BY MINOAS VITALIS, Europe Editor
It is surprising to read Denis MacShane, the UK’s former Minister of Europe, describing Alexis Tsipras in the Independent as a statesman and as a measured, successful prime minister. Prominent American academic Edward P. Joseph laughably argued that Alexis Tsipras deserves the Nobel Peace Prize in an article for the Foreign Policy magazine. The idea that Tsipras deserves the Nobel Peace Prize is absurd bordering on the ridiculous. “Surely, he cannot be that bad” some of you may say. Granted you cannot expect someone who lives abroad to accurately read the political situation in Greece, but from a former British minister and from an adjunct professor at John Hopkins SAIS, one should expect more. One must only look to Tsipras economic record.
Before coming to power in 2015, Tsipras vowed not to wear a tie until lenders agreed to cut Greece’s debt to sustainable levels. Last Friday, Tsipras finally wore a red tie as he addressed a group of his few remaining political allies to celebrate the conclusion of a new debt deal with European lenders (the now infamous Troika). The agreement, according to Reuters, extends the most pressing loan maturities by 10 years, provides a further 15 billion euros in EU financing and pushes the first repayments back to 2033. While this deal is expected to provide the country with breathing room before a return to international capital markets this summer, it is not the end of the Greek crisis as Greek officials have been saying in the last few days. The truth could not be more different.
Greece’s debt remains stuck at a 180 per cent of GDP, with the extension of loan maturities merely kicking the can down the road. As a result of this deal, the burden of adjustment is shifted onto future generations of Greek taxpayers and workers. This latest agreement has committed the Greek government to continue running a primary budget surplus of 3.5 per cent until 2022, followed by an average of 2.2 per cent until 2060, effectively committing Greece to 42 more years of austerity. To my knowledge, no state has ever managed to run uninterrupted primary budget surpluses for almost half a century. If that was not enough, our good European friends will continue their enhanced surveillance for the foreseeable future.
Countries like Germany and the Netherlands have managed to push back on the only credible alternative: meaningful debt cancellation for only short-term political goals. Eurozone officials will only revisit the issue in 2032, meaning that Greece will remain in crisis for at least the next decade or so.
This shambolic deal may well turn out to be a noose for the Greek people. Yes, Greece is at fault for the situation it currently is in but Eurozone officials are to blame as well. They quickly obscured the fact that the European banking system is dangerously overexposed and instead whipped up a frenzy of anti-Greek sentiment. Dutch Labour politician Dijsselbloem wrongly portrayed the Greek people as spending the money on booze and women. Likely bitter at losing the national elections only a week before, a failure as a finance minister and a failure as a Eurogroup chief.
Research by the European School of Management and Technology in Berlin has shown that 95 per cent of the bailout funds that were supposedly given to Greece actually went straight back to private creditors. While the bailout loans themselves were added to the overall debt with the country paying interest on them over the years that followed. In other words, Greece has never received any handouts from other Europeans. And yes, European solidarity is also a sham.
At the same time, the government reduced the public sector by 26 per cent, cut pensions and welfare spending by 70 per cent and slashed the public health budget in half. Incomes fell by one-third and unemployment reached 28 per cent. To even describe Alexis Tsipras as a successful PM is an insult that flies directly at the face of Greeks.
Even the IMF, recognizes now that the bailouts “served as a holding operation” for European banks to reduce their exposure to Greek debt before the inevitable future restructuring. Not only were creditors not making a loss but they ended up making significant gains as well. The German government, for example, made 2.9 billion euros in profits and saved over 100 billion euros on lower interest payment between 2010 and 2015.
This so-called European solidarity and Tsipras’s handling of the crisis is untenable on moral and economic grounds and the only thing that people like MacShane show is how ignorant they are. But again, what is the truth if it does not fit the narrative that the EU and Tsipras are attempting to construct?