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University of Greenwich’s Ozlem Onaran argues that the government should create its own currency and fall out of love with the eurozone

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JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore. On Wednesday evening, Greek MPs passed tough austerity reforms as part of a Eurozone bailout deal. Thousands of Greek people hit the streets to protest the 229-64 vote. Here to help us understand these developments and put them in perspective is our guest Ozlem Onaran. She is a member of the Debt Truth Committee on public debt in Greece and a professor of workforce and economic development policy at the University of Greenwich. Thank you so much for joining us, Ozlem. OZLEM ONARAN, PROF. OF WORKFORCE AND ECONOMIC DEVELOPMENT POLICY, UNIV. OF GREENWICH: Thank you for having me. DESVARIEUX: So Ozlem, do you see what happened on Wednesday as a teaching moment for the people of Greece? And if so, what are they supposed to learn? ONARAN: Well, the people of Greece put their trust in Syriza and they gave them a mandate to do two things: negotiate a deal to put an end to austerity to bring back growth and jobs, while still keeping Greece in the Eurozone and the European Union. Now, what we have learned in the last five months is that the ruling elite of the European Union, in particular in countries such as Germany, to some extent also in Netherlands, in Finland, and some of the Eastern European countries such as Slovakia or Lithuania, Estonia, are not ready to give any concessions to the negotiating team of the Greek government precisely because it’s a left-wing government. It’s threatening the hegemony of neoliberalism in Europe. If they were to make concessions it would surely be the beginning of the end of neoliberalism in Europe. It would trigger an immense domino effect in the rest of Europe, in Spain, in France, instantly. In Britain. It would give hope to the left all over Europe, including the left in Germany itself, so they simply could not tolerate that. It would be also an admission on their part that their policies, austerity policies, have failed. So they took an extremely tough stance. They waged an unforeseen financial coup against the Greek society and the Greek government. And this has been a learning process for the negotiation team of Greece itself, of the Syriza government itself. But I think most importantly it has been an incredible learning process for the social movement, trade union movement, and also the ordinary people who have voted first for Syriza, and then massively for a no vote on the 5th of July in Greece. So now they see, they have tried it all if they want to end austerity, if they want recovery, if they want reconstruction in Greece. And even when they want to end [tax evasion], to end the power of the oligarchs and to bring back tax justice in Greece, they have to also do it via a much more dramatic rupture with the policies of the European Union which may mean, as we see today, that they will have to exit from the Eurozone. And if they decide that, they should do it on their own terms rather than waiting to be, of course, expelled by the conservative, extreme conservative governments of the Eurozone. DESVARIEUX: Hold on, one moment. I want to get to this alternative. Because you said the Greek people, as we know, they’ve been polled. They say that they do not want to leave the Eurozone. But now with this development, minds could be changing. Do you think that there could be an alternative? And let’s talk about this alternative. What exactly would it look like? ONARAN: Now, at the moment the majority of the Syriza government are saying, well, we tried. There is no alternative. We were blackmailed, we have to take this offer. They’re very aware that this offer means wholesale privatization, but also massive austerity which will not bring back growth, which will not bring back reconstruction of Greece, and which will not generate jobs to put an end to poverty, unemployment and inequality. But they seem to tell to people that we don’t have a choice. However, within Syriza there is a left of Syriza. As well as outside Syriza there is trade union movements as well as other organizations of the left. They do see that there is an alternative. Now, if this alternative is put on table in front of the Greek people in a more systematic way, I think people are more ready today to see that there is a viable alternative compared to before. The trouble is this alternative has not been properly communicated to them in the recent stage after the referendum when the European governments, the Conservative governments refused to negotiate a proper deal. Now, this alternative. How should that alternative, how could that alternative look like? Firstly it is about gaining control of the financial system in Greece. It’s about taking control of the banks as well as the Central Bank of Greece and introducing a new currency. On the run up to introducing a completely new currency like the drachma, there will have to be, unavoidably, a transitionary period to where there has to be an [electronic] currency until there is time to fully introduce paper money. But the idea has to be that this is now a transition to a new drachma. There is no chance of putting an end to austerity in the Eurozone. There is no chance of creating public spending, public investment, that will create an egalitarian, ecologically sustainable, socially viable, reconstruction in agriculture and manufacturing in Greece that will generate massive amounts of new jobs. So a government with its own sovereign currency can do that. Obviously this requires also taking control of the financial system. The Greek government–yes. DESVARIEUX: Quick question, though. I mean, some might argue that that might be a bit too dramatic. Is it even possible to reform the Eurozone? I mean, currently there is clearly a lack of democratic accountability within the Eurozone. Could there be potential ways to reform it? ONARAN: There could be ways to reform the Eurozone if there was synchronized popular movements elsewhere in the Euro, [inaud.] being the rule of neoliberalism and austerity. So institutionally there is nothing intrinsic in the institutions of the European Union or in the idea of a common currency where–which would make it impossible to reform it. It’s all about the policies. The problem of the Eurozone is the hegemony of neoclassical, neoliberal economic policies. If you manage to overthrow that you could, of course, have an alternative Europe, an alternative Euro, which can be the facilitator for funding public investments across Europe and trying to achieve convergence, regional convergence, and social cohesion across Europe. Now, there is a very strong resistance to that coming from several countries, both in the core countries such as Germany and Netherlands, but also in the new member states in the periphery. As long as we don’t have social movements pressurizing those governments, resisting change in these countries, it will be very difficult. And at the moment we are not seeing that happening. And all the fault lies with the ruling elite. France and Italy on the one side versus Germany on the other side have not been enough to really push the conservatives, extreme conservatives, to the corner. So that leaves us now with the truth, that Greece must act unilaterally. Greece has unilaterally had the chance to first repudiate debt payments, to stop all debt payments. To use the report we have returned that shows very obviously that this debt is illegitimate and illegal and odious, and people have the right to refuse to pay that. On the one hand, while continuing in more detail a further debt audit, basically Greece has the right to say I’m unilaterally stopping to pay. But in the meantime, if it wants the economy to recover, if it wants economic activity to start again, you need the banks to function. But we don’t want the banks to be [used] by the conservative, austeratarian, neoliberal policies of Europe. We want them to provide credit to the cooperative movements, to public investments, to finance massive investment and jobs projects. The private banks of Greece under the liquidity support of the European Central Bank and their very conservative neoliberal policy mandate would never do that. So the government should and could take control of the banks. They are the majority owners of the Greek banks anyway. DESVARIEUX: Ozlem, thank you so much for laying out the alternatives, and we’ll certainly be checking this story. Thank you so much for joining us. OZLARAN: Thank you. DESVARIEUX: And thank you for joining us on the Real News Network.


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Ozlem Onaran is Professor of Economics at the University of Greenwich in the U.K. She regularly publishes research studies on globalization, income distribution, and business investment in publications such as the Cambridge Journal of Economics and Labour. She recently co-authored a major study for the International Labour Organization on the relative importance of decent wages versus high profits as an engine of economic growth in several countries throughout the world.