German chancellor steps up pressure on Greece

[Antid Oto]

REPLY TO: D66 at nic.surfnet.nl

German chancellor steps up pressure on Greece
28 April 2010

The German government is linking the provision of funds for Greece to entirely
new conditions, thereby delaying financial aid.

Following Athens’ request for loans of 45 billion euros from the International
Monetary Fund and the Eurozone countries—a bailout that had previously been
agreed upon in principle—Chancellor Angela Merkel has made her consent dependent
on Greece presenting a "three-year, sustainable and credible recovery
programme". In practice, this means that the government of Prime Minister
Georgis Papandreou must add a third round of austerity measures to the two
draconian packages already adopted.

Some German economists close to the government are suggesting that Greece be
pushed into state bankruptcy or be forced to withdraw from the monetary union.
They argue that supporting Athens violates the rules of the euro stability pact
and will lead to similar demands from other countries and undermine the value of
the euro.

Germany has largely isolated itself in the European Union with its implacable
attitude. In particular, the highly indebted countries of southern Europe, but
also France, are accusing the German government of stoking a wave of speculation
that has already driven up interest rates on Greek government bonds to record
levels.

Even some German commentators are warning that Germany is undermining its own
position, since it is one of the principle beneficiaries of the Eurozone area,
which absorbs about 70 percent of German exports. Bankruptcy for Greece could
trigger a chain reaction that would mean the end of the euro.

This would have devastating consequences for the European financial system,
intra-European trade and, in particular, the German export industry. Experts
estimate that the German currency would appreciate by 30 percent against the
rest of the euro area if the euro were to fail, making German industry barely
competitive.

Moreover, German banks hold Greek bonds worth €45 billion, which would be
written off in the event of state bankruptcy. The losses of these banks would
prove far more expensive for Germany's public purse than the guarantees
currently being discussed, involving Germany underwriting an €8.4 billion loan
to the Greek government.

Merkel's Greek policy faces criticism from two sides. Her coalition partners—the
Christian Democratic Union's sister party, the Christian Social Union (CSU), and
the Free Democratic Party (FDP)—accuse her of being too lenient towards the
Greek government. On the other hand, sections of the Social Democratic Party and
Merkel’s own Christian Democratic Union (CDU) accuse her of not acting quickly
enough to support Greece.

In reality, the chancellor is following a clear line. Her main objective is to
shift the full burden of the crisis onto the Greek population and force the
Greek authorities to take whatever measures are necessary to carry this through.
If the German government had immediately pledged support, writes the Süddeutsche
Zeitung, "the pressure on the Greek government would have disappeared at once.
Prime Minister George Papandreou would no longer have been able to bring a
radical austerity programme before parliament as is now foreseen".

At the same time, Merkel has signalled to the banks that they need not worry
about their money. Pro-government sources confirm that the chancellor never
seriously considered Greek national bankruptcy. Internally, she made it clear
from the beginning that the country could not be allowed to fail, and that
ultimately support would be forthcoming. However, her intention was to drive up
the price of a rescue package.

Merkel's priority is not Greece, but Germany and Europe as a whole. Greece
serves as a test case. It is a proving ground to see how the working class can
be made to pay for the huge deficits in the budgets of all countries arising
from the international financial crisis and the rescue packages to save the banks.

Dramatic cuts in wages, pensions and public spending such as those currently
being imposed by Papandreou on the Greek population are also planned for
Ireland, Portugal, Spain, Italy, Britain, France and Germany itself. Greece is
being closely monitored to see how far Papandreou can go without provoking a
popular revolt, and to what extent the unions and pseudo-left organizations such
as the petty-bourgeois SYRIZA are able to keep the social opposition under control.

It is in this context that the anti-Greek hysteria being fanned by the German
media should be seen. It serves a particular purpose: to prevent any solidarity
between the German and Greek working classes.

Papandreou, Merkel and other European leaders fear nothing more than a common
struggle by European workers against the cuts and austerity measures. Currently,
some 350,000 Greek immigrants live in Germany, having fled the military
dictatorship 40 years ago. Many of these workers played prominent roles in the
labour disputes of the 1970s and 1980s.

It is the gutter press belonging to the Springer-Verlag group that is playing
the leading role in the anti-Greek smear campaign and the drive to stir up
backward prejudices. For weeks, the tabloid Bild newspaper has told its readers
that the "Greek system" consists of "corruption and nepotism", and conducted a
witch-hunt against the "bankrupt Greeks", whose "luxury pensions" must be paid
by Germans. Bild readers are not told about the low incomes and pensions in
Greece, nor the fact that the cost of living has risen to German levels since
the introduction of the euro.

What is new is that this agitation is not confined to the gutter press, but can
also be found in the pages of publications read by the liberal middle class. For
example, Stern published a letter from the author Walter Wüllenweber to the
"dear Greeks" that drips with arrogance and maliciousness. Wüllenweber accuses
"the Greeks" of having spent more money than they have earned for decades, and
"lived at the expense of others, continually deceiving".

Following the appearance of this piece, he was promptly invited to appear on the
prestigious television talk show hosted by Anne Will, where the presenter
competed with him in denouncing all Greeks as lazy and corrupt.

The object of this propaganda is to cover up the fact that Greek society—like
German—is divided into classes, and that millions of Greeks live in abject
poverty, while a small elite has enriched itself thanks to its relations with
the European Union.

Behind this campaign is the attempt to stir up sections of the middle class
against the working class. In this, Greece serves only as the means of preparing
new attacks on the entire European working class.

Peter Schwarz

http://wsws.org/articles/2010/apr2010/pers-a28.shtml

**********
Dit bericht is verzonden via de informele D66 discussielijst (D66 at nic.surfnet.nl).
Aanmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SUBSCRIBE D66 uwvoornaam uwachternaam
Afmelden: stuur een email naar LISTSERV at nic.surfnet.nl met in het tekstveld alleen: SIGNOFF D66
Het on-line archief is te vinden op: http://listserv.surfnet.nl/archives/d66.html
**********