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Last week, Ghana’s central bank announced its biggest ever interest-rate hike as it sought to slow rampant inflation that threatens to create a debt crisis in one of West Africa’s largest economies. The Bank of Ghana raised its main lending rate by 250 basis points to 17% as consumer inflation reached 15.7% year-on-year in February, the highest since 2016. The war in Ukraine will likely make things worse. Ghana imports nearly a quarter of its wheat from Russia and around 60% of its iron ore from Ukraine.
Nothing can replace reading the official document creating the Recovery and Resilience Facility (RRF) in its entirety. However, since this reading implies an effort that few mentally healthy people would be willing to undergo, and in order to make things easier for the reader, we provide a synopsis, accompanied by some considerations.
Lexicometry can help identify the dominant concepts of the Recovery and Resilience Facility (MRR), the themes absent from it and the way in which the public authorities construct a semantics capable of concealing the interests of the ruling classes in the current crisis.1 In this dissertation we leave some clues on the interest of semantic analysis of European directives for the understanding of their policy objectives.
The European multi-annual budget plan (2021-2027) created a fund called the Next Generation EU (NGEU) which makes available a total of around €806.9 billion, of which €723.8 billion is destined to sustain the «covid-19 recovery package» known as the Recovery and Resilience Facility (RRF). There are two semantic deceptions embedded in this plan:
1) It is not exactly about combating «the effects of covid-19»; it is, strictly speaking, about dealing with the economic, social and environmental consequences of the policies implemented by the public authorities in recent years, including the measures adopted during the pandemic period.
2) Of the EUR 723.8 billion supporting the Recovery and Resilience Facility, some 42% is presented as non-repayable grants; the remaining 58% would be funds available for loans to member states. The reality is different: the entire RRF budget is obtained through loans raised on the financial market; there are in fact no «non-repayable» grants, everything ends up being a financial loan; everything will have to be repaid in full and with interest.
Cerca de 120 activistas de 31 organizações provenientes de 21 países europeus (contando com a Turquia e o CADTM-Bélgica, presentes como observadores), estiveram reunidas em Lisboa, de 21 a 25/Setembro/2018. Neste encontro internacional de organizações-membros da EAC foram discutidas estratégias de luta pelo direito fundamental à habitação e ao usufruto da cidade pelos seus habitantes. Discutiram-se estratégias de combate à financeirização da habitação e às políticas neoliberais que a sustentam, factores que se encontram na raiz da crise actual da habitação em toda a Europa.
The first part of this text presents some basic concepts like the distinction between deficit and debt, for those who are not familiar with them, and a personal idea of some of the reasons that led us to the current situation.
The second part has a demonstration, based on a simple mathematical model presented in the annex, of how the solutions proposed by those in power will never be able to solve the debt problem in our lifetime.
I therefore argue that it is mathematical evidence that austerity, growth and good behaviour towards "the markets" do not solve the debt problem, but rather aggravate it even more.
A nightmare for "those on top," a hope for "those on the bottom," SYRIZA made a sensational debut on the political landscape of Europe in deep crisis. After quadrupling its electoral strength on May 6, SYRIZA now aims not only to become the largest party in Greece in the June 17 elections, but to be able to form a left-wing government which will repeal the austerity measures, repudiate the debt and chase the Troika out of the country. So it's no surprise if SYRIZA fascinates many outside Greece, and if almost everyone is asking about its origin and true nature, its goals and ambitions.
SYRIZA, however, is not exactly a newcomer to the European left. Born in 2004, the Coalition of the Radical Left (SYRIZA) would have to attract the attention of political scientists and the international media, not least because from its beginning, it was a totally new and original type of political entity in the landscape of the Greek, European and even global left.
First, because of its composition. Formed the alliance of Synaspismos (Coalition) -- a left reformist party of vague Eurocommunist origin having members in Parliament -- with a dozen far left-wing organizations that cover almost the entire spectrum of Trotskyism, former -Maoism and "movementism," even at its birth the Coalition of the Radical Left was an exception to the rule that insisted -- and still insists -- that the more or less traditional parties to the left of social democracy never ally with the far-left organizations!
But SYRIZA's originality does not stop there. Having been conceived as an electoral and temporary alliance (it was founded just before the 2004 elections), SYRIZA has withstood the tests of time and managed to survive its ups and downs, its successes and above all to survive its crises and failures to become a shining example of a reality that the international radical left is still struggling to achieve: the coexistence of different sensitivities, tendencies and even organizations in the same political party of the radical left! Eight years after the birth of SYRIZA, the lesson can now be drawn: Yes, this coexistence is not only possible, but it is also fruitful and can even guarantee, in the long term, great success.
But, we wonder, how the dozen so disparate "components" of SYRIZA were able to first meet and then agree for a so long and so original organizational coexistence? The question is relevant and deserves a thorough and detailed response. No, the "miracle" of SYRIZA did not fall from heaven, and it is not just luck. It has matured at length and most importantly, it has germinated in the best possible conditions, in the social and anti-globalization movements over the last 15 years.
You could say it all started 15 years ago, in 1997, with the constitution of the Greek branch of the movement of European Marches against Unemployment. It was not only that it was the first step towards what we called a little later the alter-globalization movement of the Social Forums. Especially in Greece the European Marches had an even more important function, doing something that was previously unthinkable: unifying the left in action. Thus thanks to the European Marches, trade unions, social movements, parties and organizations of the Greek left (KKE included, at least for a while!), which had never met, or even that mutually ignored each other, came together to participate in a completely new European movement, alongside trade unions, social movements and political movements in other countries, hitherto completely unknown in Greece.
It is not therefore by chance that the first blow to the visceral sectarianism that has always characterized the Greek left gave rise to the same touching scenes of meetings, examples almost of psychodrama, between militants who previously did not recognize each other, and who suddenly discovered that the "other" was not so different from themselves. Clearly, this mixture took hold especially as Greek activists left the country and discovered a real European activism in flesh and bones, which previously they had not suspected existed.
Strengthened by this first coming together in action, which was all the more solid since it was done in a social movement of a new genre, most of the varied Greek political components of European Marches participated, in 1999, in a second original experience that aimed at deepening their need for unity. It was the Space for Joint Dialogue and Action, which, while advancing the necessary debate over policy and program, preparing the ground for the next unitary and movementist experience, that of the Social Forum, which was going to deeply affect the evolution of the Greek left.
Aided by the enormous popular success of the Social Forum, the step towards the formation of the Coalition of the Radical Left was taken almost spontaneously and with enthusiasm in 2003-2004. Activists of the components of SYRIZA who had met each other in struggles, and who had traveled and demonstrated together by the thousands in Amsterdam (1997), Cologne (1999), Nice (2000) and Genoa (2001), Florence (2002), Paris (2003) etc.., had had time to develop among themselves not only a political but also a human rapport before arriving at the foundation of their Coalition of the Radical Left. This coalition still was going against the grain of what was happening elsewhere in Europe, where such an alliance between a left reformist party and far-left-wing groups was simply unthinkable …
However, after a rather successful birth, the successive adventures of SYRIZA were by no means always happy, and several times they were almost completely interrupted. Obviously, there have been many crises of confidence between SYRIZA's spine -- Synaspismos -- and its partners on the extreme left, something that was "logical." But as time went by, the homogenization of SYRIZA had the effect that the crises -- as well as the debates -- not only passed through almost the entire Coalition and its individual components, but it was most evident ... that the clashes raged inside Synaspismos itself, where its tendencies were undergoing permanent recomposition.
Finally, SYRIZA found some inner peace only after the departure in 2010 of the Social Democratic wing of Synaspismos (which gave birth to the Democratic Left) and the remoteness of its former president Alekos Alavanos who after having "introduced" his protégé Alexis Tsipras, became his sworn enemy. From that time on, the political line of the Coalition was clearer (and further left), while its young leader Alexis Tsipras set up his structure and accumulated the first successes that would give an ever more radical SYRIZA the necessary credibility to take advantage of the exceptional circumstances created by the debt crisis. SYRIZA was now ready to assume the role of the political group that could best embody the hopes and expectations of entire sections of Greek society in revolt against austerity policies, the Troika, the bourgeois parties and the capitalist system itself!
The lesson to draw from this almost exemplary story is obvious: after all, what's involved is an achievement that only unrepentant sectarian forces (and, glory to God, there are many such in Greece!) could deny. However, the history of SYRIZA is far from over, and the serious struggles have only just begun. In sum, the current balance can only be provisional. But woe to those who won't take part on the pretext of the grave mistakes and the "betrayal" by SYRIZA and who look forward to finally saying: "I told you so." No, even this provisional and incomplete assessment must be made because, in the (hard) times to come, we, from the radical left in Europe, cannot permit ourselves the luxury of failing to benefit from the experiences, successes and setbacks of others.
A political entity with a program permanently characterized by a ... soft fuzziness, the Coalition of the Radical Left has almost always swung between the reformist left and a serious anti-capitalism. Indeed, it may have drawn its strength from this eternal oscillation. Yet we must be clear: what was a plus in "normal" periods, could become a liability if not a boomerang in times of acute crisis and exacerbation of class confrontations. In simpler terms, SYRIZA, which has just brilliantly made its breakthrough, will find itself on the space of a few weeks (!) transformed from a small minority party in a minority Greek left, into the leading party with governmental pretensions. And all this not in any old country and any old historical period, but in the Greece that is the "laboratory" and test case for this austerity-driven Europe in the midst of a nervous breakdown …
The upward climb is so steep it can make you dizzy. Having become in record time the nightmare of the big-shots and the hope of the little people and the voiceless in Greece and even throughout Europe, SYRIZA is now called on to take on gigantic and downright historic tasks for which it is neither politically nor organizationally prepared. So what is to be done? The answer should be clear and unequivocal: Simply help SYRIZA! In every way possible. And first of all, do not abandon it, either in Greece or in Europe. Simply put, while confronting the common enemy, do the opposite of those who fail to combine their criticisms SYRIZA with solidarity with and even support for SYRIZA as it confronts the common class enemy. Your support can be critical … but it should still be support! Not tomorrow, but today. For, beyond the tactical or other differences, the battle SYRIZA is currently waging is our battle; it's the battle for all of us. To abstain is equivalent to denying aide to a person in danger. Or rather to the populations of entire countries in danger! ...
Costas Lapavitsas is one of the economists arguing for Greece to leave the European monetary union. Here is an article defending this thesis.
It is in Greece’s interest to leave the euro
Greek politics is splitting into two camps to contest the coming election, one led by the rightwing New Democracy, the other by the leftwing Syriza. Both insist Greece must stay in the eurozone, even though New Democracy accepts the bailout programme, while Syriza rejects it. Yet harsh reality is now imposing itself. If Greece stays in the eurozone, it will die a slow death. If it leaves, it will go through a crisis, but will also have the opportunity to recover and reshape its society.
The eurozone crisis has little to do with fiscal incompetence in Greece or elsewhere. Its true cause is cumulative loss of competitiveness by peripheral countries as unit labour costs kept rising relative to the core. Large current account deficits resulted for the periphery, mirrored by surpluses for the core. Debts piled up as deficits were financed by borrowing abroad and as domestic banks expanded lending. There is an unbroken thread running from vast peripheral debt to frozen unit labour costs in Germany.
Austerity and structural reforms were aimed at fixing the problem by crushing wages to reduce peripheral unit labour costs. Even setting aside the social consequences, the task is hopeless as long as German unit labour costs remain in effect flat. Peripheral countries would have to press wages down indefinitely to even approach German levels of competitiveness. The most plausible outcome would be social unrest and eventual collapse of the eurozone.
Nor are fiscal transfers a true solution, desirable as they might be in the short term. They deal with the acute pressures of peripheral deficits, but not the underlying causes. Indeed, transfers might make things worse by cultivating a culture of dependence, turning entire nations into wards of surplus countries.
A real solution would involve, first, sustained improvement of productivity in peripheral countries and second, significant pay rises for German workers. But this would require a Marshall plan for Europe and a huge shift in the balance of power within Germany. Let us say politely that the chances are slim.
If Greece perseveres with current policies within the eurozone, its economy will shrink and stagnate. The country will become an impoverished, ageing and deeply unequal corner of Europe, a neo-colony in all but name.
Greek society is unlikely to accept this fate and will probably force a default on public debt in the first instance. There is simply no other way to make debt manageable within the foreseeable future. The bailouts have made things worse: Greek debt has increased, its composition altered from private to official and the governing law has changed from Greek to British. Default has become much more difficult but, in the end, Greece will have little choice.
Default ought to be accompanied by exit, releasing Greece from the trap of monetary union. Exit will inevitably entail a storm, likely to be greater because of the foolish policies of the past two years. Austerity has crippled the economy. Exit would restore competitiveness, allowing Greek producers to recapture the domestic market as well as boost exports. Restoring competitiveness would also boost employment, after the initial shock. Above all, exit would allow the lifting of austerity, giving Greece the breathing space it needs to restructure its economy.
The cost of exit would be severe, though probably nothing like the shoddy estimates produced by bank research departments. There would be parallel circulation of the new drachma, the euro and perhaps other forms of fiat money; a raft of litigation would follow the redenomination of contracts; bank balance sheets would become insupportable as some assets and liabilities, subject to non-Greek jurisdiction, would remain in euros; there would be shortages of oil, medicine and some foodstuffs in which there is a trade deficit; and company bankruptcies would rise.
None of these transitional costs justifies the slow death of continued euro membership. Tackling them would involve forceful state intervention including bank nationalisation, capital controls and an array of administrative measures to confront short-term shortages. Greece could then begin the slow process of recovery. The country has a highly trained, skilled and cohesive labour force, and several natural advantages. Its growth prospects are strong, as long as it wrenches power from the corrupt and venal classes that have run its affairs for decades.
The trigger for default and exit is impossible to predict, but perhaps it would be a bank run as political tensions ratcheted up. Once Greece had taken this path, it would be a matter of time before other peripheral countries followed. Germany would then have to confront the disastrous consequences of a monetary union put together very badly, and run even worse. This is, of course, not a problem that the Greek people could solve.