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Germany and the EU's Continuing War Against the Greek People

By       Message Gary Busch       (Page 1 of 4 pages)     Permalink    (# of views)   1 comment

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The Greek economic crisis is continuing to have dramatically negative effects on the Greek economy, its long-term prospects and the delicate domestic political balance which has been achieved under the Syriza Government. By the fourth of May 2017 extended and acrimonious talks between the Greek Government and the 'Troika' of the EU had produced a new agreement on how much more the Greek economy would have to suffer in return for another tranche of the EU 'bail-out' to be released. Greek ministers emerged from 12-hour talks in Athens to announce a deal had been reached with the country's leaders. They were supported in their reporting by European Union commissioner Pierre Moscovici who issued a statement lauding the apparent agreement. Moscovici said: "The agreement reached overnight in Athens on the Greek Stability Support Programme is a very positive development following months of complex negotiations".

However, the following morning German Finance Minister Wolfgang Schäuble clarified the situation saying that for Germany no deal had been reached. He gave Greek Prime Minister Alexis Tsipras an ultimatum that no deal could be reached until Greece passes laws to mandate up to 18 per cent in pension cuts and continue an arduous program of cuts and austerity. Schäuble told Tsipras that he must do what Germany ordered him to do or the deal would be off. The crisis had been precipitated by Greece notifying its creditors in December 2016 that it was struggling to meet the EU demands and that it feared it could not repay --6 billion of debt by a July deadline. The economy had picked up and the earlier restrictions, pension cuts were working and producing growth but the enormous debt burden on the Greek economy allowed for little savings to pay the Euro debt. Greece needed debt relief, not further impediments. The IMF agreed that the Greek debt must be rewritten but Germany and the EU refused. This is while the European Central Bank has allowed money to be printed in Germany and France to keep their economies afloat.

Greece is at a crossroads where Greece's latest economic reforms is supposed to be a key to winning debt relief that will unleash years of pent-up investment and finally ends its economic crisis. If it doesn't get debt relief the austerity will crush the economy and send the government cap-in-hand for another bailout. The terms of the new budget agreement insisted upon by the EU is that Greece will have to continue its budget surplus for a longer term. The Dutch Finance Minister, Jeroen Dijsselbloem, who chairs the group of euro-area finance ministers, demanded that the Greek primary budget surplus should be at least 3.5 percent of GDP for five years from 2018, something the IMF has said will exact a huge price on the Greek economy, if it can be achieved at all; especially as there are very few EU countries which fulfil this criterion. The proposed budget package included 5.4 billion euros ($6 billion) of stimulus measures for 2019 and 2020 to offset the pension cuts and tax hikes demanded by creditors. But the catch is that this stimulus will only kick in if Greece maintains or exceeds the 3.5 percent of GDP target. There has never been a non-energy exporting country able to sustain a 3.5 per cent growth over a long period so the Greeks are unlikely to deliver this and qualify for the stimuli. They are back in recession and likely to decline further despite the harshness of the cuts and the severe austerity.

Despite the protests and demonstrations by Greek unionists, students and political figures outside the Parliament the Syriza Government voted to accept the harsh austerity and a further two per cent pension cut in the hope that talks on the reduction of the debt burden could take place. That hope is being abandoned as Germany and Austria have elections soon which prelude them from any concessions to Greece. There seems no way out of the hole.
Germany's Role In Greek Debt

Although the PASOK and New Democracy governments which were in place before the recent crises the demise of the Greek economy was not entirely their own fault. When the crisis first started the PASOK government failed to pay the interest on the loans made to the country by the Troika, The EU blamed the Greeks for failing to keep the terms of the first bailout. What the Germans and the EU leave out of the analysis, to their everlasting shame, is their complicity in creating such an unsustainable debt burden for the Greeks.

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The key element in their hypocrisy is that a substantial part of the inability of the Greek government to pay its debt was because a great deal of the money went directly to Germany, and some to France, for the purchase of military equipment which the Greeks felt they needed in the wake of the Turkish invasion of Cyprus. The corrupt practices involved in these military sales by Germany to Greece are a paradigm example of how the irresponsible elites of two countries interact with an impunity which is dazzling when exposed.

Greece became the first battleground in the Cold War, with the British and the U.S. backing anti-Communists in the Greek civil war in the late-1940s against Communist insurgents. This struggle led Harry Truman to announce his pledge for unlimited military support for nations under Communist threat (the Truman Doctrine). This was in addition to the massive sums sent to Europe under the Marshall Plan to rebuild the destruction of the continent caused by the Second World War. While the rest of Western Europe used U.S. aid to rebuild its economy Greece used much of the U.S. aid to rebuild its military and fight the Civil War.

When, at the end of the 1950s the U.S. reduced its aid to Europe, the burden of Greek military expenditures was returned to Athens. Although both Greece and Turkey are members of NATO they remain bitter enemies with ongoing conflicts over oil, boundaries like the Dodecanese Islands, the security of Cyprus (with which Greece once sought 'Enosis') and similar conflicts.

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The U.S. over the years catered to the two NATO members under a 7:10 ratio, meaning for every $7 million dollars of equipment it sold to Greece it sold $10 million to the more populous Turkey.

It was in that environment that Greece in 1998 went shopping for submarines. It decided on three German-built class-214 submarines, a state-of-the-art diesel-electric powered vessel, with the option of buying a fourth--for a total of --1.8 billion. The first was to be built at the Kiel headquarters of Howaldtswerke-Deutsche Werft GmbH, with the others built at the affiliated Hellenic Shipyards SA, in Skaramangas, Greece. The arrangement, called the Archimedes Program, would preserve thousands of jobs at the Greek shipyard. The total cost of the new and renovated subs: --2.84 billion.

This was not a straight military purchase. At that time, the Greeks were trying to make their finances look right so as to join the Euro. The PASOK Government lied about its figures and the New Democrats were even worse. Many European officials have charged France and Germany with making their military dealings with Greece a condition of their participation in the country's huge financial rescue. In other words, the Germans and the French made Greek military deals with them the criterion for economic assistance from the European Union.

As the military expenditures rose, Greece's two main political parties used them as a political football, each trying to make the budget deficit figures look worse when the other was in charge. When the Socialist government first bought the submarines, it post-dated the accounting for them to the day when the vessels were to be delivered, rather than when they were purchased.

The government at the time was struggling to meet budget criteria for entry into the euro zone, which it joined a year behind other members in 2001. Pushing back the expenses saddled the bill on the Socialists' successors, the conservative New Democracy party, which came to power in March 2004.

The New Democracy government that year then used a similar tactic, by retroactively accounting for the expenditures on the date of purchase. That inflated the budget deficits of the previous government--while making it easier to get on with its own deficit problems.

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The Greek judiciary and the military authorities were outraged at this deception by the politicians and in May 2010 instituted an investigation into these military purchases and the vast amount of bribes from Germany and France which lubricated the deals. Even the German government began an investigation of the chief executive of Ferrostal (the German company building the submarines) who resigned. Greece's economic crimes unit began investigating all weapons deals of the past decade--totalling about --16 billion--to determine if Greece overpaid or bought unnecessary hardware. In April 2010, Stelios Fenekos, a 52-year-old vice admiral of the 22,000-person strong Greek Navy, resigned his position to protest the Greek defence minister's decisions on these purchases. Meanwhile, not one of the subs had been delivered. When Greek officials travelled to Kiel to test the first sub, called the Papanikolis, they said that they found that in certain sea conditions the submarine listed to the right. "The Navy said we cannot accept this sub," said Mr. Fenekos, "But the politicians did not want to stop it because they needed the production for the workers in the shipyard here." By 2009 Greece had paid the Germans --2.032 billion, about 70% of the total owed without receiving a single submarine. The Germans demanded the remaining 30% of the payment. The Greeks refused and the German companies cancelled the contract. The Greeks and the Germans arranged a variation on the deal but it never was completed because the German courts started to investigate the corrupt activities of the German companies while making the deal.

German prosecutors in Munich began turning up evidence of unsavoury dealings, according to records of their investigation. Ferrostaal executives authorized payments worth millions of euros to politicians to win the initial deal in 2000, through a Greek company called Marine Industrial Enterprises, according to the Munich prosecutor's records. To do this, Ferrostaal used sham consulting contracts, according to the records. That company then distributed payments to "officials and decision-makers" in Greece. The investigation is still ongoing. No charges have been filed. However, Former Minister of Defence Akis Tsochadzopoulos was convicted in 2013 of accepting $8 million in bribes connected to these submarines. Meanwhile the Greeks have no submarines and the Germans have about --2.8 billion of Greek funds.

In a similar case the German engineering group Siemens reached an out of court settlement with Greece following claims it had bribed cabinet ministers and other officials to secure contracts before the 2004 Olympic Games in Athens. Tassos Mandelis, a former socialist transport minister, admitted he had accepted a --100,000 payment from Siemens in 1998.

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Dr. Gary K. Busch has had a varied career-as an international trades unionist, an academic, a businessman and a political intelligence consultant. He was a professor and Head of Department at the University of Hawaii and has been a visiting (more...)
 

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