IMF back Syriza demand for debt write off while EU leaders wish for soft coup


Last night (2 July) the IMF in effect put its weight behind the Syriza government and the call for a No vote (OXI) in the referendum. An image of Chile's socialist president Allende, murdered in the 1973 US coup 'backing' the No vote captured for us both the contradictions and dangers of Sunday's vote in Greece.

The IMF is in effect controlled by the US government, it is very unlikely it would take such a stance at a key moment with at least a 'nod and a wink' from the Whitehouse. In effect this is the IMF coming out against the soft coup 'solution' to remove Syriza in power that has been pushed so heavily by the political class across the EU including the Labour Party in Ireland. There can be no one left in Labour with even a suggestion of socialist conscience but if there was finding themselves on the wrong side of a coup promotion to the IMF and the Whitehouse should give them food for thought.

The IMF have basically come out and said what Syriza and many others have been saying for months. That the Greek debt is not repayable within the limits of what a parliamentary democracy can impose on its people. They are not arguing against austerity, indeed they are not even saying the austerity programs to date have been wrong. They are simply suggesting what the EU and ECB want cannot be imposed. Instead a new deal would have to include a 20 year break in debt repayments, a debt write off and a very substantial 50 billion additional aid to stop Greece defaulting gone loans that will come due in the medium term.

Paul Mason has published a useful analysis of the IMF position in which he explains the core of why there are saying this as follows
"To go on using 15 per cent of its [Greek] GDP to pay down its €320bn debt until 2045 “would require primary surpluses of 4+ per cent of GDP per year and decisive and full implementation of structural reforms that delivers steady state growth of 2 per cent per year (with the best productivity growth in the euro area) and privatization”.

This is IMF speak for “it’s impossible” – for all the reasons the report then points out.

4 per cent surpluses are politically undeliverable by a democratic government in Greece. The conservative-led coalition fell because it could not deliver them. Nor could it deliver the “structural reforms” everybody wants – an end to bureaucracy, corruption and tax evasion – because the existing political establishment is mired in these problems."

Again this is broadly similar to what Syriza and many others have already said. In many ways its a statement not only of what is obvious but also what actually happened to the Greek economy when high levels of austerity were imposed.

The day of the Greek elections we explained why a soft coup was one likely outcome if Syriza struck to its policies. At the time a lot of the pro-Syria left presented that position as ridiculous, demonstrating a faith in EU democracy that is now revealed as hollow. It's important that lesson is retained as we move forward but what is frightening is the level of support among the EU political class for a soft coup.

EU leader after EU leader have supported the idea that Syriza have to be removed from government. In Ireland Kenny and Bruton, our two highest elected politicians have made statements to that effect. There hasn't been a word of opposition from the ranks of their own parties.

Certainly what they hope for is a soft coup. That is not one with the military taking power but where Syriza are removed from government by engineering a split and then the 'moderates' allowed to form a new government with the opposition parties that Greek voters rejected in the last election.

Of course such a government if faced with the same austerity requirements as Syriza would also be unable to implement them without falling apart and fresh elections. But the EU leaders have also been hinting that maybe a different deal would be on offer to a more 'reasonable' government. Which is where the timing of the IMF announcement that it was switching sides is so curious, why not simply waiting for a Syriza defeat on Sunday and then make the deal it proposes with the new boss?

The answer presumably is that its not confident that the EU/ECB will give enough, if so another indication of the irrationality of the EU political class. Or rather a rationality that serves a very narrow set of interests, that of the 1% in the EU who have refused to pay any of the costs of austerity and as a consequence of the political parties that have backed them to date and can not now afford to be exposed in front of their own electorate.

The problem is that if as they wish Greece is forced out of the Euro as a way of terrifying the anti-austerity movement across Europe much worse forces are waiting in the wings than the chosen inheritors of the soft coup. Greece continues to have a military funded out of all proportion to the GDP with a recent history of staging coups itself, and not of the soft variety. And the fascists of Golden Dawn stand to inherit a EU created situation which is successful will simultaneously mark Syriza as a failure and the remainder of the political parties as little more than collaborators.

WORDS: Andrew Flood (Follow Andrew on Twitter )

Written for WSM FB 3rd July