Tuesday, February 23, 2010

Euro-Bosses Try to Make Workers Pay for Greece's Debt Crisis

Euro-bosses try to make workers pay for Greece’s debt crisis

By G. Dunkel
Published Feb 22, 2010 8:38 PM

The elected leaders of the 16 countries of the euro zone gathered in Brussels, Belgium, on Feb. 11 and said they would work to prevent Greece from defaulting on its debt. By Feb. 14, they made it clear that their intention is not so much to bail out the Greek government but to pressure it into making a direct attack on the Greek working class.

The European big bourgeoisie gathered in Brussels to prevent any possible collapse of the euro, and to assure that the cost of the debt crisis was placed on the shoulders of the workers — in Greece and in the rest of the euro zone.

European Union President Herman Van Rompuy said, “We call on the Greek government to implement all these [austerity] measures in a rigorous and determined manner to effectively reduce the budgetary deficit by 4 percent in 2010.” (CNN World, Feb. 14)

At a televised cabinet meeting on Feb. 12, Greek Prime Minister George Papandreou criticized the plan to “help” Greece as “timid” and late. The plan is supposedly designed to help Greece pay off the big European banks that hold its debt and get new loans. Greece has a debt of 53 billion euros, now equivalent to about $71 billion, coming due this year.

Along with the dominant U.S. dollar and the Japanese yen, the euro is one of the world’s major currencies. The euro zone consists of the 16 countries in the EU that use the euro as their currency. The big capitalists and bankers of Western Europe created the EU and the euro zone so they could strengthen the hand of European capital against the European working class and the oppressed nations of their former colonies.

Germany, France, Italy and Spain are the countries in the euro zone with the biggest economies. Greece is also a member, but one of the poorest. Besides Greece, Portugal, Ireland, Spain and even Italy face a sovereign-debt crisis, that is, the inability to pay debt service on their sovereign debt. A sovereign debt is one contracted by selling bonds the government issues, especially in a currency other than the one the government can print, such as a Greek government debt in U.S. dollar- or euro-based bonds.

Shares in euro zone banks had slumped as the sovereign-debt crisis developed, with Greek banks falling by more than 50 percent.

Greek workers refuse to submit

The day before the Feb. 11 Brussels meeting, 500,000 Greek civil servants went out on a one-day strike. In Greece, civil servants include teachers, doctors, air traffic controllers, and many other workers who keep the country running. A major slogan of the workers on strike was, “It’s not us who should have to pay for this crisis.” (l’Humanit√©, Feb. 10).

Maria Loakimidou, a middle-aged social worker at an Athens hospital said, “After 20 years on the job I only earn 1,300 euros [a month] and now the government wants to steal from me. The big guys who stole in the past [through corruption] should be paying,” she added, referring to Greece’s rich elite. (Financial Times, Feb. 11)

On Feb. 11, Athens’ taxi drivers — a major part of that capital city’s transportation system — struck for a day over high fuel prices. Meanwhile, Greek farmers strengthened their blockades of roads along the border with Bulgaria to express their continuing outrage at the government. They have been blockading on and off for a month.

Before the Brussels meeting, Papandreou’s government had announced an austerity program that includes freezing civil servants’ salaries and cutting bonuses and stipends. It includes raising the average retirement age by two years to 63 and hiking taxes. For every five civil servants who retire, the government is going to hire only one replacement. This means speedup for the remaining workers.

The Greek workers, with Communist leadership in the PAME labor confederation, have a well-deserved reputation for combative responses to attacks on their living standards. Europe’s big capitalists also fear that a successful mass movement in Greece could inspire similar struggles in Portugal and in Spain, Italy or Ireland, where similar “reforms” are in the works.

Sovereign debt and German tutelage

Since the Greek government no longer controls Greece’s money supply — it uses the euro, not a national currency — it can’t devalue its way out of this economic crisis. Devaluing currency is the traditional cure for a government in financial distress. The Greek regime, however, plans instead to drive living standards for its workers down so far that it creates an “internal devaluation.”

It appears likely that the European Central Bank or EU commissioners, with technical assistance from the International Monetary Fund, will have monitors or examiners in every department and major office of the Greek government to make sure that the budget guidelines that Papandreou’s government promulgated, under intense pressure, are followed.

The ECB is already asking for even more intense austerity. Germany is the dominant financial power in the euro zone and its bankers will have the most influence with the “monitors.”

Athens is on a very short leash, since there is to be a mid-March interim progress report, a further one in mid-May, and quarterly updates thereafter.

Both industrial production and retail sales have been falling since the middle of 2007 (Financial Times, Feb. 6), so it is very unlikely that Greece is going to be able to export its way out of the crisis.

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