ORIGINAL FRENCH ARTICLE: Grèce-Europe : pour un vrai plan B
Translated Saturday 5 September 2015, by
We must stop using European money for austerity. By Frédéric Boccara, Yves Dimicoli, Denis Durand and Frédéric Rauch of the PCF’s national economic committee.
The content and the manner of the “agreement” Merkel and Schäuble dictated to Greece, invokes indignation throughout Europe. This diktat opens a new phase in the standoff over the use of European money and, therefore, over the euro and European Central Bank (ECB) policies. Though a battle has been lost, there is no question of laying down arms. We support Alexis Tsipras, who chose the most suitable strategy to carry on the fight when people tried to force him to choose between three catastrophic impasses:
submission to the extravagant demands of the creditors;
the immediate collapse of the banking system and exit from the euro;
the supposedly organised exit from the euro advanced by Schäuble and even by certain left wing politicians.
The consequences of a “Grexit”.
A “Grexit” would mean devaluation estimated to be at least 40 percent, and therefore, a 40 percent loss in buying power and a 40 percent increase in debt. It would not bring any competitive advantage to a country where wages have already fallen by 25 percent and where production facilities are not capable of responding to a growth in demand. On the other hand, this would immediately cause an increase in the cost of imports (therefore more wage restraints), more expensive private finance, increased difficulties in financing investments and, finally, even greater subjugation to finance. With a Golden Dawn victory at the end of it all. Anyway, a ”Grexit” would unleash massive speculative attacks forcing other countries to quit the eurozone, starting with Italy (2,070 billion euros debt), Spain (966 billion euros), Portugal (219 billion euros) and, probably France next. We would embark upon an incessant series of competitive devaluations in each country, both deflationary and wage hitting, further reinforcing the economic war for gain of market share to the detriment of our European partners. In sum, “organised” or not, exit from the euro, with its catastrophic social effects, will destroy hopes for change, not only in Greece but in the whole European Union.
An unviable “agreement”
After the 14 July vote, what can be observed?
Schäuble achieved neither of his two objectives: Greece has not left the euro and the Tsipras government has not been overthrown. Besides, many voices have risen up to say that the “agreement” of 13 July, contrary to all good economic sense, is unviable and the Greece public debt must be imperatively restructured.
Develop the Greek economy
This situation now leads us to focus on the battle for Greek economic development and thus, on the responsibility of the European Central Bank to finance it.
For now, since Greece is in the eurozone, the ECB should assure the liquidity of Greek banks and sufficiently increase the level of emergency finance while lowering its cost. It is intolerable that Greek citizens may not withdraw more than 420 euros per week! It is intolerable that SMEs continue to be drained!
Greece cannot get out of this unless the euro, spewed out by the Euro-system, serves its economic and humanitarian potential instead of squandering billions of euros fattening-up creditors. That means:
investment to restore strength of productivity and create the employment which the unemployed 25 percent need;
construct an efficient administration (starting with tax collection);
restore all public services, particularly health and education;
restructure and alleviate the public debt.
It is vital for Greece to receive all the promised funding, including unused structural funds and that it can use this to redress its problems. It is a fundamental democratic strategy.
One could say, in varying degrees, for all eurozone countries. Faced with the vetos of the German directors of large scale finance, we Europeans must find an alternative to proposing, like François Hollande, a headlong rush towards stronger federalism and fragmentation of the eurozone, increasing dominance. We must stop using European money for austerity and finance, and we should challenge the Central European Bank. France (with Italy, Spain, Belgium...) should propose the creation of a European fund for all member countries of the euro, to finance the development of public services, of the economy and the ecology of Europe. This fund would be a first step toward a European development fund shared by the ECB and states, as called for by the PCF and the Party of the European Left. This public financial institution would be funded by the ECB as authorised by the Lisbon Treaty (article 123.2). It would issue bonds which the ECB would buy with some of the 1140 billion euros which it promised to create, last 22 January, in order to stimulate the European economy. This fund would be democratically managed with specific criteria for the creation of jobs and the development of public services in each country. It would be a first step towards the gradual and radical reorientation of the ECB and, therefore, of Europe. That is what is called a really big battle.