Greece and the IMF

21 Feb

It’s been a while since I posted on Greece. Today in CounterPunch I came across a dialogue between Sharmini Peries, co-founder of Real News, and Michael Hudson, Economics Professor at the University of Missouri. Hudson, you may recall, was extensively quoted in my post last September on Washington’s use of the IMF in its growing hostilities with Russia and China.

In this extract from the CounterPunch meeting, Peries asks why the Greek economy shrank by 0.4% in the final quarter of 2016, when “its lenders are expecting it to grow by 3.5% annually”? Hudson picks her up on her phrasing:

You said the lenders expect  Greece to grow. That is not so. There is no way in which the lenders expected Greece to grow. In fact, the IMF was the main lender. It said that Greece cannot grow, under the circumstances that it has now.

What do you do in a case where you make a loan to a country, and the entire staff says that there is no way this country can repay the loan? That is what the IMF staff said in 2015. It made the loan anyway – not to Greece, but to pay French banks, German banks and a few other bondholders – not a penny actually went to Greece. The junk economics they used claimed to have a program to make sure the IMF would help manage the Greek economy to enable it to repay. Unfortunately, their secret ingredient was austerity.

Sharmini, for the last 50 years every austerity program the IMF has made has shrunk the victim economy. No austerity program has ever helped an economy grow. No budget surplus has ever helped an economy grow, because a budget surplus sucks money out of the economy. As for the conditionalities, the so-called reforms, they are an Orwellian term for anti-reform, for cutting back pensions and rolling back the progress that the labor movement has made in the last half century. So, the lenders knew very well that Greece would not grow, and that it would shrink.

So, the question is, why does this junk economics continue, decade after decade? The reason is that the loans are made to Greece precisely because  Greece couldn’t pay. When a country can’t pay, the rules at the IMF and EU and the German bankers behind it say, don’t worry, we will simply insist that you sell off your public domain. Sell off your land, your transportation, your ports, your electric utilities. This is by now a program that has gone on and on, decade after decade.

Full dialogue here. Meanwhile here’s John Smith, Imperialism in the Twenty-First Century:

Loss of competitiveness by [EU peripheral countries] vis a vis Germany and other core countries is at the heart of forces tearing Europe apart. Unable to devalue, their only option is savage cuts ..

The EU is a club of imperialist nations .. a united front against so-called emerging nations, which during the neoliberal era has deepened its exploitative and parasitic relations with the South .. But now one of them – Greece – is threatened with ejection and finds itself in competition with low-wage countries .. it cannot win due to its higher wages and lack of technological edge.

As for the IMF, see this two minute video on imperialism.

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