Monday 29 June 2015

Commentary on Greek crisis

Alexander Mercouris

Reuters / Marko Djurica

Via Facebook

I have been having fraught conversations with people in Greece.

Before discussing where we are going, let us be clear about why we are here.
Last Monday the Greek government came up with proposals that would have amounted to an extension of austerity.

On Wednesday the IMF-EU rejected the proposals. What they proposed in their place was a package of tax increases and spending cuts that in essence put the situation exactly back to the original bailout conditions, which Syriza was elected to reject in January.

In other words 6 months of negotiations have got precisely nowhere and despite their protestations to the contrary the IMF-EU have scarcely budged.

To add insult to injury, we have the typical ploy of the IMF-EU claiming their "generous" counter-proposals made on Thursday offered Greece $15 billion of extra money. As is a recurring pattern with promises of money from the EU (something the Ukraine is also discovering), it turned out that this money is simply a re offer of money that was in the original bailout package - in other words it was not new money at all.

Meanwhile the IMF-EU seems to have disagreed with itself on the separate issues of the intended size of Greece's primary budget surplus and on the issue of a debt write off.

Basically the IMF was inflexible in its demands for a primary budget surplus but wanted a debt write-off, whilst the EU - or to be more precise the Germans (the Commission was more flexible) - was prepared to give ground on the size of the budget surplus but categorically ruled out a debt write-off.

Predictably the two positions cancelled each other out so that the proposal made to Greece made no concessions on either the budget surplus or the debt write-off.
Lost in any of this is the slightest recognition on the part of the IMF-EU of the utter failure of what they have done.

A programme that was supposed to stabilise the Greek economy has resulted in GDP falling by a quarter (a third if the starting point is the debt-inflated high point of 2007) and the country's GDP to debt ratio rising to a completely unsustainable 180%.

In place of any admission of the disastrous failure of the policy - blindingly obvious though that is - we get instead more demands for more of the same - one of the best case studies of Einstein's famous definition of insanity that I can think of.

Not surprisingly Tsipras rejected the counter offer and called a referendum.
Some claim to see in this a cunning plan. My view is that Tsipras had no choice.
He had already severely damaged his political credibility by making on Monday the concessions he did. He would not have survived as Prime Minister if he had accepted the counter-offer made on Thursday. Not only would he have faced a parliamentary revolt that would have ousted him from his position as Prime Minister but Syriza would have split and we would be looking today at a very serious political and governmental crisis with no obvious solution, which would have gone on for weeks with the certainty of a default in the meantime.

As for the decision to call a referendum, far from it being wrong or misguided, it was the only logical thing to do - other than resign - given the situation Tsipras finds himself in.

Since he is not able to do what he was elected to do - end austerity whilst keeping Greece within the euro - he has no option but to seek a mandate from the Greek electorate before he decides finally either to accept or reject the offer.
The alternatives would have been (1) to resign and call new elections - which would protract the situation by weeks - weeks Greece does not have (2) to accept the offer the effect of which I discussed above or (3) to reject the offer in which case we would be facing exactly the same situation of withdrawal of ECB assistance and capital controls we are seeing now.

At least by calling the referendum Tsipras is giving himself some sort of electoral mandate to get through the difficult days that now lie head.

As for the IMF-EU, IMF and EU officials who hide behind the calling of the referendum to justify what is happening are not being truthful. The only thing that would have prevented the ECB cutting back assistance and which might have prevented the imposition of capital controls today would have been Tsipras's unconditional and total capitulation to the demands made to him on Thursday. I suspect that the IMF and EU officials - with their complete lack of understanding of the situation in Greece - were confident he would capitulate and are flabbergasted and furious that he didn't

I am afraid that in this very unhappy and dangerous situation that we are looking at, it is impossible in a country like Greece to discount completely the possibility of a coup.

One particularly alarming development was a meeting that has just taken place between the Greek President and Antonis Samaras - the conservative leader and Prime Minister who was voted out in January. An announcement that appeared after the meeting said that they both agreed that Greece should remain at the heart of Europe and in the euro.

On the face of it that looks like a political intervention by the Presidency, which is a most worrying development.

I am not predicting a coup. I am not familiar enough any longer with the situation in Greece to assess the possibilities of one happening with any degree of accuracy.

A year ago I would have said a coup is out of the question. Unfortunately given Greece's history I don't think the risk of a coup can be completely discounted especially if the Presidency is used to give it an appearance of legality. Given the mood in Athens tonight I am afraid there are a quite a few people who would support it. So I am afraid would the IMF-EU.

For my part I have made some harsh criticisms of Tsipras and Syriza in my time.
The point has come to put those all aside.

Tsipras and Syriza are not ultimately responsible for this disaster. The IMF-EU - who so fanatically insist on continuing a disastrous policy - are.

Given the situation we are now in, Tsipras and Syriza deserve all the support they can get. They will need it over the next few days.

Hyperbole from Britain’s tabloid press? Not if the forecast is accurate

Eastring vs. Balkan Stream: The Battle For Greece
Andrew Korybko

Reuters/Laszlo Balogh

28 June, 2015

Russia wasn’t bluffing when it said that Turkish Stream would be the only route for Ukrainian-diverted gas shipments after 2019 , and after dillydallying in disbelief for over six critical months, the EU has only now come to its senses and is desperately trying to market a geopolitical alternative. Understanding that its need for gas must absolutely continue to be met by Russia for the foreseeable decades (regardless of trans-Atlantic rhetoric), the EU wants to mitigate the multipolar consequences of Russia’s pipeline plans as much as it feasibly can. Russia wants to extend the Turkish Stream through Greece, Macedonia, and Serbia, in a project that the author has previously labelled as “ Balkan Stream ”, while the EU wants to scrap the Central Balkan route and replace it with one along the Eastern Balkans via Bulgaria and Romania, the so-called “Eastring” line.

Although Eastring could theoretically transit Caspian gas being shipped through the TAP pipeline, the proposal being thrown around most lately is for it to link to Turkish Stream instead, likely because the possibly projected 10-20 bcm a year from the former (Azerbaijan’s reserves may not be capable of meeting the demand without Turkmen assistance, which is far from assured at this point) is dwarfed by the guaranteed 49 bcm from the latter. If Europe does intend for Eastring to connect to Turkish Stream, then Russian gas supplies would reach the continent regardless of the route involved (Central Balkans or Eastern Balkans), meaning that it’s a win-win for Russia…supposedly. The strategic differences between Eastring and Balkan Stream are actually quite acute, and coupled with the implied motivational impetus revealed by the EU’s Eastring-Turkish Stream connective proposal in the first place, it means that they must be analyzed more in-depth before anyone jumps to a predetermined conclusion about Eastring’s ‘mutually beneficial’ nature.

The article begins by identifying the underlying strategic differences between Eastring and Balkan Stream. After having established that, it uses the acquired insight to interpret Brussels’ motivations and implied regional forecast for the Balkans. Finally, it touches upon the prolonged Greek debt crisis to illustrate how the Hellenic Republic’s current turmoil has evolved into a Western attempt at indirectly forcing Tsipras out of office as punishment for his country’s energy cooperation with Russia.

Strategic Differences
One would be absolutely mistaken for assuming that Eastring and Balkan Stream are strategically similar projects, as even if they both ultimately transit Russian gas to Europe, they promote two completely different long-term visions on behalf of their European and Russian backers, respectively.

The EU envisions that this proposed route will eliminate any of the geopolitical advantages that Russia could potentially reap from Balkan Stream (to be described soon), stripping the pipeline down to nothing more than a skinny natural gas tube devoid of any impact or influence. It’s capable of achieving this goal simply through the fact that the pipeline would be travelling through Bulgaria and Romania, two reliable EU and NATO member states whose political elite are firmly in the unipolar orbit. As an added assurance that Russia could never use the Eastring for any intended multipolar purposes, the US plans to pre-position enough heavy weapons and equipment for 750 troops in both of the Eastern Balkan countries, further strengthening the sub-NATO Black Sea Bloc that it’s been building over the past couple of years. If the US succeeds in sabotaging Balkan Stream and thus forces Russia to ultimately defer to Eastring as the only realistic Southeastern European alternative for shipping gas to Europe, then Moscow would be in just as miserable of a strategic position for its energy shipments as it was by relying on US-controlled Ukraine, thus negating the entire purpose of the Balkan pivot in the first place.

Balkan Stream:
The Russians take the entirely opposite approach to pipelines than the Europeans do, in that they understand the geopolitical utility behind them and seek to use such infrastructure investments as strategic instruments. Balkan Stream can be understood as a multipolar counter-offensive into the heart of Europe , and it’s for precisely these reasons that Russia is completely averse to falling back on Eastring as its sole Southeastern European energy route to the EU. Moscow plans on using Balkan Stream as a magnet for attracting BRICS investment into the Balkans and supplementing China’s Balkan Silk Road from Greece to Hungary . It’s thus no coincidence that American-supported Albanian terrorism has returned to the region after a decade-long hiatus and specifically targeted the Republic of Macedonia, the Balkan Stream chokepoint . Russia is betting on Central Balkan transit for its proposed energy route because it knows that Serbia and Macedonia, both of which are not EU or NATO members, can’t be as directly dominated by the unipolar world as the US’ Bulgarian and Romanian satellites, and it also sees Greece as a ‘wild card’ that’s on the verge of falling out of favor with its Western overlords. These factors in turn make the Balkan Stream route exceptionally attractive for Russian geostrategists, who correctly recognize that the three states along its path (Greece, Macedonia, and Serbia) represent the Achilles’ heel of unipolarity in Western Eurasia, which if given the proper push, can lead to the eventually collapse of the entire structure.

Reading Brussels’ Mind
The very fact that the EU is proposing Eastring as a possible component of Turkish Stream reveals quite a lot about what Brussels is thinking at the moment. Let’s take a look at what’s being expressed between the lines:

Russian Gas Is A Must:
Brussels acknowledges that it must receive Russian gas one way or another, and that the Southern Gas Corridor more than likely will not fulfill the EU’s future consumptive demands on its own (for both the EU as a whole and the Balkan region in particular). The US also understands that this is the case, hence why it wants to engineer a scenario where Russia is forced to rely on the unipolar-dominated route through the Eastern Balkans so that the project is neutralized of any multipolar residual influence, and Washington can continue controlling Russian resource transit to Europe for the indefinite future.

Unipolar Vulnerability In The Central Balkans:

The proactive suggestion that the Eastern Balkans could substitute as an alternative pipeline path for Balkan Stream implies that the West admits the unipolar vulnerability that they have to a Russian route running through the Central Balkans. This is because the successful construction of Balkan Stream would lead to a strengthening of Serbia’s geostrategic position through its emergence as a regional energy hub. Belgrade could then capitalize off of this advantage to slowly and strategically (not politically!) reintegrate the lands of the former Yugoslavia, albeit under indirect Russian multipolar influence.

As a result, the Balkans, the European region which has inarguably received the shortest end of the Euro-Atlantic stick, would be presented with an attractive, non-Western opportunity for co-development with BRICS. Russia’s Balkan Stream would bestow them with secure energy supplies, while China’s Balkan Silk Road would grant them access to the larger global marketplace, thus threatening the economic stranglehold that the EU currently has over the peninsula. If Europe is no longer economically alluring to the Balkan states (its cultural and political attractiveness is a thing of the past due to ‘gay marriage’ and Brussels’ excessive bullying over these past few years), then it loses the last of its soft power sway and the only alternative model becomes BRICS, which would use the region to cut a multipolar beachhead all the way up to the core of the continent before anyone realizes what happened.

Greek Unreliability:

The EU clearly does not see Greece, at least in its present leadership, as being a reliable geopolitical tool for its interests. While an Azeri-sourced pipeline through the politically fickle country is acceptable, one from Russia isn’t, as it can be used as a staging ground for further multipolar inroads through the Central Balkans that can lead to the rapid retreat of Brussels’ Balkan influence (as described in the grand strategic scenario above). If Greece were fully under unipolar control, or the West strongly felt that this would be the case by 2019, then there wouldn’t be a need to cut the country out of the mix. Although there remains the possibility that a sliver of Greek territory could be used to construct a gas interconnector between the it and Bulgaria to facilitate Eastring, this still isn’t the same as a pipeline traversing half of the country’s northern territory and proceeding along a route that lays outside of unipolar control (unlike the proposed Bulgarian alternative). Thus, Eastring’s proposal says a lot about the dismal geopolitical outlook that Brussels holds in regards to Greece’s 5-year forecast, although this conversely can be read as a confirmation of the multipolar opportunity that Russia had earlier identified in the country.

Balkan Proxy Wars:

More than anything, Brussels’ Eastring proposal can be read as a desperate backup plan to secure much-needed Russian gas supplies in the event that the US successfully renders Balkan Stream’s central peninsular route unfeasible through a series of destabilizing proxy wars. As was earlier explained, the EU needs Russian gas no matter what (something that the US begrudgingly acknowledges), so it absolutely has to have a backup contingency plan on the table just in case something happens to Balkan Stream. The Russian coffers need the revenue, while the European factories need the gas, so it’s a natural relationship of mutual interest for both parties to cooperate via some route or another. The contention, of course, comes down to which specific path the Russian gas will travel through, and the US will do everything in its power to make sure that it falls under the unipolar-controlled Eastern Balkans and not the multipolar-susceptible Central Balkans. As such, the ‘Battle for Greece’ is the latest episode of this saga, and the future route of Russian gas shipments to Europe presently hangs in the balance.

A (Greek) Fork In The Road

Although the debt crisis was long an issue since before Balkan Stream was even conceptualized, it’s now become intimately intertwined in the New Cold War energy drama unfolding in the Balkans. The Troika wants to force Tsipras to capitulate to an unpopular debt deal that would surely lead to the rapid end of his premiership. Right now, the main factor tying Balkan Stream to Greece is the Tsipras government, and it’s in Russia and the multipolar world’s best interests to see him remain in power until the pipeline can physically be constructed. Any sudden or unexpected change of leadership in Greece could easily endanger the political viability of Balkan Stream and force Russia into relying on Eastring, and it’s for these reasons why the Troika wants to force Tsipras into an inextricable dilemma.

If he accepts the current debt conditions, then he’ll lose the support of his base and likely usher in early elections or fall victim to a revolt from within his own party. On the other hand, if he rejects the proposal and allows Greece to default, then the resultant economic catastrophe could kill all grassroots support for him and prematurely end his political career. That’s why the decision to hold a national referendum on the debt deal was such a genius move, because it ensures that Tsipras has a chance of surviving the forthcoming political-economic firestorm over its democratically obtained results (which look to foretell a debt rejection and imminent default ). With the people on his side (no matter how narrowly), Tsipras could continue presiding over Greece as it crawls into an uncertain and troubling forthcoming period. Additionally, his continued stewardship of the country and the personal chemistry that he has with the BRICS leaders ( especially Vladimir Putin ) could lead to them extending some form of economic assistance (probably through the $100 billion BRICS New Development Bank or equally large currency reserve pool ) to Greece after their upcoming summit in Ufa in early July, provided that he can hang on to leadership until then.

Thus, the future of Balkan energy geopolitics currently comes down to whatever happens in Greece in the near future. While it’s possible that a Greek Prime Minister other than Tsipras could continue moving forward with Balkan Stream, the likelihood is significantly less than if Tsipras stayed put in office. Creating the conditions for his removal is the indirect way in which the US and EU prefer to influence the course of Russia’s future energy shipments through the Balkans, hence why such pressure is being applied on Tsipras at this moment. His referendum proposal clearly took them all by surprise, since real democracy is practically unheard of in Europe nowadays, and nobody expected him to directly refer to his constituents prior to making one of the country’s most pivotal decisions in decades. Through these means, he can escape the Catch-22 trap that the Troika set for him, and in doing so, also save the future of Balkan Stream.

Concluding Thoughts

There’s more to the Eastring pipeline proposal than initially meets the eye, hence the need to unravel the strategic motivations behind in it in order to better comprehend its asymmetrical impact. It’s clear that the US and EU want to neutralize the geopolitical applicability that Balkan Stream would have in spreading multipolarity throughout the region, which explains their tandem approach in trying to stop it. The US is stoking the flames of violent Albanian nationalism in Macedonia in order to obstruct Balkan Stream’s intended path, while the EU is handily proposing an alternative route through the unipolar-controlled Eastern Balkans as a predetermined ‘way out’ for Russia. Both Euro-Atlantic forces are conspiring together in indirectly trying to topple the Greek government through an engineered election or internal coup in order to remove Tsipras from office, knowing that this singular move would deal the greatest and most immediate blow to Balkan Stream. While it’s not clear what will eventually happen with Tsipras or Russia’s pipeline plans in general, it’s irrefutable that the Balkans have become one of the main and repeated flashpoints for the New Cold War, and the competition between the unipolar and multipolar worlds in this geostrategic theater is only just beginning to play out.

I Fear The Greeks, Even When They Bring Gifts
Raúl Ilargi Meijer

28 June, 2015

Just another normal morning at the Automatic Earth. Shaking off the local drink – when in Rome.. – and perusing a thousand views and pieces, many on the inevitable topic of ‘Da Referendum’. And I got to say, I can’t even tell whether it’s just me, but there is this huge divide between what a simple vote can and should be, and how it is perceived and presented.

And no, it’s not my ouzo-riddled stupor, it’s what common sense I have left that has me wondering what causes the divide. Case in point, Bloomberg has a piece called “Tsipras Asking Grandma to Figure Out If Greek Debt Deal Is Fair”. The implied connotation being that asking grandma about anything other than knitting patterns and souvlaki recipes is asking for trouble. What does she know? Politics should be decided by politicians. Well, and bankers of course. And Bloomberg editors. Did I mention economists?

Economists with PhDs and hedge-fund traders can barely stay on top of the vagaries of Greece’s spiraling debt crisis. Now, try getting grandma to vote on it. That’s what Prime Minister Alexis Tsipras is doing by calling a snap referendum for July 5 on the latest bailout package from creditors.
The 68-word ballot question namechecks four international institutions and asks voters for their opinion on two highly technical documents that weren’t made public before the referendum call and were only translated into Greek on Saturday. Worse, they may no longer be on the table. IMF chief Christine Lagarde told the BBC late on Saturday that “legally speaking, the referendum will relate to proposals and arrangements which are no longer valid.”
Tsipras’s decision means everyone from fishermen to taxi-drivers and factory workers will have to form an opinion on the package, with their country’s economic future hanging in the balance. A rejection of the bailout terms could lead to an exit from the euro area and economic calamity; accepting them would probably keep Greece in the euro, but with more austerity.
Usually in democracies, it’s the technocrats and the politicians who take care of the details, while voters are asked about broader issues and principles,” said Philip Shaw, the chief economist in London at asset manager Investec. “This is a transfer of responsibility from parliament to the voters.”

Now, we all know that when and where democracy was born, and I’m quite literally at a stone’s throw from the very spot it was, as I write this, grandma had precious little say. But grandpa did, and repeatedly, the idea was that people would vote on all big decisions to be made, instead of having them decided by some power-happy individual.

We all, or most of us, think to this day that that was a good, and indeed world-changing, initiative. We talk about democracy all the time like it’s a good thing. So where does Bloomberg come from belittling the concept to the point where they put the word ‘Grandma’ in their headline, in an obvious attempt at making the entire thing look ridiculous?

They could instead have said ‘grandpa’ (big difference already) or ‘cab driver’ or ‘unemployed person’ or, get ready for this, ‘the people’. “Tsipras Asking The People to Figure Out If Greek Debt Deal Is Fair”. Sounds completely different, doesn’t it? Really, we cannot talk about democracy anymore without trying to ridicule it, Bloomberg?

Greece’s own Mr Piggy, Evangelos Venizelos, who bears a lot of blame for what Greece goes through today from his stint as finance minister, and is still PASOK’s go-to guy, though they were almost voted out of existence in January, tried a nice take. He claimed that the referendum was unconstitutional, something to do with fiscal matters not being allowed to be out before the people.

As if Syriza were too stupid to have read the law before letting Tsipras call the July 5 vote.

I’m thinking there’s not a shade of doubt that we will see the craziest claims and reports and theories. From Greek opposition parties, from ‘respectable media’, from US and European spin doctors offering ‘help’ to the likes of Venizelos and Samaras et al.

But that Bloomberg thing sure sets the tone. We have lost even the most basic principle and notion of what democracy means: a vote by the people on matters that concern the people. As Yanis Varoufakis tweeted yesterday:
Democracy deserved a boost in euro-related matters. We just delivered it. Let the people decide. (Funny how radical this concept sounds!)
What else can we say? Let’s keep it at this: we’ve come a long way. We can’t even talk about democracy anymore without ridiculing it.

Oh, and the title of this piece? Blame Virgil, Roman poet, well over 2000 years ago.

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