Tags: Europe, European Union, Eurozone, France, Germany, Greece
On June 3, when the President of the European Commission (EC), Jean-Claude Juncker conveyed the collective demands of Greece’s creditors—the European Central Bank (ECB), the European Commission, and the International Monetary Fund—to the embattled country’s Prime Minister, Alexis Tsipras, a member of his governing Syriza party said of the Greek delegation: “They came, they saw, and they had their balls handed to them.”
Five months after the anti-austerity party rode to victory in the Greek elections and had renounced efforts by previous Greek governments to impose austerity measures that had led the country’s debt grow from 124 per cent of GDP to 180 per cent and its unemployment rate soar to 25 per cent (and youth unemployment to 60 per cent) and its pensioners see their meagre pensions decline even faster, the German Chancellor Angela Merkel invited the IMF’s Managing Director Christine Lagarde and the President of the ECB, Mario Draghi to a previously scheduled meeting between herself, Juncker, and the French President Francois Hollande on June 1 to draft a common negotiating position among Greece’s creditors. Prime Minister Tsipras was notably not invited.
Papering over their differences, the 5-page demands Juncker delivered to Tsipras made some concessions to Greece—lowering the demand that the primary surplus for 2015 be 1 per cent rather than the 3-4 per cent that had been the earlier demand—but also included “red lines” that the Syriza-led government had vowed never to cross such as generating 2 per cent of the GDP from cutting pensions and raising VAT to a uniform level (except on food, medicines, and hotels), not to reverse the labor market reforms that the ‘troika’ (the ECB, the EC, and the IMF) had forced down the throats of previous governments, and even to establish an ‘independent’ tax and customs agency and thereby making its operations beyond the ambit of elected officials.
Yet, far beyond debates on primary surpluses and ‘red lines,’ the real struggle between Greece and its “European partners” is over politics. The positions are clear. Because of the single currency, an indebted country like Greece cannot devalue its currency and thereby cheapen its exports and with the increase in exports (and tourism) repay its debts. Hence the ‘troika’ (now renamed ‘the institutions’) were attempting to impose an ‘internal devaluation’ on Athens: forcing it to cut minimum wages and increase labor market ‘flexibility’ (making it easier to hire and fire workers and thereby also curb labor militancy) to force down the prices of Greek products to increase exports, to privatize government assets, improve taxation and efficiency in collecting taxes, and to sharply reduce government expenditures by severely cutting welfare programs and reducing public sector employment and pensions. Syriza and other opponents of the ‘austerity’ measures have argued that these measures actually impede Greece’s ability to repay its loans: if people don’t have money due to welfare cuts, job losses, etc., they cannot buy goods and hence more businesses fail. Indeed, Greece’s GDP has contracted by over 25 per cent in the five years of troika-mandated austerity and its unemployment remains high while its debt as a ratio of GDP has grown from 124 per cent to 180 per cent.
As Robert Preston, the BBC’s economics editor puts it:
But although for the pride of the creditors, the question of whether Greece is obliged to generate a surplus on its budget, excluding interest payments, of a bit more than zero or 3%, feels like a world of difference – it is a rounding error compared with the money Greece owes them, which is equivalent to 180% of Greek GDP.
In the highly unlikely event that Greece could generate a 2% or 3% surplus year-in and year-out without its economy shrinking further (which few economists would anticipate), it would take around half a century for Greek public sector debt to fall to a level regarded as sustainable. gett A half century of austerity? In what modern democracy would that be regarded as a realistic option?
Most egregiously, sharp cuts in expenditure has meant that in some hospitals budgets have fallen by 94 per cent. How can this be sustainable in a continent as rich as Europe?
It is clear that one way or another, as Nils Pratley wrote in the Guardian, there will have to be a debt write-down. What Greece’s European “partners” are unwilling to countenance is Syriza’s demands to reverse the “austerity” measures because they want to root out any left-wing challenge to the reigning neo-liberal orthodoxy. Once Greece caves in, subjects itself to ‘vasectomy’ in the words of one of its MPs, then debt-relief could be offered but not before. To offer a write-down of the debt is particularly terrifying to Spain where the governing party has already lost many local elections to a Syriza-like party, Podemos, which now controls the three major cities of Madrid, Barcelona, and Valencia. It is also threatening to other EU economies like Portugal, Ireland, and Italy which have been compelled to implement austerity measures.
Syriza has, however, done its cause no favors despite some eloquent posturing by its Finance Minister, Yanis Varoufakis. It has not demanded a write down of the debt—and we must remember that when the troika made the first loan to Greece in 2010, Germany and France explicitly demanded that the austerity not be extended to the military—and Greece has been the best customer of the German arms industry. How is the cutting of pensions and salaries to workers while maintaining higher than the EU average in military spending morally justifiable?
With Syriza maintaining the charade of negotiating with its European ‘partners’ over the last months, Greece’s position has rapidly deteriorated as frightened depositors have withdrawn their money from the banks and even transferred them outside the country. By the end of April, Greece’s bank deposits were at their lowest level since 2004 and by the end of last week deposits were being withdrawn at the daily rate of 1 billion euros.
Interestingly, the Speaker of the Greek Parliament, Zoe Konstantopoulou, has set up a Debt Truth Committee to report to parliament on June 18
is said to be on the point of finding some of Greece’s original bailout debt, from either 2010 or 2011, was unlawfully contracted. In addition, Ms Konstantopoulou is armed with a finding from experts that Germany owes Greece €350bn in war reparations – more than the whole of its debt to Europe.
This could open up a host of legal challenges even if Tsipiras was to finally cave into the troika’s demands. The question is whether the Left Platform within Syriza is strong enough to prevent a cave in when there is nothing the troika would like than to install a government of national unity with a rump Syriza. That would, temporarily at least till Spain’s November election, decapitate the European Left. Will it happen?
In the short run, if no resolution is found, Greece will be unable to make scheduled payments to its creditors and being declared to be in default would make its borrowing costs in private capital markets intolerable; Syriza’s reluctance to impose capital controls would lead to the swift collapse of its banking sector unless the government begins to issue a virtual currency against future revenues which could ease the liquify crunch domestically at least. But Greece cannot be thrown out of the EU without its consent as all decisions must be unanimous. Even if Greece were to exit the common currency—Grexit as it has been dubbed—it would call the whole European project into question. It is also unrealistic to expect a country as bankrupt as Greece to police its borders when hordes of refugees from Africa and the Middle East are streaming to Europe—and from Greece, they could move to any country in the Schengen area. Will this be enough for its European ‘partners’ to blink?
Tags: Brazil, China, democracy, Egypt, Europe, India, Libya, Middle East, South Africa, Tunisia, United States
Heaping irony upon irony, three weeks after protesters cheered the military for ousting Egypt’s President Mohamed Morsi, the new strongman, General Abdel Fattah al-Sisi called on the people to take to the streets in a show of support for him to defeat “violence and potential terrorism.” And taking the large crowds that gathered in Tahrir Square as a mandate to crush supporters of the democratically elected president, the army launched a massacre of Morsi loyalists at their Cairo sit-in on Saturday 27 June 2013.
Much has been written about President Morsi’s overreach for power despite having secured only 51.7% of the vote in a run-off against a factotum of the old regime, Ahmed Shafik, the last prime minister to serve under Hosni Mubarak. But perhaps his biggest failure was not to neutralize the country’s coercive apparatus, laughably called its security services.
Though human rights activists had hoped that as Morsi has himself been targeted by the police during his long years in opposition, he would rein in the police, he openly praised the police for its role in the 2011 revolution—a revolution in which uniformed and plain clothes officers had killed over 800 people, just as they killed Morsi’s supporters last Saturday. The military has also been unrepentant about its role under the old regime: as late as June 2011, General al-Sisi justified the “virginity tests” the Supreme Council of the Armed Forces inflicted, among other humiliations, on women demonstrators during the Cairo chapter of the Arab Spring.
In yet another irony, the liberals installed in the interim government by the military blamed the massacre on the protesters killing each other! Nor have the liberals protested the interior minister, General Mohamed Ibrahim, a holdover from Morsi’s cabinet claiming that the anti-Morsi crowds in Tahrir Square gave him the mandate to resurrect the old regime’s hated secret police, the Amn al-Dawla or State Security force that had been disbanded in March 2011. As University of Oklahoma professor Samer S Shehata observes, Egypt’s tragedy is that “its politics are dominated by democrats who are not liberals and liberals who are not democrats.”
When television cameras beam pictures of massive crowds in Tahrir Square opposing President Morsi and the Muslim Brotherhood, it is well to remember that in the first round of last year’s presidential elections, the candidate who won a plurality of votes in Cairo and in Alexandria, Egypt’s second city, was neither Morsi nor his opponent in the run off election, but a secular candidate, Hamdeen Sabahi. Long decades of providing social services to poor neighborhoods in Cairo and other cities, and in the rural areas where most Egyptians live has created a massive constituency of support for the Muslim Brotherhood. No democracy can take root in Egypt by excluding them as the military seeks to do with the connivance of the liberals and the West.
When secular Egyptians—even radicals like Samir Amin—rejoice at the military’s ouster of a democratically elected president and plaster the general’s photo all across Cairo, they repeat Morsi’s fatal mistake of relying on the army and the police rather than on democratic institutions and protocols. By shutting down Islamists’ media outlets, reviving the secret police, and conspiring to ban the Muslim Brotherhood entirely, the military is fast overturning the gains of the Arab Spring. No future government is safe from military intervention.
The coup d’etat against Egypt’s democratically elected government will have resonances far beyond the country’s borders. As the oldest and most influential Islamist movement, the Muslim Brotherhood has affiliates across the Islamic world and while these parties have largely renounced violence, now they could well conclude that violence is the only way to achieve power. After all, previously in 1992, as the Islamists were poised to win an election in Algeria, the army annulled the election. After they are denied office a second time, why should they place their hopes again in the electoral process? An ultraconservative Libyan cleric, Sheikh Mohamed Abu Sibra has already admitted that it has become impossible to persuade militias in Benghazi to lay down their weapons.
The interim government imposed by the military is also not going to be able to solve Egypt’s economic problems that also fueled the opposition to the Morsi government. When the tourist industry was in the doldrums and over 40% of the population was living below the poverty level, Morsi ended the food and utility subsidies as demanded by the IMF as the price for a $4.8 billion loan. As prices soared, food became unaffordable and the World Food Program reported that the growth of a third of all children in the country was stunted in 2011. Neither the military nor the interim government it installed is likely to reinstate subsidies and the military which controls 40% of the country’s economy will zealously safeguard its privileges. No future government will dare tamper with the military’s perks.
With poverty and disenchantment in the streets, and continuing oppression of the Muslim Brotherhood, chances are that Egypt is in for a prolonged bout of conflict unless international forces intervene. By closing the life-giving tunnels to the Palestinians brutally imprisoned in Gaza, the military has played on Israel’s security fears and inoculated the coup against pressure from Washington. And the collapse of Egypt’s democratic essay has once again prompted the racist trope that Islam is incompatible with democracy. In an op-ed in the New York Times on the day after the coup, David Brooks wrote: “It’s not that Egypt doesn’t have a recipe for a democratic transition. It seems to lack even the basic mental ingredients.”
It is a real pity that the so-called emerging powers—China, India, Brazil, and South Africa don’t weigh in on the events in Egypt and leave the West to define an ‘international response’! Democracy, after all, is not the exclusive preserve of the West—and the few governments elected by popular vote in Europe and North America before the Second World War were underpinned by colonial or neo-colonial exploitation of the peoples of Africa, Asia, Latin America, and the Middle East. Democracy is no privileged preserve of any peoples–and the peoples of the world ought to pressure governments everywhere to adhere to democratic norms!
Tags: Chile, democracy, Egypt, Europe, Human Rights, international relations, Middle East, Muslim Brotherhood, United States, world politics
Egypt’s Tahrir Square is once again dominating world news. For the second time in a little more than two years, the army has deposed a president. If the first had ruled as a dictator for 30 years, the second was popularly elected and had been in office for just 12 months. Both times there were massive protests and using these protests as a pretext, Western politicians and their allies in the Middle East have cautiously welcomed the ouster of a democratically elected leader–even calling it a ‘democratic coup’, an oxymoron if there ever was one. Egypt’s tragedy now, as Samer S. Shehata puts it is that “its politics are dominated by democrats who are not liberals ands liberals who are not democrats.”
Just as the masses there had brought about the ouster of the long-serving ruler Hosni Mubarak in February 2011, much larger popular assemblies gathered in the square on June 30, 2013 on the anniversary of President Mohamed Morsi taking office to demand his ouster. Nabuib Sawiris, a wealthy Coptic Christian businessman who founded the Al Masreyeen Al Ahrar party, tweeted that the BBC claimed that the demonstrations against Morsi were the largest in “the history of mankind” and though the BBC had made no such claim, the tweet went viral.
Be that as it may, that there was massive opposition to President Morsi was evident by the turnout of crowds demanding his ouster in Cairo, Alexandria, and elsewhere. Notably though these were cities that had voted for a different candidate, Hamdeen Sabahi–a secular leftist–than for Morsi or his rival in the run-off, Ahmed Shafik, Mubarak’s last prime minister. That Morsi secured only 51.7 percent of the vote in the run-off against a factotum of the old regime should have indicated the depth of opposition to the Muslim Brotherhood that Morsi represented.
The fact that the main secular candidate was able to capture the largest share of the vote only in the major urban centers puts in perspective the anti-Morsi protests in Tahrir Square. It highlights a sharp urban-rural divide that will only widen if the Muslim Brotherhood is not allowed to compete in the elections promised by the military-installed government.
Morsi turned out to be an incredibly incompetent president. Despite his narrow margin of victory, he overreached the mandate given to him especially last November when he sought to place himself above the law–though he quickly reversed himself after the streets erupted in anger. He pushed through a constitution after all the non-Islamic parties had walked out. When jt was put to a snap referendum, the turnout was only 32 percent of the eligible voters as most opposition groups boycotted the referendum.
Of course, what Morsi did was not very different from what George W. Bush did in the United States–after stealing an election with the help of Supreme Court judges nominated by Republican presidents, he set to rule as if he had a massive mandate to impose a far-right agenda!
Soon after Mubarak was ousted, Egypt’s Coptic Christians faced increased attacks and Morsi did nothing, after he came to power, to reassure them.Under the military interregnum between the fall of Mubarak and Morsi’s election, assaults against women rose sharply and the current minister of defense and head of the military who deposed Morsi, General Abdul-Fattah al-Sisi, Gilbert Achcar, writes
distinguished himself in June 2011 by justifying the “virginity tests” that the SCAF [Supreme Council of the Armed Forces] had inflicted, among other humiliations, on seventeen female demonstrators who had been arrested on Tahrir Square in March.
Morsi had to contend with remnants of the Mubarak regime which were deeply ensconced in the bureaucracy, the judiciary, and the military, Just days before the presidential run-off that Morsi won, Egypt’s Constitutional Court appointed by Mubarak dissolved the first popularly elected lower house of parliament dominated by the Muslim Brotherhood. More than a week before the military gave Morsi an ultimatum, it had begun deploying troops in cities without informing him. And the police refused to protect offices of the Muslim Brotherhood from attacks.
Meanwhile, the economy nosedived as Morsi implemented the IMF’s plans to end food and utility subsidies which led in turn to more street protests that ensured that the country’s tourism sector would not recover. When 40 percent of the population was below the poverty line of $2 a day, the IMF’s austerity measures imposed to secure a $4.8 billion loan, compounded the pressures and led to the explosive street protests.With the weakening of the currency, food prices have soared and the World Food Program reports that 31 percent of children experienced stunted growth in 2011. it is not that food is unavailable–just that it is not affordable and the withdrawal of subsidies under IMF directions will only make matters worse.
None of the candidates seeking to replace Morsi have rejected the IMF’s ruinous austerity drive. Hence, Morsi’s ouster even if followed by an election is not likely to turn Egypt’s economy around. If anything, it could make matters much, much worse. In a remarkably unguarded editorial, the Wall Street Journal opined
Egyptians would be lucky if their new ruling generals turn out to be in the mold of Chile’s Augusto Pinochet, who took power amid chaos but hired free-market reformers and midwifed a transition to democracy. If General Sisi merely tries to restore the old Mubarak order, he will eventually suffer Mr. Morsi’s fate.
Of course, after Pinochet assassinated Salvador Allende, Chile did not begin a transition to democracy for 18 years during which opponents of the regime were routinely tortured and executed en masse. As Amy Davidson writes,
Egyptians might not consider themselves as lucky if Cairo’s sports stadiums were turned into mass-execution sites, as Santiago’s were. (One wonders how many free passes for arbitrary arrests the Egyptian generals will earn from the Journal for each free-market reformer they hire.)
Despite Morsi being democratically elected, such is the West’s abhorrence of the Muslim Brotherhood, that neither Washington nor the European capitals have condemned his ouster and called it a military coup. Defending the coup, Tony Blair writes in the Guardian
I am a strong supporter of democracy. But democratic government doesn’t on its own mean effective government. Today, efficacy is the challenge.
David Brooks, goes further–and denies that democracy can even work in Egypt in breathtakingly racist terms:
It’s not that Egypt doesn’t have a recipe for a democratic transition. It seems to lack even the basic mental ingredients.
Yet, what the coup does most of all is to reverse the Arab Spring which had put the army back in its barracks. The military is once again king maker and future governments are unlikely to defy the military–the military that controls some 30 to 40 percent of the Egyptian economy and insulates itself from the economic problems of the masses. The military has not merely ousted Morsi, as Fawaz Gerges notes, “it has ousted democracy.”
This need not have happened. As the protests grew, Morsi offered to form a government of national unity–when he was on the ropes, he could have been forced to accept a prime minister acceptable to the opposition.
There is no indication that the military–or any government that it installs–is going to reverse the austerity policies that hurts the most vulnerable Egyptians. The military has already withdrawn the offer of prime ministership that it had made to Mohammed el-Baradei, the former head of the International Atomic Energy Agency and Nobel Prize laureate, as the Islamist Nour Party refused to work with him. Coptic priests continue to be killed and more than 80 women were assaulted in Tahrir Square on the night al-Sisi announced Morsi’s ouster. If they are willing to work with the Islamists, why should the Islamists trust the military after the ousted Morsi? And if they exclude them, they are ignoring the 50 percent who voted for Morsi and the country’s best organized political force.
Morsi’s ouster had region-wide significance. If the world looks idly by, why should Islamists elsewhere participate in democratic processes. As Sheikh Mohamed Abu Sidra, an ultraconservative cleric in Benghazi, Libya says it is now impossible to persuade the militias there to lay down their weapons and trust in democracy:
Do you think I can sell that to the people anymore? I have been saying all along, ‘If you want to build Shariah law, come to elections.’ Now they will just say, ‘Look at Egypt,’ and you don’t need to say anything else.
This was the time for the United States to call for the restoration of democracy but once again. Washington and its allies have sided with the anti-democratic forces. Perhaps to ingratiate themselves with the United States, a day after ousting Morsi, the military demolished the tunnels with Gaza, the tunnels that were vital lifelines to the besieged Palestinians.
The problem of a country where the democrats are not liberal and the liberals are not democrats as Shehata put it so well is not going to be solved any time soon. Democrats must accept that minorities have rights, stakes, and interests that must be protected, and liberals must recognize that armies cannot be king makers in democracies.