There is a serious political and economic clash going on deep inside the EU chambers. The newly elected Tsipras government has triggered a tsunami that may not be so easily contained. The northern states dominated by Germany and braced by the ECB have now also regressed to blackmailing tactics. What they feared the most is about to happen; a battle has ensued between David and the mighty Goliath – everyone knows the end result! It may also cause a domino effect over other member-states and that’s the worst nightmare facing the EU institution.
All eyes are on the new, charismatic, young Prime Minister Alexis Tsipras and his unorthodox Finance Minster Yanis Varoufakis. A Greek Revolution of the Mind has sprung into action. Immediately after taking office, the Greek government has forbidden the Troika to return to Greece and canceled the selling-off of the Piraeus Port to private investors. That shocked the Eurogroup.
The Greek nation has had enough of Troika’s failed austerity measures and Athens decided that economic colonization through the suffering of the Greek people could no longer be tolerated under any terms.
Unless Greece renegotiates and restructures the unsustainable Troika loans, it will be impossible to repay it and the nation will remain in debt for generations to come. Greece’s request to renegotiate Troika’s terms was a wise move but was rejected by the Eurogroup. Exacerbating tension between the two camps, the Greek government also decided not to adopt further EU sanctions against Russia. That did not go down well either. But one thing is for certain; the government of Greece is no longer prepared to play ball and be dictated by a group of unaccountable and unelected EU/Troika bankers at the expense of the people and its integrity as a free democratic nation.
Knowing its limitations and economic strength, Tsipras’ government behaved responsibly in wanting to restructure the country’s debt within the EU boundaries. The refusal of assistance by the Eurogroup, but especially by Germany, came of no surprise. Actually Germany should have behaved much better because after WWII, it also faced a similar situation. Instead, it chose to behave appallingly against Greece.
In fact Germany faced total bankruptcy from the strains of the Second World War but the Allied nations came to its rescue with a grand master plan; a plan that was based on a different school of thought on how to help a country out of debt.
The London Agreement on German External Debts known as the 1953 London Debt Agreement was established as an Agreement that set a precedent for debt relief for poorer economies.
This Debt Relief Agreement negotiated by the Western allies (Britain, USA, France and bankers) provided an inspired master plan to help Germany recover financially rather than destroy it completely. The idea behind the prescribed plan was that a country is more likely to repay its debt through economic recovery rather than economic suppression and stagnation.
For Greece (and Cyprus for that matter), the EU/Troika did precisely the opposite. It destroyed its economy; robbed people’s bank accounts (bail-in); caused massive recession; suppression; shut down banks; raised taxation and triggered massive unemployment. Troika’s economic rescue plan was actually based on economic colonization and its success for ultimate control depended on destroying all hope of recovery.
Compare what the Allied Debt Relief Agreement did for Germany with what Troika’s Memorandum rescue plan for Greece (and Cyprus) has done, and a contrasting picture emerges; one that shows double standards and sinister motives.
Germany’s debt after the war amounted to 38.8 billion marks and the Agreement signed on February 27, 1953, reduced the debt to 14.5 billion, which amounts to a 62.6% reduction. The repayment period was also stretched out over 30 years and allowed Germany to postpone some payments until such time as a re-unification. It was decided that the burden of servicing the entire debt, if not reduced, meant that the German economy stood: little chance of a recovery.
The philosophy behind the Agreement was a masterpiece of the road to recovery, and it worked wonders. First and foremost, the Agreement provided that Germany was able to pay its external debt while maintaining a high level of growth and improving living standards for its population. In fact, it meant that they were allowed to pay back the loan without getting poorer. That was a superb piece of economic strategy that could only benefit both parties!
To achieve this, creditors agreed to help Germany in a number of positive ways such as but not limited to: Reduce importation to assist and manufacture at home those goods that were formerly imported (equally helping with job creation); creditors agreed to reduce their own exports to Germany; supported and purchased German exports to restore a positive trade balance; the debt service/export revenue ratio was not to exceed 5% and depended on how much the economy could afford; debt repayment would derive directly from export revenue income; the Agreement also contained the possibility of suspending payments while conditions were renegotiated in the event of reduced available resources. On October 3, 2010, the last payment was made with 69,9 million euros. This payment was considered to be the last one to its creditors.
This is the kind of formula necessary for economic recovery and not Troika’s austerity, which destroys nations and reduces citizens to poverty. With the help of a hard-working population, Germany has become one of the most economically powerful and influential countries in Europe.
Compare what Troika’s rescue plan did for Greece, and it becomes obvious that the Memoranda introduced were never meant to restore economic recovery and growth like the 1953 London Debt Agreement did for Germany; they were geared to dominate through debt dependency.
In fact, under the terms of the 1953 London Agreement on German External Debts, Germany owes the Greek people 476 million reichmarks ($14 billion) that Greece was forced to give Nazi Germany during its occupation. If 3% interest had been accrued over 66 years, the loan corresponds to $93 billion in today’s terms. The Tsipras government is now demanding that money back and, if successful, would certainly open up Pandora’s box for Germany.
If things remain unchanged, Greece will never be in a position to repay its crippling debt but will only enter into a deeper crisis. The annual interest payments alone (in billions) on a 350 billion debt would keep the nation in utter poverty and that’s precisely what the new government wants to avoid.
Equally, one can reasonably ask: what happened to all those billions borrowed? Where did it all go? Certainly it did not go to improving public services, infrastructure and hospitals or making people affluent and living with dignity. The majority of those funds borrowed went straight back into the coffers of German and EU banks to bail themselves out at the expense of citizens. It is reported that less than 10% of the bailout money borrowed ever reached the people; that is what modern economic colonization does to poorer nations.
The new government recognized this and, for the first time ever, an elected government decided not to follow the footsteps of its predecessors who failed the people of Greece, miserably.
A well-organized exit from the Euro currency and return to the Greek drachma cannot be discounted. In fact, it would be a wise decision because Greece will then determine its own exchange rate to help its economy grow free from EU constraints. As an EU member-state, the UK did not adopt the Euro currency so why not Greece or Cyprus for that matter.
Actually, an exit from the Euro may be more beneficial in the long run. However, there are various conflicting theories made by economists regarding a Euro exit but they all agree on one thing: that an exit from the Euro would not be easy, but not impossible. The final word however, whether to retain the Euro or not, rests with the Greek people under the terms of a referendum. With transparency, well-informed citizens can make well-informed decisions, and the decision whether to retain the Euro or not belongs to the people and not to a temporary government.
Out of the ashes of despair, Greece will rise up again and will succeed. It will do so because the nation’s dignity has been restored with thousands of people flooding the streets of Athens, Thessaloniki and major cities to endorse their support for the new government. Unquestionably, a nation that has the full support of its people will never fail.
However, there are certainly clouds looming on the horizon for both nations but on the positive side, Greece may be the catalyst to bring about changes for the better, and hope may also spread to Cyprus – I sure hope so for Cyprus’ sake.
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