eliminating corruption and taxing the oligarchy/kleptocracy whose back taxes alone would put Greek finances into stability, Their assets are beyond the reach of the Greek government, but within easy reach of the European financial authorities. Since what is going on is a developing pan-European conflict between peoples and crony-capitalist oligarchies, the response will not be an easily predictable one. To demand a pound of flesh from Greek workers while refusing to pursue the oligarch/kleptocrat wealth would seem to be the most inept performance of which Merkel and the Eurocrats might be capable. We’ll see.

      2. Why do we pretend that Germany wants to support any attack on corruption ? Merkel leads a conservative capitalist government in bed with a bunch of oligarchs. Corruption to them is a civil servant who takes a long lunch.

    2. What the Germans WANT is one thing. What they DON’T WANT is a collapse of the Eurozone that would leave them with that humungous TARGET obligation in a situation of economic chaos. tomorrow we’ll see how well Syriza manages to put them to that choice!

    3. Syriza had ~2 years to prepare a plan for government. If they didn’t have a plan coming in, they won’t have a plan 4 months from now. On the contrary, it’s the Troika and the Right that has bought itself time, while time is of the essence for Syriza, Greek workers and the European left more generally.

      The time is NOW to head off the growth of Far Right influence in Europe with – how did Maggie Thatcher put it? – a short, sharp, shock. We have been waiting since the 1970’s. 4 more months means nothing.

      1. you left out most of your quote “…a short sharp shock from a cheap and chippy chopper on a big black block.” cheap choppers are avaIlable on credit from the PRC, but they don’t make ’em chippy. And while little black bloc[khead]s seem to show up at every demonstration, they seem extraordinarily unsuited for the purpose to which you would put them.

    1. Not people. The IMF, the ECB, other eurozone institutional funding mechanisms. Who bailed out most of the private creditors four years ago. Pure piracy, of course.

    2. What does that matter, what there names are?
      Here are the main players– 248 billion to the Eurogroup, of which the German govt owns 60 billion. Angela “Ask me if I care” Merkel’s the name 24 or 25 billion to the IMF– Christine “Black Widow Lagarde.” X amount to the ECB– guy you’re looking for is called Snake Draghi.

      I say we all unfriend them on Facebook and don’t follow their tweets. That will show them.

  4. Greece has paid back anything between €1 to €1.5 trillion in debt repayments over a 30 year period. All the alleged debt has been paid back more than once.

    According to the gov’t newspaper Greek banks have received €233 billion in bailout money. To service all these private debts Greeks have had a massive 50% cut on average in wages pensions and in costs for schools and hospitals. The total debts (‘public’ and private) now stand at €700 billion.

    On average 2 people a day commit suicide. This is an economic war to the end. Until it develops into a civil war. The banksters now have ‘left’ debt collectors.

  5. fosforos…
    Last time I read the Russian Revolution still occurred in Russia not Papua New Guinea but I could be mistaken. All gains by working classes occurred within national boundaries and to argue we have to wait till London Rome and Berlin revolts simultaneously is a recipe for inaction.

    1. I don’t know the census figures, but I suspect that today the proletarian component of New Guinea’s population (under Indonesian plus de facto Australian rule) is larger than the proletarian share of the Russian-Empire’s 1917 population/

  6. Obviously can’t vouch for their authenticity, but these primary materials may interest readers (all except the first are in one scribd document):
    1) the Master Financial Assistance Facility Agreement, as amended on 12Dec12 (it’s between the Bank of Greece &, on the other side, three parties: the European Financial Stability Facility, the Greek Republic, & the Hellenic Financial Stability Fund);
    2) W11Feb15 Varoufakis’ address to Eurogroup mtg., Brussels – pp.1-8;
    3) W11Feb15 “non-paper” from Greek gvt. to Eurogroup, Brussels – pp.9-13
    4) Th12Feb15 Varoufakis’ address to Eurogroup mtg. – pp.14-17
    5) M16Feb15 “non-paper” from Greek gvt. to Eurogroup, Brussels – pp.19-25 (p.18 is blank)
    6) M16Feb15 Varoufakis’ press conference statement “immediately after” Eurogroup mtg. – pp.25(sic)-27
    7) undated text headed “Moscovici” – p.27
    8) undated “[Draft] Eurogroup statement on Greece” [original interjection] – pp.28-9 (p.30 is blank)

    1. One oddity in this document cache is the above #4: the press has not reported that there was a Eurogroup meeting on the Thursday – only the Wednesday & the next one being Monday last week. Nevertheless p.26 indicates that it might have taken place.

      Below are choice quotes from the purported Greek documents presented to the Eurogroup, starting with the matter of privatising Piraeus docks:

      “On privatization and the development of publicly owned assets, the government is utterly undogmatic; we are ready and willing to evaluate each and every one [sic] project on its merits alone. Media reports that the Pireus [sic] ports privatisation [sic] was reversed could not be further from the truth. Indeed, quite the opposite holds as foreign direct investment will be encouraged as long as the state secures a stream of long term revenues and a say in labour relations and environmental issues” (Varoufakis, pp.3-4)

      Public-private ‘partnership’ (think vampire & victim) is what Greece needs: “We want to revive infrastructure projects with public and private sector investors” (3)

      This all makes sense (?) as “We are committed to sound public finances.” (2)

      Therefore (?) “Continued primary surpluses will remain our mantra.” (5)

      Indeed, we propose a maximum such surplus of 1.5% of GDP when “the present disturbed economic situation has stabilized and_for [sic] as long as necessary to achieve the underlying goals.” (5). You really can trust us, we are not flight-by-night wideboyz – despite my couture.

      And all this is plausible, despite certain appearances that we ourselves have cultivated, not least to get elected, because “we are not tied to any interest groups.” (2) – such as workers & the poorer self-employed. [Leo Panitch & Peter Bratsis reported 8Feb that Greece is the world leader in self-employment: 30% of the workforce, 37-38% if you include family-only businesses – which proves a significant problem for tax collectors. At the time of speaking, LP also noted the lack of discussion within SYRIZA: in the previous six weeks neither the Central Cttee. nor even the Executive Cttee. had met – presumably this is still the case:]

      Let’s be frank: the Troika is our friend, not our fiend, so it makes sense for us to take the initiative, requesting that “IMF technical staff should work closely with the Greek team to assist in developing a sustainable debt program” (the first “non-paper”, p.11). After all, from our technocratic vista, this is all about technique, not politics.

      We don’t like ‘Troika’ so ‘Institutions’ is much better. Likewise we can ditch that toxic word ‘austerity’ & use a much nicer one, from the Land of the Free, Home of the Brave, we can talk of “the ‘new deal’ to be sealed between Greece and its partners” (11)

      Not satisfied with three Institutions ruling over us we have even taken the opportunity – unlike the awkward squad known as New Democracy – to add a new one: “The Greek authorities have asked the Secretary General of the OECD, who has accepted, for technical assistance in devising, implementing and monitoring this new reform agenda” (12)

      Oh yes, there’s also a lil bit of bookkeeping that needs tidying up: “we are eager to find ways of writing off the accumulated penalties on taxpayers in arrears that have mounted up to €70 billion.” (Varoufakis, p.15) [So let me get this right . . . €70bn. Michael said 9Feb that the Greek state owes €333bn (€273bn to the IMF, ECB and EU states, plus the central bank owing €60bn of Target 2 net liabilities). Assume the ratio of uncollected tax to penalties is a generous 10:1 (it’s more likely to be far, far more). That makes €770bn in total. This means that far more than twice the sovereign debt lies unclaimed within Greece simply because of a highly inefficient capitalist state. That, amazingly, is the scale of this detritus, a capitalist society – & culture – that has ground on for the best part of 200 years. And this is what, in substance, is defended within the horizon of possibilities of the SYRIZA leaders & their followers, a capitalist horizon.] [Although this is the ‘speech’ that may not have been delivered, it is reasonable to accept the €70bn datum.]

      And we remain, as ever, committed: “Privatizations will not be stopped” (second “non-paper”, p.19). Our word is our bond.

      Unless, that is, you want it to change. After a few days of pressure the Greek position shifted from the general ‘primary surpluses as a mantra’ to “The Greek authorities are committed to continued primary surpluses over the next decade” (20). As the wrecking crew said, atop the rubble, dripping with sweat, we haven’t started yet.

      What is totally missing from the framework agreed last Friday are these concepts proposed by Varoufakis: humanitarian crisis; model of Greek growth; a Greek development bank. Instead the primary focus remains: repay the debt; the Troika is much less interested in growing the Greek economy.

      Last, a better piece than usual from Tariq Ali yesterday on Facebook:

    2. You call underpaid or unemployed workers “interest groups?” Your language betrays your “leftism’s” incomprehensible conceptual confusion with the predominant anti-people meme of capitalist propaganda. An “interest group” is not a group of birdwatchers or environmental advocates, as pretended by media propagandists.. It is a gang of oligopolists devoted to using the state to advance its FINANCIAL interests. Varoufakis knows the English language, and the economics of the market, though his maternal tongue is Greek and he has read a lot of Marx. But you talk out of the playpen where “Vampire” counts as a meaningful analytic term!

  7. The greek oligarchs have all their money in Swiss bank accounts. SYRIZA won’t be able to touch it. Germany also doesn’t care about corruption when it comes to the wealthy, let’s stop talking as if they did. And Podemos will never achieve power in Spain because there is no 50 seat boost and the old parties will form a coalition. I don’t think YV has a strategy besides hoping for American pressure as he is close to US liberal economists. It’s probably best for Greece to leave the Euro if they can figure a way to keep the military out of politics. Maybe EU but no Euro.

    1. The Syriza proposals have now been accepted by the Eurozone institutions, just as Varoufakis had predicted with “absolute certainty.” And they capitulate on absolutely nothing–Greece is in no position to undertake instant reversal of established privatization nor to force bankrupt employers to pay an increased minimum wage with money they don’t have. But the accepted program calls for enforcing some 8 billion euros of taxes on the oligarchic kleptocrats, implementation of the essential “humanitarian” measures of the Thessaloniki program, and no requirement for a primary surplus above the 1.5 percent specified in Syriza’s election program. The Greeks, as I have been insisting, have won–have won the essential thing, TIME, Now having (as Tsipras said) won “the battle, not the war” with the “hardest fight” ahead is the time to formulate and implement the winning strategy for that war–a war whose battlefield is NOT Greece but all Europe, starting in the South (with Spain) but culminating in Brussels and Strasburg.

      1. First off, Syriza has reversed itself completely on the primary issue it raised in its campaign– which is an end to the conditions of the 2012 bailout.

        What was proposed today, Tuesday, means nothing in that it has to be agreed to by the European Union–

        That’s 1.

        2 is that no matter what the EU accepts or agrees, Syriza has agreed that the Troika will have the right to review the governments budgets and actual appropriations and revenues. In short, Syriza has agreed to continued supervision of its finances by the Troika.

        3. 2 should could as no surprise to anybody, given that the Ministry of Finance hired Lazard to advice it on matters of fiscal policy and debt “mitigation.” Lazard was kind enough to give Felix Rohatyn to the state of New York to oversee the deconstruction of NYC finances after the city’s “Greece experience.”

        4. The document itself is long on promises and short on substance. Now I don’t expect someone as ill-versed in the ways Marxism, and someone as ignorant of how capitalism really works as Varoufak is, to actually understand the importance of quantities, numbers, actual and projected revenues to any list of reform measures that are designed to mitigate debt– but that’s just the point: this document is not about mitigating the debt.

        “Reform VAT, modify income taxes, broaden the definition of tax fraud, create a culture of compliance…”

        Expected comment from Herr Schäuble:”fucking please spare me the bullshit. What does that mean to your budget? And how much will it cost you to make these reforms?”

        “Take steps to improve public finance management, modernize payment procedures, device and implement a strategy on tax refunds and pension claims…”

        Expected comment from Wolfgang: “Big fucking deal. What does any of that mean regarding reducing the debt burden? Nothing. If such things had any impact on expenditures, there would never have been the impulse to accumulate debt in the first place.”

        “Enhance the openness, transparency etc etc etc….”

        Expected comment from Herr Rollerblade: “Apparently GameBoy Yanis still thinks he’s at a university teaching undergrads what to write in the bluebooks for the mid-terms. Somebody tell this clown that buzzwords don’t count. We’re talking cash flows here.”

        Page 2 of the statement. “Review and control spending in every area of government, drastically improve the efficiency of government, reallocate, restructure, redeploy.”

        Expected comment: “Fuck off Bozo. Quit pissing down my leg and telling me that it’s raining outside.”

        “Control health expenditure and improve the provision and quality of medical services while granting universal access.”

        Expected comment from WS: “Huh? Control health expenditure by granting universal access? Really? Show me 1) the numbers 2) the plan that will do both.”

        “Continue… Consoldiate… phase out… steamline…strengthen…” pension benefits.

        Expected comment from Wolfie: “Sure thing. Corporations bullshitting people for years using exactly those terms specifically in order to gut pension plans– look at any of the “pension improvement programs” imposed in the USA. Just because Yanis believes that bullshit, he thinks we believe? Here’s the difference: We don’t believe our own bullshit. We leave that to the social-democrats.”

        “fight against corruption, target smuggling, monitor prices of imported goods, and tackle money laundering… through the newly established minister of state.”

        Expected comment from Wolfie: “Ya. Richtig. Oh that’s going to put a lump in my pocket and my shorts as the rest of the capitalist world has been so successful in generating budget surpluses through just such activities. Sure thing. However, Ich denke Yani is beginning to see the light– More police and more police power. I’m down with that.”

        Wolfgang underlined the be;pw paragraph and added “Magisches Denken. Ihre ganze Programm hängt von magischen Denkens”:

        “Reform the public sector wage grid with a view to decompressing the wage distribution through productivity gains and appropriate recruitment policies without reducing the current wage floors but safeguarding that the public sector’s wage bill will not increase.”

        Magical thinking indeed. Who knew capitalism could do all that?

        Page 4: Banking and non-performing loans;
        Comment from Wolfie: “Wonderful. refers only to the private banking sector, and real estate. Sovereign debt is embraced as sacrosanct.”

        Privatisation and public asset management.

        Comment from Wofie: “Does this schmekel think we don’t know what a failure the privatization program has been? How it doesn’t, will not, cannot even come close to previous revenue projections. He can do anything he wants with that dead fish. It still stinks.”

        und so weiter. The important thing here is that Syriza accepts acknowledges and commits to servicing the complete burden of the sovereign debt without asking for any reduction. Now if this document is supposed to serve as a basis for future reductions of that burden, then it is imperative that actual numbers. with mechanisms for measuring the numbers, and with “trigger” provisions, should goals not be met, be established.

        This document in short isn’t worth the paper it isn’t written on.

  8. As for accepting the measures, here’s what acceptance means:
    From the BBC:

    The Eurogroup said in a statement: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions.”

    The European Commission and the European Central Bank (ECB) both stated that the Greek proposals were a “valid starting point”.

    The agreement had “averted an immediate crisis,” said European Commissioner for Economic Affairs Pierre Moscovici.

    “It does not mean we approve those reforms, it means the approach is serious enough for further discussion,” he added.

    The Syriza government has produced an “air sandwich”– no meat, no bread, and not intended for the Troika’s consumption, but for the public’s– so that those who think “Greece is in no position to…” repudiate the debt, seize factories where workers haven’t been paid” can argue that Syriza has done its best. Indeed, Syriza has done its best. And that’s why Syriza has to be opposed.

  9. You really have contempt for the Greek people, don’t you? They gave Syriza its relative majority on its commitment to stay in the Eurozone, not to destroy the Greek banking system, not to default on the debt, and to start reversing the austerity measures. They’ve kept that commitment and won the essential, TIME. What a moment to solidarize with the Stalinists of the KKE and their Golden Dawn buddies (echoing the Stalin-Hitler alliance) under that inspiring slogan “Syriza has to be opposed.”

    1. Syriza said no MoU and no Troika. They also promised €751 the day after. Bullshit artists are two a penny in politics. Tsipras & Co better watch themselves that the accumulated hatred doesn’t land on their heads. Left Debt enforcers aren’t going to succeed where the hard right failed…

      1. You wanted and want the Greeks to leave the euro, close all their banks, put drachmae in the empty vaults, and pay for imports with them? Last month the Greeks had that choice presented to them by a weird collection of Stalinists, Nazis, and self-styled “Trotskyist” sectarians. They chose, overwhelmingly, to fight for survival as a sovereign democratic polis. That is the war which as Tsipras has said, is yet to be won though the battle for immediate survival has been.

      2. The situation demands Grexit, not my personal desires. There will be no national economy with the EZ of any recovery. Any honest left-wing leadership would admit that. The clowns now in Charge are dishonest. This will become common knowledge soon.

      3. Oh fuck off with your phony “whitey got not business criticizing a black thang.”

        Obama got elected twice. What are we supposed to say– “you have no respect for black people if you criticize the first black President”?

        Quit playing the “national pride” card to deflect from your support for maintaining the debt/bailout programs that have caused living standards to crumble.

        But love when you play that Stalin-Hitler card too, because that’s a real good one, with Tsirpas demanding war reparations from Germany.

        Syriza campaigned against extension of the MFFA 2012 program. The finance minister himself said there would be extension of the program.

        You, like him, are just another pompous clown pretending that there is no alternative to capitulation.

        “Sovereign democratic polis”??? Cue the Battle of Chile, please. That’s where your sovereign democratic polis gets not you– you’ll probably be long gone by the time it comes down– but where it gets others– disappeared, tortured, tossed out of helicopters, hung up on a bayonet point.

        Sovereign democratic polis??? No such animal. Conspicuous in its absence. The finances, budget, programs of Greece are subject to review and approval by the EU, by the creditors.

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