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  July 19, 2015

SYRIZA Forced to Choose Disorderly Grexit or Terrible Deal

In an interview with Dimitri Lascaris, Minister of Education Aristides Baltas of Greece explains the conflict between responsibility and conviction in the decision to accept the new deal
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Dimitri Lascaris is a lawyer, journalist and activist. After working in the New York and Paris offices of a major Wall Street law firm, Dimitri became a class action lawyer in Canada. His practice focused on shareholder rights, environmental wrongs and human rights. In 2012, Canadian Lawyer Magazine named him one of the 25 most influential lawyers in Canada, and in 2013, Canadian Business Magazine named him one of the 50 most influential persons in Canadian business. Dimitri ran for the Green Party in Canada’s 2015 federal election and has served as the Justice Critic in the Green Party of Canada shadow cabinet.


SYRIZA Forced to Choose Disorderly Grexit or Terrible DealDIMITRI LASCARIS, TRNN: This is Dimitri Lascaris for the Real News. We're at the Ministry of Education outside of Athens where we've come to interview Minister Aristides Baltas, the Minister of Education, Culture, and Religious Affairs, as part of our exploration of the aftermath and effects of the controversial bailout agreement of July 13, 2015.

Minister Baltas is a philosopher of science and a physicist by training, and a confidante of Prime Minister Alexis Tsipras. The Minister voted yes in support of the prior actions that were stipulated as part of the bailout agreement and were approved by the Greek parliament in the early hours of July 16.

I wanted to start our discussion by exploring the very difficult negotiations that occurred in Brussels on July 12 and 13 which culminated in an agreement in principle, as you well know, which I think many regard as requiring the imposition of austerity. Very difficult austerity, and quite possibly harsher austerity than has previously been opposed upon the Greek people. And what I wanted to ask you first of all was whether you believe that respect and implementation of this agreement would enable the party to honor any aspect of the Thessaloniki program on which it sought election.

ARISTIDES BALTAS: Yes. This is the main question that's hovering all over Greece right now. And the answer is not an easy yes or no. To explain all this I can say the following regarding first of all the dilemma our negotiating team and our prime minister found himself in. He had a very difficult decision. Because if he signed the agreement this could be against all of what we have been saying during these years regarding the impossibility of having a program like this in Greece. For many reasons, the most technical one being it does not work on financial grounds.

On the other hand, if he said no, given the kind of blackmail Greece found itself in during the referendum [inaud.], particularly, it would be total catastrophe. The next day nothing would work here, the banks would be closed for [all], totally. And the humanitarian crisis of enormous proportions would start [just on Monday]. So he had to sign the agreement. During the 17 hours of negotiations, understanding that he would not just say no, he bargained as hard as he could to alleviate the bad aspects of the program. And in fact, he one point, were it not there at all in the initial blackmail about a week before the referendum. This is let's say the political, as it were, aspect of that bargain.

Now, the question you ask is difficult to answer for at least two reasons. One being economical in the sense that the program regarding what we called the reforms cannot function. We know that through these kinds of programs the economy goes in a downward spiral with a kind of repetition in a sense of previous programs. And so on economic grounds this program, which cannot but fail.

On the other hand. If a bargain was struck, even at this level, is better than the two previous [one]. The main reason being that what we call the, I don't know the term. [Protogenespionesma], you understand what I'm saying?

LASCARIS: Not entirely.

BALTAS: What the economy has to produce over costs in order to adjust to the financial demands of Greece and Europe is much better than the one had been used to in the two previous years. Because in the two previous years the demand for such a surplus was much bigger. And so in order to get this much bigger surplus you could drain the resources from pensions, salaries, and things like that. The kind of adjustment they're asking for for this program is less.

So from this let's say strictly economic point of view, this program is a little better than the previous ones. But the main thing we gained through the 17-hour negotiation was a kind of realization and acceptance that the debt in itself is not sustainable.

So we have as it were three years within which this program has to be implemented. During these three years our, let's say, needs towards our lenders is taken care of. And there is a strict commitment that in [August] by [inaud.] will be discussing the rest of the debt and how it must be alleviated as the IMF is saying right now. These two things were not there in the first blackmail. The initial blackmail being either you get this kind of program, exactly this kind of program, just for five months and we renegotiate with no discussion about the debt. The renegotiation meaning our program would be, dig even deeper. While this program is more or less the same regarding social measures and [the first], but give us three years and alleviation of the debt is a promise, commitment, rather, and a kind of investment money on which we can start moving the economy.

LASCARIS: I'd like to just go back to the first part of that. You talked about the relative harshness of the prior memoranda compared to this one, and secondarily the issue of the debt. So I just want to park the debt for a moment.

Under the prior bailouts the Greek government was not ever required as I understand it to achieve the primary surpluses that are required by this one. This one, as I understand it, requires a primary surplus in this year even though the economy at this stage has probably contracted significantly in part due to the capital controls a 1 percent primary surplus, 2 percent next year, 3 percent in 2017 and 3.5 percent thereafter.

Many of the world's leading economists have characterized this as madness, one of them being Paul Krugman. And I think Joseph Stiglitz used the word insane. Even the IMF has acknowledged that no country, or few countries, have been able to maintain a primary surplus of 3.5 percent for an extended period of time.

Coupled with these very aggressive primary surplus targets is a requirement--again, this is as I understand it a new feature of this bailout that didn't exist in the prior ones, of mandatory spending cuts, so that the government would be legally obliged to cut spending in order to meet the targets. Doesn't that effectively destroy the government's room for maneuver and spending on humanitarian initiatives and the implementation of the Thessaloniki program?

BALTAS: We started with numbers and these factors--the answer, the first degree answer, is yes. The second degree answer is that the kind of adjustment that we're in if we sign this agreement can be let's say more or less be taken care of with the help of movements outside the program. We're talking about solidarity campaigns within Greece. Possibilities of helping outside the program poorer classes of, categories of people here. And there is a hope that this will, let's say, overcompensate, or at least compensate, what they're asking us for.

But in addition to that the kind of growth of the surplus is [inaud.] more flexible than the previous programs. So we can somehow adjust a few months falling behind with a few months getting above it, and things like that.

So from a purely economic level it's not sustainable, all of these economists are absolutely right. But there are two factors. One, social in the sense I was trying to describe. And the other political in a more general sense. What I understand, in all corners of the world right now, in [parliaments] with most European countries, the question has been opened. Europe in general is not the same as it was before the agreement. Everybody understands the kind of strategy Germany is forewarning within Europe. Very many voices have been raised against it, and not just intellectuals or famous economists, but parties, factions of parties, oppositions, things like that.

And this gives the idea that to the effect that the program has proven not sustainable even the next few months, some measures can be taken at the political level. That's why at this level it's important that this government stays in place, because it can renegotiate based on what's happening in Europe and the kind of support it gets politically from parties and governments which understand that this situation is absolutely [terrible].

LASCARIS: In terms of the specific initiatives the government may or may not be able to undertake under this new program, the prior regime of Antonis Samaras closed down the state broadcaster, ERT, and this government managed to resurrect ERT months ago. Is it the intention of the government to continue to fund ERT, and to ensure its survival?

BALTAS: Absolutely, absolutely. Absolutely. Within this program there's a question which is phrased politely, that we have to review the kinds of measures the government has been taking. But it is phrased, as it were, politely enough so we will not go back to the kinds of [inaud.] we've been making up till now.

In addition to that this government is going to implement new bills with no, let's say, financial cost regarding aspects to Greek society which have to be transformed and reformed in many kinds of ways, starting from the state itself, which have no cost. And which on the other hand it can, let's say, stop spending without measure or corruption without measure, which we encounter every day in all ministries, including this one.

So if they just allow us, whoever they might be, to continue with this kind of program we will be surprised how much money we can save without cost to anybody, but to the profit of everybody. Because I mean, two particular kinds of things to interest your audience. But I can give you examples, how much money has been spent in the sense of corruption. How much money has been spent in the sense of just throwing away with no effect. And how much money can be saved if we do the right kind of forms independently of our debtors.

But they don't allow us this, even for political reasons. Because behind the strategy I think is a political aim.

LASCARIS: The strategy you're referring to is--.

BALTAS: An alternative kind of government cannot be accepted in Europe. This is the big thing.

LASCARIS: You're referring to the strategy of the creditors.

BALTAS: That's right.

LASCARIS: Returning to the second point that you articulated at the outset of debt sustainability. IMF staff or somebody has leaked an evaluation by IMF staff of the sustainability of Greek debt in light of more recent developments, including the imposition of capital controls. And according to the IMF, Greece's debt to GDP ratio, which has soared under austerity, is going to peak at 200 percent. I think it's currently in the range of 280 percent. And in addition, the IMF is saying that far greater debt relief than anything envisioned by this tentative agreement will be required in order to render Greece's debt sustainable.

Meanwhile, Wolfgang Schauble has said--initially he and Angela Merkel the chancellor said that there would be no writedown of Greek debt. Perhaps other forms of debt relief might be available, but after implementation of the program. Now Schauble appears to be saying that a debt writedown could be available in the near term, but that would require a temporary Grexit, as he puts it.

In light of the IMF's assessment, and in the light of the statements of the German government, would you agree that it seems very unlikely that ultimately the Greek debt will be rendered sustainable? And if that's true then isn't a default inevitable? And wouldn't that inevitably precipitate a Grexit, which is precisely what the government has sought to avoid.

BALTAS: What I think is the following, is that--to start from the beginning, the fact that the IMF report came out before the vote and the referendum was the result [inaud.]. This information should be given to the Greek voters. In this [place], I think [quite or all] in the final vote during the referendum. It appears that the IMF has finally come to the conclusion that the Greek debt is not sustainable. I cannot do anything, according to my [statistics] if the debt is not sustainable. So there's a big force forcing our government, including Schauble, to finally accept what we have been saying for years now. [Inaud.]

We cannot assess right now what influence this will have on the final discussion of the debt, starting this August. The general idea is that it will not be, let's say, a writeoff [or] percentage, the nominal value of the debt. But to be pushed during the year, we lower interest rates, which will make the debt sustainable.

The government, at this economic level, what it's hoping for is that within these three years we will have the position when given what we say about the rest of the debt, we'll be able to just be on our own. And the taker of the additional debts incurred during this period, the eight, whatever billion that they're giving us. In a [way assures] that we'll be a full member at the economic level of the European community, being the program of the European Central Bank regarding, how does that [inaud.] term. The--I don't remember the word. But you understand, I mean giving fluidity, liquidity, et cetera.

LASCARIS: Yes. The emergency liquidity assistance.

BALTAS: Right. So this will make Greece again a kind of state which, as all the others. And what we're hoping for is that within these few years implementing the programs [scrupulously], as much as we can. We'll arrive after three years at this, let's say, exit point. The big problem is, will people wish we be hit by the [inaud.] different kinds of ways. And the kinds of countermeasures the government could say inspire. This perhaps I would, for surely that campaign regarding particular sections of the population which are hit.

To give you an example which a friend of mine thought about yesterday, because his wife is running a pharmacy. And one of the measures is that the supermarkets can sell things that up to now were sold only pharmacists. He said, okay. Make a campaign in the neighborhood, and all people continue to buy from where they used to buy before. Nobody can [forget] this. If you arrange, if you can, I mean, inspire this kind of resistant movements, then the worst, let's say, perhaps the worst kinds of misery can be saved. It's a big bet, of course.

LASCARIS: Another form of resistance which is available to the Greek people, which certain members of Syriza, notably in the Left Platform have notably advocated, is to exit the monetary union altogether. And I wanted to ask you about the question of whether the Greek government has a mandate to do that. And if you'll bear with me, I just want to sort of lay out the landscape of where the country currently stands with respect to the question of Grexit.

In December of 2014 a Gallup poll showed that a slight majority of Greeks favored a return to the drachma. In 2015 in March and June of this year an independent polling firm called Bridging Europe also found a majority of Greeks favored a Grexit. Although Prime Minister Tsipras was very clear when he called the referendum that it was not a vote on Grexit, nonetheless the prime minister of Italy who tried to characterize himself as an ally of Greece, the president of France who tried to characterize himself as an ally of Greece, Juncker, the president of the ECB, and Angela Merkel, all of them, amongst others stated very bluntly to the Greek people that a vote of oxhi meant a vote for withdrawal form the monetary union.

Now, it's true that there have been polls. A number of polls have shown a substantial majority of the population wants to remain within the Eurozone. However, some have questioned the legitimacy of the polls that have been commissioned by the oligarchy-controlled media in this country. And the case in point is the referendum itself.

There were a number of polls. The one that showed the largest margin of victory for the no camp showed a ten point margin. The ultimate margin was 24 points. Most of the polls showed either a very narrow victory or very narrow loss for the oxhi camp. And so one wonders just how reflective those polls are of the will of the Greek people, and whether these other polls that I mentioned and the referendum result itself can be interpreted ultimately as a mandate for a Grexit. I wanted your thoughts on that.

BALTAS: What I think is the following. The polls which say that Greece should remain within the Eurozone in Europe are mostly correct in the sense that what you hear about, people don't want to get out of Europe. Not for financial reasons, but geopolitical reasons. Greece in a very let's say unstable part of the world. It's a kind of limit between Europe and Asia. Asia Minor, all these countries, a very different situation. Turkey. Balkans.

So Europe and the Eurozone gives us a kind of security sense. So it's not a question of money. It's a question of more, let's say, elementary kind of reactions. On the other hand there are people who think that getting out of the Eurozone will help Greece. This is, this has been debated over the years here within Syriza. And with all the analysis, et cetera, we had and we've been discussing, it's not at all sure that this is this [exchange] will be better, to put it as mildly as I can.

On the other hand, being within the Euro gives us a kind of political leverage which would be impossible outside the Euro. For example if Puerto Rico fails, who knows it, who cares about it, [in other words]. But if Greece fails within Europe, then it's a big world problem. So being within the Eurozone is also a kind of political necessity, as it were.

From this point of view I think that the Greek people understand these issues. So when they say well for Tsipras, and the exact mandate we're giving him is that, most believe it. And it's interesting to see that all the campaign during the referendum for the yes vote was trying to say that this is a campaign for or against Europe. And the very next day after Tsipras signed, this was completely forgotten. Nobody came out to say, oh, Tsipras does not want to get us [after] Europe. He's faithful to his mandate.

Nobody said it. Continued to be business as usual saying forget--forgotten what they were saying to [inaud.] before. It's the kind of media situation that we're living in and the kind of political situation we are living in. If you look at television stations, major newspapers in Greece [and elsewhere] you find Syriza totally isolated, as a matter of fact. So it's a kind of miracle that against all this absolutely terrible kind of propaganda who could be having during their [inaud.] despite all these pictures of people waiting in queues to get their pensions and all that, there was absolute calm. And absolute dignity. They didn't dare show what people were saying when they were interviewed, because very few were hysterical.

And the very day of the referendum, to give you personal experience, I [wrote] my wife who voted in a town outside Greece--outside Athens. And the atmosphere was frozen. I thought we're going to lose the referendum because nobody speaks out. The yes campaign seems to predominate. People are silent. Not at all the kind of atmosphere you get in Greek elections. The next day we discovered that the [inaud.] the no vote got [73] point percent.

The kind of fight these people were doing, I mean, new kinds of weapons, frequencies, TV, and ATMs. People just managed to take care of these new kind of weapons without having equally [not numerals], but at least something [developed] as [inaud.] weapons of this sort.

This I think is one of the big moments of European history. This now.

LASCARIS: Yes. And lastly I wanted to ask you about a comment that you made yesterday at the Democracy Rising conference. You have extensive background in philosophical issues and you spoke rather philosophically about the tension which you've acknowledged today between the government's mandate, its agenda, and this deal that was struck under very difficult circumstances.

And what you said yesterday was it--and I'm paraphrasing here. But there comes a time in the life of a politician, of all of us, perhaps, where we have to choose between responsibility and conviction. And I thought perhaps you could elaborate on what you meant by that in the context of what we've been discussing here.

BALTAS: [I think that] the kind of distinction that Weber has made, like [inaud.] I don't remember the exact words. But a kind of ethics of conviction versus ethics of responsibility. Ethics of conviction is something which turn mostly towards yourself. You have to be faithful to your principles, conduct your life according to your principles. Follow your convictions out to the bitter end and things like that.

But there are times when this kind of ethics is not what the situation demands. And then the ethics of responsibility, which before were more or less--worked more or less together with the ethics of conviction becomes a kind of opposing [inaud.] dilemma. The ethics of responsibility as well, you forget about yourself. You may even destroy yourself as a person with convictions in order to serve something which goes much above you. So from this point of view, either you politics in whichever capacity, the ethics of responsibility is predominant. And the times--I mean, most of the times you can more or less arrange the two going together. But there are some big moments in world history where you have to choose responsibility over conviction. Perhaps with extraction of yourself as a person with convictions. Of course and at the second level you can say there's conviction that [inaud.] but let's not get into, I mean, weird philosophical things.

But I think that Tsipras found himself within this kind of dilemma. Because it's not just the question of signing. It's a question of [become faithful] to whatever brought him to that position. Together with all of us, and together with this. And he went to say, I promised you never to sign a treaty like this. But look, I'm here finding myself signing it. And the second dilemma is also a big one. Because after that the natural thing to say is I failed, I did as well as I could, so I have to resign. I failed.

So the second thing comes in. Do I resign or not? And everybody was saying to us during the whole of [no campaign], even the poorest of people, even those living with a pension from the whole family, even if you lose the referendum won't leave us because you will be able to treat the situation even if you are in this kind of condition much better than the other governments. So this kind of pressure was felt literally during the few hours that Tsipras had to decide on all these existential issues.

And so the second decision is, again, a kind of responsibility. I remain as prime minister or [vote] become faithful to what I have been saying before. It's one of the big moments, I think, of history.

LASCARIS: Thank you very much, minister, for taking the time to speak to us today.

BALTAS: Thank you very much. It was a pleasure meeting you.

LASCARIS: This is Dimitri Lascaris for the Real News.


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