What’s the U.S. Role In the Greek Crisis?
CEPR Economist Mark Weisbrot discusses the role of the U.S.-dominated institutions in the current crisis in Greece.
JARED BALL, PRODUCER, TRNN: What’s up world, and welcome back to the Real News Network. I’m Jared Ball here in Baltimore.
As the struggle in Greece continues, with much of the media focus being decisions taken by Greek and European political and economic leaders, one question we wanted to pay particular attention to here is the involvement in this crisis of the United States. In other words, what role is taken previously and now by this country, and what is the impact of the Greek economic crisis of the U.S. specifically?
To address this question and joining us now is Mark Weisbrot, who among other things is an economist and columnist, and co-director of the Center for Economic Policy Research in Washington, DC. Welcome back to the Real News Network, Mark Weisbrot.
MARK WEISBROT, CENTER FOR ECONOMIC POLICY RESEARCH: Thanks, Jared. Good to be with you.
BALL: So as I said in the intro, what from your perspective is the impact of the United States and its dominated institutions on this crisis in Greece?
WEISBROT: Well, the U.S. government, the Obama administration, its main concern is really they don’t want to see Greece leave the Eurozone. And they’re looking at it kind of from an empire point of view, that if Greece leaves the Eurozone the Eurozone could be weaker, it could disintegrate. The whole process could weaken European unity. In worst-case scenarios Greece could leave NATO, Greece could end up borrowing from Russia. So these are the way, this is the way it’s looking at it.
That puts them a little differently from Europe. Europe is a little more divided. They don’t want Greece to leave the Eurozone either. They want to get–their strategy is really to get rid of the current Greek government, the Syriza government, and force them out. And the U.S. is okay with that, but they were more worried about them forcing them possibly out of the Eurozone altogether.
One place where this shows up is through the IMF, because the U.S. dominates the IMF. Now, they don’t usually use all their muscle at the IMF to go against Europe. They would normally let the Europeans decide what happens in Europe. But in this case there was a board meeting before the referendum in Greece on July 5 where the U.S. got the IMF [board] against the wishes of Germany especially, to release a study that the IMF had done showing that Greece’s debt was not sustainable, that there had to be debt relief. And that really angered the Germans and their allies, because this kind of helped Syriza in their referendum on July 5 because Syriza, the government which was pushing for a no vote to reject the last offer that the European authorities had given them, the government was able to cite that study and say look, we need debt relief. This is an unsustainable debt, vote no. And so that was a real point of friction between the U.S. and Germany, and there’s a case where the U.S. used its muscle in the IMF to get that report released before the referendum, and it could have had an influence.
Now, the problem is that this doesn’t really do Greece or the world any good because it’s nice that they want debt relief. But the IMF is still signed on to a program in Greece that will not allow the economy to recover, and the debt relief isn’t going to help that at all.
BALL: So if I heard you correctly, the United States hasn’t had a particular problem with what led to this crisis. Their problem comes with the various forms that a response to this crisis have taken among the Greek people, which is somewhat related to the second question I wanted to ask you about this looking somewhat to some of us like a macrocosmic version of the predatory lending we saw here that of course the United States as a whole didn’t have a problem with for individuals in the United States. Does that analogy work at all for you? And if not please tell us why.
WEISBROT: Well, I don’t think it’s really analogous to predatory lending because this isn’t really about the money. It’s not about how much Greece is going to pay on its debt, which is unsustainable, and how much the European governments are going to lose. It’s probably 86 percent government-owned debt now because they’ve already bailed out the private lenders.
So it’s really about power, and using that power, on behalf of the European authorities using that power to change Greece and change Europe into societies that have a smaller social safety net, reduced pensions, healthcare spending, weaker labor movements, more inequality. More like the United States, actually. That’s the kind of transformation they were trying to make in Europe. And they’ve been using the debt crisis and associated vulnerabilities of the more vulnerable European countries to force those changes there. Not only Greece but Portugal, Spain, Ireland, Italy, and even in the whole Eurozone as a whole, that is their vision. That’s what they are trying to do.
BALL: But in–well, at least for some of us that is in some way how we interpreted the predatory lending impact or purpose or function here in the United States, to do just what you said is the intent among–by the United States for those in Greece, that is, to weaken the resistance to a drawback of society’s safety nets and other benefits to working people. But you don’t see that as having the same function here?
WEISBROT: Well, if you look at the response to the financial crisis and the great recession here, it was very different than in Europe. Now it’s true if you look at the state level, you did see some of that. You had cutbacks, teachers and other state employees laid off, and things that were probably also politically motivated.
But at the federal level you had a stimulus. It wasn’t enough of a stimulus. But if you look at–they didn’t attempt to use the great recession as an excuse for imposing nationwide austerity and taking away–you don’t have anywhere near as much to take away as Europe, but they didn’t cut Medicare or Social Security or do any of the kind of things that you see in Europe. And we didn’t have the prolonged recession either, that they had.
Unemployment in Europe is twice the level of the United States, and that’s primarily because of the different response of macroeconomic policy here as compared to Europe. I’m not going to defend it because they could have done much more. We’re still down three or four million jobs from where we should be right now, so they should have done a lot more and it would have been easy to do a lot more. But compared to Europe, it was still very, very different.
BALL: Mark Weisbrot, thank you again for joining us here at the Real News Network.
WEISBROT: Thank you.
BALL: And thank you for joining us as well here at the Real News Network. And for all involved, I’m Jared Ball. And as always, as Fred Hampton used to say, to you we say peace if you’re willing to fight for it. So peace, everybody. Catch you in the whirlwind.
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