Before Euro-politics wandered into Alice in Wonderland territory, we asked if anybody else out there was quietly cheering for Greece as it took on the bullying bean counters of the IMF and the European Central Bank. We’re still asking because though these financiers have already humbled Greece they appear to be looking for more.
Here’s the Guardian underlining that possibility:
‘We’ve now got hold of the new IMF report into Greece’s debt sustainability. And a quick perusal shows that the Fund has comprehensively obliterated the notion that this third Greek bailout will work, as it stands…’ Eh?
In the past month, media here told us in dramatic terms about the likely, then inevitable Greek default on loans from those bodies. It sounded awfully close to financial apocalypse. Only late in the saga did we hear about the social impacts of money-lenders on Greece: of banks being closed, withdrawals limited, social services pared back, pensions threatened or cut, increased homelessness and a higher suicide rate.
Greece we were told was the only advanced country to default on its loans to the IMF. Yet Russia defaulted in 1999, as did nuclear nation Pakistan. The Daily Telegraph listed other defaulters including ten other nations in Latin America and Africa.
Greece’s governments were hardly good managers of the economy. Allegations of corruption were commonplace as were accusations of ‘bloated’ public sector. One Greek administration even used American banks in a complicated deal to obscure public borrowings. For some, this simply indicated slack oversight from the EU and the European Central Bank.
When they finally acted it was with the enema of austerity. GDP dropped 25% from 2010 to the present. Unemployment soared after averaging 14.94 percent from 1998 until 2015 according to the country’s Statistical Service. It is now 25% . That’s a trifle compared to youth unemployment which stands at 49%.
The cruellest cuts were however reserved for the elderly who were left with reduced pensions or ones under threat. Greece spends the most of EU countries with 17.5% of GDP. But not far behind are two of its major creditors, Italy and France, (each spend 15%).
What the crisis highlights is the way that leading financial institutions like the IMF act. It’s not the biggest bank involved here but the solutions advanced for Greece are almost identical to those which have been used by the IMF in countries across the world.
Under the term ‘structural adjustment’ – meaning privatisation, liberalisation, and reduction of public spending, whole countries have been transformed – and not for a public good. But the mandate of the IMF and the World Bank at their inception in Bretton Woods in 1944 had little to do with their current roles.
Naomi Klein, author of the classic, Shock Doctrine, the Rise of Disaster Capitalism wrote that both organisations began with quite different remits. ‘The World Bank would make long term investments to pull countries out of poverty; the IMF would act as a kind of global shock absorber, promoting policies that reduced market speculation and market volatility… the two organisations would co-ordinate their responses…. ‘
They were created, she wrote, with the goal of never repeating the mistakes that allowed Fascism to rise in the heart of Europe. According to the Centre for Research on Globalization, Greece has recently seen the growth of one of the largest neo-Nazi movements in Europe – in a country with a traditionally weak far right.
From the start both organisations allocated power not on the basis of one country one vote, but on the size of each country’s economy Klein wrote. ‘…an arrangement that gives the United States an effective veto over all major decisions, with Europe and Japan controlling most of the rest’. Both institutions maintained a policy of making recommendations when they handed out loans, but all that all that changed in the early 1980s as Klein noted:
‘…emboldened by the desperation of developing countries, those recommendations morphed into radical free market demands’. And so country after country was structurally adjusted.
To read the Shock Doctrine is to see societies (including New Zealand) reeling in the wake of rapid, unmandated changes in which politicians became servants of an ideology which served the rich, while marginalising the public good. Increasingly though, that policy is being met with resistance.
Tap into wikipedia.org/wiki/anti-globalisation movements and the pages spill out, listing opponents from diverse groups to economics Nobel laureates and Booker Prize winners. What they share, is a belief that large, multi-national corporations have unregulated political power, exercised through trade agreements and deregulated financial markets.
A new generation is challenging that failed financial orthodoxy. The human rights website global exchange is one of many informing people about other alternatives. This month it urged its readers to join the global exchange in values. It accuses the IMF of operating in secret and without accountability; it claims it favours corporates and the selling of public assets – and has a say in over 60 countries in areas like spending on health and education.
It’s all too familiar but this month, Greece – regardless of its governments’ economic mismanagement and the Eurogroup’s harsh measures – may just have slowed and perhaps discredited the juggernaut lenders like to call ‘reform’.