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An appeal: A future for Greece  has been launched  by Gabriel Colletis (France) and Ioannis Margaris (Greece). The appeal is available in several languages and can be supported by co-signing. 

germanpages.de--Deutsche Rundschau is pleased to present this paper together with comments by Rundschau editor Heinrich von Loesch (HvL)  and Professor Gabriel Colletis (GC). He was also among the economists who urged Europe to back the proposed debt crisis principles at the UN whicb were approved by the General Assembly on Sept. 10, 2015. See postscript..

 

Preamble

   This appeal to the social and political forces of Greece, as opposed to "institutions" that would dictate to Greece and its government what it must do and how, is hereby set in motion by its signatories, with absolute respect for the course that the Greek people and their elect have chosen.
We, the citizens of different European countries, Greeks and non-Greeks alike - a diversity of social and political backgrounds, pursuant to the fact that what unites us is far greater than what divides us, together affirm our readiness to harness our skills and experience to help Greece. We stand ready to contribute to the advancement of tools and methods needed to define and implement the development program that Greece so urgently needs.
 

 A democracy disparaged, an economy ruined

    Today, the people of Greece are being denied the fundamental right of self-determination. The Parliament is being trampled on and the government is being called upon to implement a program in which it does not believe.

According to the Euro Summit Statement of July 12, 2015, "The [Greek] government needs to consult and agree with the Institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to Parliament."
Once again in the nation's history, Greece has been placed under unconditional tutelage by its creditors.
The third memorandum, ratified by the Parliament of this country without any real possibility of examination, imposes a new series of austerity measures (increased VAT, lowered pensions, lowered public spending, etc.), this, at an exorbitant price, just to keep the country in the Eurozone, which is not even assured.

   Within weeks, or at most a few months, an aggravated recession will ensue, leaving the Greek people with no other option than to try to survive by seeking refuge in "grey" or parallel economies to escape ever-increasing tax burdens within a context of income reduction.
It seems that the Greek economy is recovering from the days of the bank closures. After years of contracting consumption it is growing again.
GC: well. It is not exactly what is considered as probable for 2015 and the years after. The Greek economy will remain recessive.
Creditors and institutions, (whose normative power is significantly strengthened at the expense of the Greek Parliament), are free to attack the Greek authorities for not honouring their commitments (primary budget surplus, privatizations) and then to impose new requirements. They will repeatedly and relentlessly pressure the government, whatever its political colour, threatening not to grant the sums foreseen if new austerity measures are not implemented. This worm drive mechanism will crush Greece's social structure and economy, forcing the country's (often highly qualified) youth to accept an exile they do not desire.

   Debt, the principal vector of servitude, can only grow. New loans granted within the framework of a third "aid" package will at best only serve to roll the debt over, plunging Greece into a downward spiral of over-indebtedness through the interplay of interests and decline in GDP.

HvL: Which seems to be growing, as of recently, much to the disdain of the Italians...
GC: unfortunately but logically not.

   In a document dated July 14, the IMF also indicates that the Greek state's debt is expected to reach 200% of its GDP within the next two years!
In short, what is imposed on Greece, with no advantages whatsoever, is a loss of its sovereignty, the return of the Troika and its "men in black" in Athens, deepened austerity and worsened recession.

   An impending danger is that the far-right "Golden Dawn" party could become effectively popular as the only political force offering an alternative proposal for Greek society. This disastrous consequence, should it occur, would be the product of anti-social policies.

HvL: But is Χρυσή Αυγή, "Golden Dawn" really growing?
GC: not really because they are not clever enough to try to appear otherwise than an extreme-right movement.

   Elected on a basis of opposing austerity, anti-democratic and unconstitutional practices, it is unfortunately clear that the current government has passed a third memorandum likening Greece to a colony deprived of any right to self-determination.

The future of Greece must be written in Greek!

   We contend that no international institution, (ECB, European Commission, Eurogroup, IMF), or State, has the right to dictate to the Greek people and its government how to conduct their affairs. Greece's sovereignty, like that of any other nation, is non-negotiable and not subject to conditions.

HvL: Five times since the liberation from the Ottomans, Greece has defaulted for a total of 90 years and came under foreign tutelage. Nothing new...
GC: nothing new…except the context !

   We call to mind the UN Council Resolution on Human Rights of April 23, 1999, according to which, "the exercise of the basic rights of the people of debtor countries to food, housing, clothing, employment, education, health services and a healthy environment cannot be subordinated to the implementation of structural adjustment policies and economic reforms arising from the debt".

Finally halting the decline - assuring economic and social development

   Implementation of the third memorandum steers Greece ever closer to its decline and abdication from its sovereignty.

HvL: To the contrary: only the vigorous reforms urged by the third bailout will halt the decline, restore credibility and, in the end, hopefully sovereignty.
GC: reforms are necessary but, globally, not these ones. What is needed: a good working state (administration, evaluated expenditures and resources and so on…) education, RD, investment in health, housing, entrepreneurship + good social relations…

   Whether Greece remains a member of the Eurozone or not, it is likely that Greece's social structure will be severely tested in the coming months and perhaps years. Rising inequality will produce very visible effects with an increase in extreme poverty, the very rich being largely unaffected, or possibly taking advantage of the crisis by buying up assets sold by the State or households in serious trouble.

HvL: There is an overhang of luxury real estate, yachts and luxury automobiles desperately looking for investors. The main problem for the state divestments urged by the creditors is simply: who wants to invest in Greece? Without reforms, confidence will not return.
GC: I agree. But these reforms cannot be oriented through labor market deregulation and labor cost reduction. That is the wrong way. High added value products and services need qualified and well paid workers. Greek labor force is, in general, high and sometimes highly educated.

   This risk of collapse can and must be averted. Promoting the diversified development of productive capabilities and democracy is the only way to prevent the destructive course of parallel, grey, or mafia-style economies arising from the choices imposed on Greece.
In opposition to this gruesome scenario, we believe that implementation of a program to develop the country's productive potential is essential.
Five principles seem to guide the definition of such a program:

  • Recovering the political and economic sovereignty of the country

  • Developing democracy in all areas of political, economic and social activity,

  • Responding to the fundamental needs of the Greek people through valuing the work and skills of all.

  • Protecting nature and natural resources in general,

  • Promoting regional development and stimulating local economies.

  

   Based on these guidelines, the challenge is to develop Greek industry and agriculture comprehensively by leveraging new technologies:  

support for agricultural and agro-food activities (organic farming, "sustainable" agricultural practices, etc.), housing renovation activity (e.g., use of new materials), promoting energy conservation (intelligent networks, insulation, etc.) and renewable energy (e.g., wind, photovoltaic energy), health-related industries (biotechnology, nanotechnology, etc.), the textile and clothing sector (new materials, technical textiles, etc.), transportation equipment (small clean electric or hybrid vehicles, efficient public transportation, etc.), ship construction/repair, (e.g., new propulsion methods).

HvL: This program sounds like an excellent development plan for a highly developed country such as France or Germany. For the Greece of today it would require immense investments ("efficient public transportation", "housing renovation") and basic research (e.g the "small clean electric vehicles" which Paris craves)
GC: I agree.
HvL: There is a basic problem with long term investments in Greece:
The creditors have diluted the servicing conditions for the sovereign debt to the extent that it does not really burden the state.
GC: this is not exact.
HvL: Which means that Greece will be able to service its debt for the next few years. But the debt is still there, and -- starting in 2023 and even more after 2032 -- until the end in 2054, Greece will have to pay double digit billions per year.
GC: This is exact!
HvL: With these massive debt payments looming it will be impossible to attract the long term investments required by the above program.
GC: I agree fully
HvL: Of course, no one expects the creditors to continue insisting on full repayment. Most of the debt will be forgiven, but only in the long term. For the short term the German economist Hans-Werner Sinn warned not to reduce Greece's debt because that would encourage Greek governments to contract new debts. This warning was well understood in the creditor countries' finance ministries.
GC: to “solve” the debt problem, we have made a proposal,  you know. A win-win solution except for those who are ideologically driven.
HvL: In October, the conditions of the Greek sovereign debt will again be discussed and softened in order to satisfy the IMF's regulations and permit it to participate in the third bailout. Again, the debt as such will remain. It will be kept at its nominal value until a new generation of Greek governments proves that fiscal stability has become a centerpiece of Greek politics. It will take years, perhaps a decade, until Greece has shaken off its awful historic record of financial instability.
GC: see above.
HvL: Only after Greece has become a trusted partner of the Euro community, the debt can be reduced and the remainder deleted. In the long run, Greece will be first country to benefit from the Eurozone transfer community which French economy minister Emmanuel Macron demands as part of his reform plan.
GC: the perspective should be co-development and not transfers to reduce growing asymmetries effects.
Hvl: Back in 2011, german.pages.de--Deutsche Rundschau wrote:
"Ein Blick in die USA zeigt, dass reiche Staaten wie Massachusetts und arme wie Louisiana problemlos eine gemeinsame Währung haben können, vorausgesetzt, die Währungs- und Finanzpolitik ist zentralisiert. Dies zu erreichen, ist die Aufgabe der nächsten Jahre. "(Benedikt Brenner: http://die.soziale.spaltung.des.eurolandes.at.german.pages.de/

Only after the sovereign debt problem has been solved, Greece will be able to attract the kind of long term investments the above program requires. In the meantime, only small steps will be possible which do not require private long term investment.

GC: small steps but well oriented: to support development

   A developmental model for Greece cannot rely on a monistic vision based solely on private initiative, or only on public property, or exclusively on a social and solidarity economy. A new developmental model for Greece must be based on a diversity of economic forms, combining private initiative, a renewed public sector and a dynamic third economic sector:
   This model then must be based on complementarity and address three areas:

  • The first area concerns actions to be implemented to encourage new forms of entrepreneurship, as well as innovative forms of collective social and economic organization: industrial channels, consolidation of small and medium-size businesses, collaborative projects, etc.
  • The second area concerns actions aimed at developing economic and social solidarity, most often regionally. This second type of activity operates within a context of social and solidarity economy: local trade systems, time banks, short distribution channels, circular economy, etc.
  • The third area, coordinating the first two, focuses on developing productive regionalized networks: clusters of different types, bringing together companies of different sizes and universities and/or technical training for so-called traditional, as well as high technology activities.

HvL: Since the crisis started in 2008/9, Greeks have successfully experimented with new forms of collective production, marketing and local barter trade. This trend certainly merits support and encouraging.
GC: I agree fully.

   It is only by immediately undertaking the project of a new diversified developmental model based on new forms of democracy and involvement of social forces that Greece will finally be able to escape the state of double political and economic dependency in which it is trapped: political dependency with respect to "institutions" and traditional political practices, economic dependency associated with imports and external financing.

Our appeal to the social and political forces of Greece

   Democracy was born in Greece. The "Greek crisis" has, for some, revealed all the Eurozone's current functional limitations and the authoritarian straightjacket of austerity it has created. For others, it only confirms the destructive dysfunctional nature of a single currency across different economies with diverse limitations and in which it only increases those differences. Whether one believes in the possibility of reform in this zone that would in the end favour development, or in its inevitable and remedial, (if possible organised) dissolution, the fate of Greece, for which we are ready to work, Greeks and non-Greeks together, is of crucial importance for all Europeans.

HvL: Introducing a single currency in a number of different countries creates problems that take years to overcome, as the United States experienced when the dollar became the standard currency for the union. The advantages of the single currency for the Eurozone are so enormous that not even a leftist Greek government --Tsipras -- wanted to renounce to its membership. For good reason! 

GC: the Grexit is almost unavoidable with the the third memorandum. Grecce will never achieve the 3.5% primary budget surplus in 2018 and 50 billions privatisations

   We believe that the hopes raised by Syriza's victory in last January's election, as well as July's referendum result, signify an immense need for change that extends beyond Greece's borders.

HvL: Unfortunately, poor Tsipras seems to be losing the support not only of his radical friends but also of the electorate at large. Since he does not want to enter in a coalition with the "old" parties (understandably!) he suggested he would step down as leader of Syriza and open the door to a coalition. Such a coalition of Syriza and New Democracy could be headed, for instance, by the last trusted politician of the old guard left in Athens, Giannis Stournaras. 

GC: Greece is going to be ungovernable.

   We, Greeks and non-Greeks alike, stand ready to engage ourselves in the mission of assisting the social and political forces that strive to forge a viable development project. This project is of crucial importance for Greece, whether it remains in the Eurozone or not. It represents a first response against a Europe dominated by financial markets that stifle production, as well as the political forces currently in power in Germany that compel that country to conduct itself in a hegemonic fashion. Some key German politicians, throughout the negotiations with the Greek government, have in fact shown that they will not hesitate to use the economic power of their country in order to enslave

HvL: Wow! Schaeuble would have preferred Greece to leave the Eurozone rather having to mess around with a tricky and costly third bailout effort.
GC: the Grexit is Schaeuble’s perspective. Which country will be the next ? What about the European Commission's role itself? Wow! I imagine Frau Merkel does not full agree with this view.

the governments of other nations (especially when these claim to choose a political path that is not their own

HvL: but which promises strength in implementing reforms that the traditional parties did not pursue because of their weakness and corruption. Perhaps it has not been understood how much trust the creditors had put in Tsipras because he represented the Greek Left.
GC: yes

or even to question the authority of the European institutions themselves (the European Commission).

  We appeal to the Greek authorities, now and in the future, to not accept political, economic and social incarceration within a context of financial logic dictated by debt repayment and deficit reduction.

HvL: Let us hope the next Greek government will not attempt to renegotiate the current bailout agreement. Any such effort would open Pandora's box and provoke a tough response by the creditors which could instantly lead to a stop of payments, a resulting bank crash and de facto Grexit.
GC: the Grexit comes anyway and the third memorandum is not viable.

   In the hope of being heard by them and despite the concessions that have been made, we appeal to the Greek authorities to henceforth serve the will of the people and urgently organize a General Assembly for Development, promoting unity and open dialogue throughout Greece and bringing together all the social forces of the country to chart the general vision and key points of the development project that Greece needs.

   We appeal to the nation's vital forces to urgently commit themselves to the creation of a development project: a program ensuring the future of the country and its youth. New forms of political and social organization must emerge or be enhanced, to mobilize the social forces that have been inactive in recent months. Only with strong determination and a sweeping popular movement will we be able to release this powerful, creative and multifaceted potential; without these qualities, nothing is possible.

   As a final point, we appeal to the Greek progressive forces to seize the opportunity of the forthcoming elections, to discuss this major challenge: a development program coordinating democracy, innovation and productivity.

To sign the appeal: just reply "I sign" by sending your message to Gabriel Colletis:
http://www.unavenirpourlagrece.com
Please indicate your occupation or title!
Gabriel Colletis
Professor of Economics at the University of Toulouse
and Ioannis Margaris
Ph.D. Energy and Technology at the National Technical University of Athens (NTUA), Post-Doc (DTU)

 

PS:

The appeal:

Europe should back debt crisis principles at the UN

 

On 10 September, the United Nations general assembly will vote on nine principles concerning the restructuring of sovereign debts. Abiding by such principles would have avoided the pitfalls of the Greek crisis, in which political representatives gave in to creditor demands despite their lack of economic sense and their disastrous social impact. This public interest resolution must be supported by all European states and brought into the public debate.

These nine principles reaffirm the pre-eminence of political power in handling economic policy. They limit the depoliticisation of the financial system, which until now has not left any alternative to austerity and instead has held states hostages to creditor demands. The UN vote provides a stark choice between the democratic handling of sovereign debt matters and the continuing rule by debt markets.

Yanis Varoufakis Former Greek minister of finance
Thomas Piketty Paris School of Economics
James Galbraith University of Texas Austin
Heiner Flassbeck Former chief economist, Unctad
Martin Guzman Columbia University
Jacques Généreux Sciences Po
Steve Keen Kingston University
Gabriel Colletis Toulouse 1 University
Michel Husson IRES
Benjamin Lemoine Paris-Dauphine University
Mariana Mazzucato University of Sussex
Robert Salais IDHE, Marc Bloch
Bruno Théret Paris-Dauphine University
Xavier Timbeau Principal director, OFCE
Gennaro Zezza Levy Economics Institute
Giovanni Dosi Scuola Superiore Sant’Anna
Engelbert Stockhammer Kingston University
Ozlem Onaran University of Greenwich

 

The vote:

Sep 11, 2015 

UN approves resolution on restructuring sovereign debts

The UN General Assembly  approved a resolution that establishes nine principles to restructure sovereign debts.
The non-binding resolution, adopted by a vote of 136-6 with 41 abstentions, urges debtors and creditors "to act in good faith and with a cooperative spirit". The U.S., U.K., Germany, Canada, Japan and Israel voted against the resolution. Greece, France, Belgium, Italy and 37 others abstained.