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Elite interests aim to keep Greece on the path of further austerity, say University of Greenwich’s Ozlem Onaran and University of London’s John Weeks

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JESSICA DESVARIEUX, PRODUCER, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore. The Greek finance minister, Yanis Varoufakis, says he’ll resign if the Greek people vote yes on the national referendum set for July 5. The vote will decide whether the Greek people will accept the bailout terms offered by the Troika, which is made up of the European Central Bank, International Monetary Fund, and the European Commission. Since the Greek prime minister called for the referendum vote, Greece defaulted on a $1.8 billion payment to the IMF. European leaders have threatened to force Greece out of the Eurozone, and the ECB is signaling that the current emergency funding that it’s providing to Greek banks is dependent on the referendum, a point critics of international creditors have called a scare tactic to get Greece to vote for the deal. Now joining us to discuss all of this are our two guests. We have Ozlem Onaran, who 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. Also joining us is John Weeks. John is a Professor Emeritus at the University of London School of Oriental and African Studies. Thank you both for joining us. JOHN WEEKS, UNIV. OF LONDON: Thank you, glad to be here. OZLEM ONARAN, UNIV. OF GREENWICH: Thanks for having us. DESVARIEUX: So Ozlem, let’s start with you so we can get a better understanding of a Greek exit, a potential Greek exit from the Euro. We hear from European leaders like German Chancellor Angela Merkel that a no vote will mean Greece will be forced to leave the Euro. First of all, can the members of the ECB force another member out, legally? ONARAN: There is no legal mechanism for doing that, but obviously the European Central Bank saw that the financial [affair] already back in February by cutting direct funding of the Greek banks. What they will do about emergency liquidity assistance to the Greek banks now after a no vote will be the most important determining factor here. But there is no direct mechanism. The Greek government doesn’t want to leave the Eurozone. They will therefore try to negotiate for an alternative program. And this means the ball will be in the corner of the European government. And the political contagion of the resistance to austerity in Greece will open so many other avenues for popular mobilization across European countries that it will be very difficult to further this financial coup. And I’m thinking the opportunities are all open in front of the Greek people, after a no vote on Sunday evening, it will [inaud.] the European people on Monday. DESVARIEUX: Okay. So let’s enter the realm of speculation, and let’s say it’s Monday morning and we have a vote, John, and the Greek people decide to vote no on this bailout deal. Would you be in favor of a future Greek exit from the Euro by Syriza? WEEKS: Before I do that let me just point out to everyone that this is an extraordinary event. I mean, a government has gone to its people to ask their advice on a major issue of policy, rather than saying, well, circumstances have changed and we’ll push it through parliament. Okay. This is a major event. This is a shock to the European system. This is particularly a shock to the Troika, which is very nondemocratic, to say the least. So what will happen. Will it go out. I think if there is a no vote, then the Troika, particularly the German government will be absolutely ruthless and relentless. And I’m sure that the Greek government is prepared for that. They’re prepared, they’re prepared for the Germans to be ruthless. What they do then, I think it probably is–it will be necessary for the Greek government to take steps that involve issuing IOUs. Which are common enough, which has happened often enough. The problem will come if there is a run on the banks. Which I don’t think there will be, but we can discuss that. DESVARIEUX: Okay. So when you say issuing IOUs, to whom? WEEKS: Well, so for example, when you get your hefty paycheck from the Real News, they pay it into your bank account. But–. DESVARIEUX: Hefty, that’s funny. WEEKS: The same thing when I get my hefty, you know, pension fund payment. They’ll continue to do the same thing. And the way they will fund it is, I assume, that they will borrow from the domestic banks and they will borrow from the Greek Central bank. So for a while it will look like nothing is happening. But in fact, something will be happening. DESVARIEUX: Okay. Ozlem, you just heard John kind of lay out what he predicts might happen. What about you? Do you think a potential no vote would mean that Greece would have to consider at the very least exiting the Euro? ONARAN: The question that the Greek government will start with is an alternative program for recovering reconstruction, for social recovery in Greece. So that’s an alternative to austerity. They can only implement this program if at the same time they have a major write off of their debt. Now, we have provided a report to the Hellenic parliament after they had set up the Truth Committee on Public Debt, that the current public debt of Greece is neither legitimate nor legal, nor sustainable. It’s not sustainable from an economic point of view, but it’s also not sustainable from a humanitarian point of view. And the lenders, the creditors, who have signed these loan agreements very well knew that these loans were not going to be used in favor of the Greek people. These were meant to bail out the private banks of Germany and France. They’ve successfully done that. They also from the start knew that this would lead to a major depression in Greece. Now, this makes the debt also odious. And this truth is out. The major, this is a major piece of empowerment for the Greek society and the Greek government to take unilateral action about the debt. So I would suggest that they refuse to pay any part of this debt until a major European conference is held, just as the one in 1953 in London, which wrote off more than half of the German debt at the time. And of course, if this is [the same] the Greek government saves, the political contagion effect of that to the rest of Europe will be immense. And that requires however of course time. And I do believe after saying no to austerity, if the European Central Bank with the pressure coming from the German government, pulls the plug on funding the Greek private banks, the option that is available for the Greek government is first to nationalize the Greek banks. Because what will happen to the banks will be very important. And then use the IOUs to recapitalize the banks, under their control however, not the European Central Bank. Use the IOUs as a medium of exchange for a transitionary period. It will turn into a currency, but it will be denominated in Euros. So the exit from the Euro, after a no vote, is not an immediate consequence. Time is all they need if they are to achieve the political popular support across Europe. So what I suggest is basically default on the debt, and tell the European government to send the bill to the private European banks of Germany, of France, of Belgium, and elsewhere. DESVARIEUX: All right, Ozlem, thank you so much for those comments. But I want to just pause the conversation here because in part two I want to get more into the counterarguments being presented about why Greeks should vote yes on this referendum, and I’d like to get your responses. So Ozlem and John, thank you both for joining us. ONARAN: Thank you. WEEKS: 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.

John Weeks is Professor Emeritus and Senior Researcher at the Centre for Development Policy and Research, and Research on Money and Finance Group at the School of Oriental & African Studies at the University of London.