The Greek Program: a colossal failure

The Greek Program: a colossal failure

By Dimitri Konstantakopoulos

If we judge the Greek program not on the basis of our own criteria, but on the basis of the goals it set itself and of its predictions, we can safely say it was a gigantic failure, by far the biggest in the history of western leading economic institutions, like the IMF, the EU and the ECB.

In the future, every economics handbook in the world will begin by a chapter under the title “The Greek Bail-Out Program: What Economists must not do in any country”.

The Greek program was launched, supposedly, to help Greece cope with a situation where the “markets” (the international finance) were refusing to lend it, its huge debt considered unsustainable.

In 2010, when the program was launched, Greek sovereign debt was 129% of GDP. Now it is more than 185%. (After the Coronavirus, it will probably be more than 200%.)

The bail-out program not only failed to address the sovereign debt problem, it added to that an equally important problem of a huge private debt, created as a result of the Troika (ECB, EU, IMF) measures. Back in 2010, the non-served loans to banks were insignificant. Now, near half of all loans are not served.

Back in 2010, Greek Banks had about 220-240 bn. euros in deposits. Now they are no longer Greek and have half of that sum.

Back in 2010, Greece was in a much more powerful position vis-à-vis its lenders, which were private banks and funds. Its debt was regulated by Greek law and its national parliament. Disputes related to the debt were under the jurisdiction of the Greek courts. The Greek debt was denominated in Greek national currency, so if Greece left the Eurozone, the Debt would be undervalued as much as the new Greek national currency introduced.

Now the debt is owned by states and international institutions and ruled by British Colonial law, all Greek public property has become a mortgage to the service of the debt, its constitutional protection lifted. Debt related disputes are under the jurisdiction of foreign courts and it is denominated in Euros.

The Greek debt restructuring (PSI, 2011-12), was the first in History undertaken against the interests of the debtor country! They changed the legal status of the debt, while slashing the reserves of Greek pension funds, hospitals, universities etc.

The country has encountered a recession three times bigger than the IMF and the EU were predicting, not to speak of the predictions by the then Greek Finance Minister who was speaking for growth already by 2012. This is why we stated this program was a colossal failure even on its own terms.

The IMF, European Governments, the EU and the ECB use the services of some of the best economists of the world. How it was possible to make such an enormous “mistake”? If it was really a mistake, why did they not correct it and why haven’t they yet?

This is what gives us the right to ask the question if this program was a mistake or, rather, and from the very beginning, a program intended to achieve such a result. The IMF representative in Greece, the Danish Paul Thomsen, a kind of economic hit man and sadistic personality like most of the people who were treating with Greece on behalf of international organizations, has revealed the hidden goals of the program when he stated that Greek salaries had to be somewhere between the Portuguese and the Bulgarian.

By stating that, he inadvertently revealed the philosophy of the EU leaders today. They do not understand the EU as an organization contributing to the improvement of the living standards. They understand the EU as an institution lowering the living standards and social rights of its members.

We want to remind our readers that this program was not imposed on Greece only by Germany and the EU. For its imposition to become possible Berlin had to enter into a tacit alliance with international banks to attack Greece and create the conditions justifying the program. The program was also approved by the IMF, against its own rules and principles. Such a thing could not happen if International Finance and the US administration did not want it to happen. Not to speak about the role of US banks like Goldman Sachs in creating, first of all, the Greek debt bubble and then making it explode.

The result of the crisis was the destruction of Greece, the political capital of Germany and the weakening of Europe on behalf of international Banks and the United States. (The same happened, by the way, during the Yugoslavia crisis in the ‘90s, when the aggressive and imperialistic policy of Germany, Austria and the Vatican greatly contributed to the bloody disintegration of Western Balkans only to rehabilitate US – NATO role in European affairs and destroy for good any prerequisite for a common European Foreign and Defense Policy).

Behind the Failure: the economic crime of the century by the numbers

As a result of the implementation of the bail-out program, Greece has suffered a loss of 27% of its GDP while unemployment approached nearly 30% of the workforce, in spite of emigration by half a million Greeks and the return of another half million of already established immigrants to their homelands. All this was the result of artificially subtracting demand from Greek economy. In Portugal, the troika subtracted three times less than in Greece. This is why in the former they provoked a painful recession and austerity, while in the latter they just destroyed the country.

To give an idea what 27% actually means, such a percentage is approximately what happened in the US or Germany during the biggest crisis in the whole history of Capitalism (1929-33), directly responsible for Hitler’s rise and WWII. Material losses of Germany or France during WWI represented less than that.

The Greek recession has lasted practically since 2010 and is by far the longest in the history of world Capitalism.

Unemployment was 7% back in 2010, it is now more than 20% and more than 40% among young people and that in spite of completely slashing wages and workers’ rights. Nonetheless, the number is much higher in reality, if one takes into account how they count it (working one day is enough to be classified as employed) and the massive emigration of probably up to a million people (near 10% of the population, much more of the active population) out of the country (both Greeks and long established immigrants). We did not count here what will happen because of the corona-Crisis, which is threatening one third of the Greek economy.

Up to half a million young, very well educated Greeks (about 5% of the whole population), absolutely necessary for any future development of the country have already migrated abroad. More are prepared to follow.

Greek investments and exports were cut to one third of what they were and they were beginning to approach half of the previous level just before the corona-crisis. Greek industry, commerce, and much of the service sector was decimated. Only agriculture and tourism were able to resist. Now tourism has become the great victim of COVID-19.

Education, health, social welfare expenses were radically cut, sometimes with tragic consequences, as people who are in need of vitally important medical treatment have to wait so much they die if they don’t have money to afford private health care. Greek universities were particularly hit losing 80% of their previous budgets. We witnessed a diminishing of life expectancy.

Social rights earned over the course of a century were abolished. Disabled people and other vulnerable groups of the population were strongly hit. A wave of suicides swept the country.

Greece had serious problems in 2010. All of them are now aggravated because of the so-called reforms imposed by the IMF and EU, which were often the exact opposite of what Greece needed. Corruption, always closely connected to the top, with big European and US companies like Siemens, which was paying both parties and a myriad of state officials, has continued unabated.

While the health expenditures were drastically cut under the Troika rule, a new huge scandal appeared with the Swiss-German drugs company Novartis. It continued to happen while the country was under the tight surveillance of the Troika.

The Troika has, by the way, insisted and imposed the impunity of its officials and representatives for economic crimes they may commit.

The Greek State was always notorious for its ineffectiveness and bureaucracy. Now it is smaller and worse. Tax evasion has skyrocketed, as Greeks are unable to pay the exorbitant taxes imposed by the foreign Creditors, which represent in some cases up to 70% of their income. Greeks also lost any moral incentive to pay taxes, especially in the social – moral atmosphere dominating after their 2015 defeat by betrayal. The Social Trust Capital in the country was all but destroyed.

The Troika and Eurogroup itself also have intervened in a completely illegal way, even on the terms of the program itself, to facilitate private interests in circumventing legislation. To give an example, three times, Greek archeologists were called by the government, under Troika pressure, to revise their opinions in order to facilitate the Hellinikon project.

This project will seriously damage one of the greatest climatic, aesthetic and historic treasures of humanity and one of the cradles of world civilization, the region of Attica. Skyrockets and Casinos will be built in the land of Attica, the first buildings ever overpassing Acropolis.

One is tempted to conclude that maybe, some very important forces in the power structure of our world want to take revenge on Greeks, they have never forgiven them for writing in their language, for the first time in human history, the word Freedom (Homer’s Iliad, 8th century BC).

Taking all property out of Greek hands, turning Greece into a Slave society

In the context of the program, most of Greek public property and much of private property was transferred to foreigners, including banks, transportation, energy and communications infrastructure of the country – and all that for peanuts. What was not already sold was transferred to a special fund, for 99 years, to be automatically sold in case Greece does not obey the engagements. Germans, Americans, Chinese, Italians, Israelis, Arabs etc. are competing to get something out of the country. Only Russia is forbidden to participate in the plundering for geopolitical reasons. We guess China will follow suit in the present international conditions.

Greece is a country of small and medium enterprises. By applying neoliberal receipts, like having shops open as much as possible, or permitting super markets to sell drugs, the Troika has organized “unfair competition” against Greek enterprises. The best of them, including the best touristic ones, are sold to foreigners, while foreign firms are increasing their share of the Greek market. Others were closed, including some historic firms operating for a century.

Greeks are also losing their homes, as they cannot repay the loans with which they bought them. Foreign vulture funds are buying the loans to probably a tenth of their value. More and more Greeks are refusing to inherit the property of their parents, being unable to pay the corresponding taxes.


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