Q&A: Repercussions of the Greek Crisis

بسم الله الرحمن الرحيم

Question and Answer

Repercussions of the Greek Crisis

(Translated)

Question:

It was reported on Friday, 27/02/2015 CE that by an overwhelming majority of the German parliament has approved the aid extension to Greece for four months … Does this mean that the Greek crisis has ended, and that Greece will remain a member of the European Union without hindrance? Also it was noted that the United States is interested in keeping Greece in the European Union and to solve its problems. Obama said during the peak of the crisis, in an interview with CNN on 01/02/2015, expressing “his hope that Greece remains in the Eurozone”, and said that “it requires compromises from all sides”. He added, “The best way to reduce the deficit and restore durability lies in the achievement of growth”. What is the motive for this American declared intervention in the crisis in Greece? Jazak Allah Khair.

Answer:

To get a clearer view we will present the following:

1. Greece recent financial crisis began to appear at the end of 2009, after the eruption of the global financial crisis in America, the head of capitalism, and included Europe and the rest of the world which is subject to the capitalist system. It engulfed Greece in April 2010, and subsequently, on 23 June 2010, the Greek Government formally requested from the European Union and the International Monetary Fund to launch a bailout program that includes loans to help Greece to avoid bankruptcy and debt defaults. The interest rate on Greek bond rates increased as insurance rose on these bonds against default. As a result, all were raised to high rates due to investors’ fears of a “lack of Greece’s ability to meet its debts, with a high budget deficit and mounting public debt rate in addition to the weak growth in the Greek economy”. This crisis has threatened the euro and its region, and therefore the European Union as a whole, and floated the idea of Greek exit from this economic region. However, Europe has decided to provide assistance to Greece in return for implementation of economic reforms and austerity measures aimed at reducing the deficit in the public budget. Noting that, the current program of the so-called reforms was due to expire in February 28 this month. The agreement was not decisive in its content but it delayed the explosion, as has been said.
2. The package offered to Greece since 5 years ago is estimated at 240 billion euros, while the Greek debt currently amounting to 323 billion euros; broken down as follows: 60% of this debt is due to the euro zone, 10% to the International Monetary Fund, 6% to the European Central Bank, 4% to Greek banks, 1% to foreign banks, 1% to Greek Central Bank, 3% Other loans and 15% Treasury Bond. The Eurozone necessitates the achievement of a budget surplus of 3% after the payment of interest on loans. Greece does not have the ability to achieve this, but the Greek finance minister says his country is no longer bound to this condition according to the latest agreement, and Germany and the zone did not issue any explanation in this regard. The austerity policy that was imposed on Greece in recent years has led to an ongoing state of economic recession during the past years, rising in the unemployment rate to 27%, and bankruptcy of about one third of the special projects. Thus, Greece has been living under the austerity program since 2010, and the European Financial debt-servicing rescue has lost more than 200 billion euros of the loans made so far, to rescue the banks and hedge funds payable to Greece, particularly the French and German banks. These loans have been provided by the European Union, the International Monetary Fund and the European Central Bank in exchange for Greece’s commitment to austerity measures. This means that the EU reimburse for its banks the money that it lent to Greece with high usurious interest rate at the time the Greek citizen has lost the confidence of his country’s economy. For example, 18 billion euros have been withdrawn since last December and 500 million were withdrawn on the 18th and 19th of this month. All of this indicates the seriousness and the corruption of the so-called capitalist bailout plans, as they are drowning and not rescuing, and fatal for the country and the people…
3. Germany was the most hardliner state on the issue of the Greek crisis and rejects debt relief. Thus, Germany was a top negotiator and was leading the talks, to the extent that the talks have been described as Germany-Greece talks. Therefore, the news reported that the agreement was not made through the real negotiations between ministers of 19 countries in the Eurozone and Greece; instead, it was through negotiations between the German Finance Minister and his Greek counterpart in the presence of officials from the International Monetary Fund and the European Central Bank. This has allowed the current anti-European Union movement in Britain to intensify its criticism of the bloc and described it as a club dominated by Germany, which seeks to take control of Europe. Germany began to feel it is the European Union financial leader because it is Europe’s strongest economy, and all extend their hands out to it and show their need to it and to its help. Germany does not want to compromise the issue of the Greek crisis because the contagion will move to Portugal as a first stage, and in the late stage to Ireland, Italy, Spain and other EU countries that suffer from similar problems. These countries are subject to the rescue program and apply the policy of austerity which Germany imposed on behalf of the Union. And so, if Germany compromised with Greece, those states will begin to abandon the policy of austerity that burdens their citizens. Therefore, the German Finance Minister Wolfgang Schaeuble, a hardline opponent of the idea of exempting Greece from debt said, “There would be no payment of new funds to Greece until the conditions of the deal had been met”, and said, “Greece’s leftist-led government would have a difficult time” (BBC 21/2/2015). Greek government spokesman Panagiotis Agrafiotis said, “Greece and Germany have reached an agreement on the extension of Greece’s bailout loan program for four months”, and, “There has been an accord between the institutional partners, Greece and Germany” (Al-Quds 20/02/2015). And finally, after the Greek government pledged commitment to the program without any reservations or conditions, the European Parliament or, rather the German Parliament, agreed on 27/2/2015 on the extension of the deadline for four months… Schaeuble has stressed that the current agreement “is not about new money, it is not about changing the program” (London-based Al-Arab, 28/02/2015). Schaeuble has sought the reassurance that this is never about “giving new billions to Greece” or amending the terms of the current program. The European Commissioner for Economic Affairs Pierre Moscovece has urged Athens to “respect its commitments to its European partners and the International Monetary Fund”. (27/2/2015 swissinfo.ch-afp_tickers)
4. As for the position of France, which is the leading state of the European Union alongside Germany, French President Francois Hollande described the agreement as “a good settlement for both Greece and its creditors” (BBC 21/2/2015). The French Finance Minister, Michel Sabin said, “Athens agreed at the end to stay under creditors’ supervision, but there will be work of different nature, there will definitely be a political action, pointing out that the Greeks no longer want to meet experts” (FPA, 21/2/2015). The agency added, “If Athens sticks to its commitments, it stands to receive up to 7.2 billion euros in funds still left in its 240 billion euro bailout ($273 million) from the EU and the International Monetary Fund. Greece is keen to turn the page on austerity but Germany, the guarantor of the strictness in European budgets necessitates that Greece continues to purge its finances and move on structural reforms”.
5. As for the American’s stance was clear from it the public intervention in the subject. Thus, the US President Barack Obama said in an interview with CNN on 01/02/2015, commenting on the financial crisis in Greece, standing by it and criticizing the position of the European Union, said, “You cannot continue to pressure countries in recession” and added “at some point there must be a strategy of growth in order for these countries to be able to repay their debts and reduce some of their deficits”. He acknowledged that “there is no doubt that the Greek economy was in urgent need of reforms.” He also said, “These changes are very hard to achieve if the people’s living standard has dropped by 25% – this cannot be sustained either by the Greek society or the political system.” Obama expressed “the hope that Greece will remain in the eurozone” and said that “this will require compromises on all sides” and criticized the European austerity policy, and said, “When the economy is in free-fall, you need a strategy of growth, not just pressuring a population that is suffering more and more”. He added, “The best way to reduce deficits and restore fiscal balance lies in growth”. The US President was speaking several days after the leftist Syriza party won the Greek legislative elections that took place on 25/1/2015 and nearly a month before the end of the European rescue phase for Greece to give a clear signal to Europe that it stands beside Greece, and criticizes Europe in order to pressurize it to keep Greece within EU and exploits its support for it against the Union. America wants to keep Greece within the European Union, so that this Union continues suffering from crises and cracks and remains a fragile union threatened to collapse.
6. As for Greece itself, in which new left-leaning government, led by Syriza party, swept to power last month, it wants to stay in the European Union. The Greek Prime Minister Alexis Tsipras has praised the agreement, saying, “The government had foiled a plan by “blind conservative forces” in Greece and abroad to bankrupt the country at the end of the month”, i.e. when its European bailout had been scheduled to expire. He added “The agreement with the European Union leaders to extend Greece for four months will end the unpopular austerity measures in the country, however, the government still faces difficult challenges”, claiming that “the agreement cancels out austerity”. However, this agreement came in exchange for concessions, including its commitment to identifying the so-called reforms in two days. He said, “The government would now focus on negotiating a new reform blueprint with Greece’s creditors by June” (AFP 21/2/2015). The Greek government has requested the extension of funding for Greece for a period of 6 months to be able to provide reforms plans for four years. “The Greek government it had averted threatened cuts to pensions and tax hikes, and had persuaded its European creditors to drop unrealistic budget demands.” The Greek Finance Minister deemed the agreement a first step in a long path, and added “nobody is going to ask us to impose upon our economy and society measures that we don’t agree with… We now have a new framework, but we respect the previous ones. We are becoming co-authors of the reforms that we want to implement, which we are going to dictate.” On his part, German Finance Minister Wolfgang Schaeuble said, “as long as the programme is not successfully concluded, there will be no payment.” (Euro News 21/2/2015) This was before Greece agreed on the terms of the program and then Germany agreed on the extension.
7. As for the British stance, the British Finance Minister George Osborn described the current situation in the dispute between Greece with other partners in the euro zone as “a risk to Britain’s economic stability, and called for the need for the Eurozone countries to find a common solution to ward off a full-blown crisis”. Adding, “in this stand-off between the Eurozone and Greece is the risk of a full-blown crisis, which will do real damage to the European economy and is a risk for Britain” (Sky News, 20/02/2015). Britain wants the European Union to remain for as long as it can take advantage of it and does not constitute a danger to it. Especially that the whole Western world is suffering from a full-blown financial crisis, the collapse of the European Union at this time will be a strike, and perhaps a fatal one, for the capitalist economy as a whole. It, i.e. Britain, wants the EU to remain in order to compete with America and be able to use it in its hidden struggle with America and to prevent the latter the hegemony in world’s politics.
8. We conclude from all of this the following:
9. The European Union is a fragile union, because it is not founded on a political decision and it is not a single political entity, for there is no one centralized administration to run it. Rather, it is a group of states which agree on certain positions and situations and differ in others, and its major forces are competing for its leadership and for imposing their will on it. Especially if we know that it is based on interest, since it adopts the capitalist ideology that makes interest a basis and a measure for actions. And that they are nation-states seeking to achieve sovereignty over others, because this ideology approved nationalism and did not resolve it, hence it was unable to integrate the people who believe in it into one pot. Accordingly the European states and in particular the major states, are competing on the sovereignty of the Union countries; Germany seeks to achieve it, France is seeking a prominent role besides Germany, and Britain is seeking to use the Union to compete with America, so that it benefits from both sides.
10. America is trying to permeate and influence the EU countries, and is working to beat the Union, and to undermine it so as not to become a single political unit with an influential force globally. It also seeks to drop the euro, so it does not continue to be a global currency rivaling its currency, the dollar. America exploits the Union’s crises and its problems and discredits its solutions in order to degrade its ability so it remains the leader of the capitalist world without rival. Thus, it exploited the crisis in Greece, and is working to flirt with the leftist government in it and attract it. It also defends its staying in the Union so that the Union remains fragile eroded by crises. And it will work to exploit it and encourage it to take positions in the face of the European Union and to make Greece a weakening or cracking factor for the Union, and the Union faces the risk of falling.
11. Germany is working to preserve the Union and the Eurozone and to strengthen them and has almost become the prominent voice. It is the primary beneficiary; since its financial institutions are the ones profiting; as they lend to Greece and other European countries and recover these funds with profit. Hence it moves the economy in its financial institutions of banks, funds reserves and insurance companies. It also works to strengthen its influence in it. It has currently become described as the world medium superpower. France is the second beneficiary along the lines of Germany and is working to strengthen its international role in the Union. Britain, which is monitoring the situation as if it is not a member of it; it does not work to strengthen it and neither seeks to drop it down; instead it is working to take advantage of it and exploit it.
12. And so the competition will remain between the major countries in the Union, and the conflict continues between the Union and the United States which seeks to undermine it, and fragment it, if it could. And seeks to drop the euro as a world currency so that its green paper, which is not worth the ink it is printed with, stay the world currency, plundering through it the resources of the world and funding its military apparatus to ensure its world dominance as the leader state that controls the world.
13. Thus, it is proving, once again, that capitalism is a false ideology, its economic system is corrupt, its solutions are dangerous, and its consequences are disastrous, for it does not address the diseases, rather it is working on soothing them, so the problems continue to exist and the diseases remain chronic. Thus, Riba, which it adopts as a basis for the transactions and loaning, is a destructive burden on the debtor. Moreover, the debtor country that issue Treasury bonds to borrow money with Riba must insure these bonds, hence paying large extra sums in exchange for insurance. Consequently the burden increases on the borrowing state and this does not rescue it, rather it continues to suffer deficit in the budget and in the ability to repay the debt and keeps it under the control of the creditors! And keep its citizens living in hardship and misery as a result of being forced to apply the austerity policy. And Greece, which this talk is all about, is the most prominent example of this. For all the solutions to its crisis, as indicated above, are at best relievers for a period of time and then soon explode, and so on … for the fact of the matter that Greece has lived for four centuries in the affluence of living, stability, security and safety under the rule of Islam.

9^th Jumada I 1436 AH
28/02/2015 CE