During the early hours of Saturday morning, the Greek Parliament passed the motion by a majority vote of 250 – 300, but Dimitri Lascaris says this is one of the worst political debacles in modern European history
Story Transcript
SHARMINI PERIES, EXEC. PRODUCER, TRNN: This is the Dimitri Lascaris report on the Real News Network. I’m Sharmini Peries coming to you from Baltimore. The Greek MPs are debating the controversial reform plan tabled by Greek prime minister Alexis Tsipras to its European creditors on Thursday. He’s trying to avert a forced exit out of the Eurozone despite the clear mandate given to him on Sunday to say no to its creditors. In the meantime the left platform of Syriza, which includes Costas Lapavitsas that we have interviewed here on the Real News Network, issued a statement demanding that Greece exit from the Euro and deal with the economic crisis by developing its own economy in the interest of its own citizens. With me to discuss all of this and more is Dimitri Lascaris. He’s joining me from London, Ontario. He’s a lawyer with the Canadian law firm Siskinds, where he heads the firm’s securities class actions practice. He’s also a board member of the Real News Network. Dimitri, thank you so much for joining us today. DIMITRI LASCARIS, SECURITIES CLASS ACTIONS LAWYER IN CANADA: Always a pleasure. PERIES: So Dimitri, give us the latest development in the last 24 hours. LASCARIS: Well, I think we are witnessing what could fairly be described as one of the worst political debacles in modern European history. The government surprised and annoyed, infuriated, its negotiating partners at the Troika by announcing at the 11th hour of the negotiations a referendum. It vigorously urged the populace to vote against the ultimatum of the Troika, despite immense pressure being placed upon the Greek electorate through the capping of liquidity assistance to the Greek banks, which resulted in the imposition of fairly severe capital controls, very extensive damage to the economy as a result of the freezing up of the flow of money in the economy. And the threats that a no vote would be equivalent to a Grexit, and there was a–it’s debatable how many people in Greece want to avoid a Grexit, but certainly a substantial portion of the population does not want to go down that path. Despite all of that pressure, the Greek electorate showed immense courage and voted oxhi, no, with a quite substantial majority, 61 percent, as we all know. In excess of 61 percent, actually. And within approximately 48 hours, the Greek government proceeded to offer terms, austerity terms, that were at least as harsh–I mean, essentially as harsh, and perhaps even harsher than those it urged the Greek people to reject only days earlier, successfully urged them to reject. And in addition, its proposals sent to the Troika yesterday make no mention at all of debt relief. Simply nothing in them in relation to debt relief. Even though, you know, the IMF and the treasury secretary of the United States have been saying in the last 48 hours and started to say previously, and Donald Tusk, senior official of the EU, others have said debt relief should be accorded to Greece. The acceptance–this term is not actually conditional. Certainly not on its face. PERIES: Is that because Germany, the German finance minister, has come out so clearly saying that they would not accept a haircut? LASCARIS: German finance minister, Angela Merkel herself, the chancellor, said that very clearly in the last 24 hours. She said that a haircut is out of the question. Let’s recall that the IMF itself–and these were words repeated to the Greek electorate in the run up to the referendum by the Prime Minister Alexis Tsipras, has said that in order for Greek debt to be rendered sustainable–and this was before the economic collapse that has been occasioned by the capital controls, the Greek government or state required a debt writedown of 30 percent, and a 20-year grace period on payments on that debt. And you have the German government saying–and they have enormous power, obviously, in this entire discussion, saying unequivocally that a debt haircut of any kind is out of the question. PERIES: And I might want to remind our audience, this is the proposal that the IMF thought, and issued a statement recently saying, that that was perhaps something that they should try to achieve. LASCARIS: Absolutely. And you know, to be fair to the Greek government, and I’ll try my best to do that although it’s very difficult under the current circumstances to say anything positive about what is currently going on in the Greek parliament and the Greek government, the German government has not ruled out other forms of debt relief. For example, they could agree to extend the maturities. They could agree to reduce the interest rates. But I assure you, I would be astounded if any other forms of debt relief that the government of Germany would agree to–and not just the government of Germany, the government of Finland and the government of Slovakia and other hardline governments in the Eurozone, would not come anywhere close to rendering Greek debt sustainable. That simply isn’t going to happen. There’s no appetite for it. It’s not even clear that there’s any appetite to disperse any further moneys to Greece, and this deal would require approval by the parliaments of the Eurozone for the disbursement of over 50 billion Euros to the country over the next, I think, three years. So debt relief just ain’t happening. Certainly not to a degree that is going to render the debt sustainable. And so this is the big question. I mean, really there are two questions in this debate. The first question is, is Greece better off on a long-term basis in the Euro, outside of the Euro. And you’ve heard people like Costas Lapavitsas say quite clearly that Greece is better off outside the Euro. The other question is even if you believe that Greece is better off inside the Euro, you disagree with people like Syriza MP Costas Lapavitsas, one must ask the obvious question, will this deal actually prevent a Grexit? And anyone who thinks that this deal, which is going to cause further economic contraction in Greece, further social inequality, further increase, probably in the debt–certainly there will be an increase in the debt-to-GDP ratio. Further unemployment. But somehow magically this is going to prevent a default. I think they need to have their heads examined. If anything, this is going to accelerate a default on the other debts that Greece has. And when that default happens, there will be an end to liquidity assistance by the European Central Bank, assuming that it ever restores the liquidity assistance, and that’s going to result in a failure of the Greek banking system and the need to seize the banking system and issue a parallel currency. So as a matter of fact this deal, if it passes, will not prevent a Grexit. Whether you think a Grexit is in the best interest of Greece or not is rather secondary at this point. It won’t prevent a Grexit. We’re going to be right back having this same discussion in a few months’ time, maybe perhaps next year. Maybe they’ll buy themselves that much time. And what’s going to happen in the interim. Let’s suppose that in Germany by some miracle there’s an election and the social democrats were to come to power. Few people in the Eurozone have been as hardcore in their denouncements of the Greek government than Sigmar Gabriel, the leader of the social democratic party in Germany. There’s no reasonable prospect of a government coming to power before Greece ultimately defaults on all of its debt that would have an appetite for a debt writedown that would allow the debt to come to sustainable. So ultimately what we’re doing here is we’re engaging in precisely the game that the Greek government so rightly and eloquently condemned prior to taking power, the game of extend and pretend. That’s what this is. It will not prevent a Grexit. It will simply delegitimize the government, drive it into the arms of neoliberal parties who have historically protected the very oligarchy that the Syriza party purports to want to destroy, and rightly so. And simply destroy any sense of hope within the Greek populace, and potentially result in a great deal of social unrest. Effectively Syriza, the leadership, has caused the economy to experience extreme hardship, has set back the economy of Greece quite significantly, to an unknown degree, for nothing. Because they could have gotten this deal without capital controls. They could have gotten this deal without pushing the European Union and the creditors to the limit that they did. PERIES: And what is in the minds of those who are favoring what they have just tabled to the creditors? What are they hoping to do? Is this crisis management, is this a stopgap measure? Is it buying time? LASCARIS: I’m going to be as charitable as I can. I think they are overcome with fear. That’s all. That’s the–that’s the most charitable interpretation. You know, a cynic would say–and I must say, I interviewed a candidate for PASOK, the so-called social democratic party of Greece that has in fact become a neoliberal party, and has been completely wiped out electorally, virtually wiped out as a result for its support for austerity. But in the January election, I interviewed a young candidate for PASOK, his name was [Michaelis]. He wasn’t elected, ultimately. But he said to me in the interview, if you believe that these people, the people who are running Syriza–and he was very careful to identify, to be clear that he was talking about the leadership, not the rank-and-file. If you believe that they’re going to change anything in Greece, he said, you’re deluded. At the time I thought that that was politicking. In retrospect he turns out to have been right. Whether his assessment of their character is correct is another matter. I’m going to be charitable and say I think they’re simply overcome by fear and that they actually did want, genuinely wanted to stay within the Eurozone and strike a more humane deal. But even on the most charitable interpretation the way they’ve gone about this has been a complete and utter disaster from a political and economic perspective. PERIES: Dimitri, we’re going to be watching this over the weekend. As the debate unfolds, the decisions in the Greek parliament are made, as well as the Sunday meeting of the European leaders in order to deal with the final deadline for Greece. I will hopefully be calling out for you on Sunday as that decision comes down. LASCARIS: Hopefully we’ll all be able to talk about something better than a capitulation. PERIES: Thank you so much for joining us, Dimitri. And thank you for joining us on the Real News Network.
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