July 26, 2012 · 0 Comments
By Costas Panayotakis:
Rachel Donadio and Suzanne Daley’s ‘Euro’s Medicine May Be Making Greece’s Symptoms Worse’ is the latest addition to the uneven coverage by The New York Times of the situation in Greece. On the one hand, and in line with The New York Times’ past coverage of the European crisis, the article recognizes how counterproductive the harsh austerity policies imposed not just on Greece but throughout the European periphery have become. As its title suggests, the article points out that the austerity program imposed on Greece was utterly unrealistic in the targets it set for Greece and, therefore, had no chance of providing Greece with an exit strategy out of a fiscal crisis triggered by the broader global capitalist crisis.
However, the way it backs up this otherwise correct claim is problematic in a number of ways. First of all, in painting a picture of division between the International Fund and Greece’s European lenders, the article contributes to a whitewashing of the IMF’s responsibility for the humanitarian catastrophe that is unfolding in Greece and, increasingly, in other countries of the European periphery from Italy to Ireland. The IMF, we are led to believe, is more sensitive to the counterproductive effects of harsh austerity and is willing to ease the pressure on Greece, but it is blocked by German intransigence. It must have been this sensitivity that the director of the IMF, Christin Lagarde, was expressing when she stated recently that she is less concerned about the plight of Greeks than she is of the plight of children in the impoverished country of Niger. In other words, Greeks cannot expect any sympathy from the IMF until its austerity program makes their living conditions sink to the level of the poorest of the poor on the planet! (Incidentally, it would be interesting to hear from the people in Niger what they think about the ‘sympathy’ that the IMF is supposedly showering on them).
The article also quotes Panagiotis Roumeliotis, a Greek banker and Greece’s former representative to the IMF who admits that the IMF went along with the Greek austerity program even though “[w]e knew at the fund from the very beginning that this program was impossible to be implemented because we didn’t have any –any- successful example”. According to Roumeliotis, no such example was available because, being a member of the eurozone, Greece could not do what countries in IMF programs usually do, namely restoring competitiveness through a currency devaluation.
Though damning for the IMF’s handling of the Greek program, this admission could also be read as an attempt to present the IMF’s failure in Greece as an exception that was due to Greece’s also exceptional lack of control over its currency. In reality, of course, the IMF has a long record of structural adjustment programs that have squeezed dry workers and ordinary citizens around the world in order to ensure that their foreign creditors get their money back. And, as Joseph Stiglitz among others pointed out more than ten years ago, Greece is certainly not the first country to fall victim to the IMF’s cookie-cutter approach with its inability and/or unwillingness to take into account in its programs the unique socio-economic circumstances of specific countries.
To explain why an unrealistically harsh austerity program was selected for Greece, the article goes on to quote George Papandreou, who was prime minister and leader of the Greek ‘socialist’ PASOK party when the austerity program was adopted in the spring of 2010. According to Papandreou, Germany chose to make an example of Greece by attaching such harsh conditions to the Greek loan package that no other European country would be tempted to seek a bailout. In line with the article’s primary focus on Germany’s responsibility for the Greek debacle, Papandreou’s account conveniently absolves himself and his government from all responsibility. By portraying Greece as the innocent and powerless victim of the German bully, Papandreou glosses over the fact that Greece did have leverage over the Europeans, since a Greek default would likely bring down the entire eurozone. A government that sought to represent the interests of most Greeks would have used this leverage to negotiate with the Europeans and the IMF terms that were more fair and more economically effective. Neither Papandreou nor his successors have done so and thus bear great responsibility for the great suffering of workers and ordinary citizens around Greece.
This last point is thoroughly obscured by the article, which gives the reader the false impression that the Greek government that formed after the June elections is divided and poised to request a reconsideration of the program, notably the harsh austerity measures that have plunged the Greek economy into a deep depression. Nothing could be further from the truth. The new government has declared its unwavering commitment to the harsh austerity program that has led to skyrocketing levels of unemployment, poverty and suicide.
The two larger partners in the coalition, the conservatives and the socialists, had already formed a pro-austerity coalition before the elections of last May and June. The object of that coalition government was to negotiate a new austerity package adopted by Greece in exchange for a second bailout and a partial restructuring of its debt. It was the harshness of the austerity measures accompanying this package, along with the devastating effects of the already adopted austerity measures, that led to a resounding popular rejection, in the May election, of the socialist and conservative arguments that the austerity measures were the only way to ‘save’ Greece. As the socialists and the conservatives saw their support sink to such low levels that they no longer had enough support in parliament to form a coalition government, they changed their tune and in the June election that followed ran on a platform of renegotiating the austerity program. It was only by promising to make significant changes in the austerity program that they managed to rally enough support to form a government and fend off the challenge of the rising anti-austerity Syriza party on their left.
Immediately after the election they forgot their promises, appointed an austerity hawk to the post of Finance Minister and are now preparing new cuts that will further aggravate Greece’s economic and social conditions. Unlike what the article suggests, therefore, the problem for Greece is not that the partners of the governing coalition are in disagreement with each other but that they are on the same page when it comes to ignoring their pre-election promises and continuing the same failed policies that Greek citizens repeatedly rejected in the recent elections.
In short, while German and European political and economic elites have a lot to answer for, one should also recognize the responsibility of Greek political elites and the International Monetary Fund for the current situation. All of these players have been instrumental in using the current crisis as an opportunity to smash labor rights and attack the living conditions of workers and ordinary citizens in Greece and beyond.
Costas Panayotakis is Associate Professor of Sociology at the New York City College of Technology of the City University of New York and author of Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy.