Dimitri Lascaris says debt relief is not on the table, but unnamed European government officials are indicating some modest short-term concessions might be in order
Story Transcript
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Real News Network. I’m Sharmini Peries coming to you from Baltimore. As far as Greece is concerned, any prospect of delayed payment on IMF debt now seems to be off the table according to IMF managing director Christine Lagarde. Further, President Obama and Mario Draghi of the Central European Bank have all added their voices to the chorus. They’re all calling on Greek government to do more to resolve the standoff amid depleting cash reserves. Now joining me to discuss this is Dimitri Lascaris. He is a partner with the Canadian law firm Siskinds where he heads the firm’s securities class action practice. He’s also reported for The Real News Network from Greece during the election, and he’s a board member of The Real News Network. Thank you so much for joining us, Dimitri. DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER IN CANADA: Thanks again, Sharmini. PERIES: So Dimitri, tell me, Troika and all of the European institutions are all leaning on Greece heavily. It is like trying to draw blood from a stone. What do you make of this pressure? LASCARIS: I think that they’ve begun to conclude that they’ve pushed the Greek government as far as it’s prepared to go. One line in the sand that the Greek government does not appear prepared to cross is further reductions in pensions. The Greek government also is not prepared to make any more hard, definitive commitments in respect to the privatization program. What it has said is that it won’t undo privatizations that have been completed and will not disrupt those that are in progress, although there’s some question as to what terms it would be prepared to accept with respect to those that are in progress but not completed. The Greek government has not committed to going ahead with uncommenced privatization processes. So that’s a red line also that they seem to have drawn. And I think that the eurozone leaders are coming to the conclusion that they’ve pushed Greece very far, the Greek government. It’s as far as they’re prepared to go. And it’s time for them to begin making some modest concessions to achieve some kind of a short-term deal that in the end will not solve the long-term crisis. The reason why I say that, that there are signs that they are prepared to make some modest concessions at this eleventh hour, is you’re seeing reports in the media–for example in Bloomberg, three officials, unnamed officials of the eurozone governments have said, you know, that as long as Greece doesn’t backtrack on commitments made thus far and as long as it does something, without specifying what that something may be, to implement further reforms in addition to those so-called reforms, in addition to those that have been implemented thus far, then a deal can be done. This is, this is new. But it’s extremely modest. And from my perspective what got lost very early on in the conversation and is not on the table at this stage, a critical, key component by the Greek government’s own account is debt relief. That seems to have evaporated. And without any long-lasting debt relief, any substantial reduction in Greek debt, a write down of the Greek debt, you’re simply engaging in the, to borrow the words of Minister Varoufakis himself, in a game of extend and pretend. And this crisis will inevitably erupt in the future. PERIES: Now Dimitri, in the hour-long conversation we had just aired on The Real News, conversation between Yanis Varoufakis the finance minister and Joseph Stiglitz the economist, Stiglitz actually asked Varoufakis, he says within the framework that currently exists is, you know, what is it that can be done? And I was shocked at Varoufakis’s answer, where he didn’t ask for debt relief, as you said. This would have been his opportunity to bring on board a critical, key economist in the discussion on this very issue. Why do you think he’s doing that? LASCARIS: Well, I think that his determination to keep Greece within the eurozone is greater than his determination to effect radical reform–reform, progressive reform, within Greece. I think he does genuinely desire to do the latter, but his determination to do that is not as great as compliance with demands of the eurozone, for the purpose of keeping Greece within it. The idea that he’s continuing to advance, it’s an interesting idea, is that you know, Europe is–and I’m simplifying it–but that Europe would essentially shift to a pro-growth approach to the eurozone through infrastructure investment. Through a development bank that the European Union has established. And that, that bank would borrow money at low interest rates and then inve–and create growth through infrastructure investment and other types of investment. The problem for Greece–and that would be a positive development, to be sure. And it is one that I think is doable within the existing legal framework of the European Union. Although it may not be doable within the current political environment. Even if it were doable in the current political environment, Greece cannot grow its way out of this debt. No matter what is done. It’s simply too great. It is unsustainable. It is far too high a percentage of Greece’s GDP. And it has to be written down. And until that very difficult negotiation is engaged in in good faith by all parties, this crisis will not end. And the suffering of the Greek people–and others within the European periphery who, other states where the debt loads have become unsustainable, their suffering will not end either. PERIES: Now Dimitri, somewhat amusingly they all played on the term “times are changing”, and I think when Yanis Varoufakis referred to that in this discussion with Stiglitz he was referring to the pressure that these countries that are currently experiencing difficulties in terms of debt, like Greece, Spain, Portugal, and others could bring on some sort of change within the eurozone to address these issues that a number of them are having. Do you think that’s a real possibility? LASCARIS: I’m skeptical that it is. The governments that wield by far the greatest power within the eurozone are both politically and ideologically invested in a neoliberal vision of Europe that is fundamentally incompatible with dramatic progressive reform, in the periphery or elsewhere. And unless those governments are dislodged from power, there is really no, there’s no meaningful prospect for long-term progressive reform within the current framework of the eurozone. I mean, that’s just the unfortunate reality. Now, if Greece does–interestingly, opinion polls, or current opinion polls are indicating that Syriza continues to enjoy very high public support, even roughly double, a little bit less than double of what it enjoyed at the point of the election in January. They’re showing public support for Syriza in the range of 70%. And if Syriza can effect meaningful albeit modest reform, that may start a movement. That may revitalize a movement within Europe. It may give more, for example, impetus towards parties like Podemos in Spain. And so I suppose there’s a small prospect that once you start the ball rolling, so to speak, in terms of achieving some change in the conversation, some substantive change of the policies towards more pro-growth, towards more humane treatment of the more vulnerable members of European society, at that stage you may see over a longer term meaningful political change, political movements, within the eurozone. But I think, you know, given the power, the distribution of power within the eurozone and the ideological inclinations of those who exercise it, that is unlikely to occur within this, the current framework of the eurozone. And if it does occur, it’s going to occur over a very long time frame, and Europe is in, urgently in need of dramatic reform. You know, that, that approach, the incremental approach is not going to accomplish in the near term what needs to be accomplished in order to sustain the union. PERIES: So then what options does Greece have? I mean, it really does not have the money to make these next payments. What could it possibly do under these circumstances? LASCARIS: Well as I’ve, I’ve advocated previously and will continue to advocate, Greece needs to default on this debt and commence a negotiation with its creditors for a massive writedown. Greece needs to withdraw from the eurozone, Greece needs to regain sovereignty over its currency. It needs to engage in an external devaluation rather than continuing this vicious internal devaluation, these wage cuts, these cuts in social benefits. And it needs to rebuild its economy in accordance with certain basic humanitarian principles. And other states within the eurozone may need to do that. For example, Spain. But short of that, given, as I say, the current ideological inclinations of those who exercise the greatest power within the eurozone, I don’t see the necessary reforms occurring to achieve a stable, robust and egalitarian democracy within the eurozone. PERIES: And in order to change the current political outlook on Europe and who Greece is negotiating with, if Podemos is actually successful in Spain, who else is in line to make a difference in that framework? LASCARIS: Well, at the moment, you know, the party as I understand it in Italy, another country which is burdened by unsustainable debt and is suffering from the austerity quite significantly, although not as badly as Spain and Greece from the austerity policies of the Troika. That’s the party of Beppe Grillo. He tends to be more of a right-wing populist persuasion, so I’m not sure that, that that would provide a viable answer on a long-term basis for Italy. Really, the two parties that stand out within the periphery, within the countries that are most indebted and most suffering from austerity are Podemos and Greece at this stage. I’m not aware of any, you know, real, viable alternatives. But I think that there’s a great hunger and an appetite amongst the European populace for parties like Syriza, like Podemos. And if they can, if they can achieve some measure of palpable success for their own constituents I think you may see the rise of progressive parties within other jurisdictions quite quickly. Things could turn quickly. Relatively quickly. But at the end of the day, without, without debt relief, these peripheral states are not going to achieve the reforms that they need to in order to revive their economies and protect the most vulnerable members of their society. PERIES: We’ll be watching. Dimitri, thank you so much for joining us today. LASCARIS: Thank you again, Sharmini. PERIES: And thank you for joining us on The Real News Network.
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