Greece: Austerity for the Bankers

Transcript of Sharmini Peries’ Interview with Michael Hudson

Sharmini Peries: Welcome to The Real News Network.

The four-month extension secured by the Greek finance minister, Yanis Varoufakis, on Friday, February 20, 2015, came with the condition that Greece provide a list of measures to quell the concerns of its international lenders, especially the German banks represented by the finance ministers in Brussels, who feared that Athens might bail on the promises to cut spending and implement austerity measures. So, on Sunday, Athens provided that list.

Now joining us to discuss Syriza’s tabled plan is Michael Hudson. He is a distinguished research professor of economics at the University of Missouri-Kansas City. His upcoming book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroyed the Global Economy.

Thank you so much for joining us, Michael.

Michael Hudson: Thank you.

Sharmini Peries: So, Michael, these international banks represented by the finance ministers now in Brussels, when they were in crisis and we, the public treasury, bailed them out, they had no problem with that. Why are they now refusing to assist Greece at a time of need when in fact some politicians and even the troika [the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB)] is being more receptive to what Greece is saying?

Michael Hudson: Because what’s at issue really is a class war. It’s not so much Germany versus Greece, as the papers say. It’s really the war of the banks against labor. And it’s a continuation of Thatcherism and neoliberalism.

The problem isn’t simply that the troika wants Greece to balance the budget; it wants Greece to balance the budget by lowering wages and by imposing austerity on the labor force. But instead, the terms in which Varoufakis has suggested balancing the budget are to impose austerity on the financial class, on the tycoons, on the tax dodgers. And he said, okay, instead of lowering pensions to the workers, instead of shrinking the domestic market, instead of pursuing a self-defeating austerity, we’re going to raise two-and-a-half billion from the powerful Greek tycoons. We’re going to collect the back taxes that they have. We’re going to crack down on illegal smuggling of oil and the other networks and on the real estate owners that have been avoiding taxes, because the Greek upper classes have become notorious for tax dodging.

Well, this defiance has infuriated the banks, because it turns out the finance ministers of Europe are not all in favor of balancing the budget if it has to be balanced by taxing the rich. The banks know that whatever taxes the rich are able to avoid end up in their vaults. So now the gloves are off and the class war is back. Originally, Varoufakis thought he was negotiating with the troika, that is, with the IMF, the European Central Bank, and the Euro Council. But instead they said, no, no, you’re negotiating with the finance ministers. And the finance ministers in Europe are very much like Tim Geithner in the United States. They’re lobbyists for the big banks. And the finance ministers said, how can we make sure that we treat Greece as an object lesson, pretty much like America treated Cuba in 1960?

Sharmini Peries: Hold on; hold on for one second, Michael. Let’s explain that, Yanis Varoufakis, the finance minister of Greece, is very well-briefed and very well-positioned to negotiate all of this. Now, why did he think he was negotiating with the troika when in fact he was negotiating with banks.

Michael Hudson: Because officially he is negotiating with the troika. He went and he took them at their word. And then he found out—and yesterday, Jamie Galbraith, who went with him to Europe, published in Fortune a description saying that the finance ministers are fighting with the troika. The troika don’t have their story straight. The troika and the finance ministers are all fighting among themselves over what exactly is to be done. And to really throw a monkey wrench in, the German finance minister, Schäuble, said, he will bring in the Spanish government, the Portuguese government and the Finnish government, and they’ve got to agree.

The position of Spain, for instance, is that they are in power, essentially a Thatcherite neoliberal party. If Greece ends up dumping austerity and saving its workers, then Podemos Party in Spain is going to win the next election. So the current Spanish government intends to make sure that Varoufakis and the SYRIZA Party is a failure, so that they themselves can tell the working class to look at what happened to Greece. It got smashed, and that is what is going to happen to you if you try to do what they do; if you try to tax the rich, if you try to take over the banks and stop the kleptocracy, there’s going to be a disaster.

So, obviously, Spain and Portugal want to impose austerity on Greece. And even Ireland now has chimed in and said: What have we done? We have imposed austerity for a decade in order to bail out the banks. Even the IMF has criticized us for going along with Europe, bailing out the banks and imposing austerity. If SYRIZA wins in avoiding austerity in Greece, then all of our sacrifice wrung from our peoples, all of the poverty that we’ve imposed, all of the Thatcherism that we’ve imposed has been needless. We didn’t have to do it.

So there’s a whole demonstration effect, which is why they’re treating Greece almost as a symbol for—the class war as a symbol for labor saying, wait a minute; we don’t have to allow austerity. We can collect taxes from the tax dodgers.

Remember a few years ago when Europe said, Greece owes 50 billion euros in foreign debt? Well, it turned out that the central bank had given to the Greek parties a list called the Lagarde list (for Christine Legarde, head of the IMF) of all of the tax dodgers, Greek tax dodgers who had Swiss bank accounts. Well the Swiss bank accounts that the tax dodgers had added up to about 50 billion euros. So Greece could pay off the debt that it’s borrowed simply by moving against the tax dodgers.

But, of course, this would be at the expense of the Swiss banks and the other banks. So in effect the banks would be paying themselves. And they don’t want to pay themselves. They want to squeeze labor and let the tax dodgers and the Greek tycoons succeed in stealing the money from the government. So, in effect, the troika—not the troika—the finance ministers, really, are backing the tax dodgers and the crooks in Greece that SYRIZA is trying to move against, whereas the IMF is actually, for once, taking a softer position towards the whole thing. And even President Obama has chimed in by apparently calling German Prime Minister Merkel and saying, look, you can’t just push austerity beyond all reason, because you’re going to push Greece out of the euro, and you’ll be pushing them out of the euro on SYRIZA’s terms, where SYRIZA can then turn to the Greek population and say: We did what we promised here. We stopped the austerity. We didn’t withdraw from the euro; we were driven out as part of the class war.

Sharmini Peries: Michael, earlier you were also making an analogy between what’s going on in Greece and what happened to Cuba.

Michael Hudson: Castro had an alternative social system. Castro wanted to spread the wealth around (it was a Marxist system) in his way. He wanted to get rid of the crooks around Batista who were actually running the country, the rich who didn’t pay taxes, and he wanted to have a social revolution in Cuba. So the American government said: No you don’t. If Cuba succeeds, then there will be revolutions all throughout Latin America. Latin Americans will realize that they can take over the American sugar companies, that they can take over the American banana companies, that they can make the rich pay the taxes and the corporations pay the taxes and the exporters pay the taxes—not simply the workers. The American government realized that if Cuba can educate labor, so could everybody, and that would be a disaster for the neoliberal plan. If labor’s educated and has a program, then it will realize that there is an alternative to Thatcherism.

Well, this is the problem that Varoufakis wrote about in an article earlier this month in The Guardian on how he came out of the Marxist movement. He said, the whole problem that we’re facing in Greece is that if we withdraw from the euro, if we’re forced out, there’s going to be an economic trauma, and the left wing throughout Europe, as in America, doesn’t really have an economic program. It has a political program, but not really an economic program. And the only alternative to SYRIZA with its economic program is the New Dawn movement and the neo-Nazis. Varoufakis is worried because he’s not only contending with the European finance ministers on one front, but he’s contending on the Greek front with the right-wing parties that are the nationalist parties, like Marie Le Pen in France, the parties that are saying: Yes, we have an alternative; withdraw from the euro. The kind of withdrawal and alternative that the far right would have is not at all what the left wing would have.

At this time, there really isn’t yet much of a left wing in Greece, apart from the SYRIZA party, which is certainly not comparable to Papandreou’s socialist party, and certainly not the nominally socialist party in Spain, which is a Thatcherite party, and it’s certainly not the British Labor Party, which has gone the way of Tony Blair.

So the problem is that Varoufakis has about four months to educate the Greek public to the fact that: Yes, there is an alternative, here’s what it is. The alternative to neoliberalism doesn’t have to be right-wing nationalism. There is a socialist alternative, and we’re trying to work out as many arrangements we can, so if we’re driven out of the euro, if the banks go under, we do have a fallback plan. Varoufakis can’t come right out right now and say this is the plan, because it has to be made very clear to the Greek people that it’s the finance ministers of Germany, Spain, Portugal, Ireland, and Finland that are driving Greece out, not the IMF, not the European Central Bank, and not even centrist governments.

Sharmini Peries: Michael, thank you so much for joining us on The Real News Network today, and we’ll be following this story at The Real News. So do join us very soon again.

Michael Hudson: It’s always good to be here. Thank you.

Sharmini Peries: Thank you very much for joining us on The Real News Network.

Sharmini Peries is Executive Producer of The Real News Network.

Michael Hudson is a Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His two newest books are The Bubble and Beyond and Finance Capitalism and its Discontents.

The Real News Network, February 14, 2015