Dr. Paul Tyson, who is Honorary Professor in the Department of Theology and Religious Studies at the University of Nottingham has recently published an important essay on ABC Religion and Ethics Online on what the recent Greek financial crisis exposes about the state of political power and the place finance plays in those power plays. He has closely followed the Greek crisis and provided his own breakdown of the chain of events.
What seems to be at the heart of Tyson’s analysis is a clash of narratives between that peddled by the mainstream media, and the political machinations of financial interests. Indeed, the economist Joseph Stiglitz, as interviewed on the Al-Jazeera news agency, claimed recently that the recent bailout deal is not a bailout of Greece per se, but German banks and other creditors.
After speaking to Tyson, The Divine Wedgie has reproduced below his essay as published on the ABC.
Oxi and Nai: What the Greek Crisis tells us about Financial Power and Politics
The referendum held on 5 July 2015 asked the Greek electorate whether they were prepared to surrender the anti-austerity policy agenda of their Syriza-led government in order to secure more loans. The Greeks answered with an emphatic – “No!”
Prior to the referendum, Yanis Varoufakis (the then Minister for Finance) argued that the stronger the No vote, the more bargaining power the Greek government would have with her creditors to seek a viable re-structure of Greece’s debt. Surely, Varoufakis seemed to believe, the Eurogroup would not ride rough shod over an expression of political will of a sovereign European state.
Varoufakis also claimed that the refusal of Eurozone financial institutions to extend normal operational terms to the Greek banks for the week prior to the referendum was an overt act of national intimidation, intended to influence the outcome of the referendum towards a Nai or “Yes” vote.
Before the referendum, Prime Minister Alexis Tsipras also urged the Greek people to vote No as a display of national pride in the face of the creditors’ demands for humiliating and damaging austerity terms.
It now seems clear that Prime Minister Tsipras was not, in fact, expecting the No vote to win. For immediately after the referendum, and with Greek banks under siege from their European creditors, Tsipras entered negotiations with Eurozone financial institutions in Brussels – the troika – thereby abandoning his anti-austerity agenda in a desperate attempt to secure another bailout package for Greece.
As Tsipras saw it, he had no choice but to act thus, whatever the Greek people said, for if he could not secure a further loan from the troika the Greek banks would fail and Greece would be pushed out of the Eurozone into financial chaos and, possibly, into social and political anarchy.
So less than two weeks after the decisive Oxi (“No”) vote, the Greek Prime Minister persuaded the Greek parliament to say an emphatic Nai (“Yes”) to the devastating terms of surrender mandated by the troika, which entailed more far reaching austerity measures than Greece had ever experienced before. Tsipras abandoned Syriza’s original policy as politically untenable, even though two weeks prior over 60% of voting Greeks made it clear they backed their government’s policy.
What is really going on here?
Watching this drama unfold in the mass media, an easy-to-digest morality tale is often presented to us. It goes something like this. The Greeks are – let us be frank – economically unproductive; they don’t pay their taxes; their government must have done something fundamentally irresponsible to be in such massive debt; any way, everyone knows that Greece’s institutions are riddled with cronyism. What we are now seeing is the Greek state, having has maxed out its credit card, took out a high-interest loan to pay off its debts, but cannot make its repayments and doesn’t want to be liquidated. Consistent with this purported refusal to face the consequences of their own indiscretions, the Greeks elected Syriza in January this year to bargain with their creditors, in the hopes that they could somehow pull off a deal with the troika that would let them off the hook.
Unsurprisingly – so the story goes – the wealthy and industrious Germans refused to negotiate any such debt restructure with Syriza. While the 5 July referendum indicates that the Greeks do not accept the austerity terms upon which any further loans are predicated, those loans are necessary in order to keep their banks open (so that they can continue to “service” unpayable and ballooning public debts with a shrivelling economy subjected to higher taxes, the sale of all state assets, reductions in meagre pensions for the old, and even more meagre support for the 25% of the workforce now unemployed). The No vote is thus inconsequential. The reality is that whoever has the money has the power, and the creditors are being very generous to Greece to bail them out at all. So Prime Minister Tsipras was simply acquiescing to the inevitable and the Greeks should stop complaining, accept reality, and work their way out of their debt troubles.
You may have noticed the bracketed section in the above paragraph. I put it in brackets because, while it is a well-known part of the public story about Greece’s current situation, it is, necessarily, bracketed out from the easily digestible morality tale of Greece’s irresponsible desire to escape austerity and the assumed fiscal rectitude of the Eurozone creditors. The fact is, morality has nothing to do with what is really going on between Greece and the troika.
What we are witnessing instead is the result of the impossible economic architecture of the Eurozone and the fruits of the determination of Europe’s dominant financial powers to retain control of the banking sector so as to protect their own interests, whatever the consequences to the struggling economies of southern Europe. This is a clear case of finance determining politics and the mass media largely supporting the status quo by framing this situation in simplistic moral terms.
This tendency for finance to be the real centre of power, for financial power to be politically and socially unaccountable and for finance to have little regard for nationally framed economic realities, is not something restricted to Europe. Even so, in Greece we see it in very stark terms.
What that is most tragic, however, is that Syriza provided Europe with a unique opportunity sensibly to moderate the unaccountable nature of financial power, and to discipline merely financial power by making it accountable to basic economic and social realities. By crushing Syriza’s attempt to negotiate a realistically viable debt restructure, Europe will unlikely get this opportunity to re-work an unworkable system again.
If something is not done to mitigate financial power with social, political and economic realities, the sad truth is, destruction is on its way to Europe. Ironically, finance is ultimately dependent on real economies and social stability, so the interests of finance can only be properly advanced by reconnecting financial power with social, political and economic reality.
If Wolfgang Schauble thinks he will secure German financial interests by either crushing Greece or ejecting them from the Eurozone, I fear that history will show him to be profoundly wrong.