Unbiased pros and cons of EU membership 2 : Are the EU's actions towards Greece undemocratic? Would the UK leaving the EU help or harm Greeks?

Is the EU’s treatment of Greece democratic or not though? Unelected officials from the ‘Troika’ (European Commission, European Central Bank and International Monetary Fund) were sent to oversee Greek government departments’ spending , with the stipulation that “No unilateral fiscal or other policy actions will be taken by the [Greek] authorities. All measures, legislative or otherwise, taken during the programme period, which may have an impact on banks’ operations, solvency, liquidity or asset quality should be taken in close consultation [with the troika]” (1)

The Greek electorate voted in a party – Syriza – whose manifesto included scrapping EU imposed austerity. Then they were told this would not change the agreements made with the Troika by previous Greek governments.

German and Hungarian government politicians argue that they were representing the electorate of their own countries who were paying for financial support to Greece.

The reality is a lot more complicated than that as Germany benefited most from a free trade zone and single currency with weaker economies like Greece.

Despite myths of Greeks being lazy and tax avoiders, they in fact worked longer average hours than any other country in Europe even before the crisis , with Germans working considerably less hours on average(2) – (3).

And tax avoidance by the very wealthy is hardly something unique to Greece with e.g Switzerland, Luzembourg and the British Channel Islands being notorious tax havens, and many British companies, banks and billionaires avoiding tax in tax havens.

Greeks also had the options of defaulting on their debts and dropping the Euro as a currency and going back to their own currency, so they could issue money themselves, rather than having to ask the European Central Bank to issue them with Euros.

The Syriza Finance minister Yanis Varoufakis favoured at the least threatening to do this, and if necessary, doing. However the Greek government did not do it as the majority of Greeks in polls were against it, fearing that if done during a crisis it would lead to more panic and hyper-inflation.

This is still an option for the Greek government though, if it believes the damage done by EU imposed austerity policies is so bad that the other risks couldn’t be worse.

What there can be no doubt about is that the refusal of the same 50% debt forgiveness that Greece approved for Germany after World War Two, and the austerity policies imposed on Greece are both unfair and completely counter-productive.

Severe austerity cuts on the scale imposed on Greece reduce the size of the economy as a whole by reducing demand for private sector goods and services, reduce growth, and so make paying off any of the debt impossible.

From 2008 on during protests and riots against austerity measures Greek riot police have killed dozens of protesters and rioters, starting with what seems to have been the unprovoked murder of a 15 year old boy by armed police in December 2008 (4).

The EU have demanded that Greece run a budget surplus of 3.5% of GDP by 2018, which is over five times as large as the largest budget surplus that Germany, the strongest economy in the EU has ever had, at 0.6% of GDP in 2015 (5) – (6).

Even the IMF – one part of the Troika – has now said this ridiculous and argues that debt forgiveness and a relaxation of austerity are required for Greece (7).

What they don’t say is that, as Syriza have pointed out, some of the 1 trillion euros of Quantitative Easing money which have been created by the European Central Bank to hand to private banks could be used to pay off much of Greece and Spain’s debt (8) – (9).

Some people would argue that the UK leaving the EU could lead to the collapse of the EU and that this would free Greece from EU austerity policies.

However some Greeks, like Yanis Varoufakis,  a leading critic of EU austerity policies, want the UK to stay in as an ally for reform , arguing that if the EU splits up the result will be chaos and panic, which will be even worse for Greece (10).

He has launched an EU wide movement for democracy and against austerity policies called Diem25.

And the majority of Greeks , while they are angry and unhappy at what the EU has imposed on them, believe they are not in a position to leave the EU or go back to their own currency at the moment.

(1) = Open Democracy 14 aug 2015 ‘Greece has become the EU’s third protectorate’, https://www.opendemocracy.net/can-europe-make-it/jan-zielonka/greece-has-become-eu%E2%80%99s-third-protectorate

(2) = BBC News 26 Feb 2012 ‘Are Greeks the hardest workers in Europe?’,
http://www.bbc.co.uk/news/magazine-17155304

(3) = OECD Stat Extracts ‘Average annual hours actually worked per worker’, http://stats.oecd.org/index.aspx?DataSetCode=ANHRS

(4) = BBC News 05 May 2010 ‘Three dead as Greece protest turns violent’,
http://news.bbc.co.uk/1/hi/8661385.stm

(5) = BBC News 22 Jun 2015 ‘Greece spells out terms for debt crisis 'breakthrough'’,
http://www.bbc.co.uk/news/world-europe-33228119 (scroll down to subheading  ‘Greece debt talks : main sticking points’ ‘EU officials say Greece has agreed to budget surplus targets of 1% of GDP this year, followed by 2% in 2016 and 3.5% by 2018; Greece says nothing is agreed until everything is agreed’ )

(6) = AFP 23 Feb 2016 ‘Germany notches up record budget surplus in 2015: stats office’, http://www.newvision.co.ug/new_vision/news/1417803/germany-notches-record-budget-surplus-2015-stats-office

(7) = www.guardian.co.uk 23 May 2016 ‘IMF tells EU it must give Greece unconditional debt relief’, https://www.theguardian.com/business/2016/may/23/imf-warns-eu-bailout-greece-debt-relief

(8) = Greek Reporter 28 Jan 2015 ‘Greece: This is SYRIZA’s New Government Plan in Detail - See more at: http://greece.greekreporter.com/2015/01/28/greece-this-is-syrizas-new-government-plan-in-detail/#sthash.ahNA2k1R.dpuf’, http://greece.greekreporter.com/2015/01/28/greece-this-is-syrizas-new-government-plan-in-detail/

(9) = BBC News 22 Jan 2015 ‘ECB unveils massive QE boost for eurozone’, http://www.bbc.co.uk/news/business-30933515

(10) = www.guardian.com 05 Apr 2016 ‘Yanis Varoufakis: Why we must save the EU’,
https://www.theguardian.com/world/2016/apr/05/yanis-varoufakis-why-we-must-save-the-eu

Gaza conflict helps Israeli government distract from the acceleration of it’s West Bank land grab under Netanyahu, Lieberman and Barak

The conflict between Israel and Hamas continues to distract from the Israeli land grab in the West Bank, which has accelerated under Israeli Prime Minister Benjamin Netanyahu and his Foreign Minister and now electoral list partner Avigdor Lieberman, who says Palestinians should settle for just 40% of  it, along with Gaza (which is almost water-less), while Israel keeps the entire former British Mandate of Palestine along with 60% of the West Bank (1).

Israel currently takes 80% of vital water supplies in the West Bank ; and 64% of the West Bank is already under Israeli military control under the one sided Oslo Accords ( not all has been annexed yet, although the Israeli military are telling more Palestinian farmers to get off their land within Zone C (the 64%) all the time) (2) – (5)

As soon as the Gaza crisis became the media focus Netanyahu’s Finance Minister Yuval Stenitz told Israeli journalists “we doubled the budgets [allocated] to Judea and Samaria. We did it with a low profile” so that “elements in Israel and abroad” wouldn’t block it (6).

(All Israeli governments call the West Bank by it’s ancient biblical period name of ‘Judea and Samaria’ in order to try to claim it is all similarly part of the modern state of Israel by right – a claim about as valid as if the Italian government claimed a right to rule over the entire former Roman Empire, or a modern Assyrian Iraqi to the ancient Assyrian empire.)

Netanyahu’s government has gone beyond even previous Israeli government’s annexation of West Bank land by formally authorising Israeli settlements even East of the vast Israeli “barrier wall”. These new settlements are not only illegal under international law (as all Israeli settlements in the West Bank are) but even under Israeli law according to Israeli Supreme Court rulings (7).

Israeli Defence Minister Ehud Barak (who was also Defence minister in the previous government during the previous Gaza war in December 2008 to January 2009) personally approved the five-fold expansion of one West Bank settlement in September (8). A freedom of information request by an Israeli peace campaigner found that Barak’s Defense ministry has marked 10% of the West Bank for expansion of settlements over the years, including many settlements illegal under Israeli law which were later approved by the government (9).

The Israeli group Peace Now also say more West Bank settler houses were constructed in 2010 (9 months of which were part of a moratorium on settlement construction meant to allow negotiations) than in 2009, before the moratorium (10).

 All this will boost the vote for Barak’s new party and even more so the joint election list announced by Netanyahu for his Likud party along with Leiberman , whose Yisrael Beitenu party won more seats than Labor in the 2009 elections and whose support base comes from immigrants to Israel from the former Soviet Union – mostly Russian, secular, but hardline Israeli nationalists (11).

The collapse of the Soviet Union’s economy, especially under Yeltsin’s complete free market “reforms” created a few dozen billionaires while leaving millions with nothing. Israel by comparison provides cheap housing to settlers (land taken by force doesn’t have to be paid for after all) and some welfare payments including child benefit to it’s citizens

Israel’s ‘Law of return’ allows anyone with one Jewish grandparent or who has converted to Judaism as a religion the right to Israeli citizenship. In practice their partners are usually granted citizenship too, unless they are Palestinians or Arabs (12).

The Israeli government is also forcibly relocating Bedouin Israeli-Arab Israeli citizens from the Negev region within Israel itself in order to make way for Jewish settlements within that part of Israel, who, like 19^th century American Indians, have been forced to move twice already (once in the 1948 war and again in the 1950s) to make way for settlers (13) – (14).

This is all part of trying to solve “the demographic problem” which is a euphemism for the Arab birth rate being higher than the Jewish birth rate within Israel and the occupied territories. The Israeli government wants to settle most of the West Bank without ending up with an Arab majority (15).

The conflict between Israel and Hamas in Gaza serves to distract the US, the UN and international media from the West Bank and settlements. Palestinian President Mahmoud Abbas of Fatah ended negotiations with Netanyahu’s government in November 2010 because Netanyahu refused to continue a freeze on new settlement building in the West Bank, and returned to coalition with Hamas (the other half of the elected Palestinian government since the 2006 elections) from April 2011. (16).

The useful distraction from the West Bank may well be one of the reasons the Israeli government refuses to negotiate on anything with Hamas except for ceasefire agreements, despite Hamas being half the elected Palestinian government and despite some of it’s leaders and spokesmen having offered negotiations repeatedly on the basis of the 1967 borders (17) – (18)

Whether any of these offers are genuine or not is debateable, but as many Israelis including former heads of Mossad and Shin Bet say there should be negotiations with Hamas without preconditions, because if even some of Hamas are serious about negotiations it will swing influence within the organisation in their favour if Israel actually makes any serious concessions (i.e full sovereignty for a Palestinian state in Gaza and the majority of the West Bank, including most of the water and farmland).

If Hamas are not genuine Israel has it’s overwhelming military strength not to mention the world’s only remaining superpower the US as an ally, so it has nothing to lose by negotiating – except the majority of West Bank land and water which it wants to keep for itself.

Israeli governments claim Hamas’ offers of negotiations on the basis of a ‘Hudna’ (an Islamic term from the Quran) for the 1967 borders are similarly just for an extended ceasefire and so worthless, though opinion among experts and even Hamas leaders on what a Hudna involves is divided.

 

Sources 

(1) = Guardian.co.uk 14 Nov 2012 ‘Israel threatens to overthrow Abbas over Palestinian statehood bid’, http://www.guardian.co.uk/world/2012/nov/14/israeli-minister-threatens-abbas-un ; ‘Lieberman's draft paper proposed Israeli recognition of a Palestinian state on provisional borders encompassing around 40% of the West Bank in exchange for the Palestinian leadership dropping its approach to the United Nations.’ (3rd from last paragraph)

(2) = guardian.co.uk 27 May 2009 ‘Israelis get four-fifths of scarce West Bank water, says World Bank’, http://www.guardian.co.uk/world/2009/may/27/israel-palestinian-water-dispute

(3) = Amnesty International 27 Oct 2009 ‘Israel rations Palestinians to trickle of water’, http://www.amnesty.org/en/news-and-updates/report/israel-rations-palestinians-trickle-water-20091027

(4) = KIVA blog 06 Apr 2012 ‘The ABCs of West Bank Agriculture’,
http://fellowsblog.kiva.org/fellowsblog/2012/04/06/the-abcs-of-west-bank-agriculture

(5) = Al Jazeera 29 Aug 2012 ‘Palestinian farmers ordered to leave lands, http://www.aljazeera.com/news/middleeast/2012/08/2012829184442780471.html

(6) = Haaretz 12 Nov 2012 ‘Netanyahu's government has quietly doubled funding for settlements, says finance minister’, http://www.haaretz.com/news/diplomacy-defense/netanyahu-s-government-has-quietly-doubled-funding-for-settlements-says-finance-minister-1.477204

(7) = UNoCHA IRIN news 14 May 2012 ‘Analysis: Israeli government challenges the law to embrace illegal settler outposts’, http://www.irinnews.org/Report/95445/Analysis-Israeli-government-challenges-the-law-to-embrace-illegal-settler-outposts

(8) = Haaretz 12 Nov 2012 ‘Barak approves plans to build 500 new homes in West Bank settlement’, http://www.haaretz.com/news/diplomacy-defense/barak-approves-plans-to-build-500-new-homes-in-west-bank-settlement.premium-1.476862

(9) = Haaretz 30 Mar 2012 ‘Israel Defense Ministry plan earmarks 10 percent of West Bank for settlement expansion’, http://www.haaretz.com/news/diplomacy-defense/israel-defense-ministry-plan-earmarks-10-percent-of-west-bank-for-settlement-expansion-1.421589

(10) = Peace Now 23 Dec 2010 ‘Intensive construction in every other settlement’, http://peacenow.org.il/eng/content/intensive-construction-every-other-settlement

(11) = Ynet News (Israel) 25 Oct 2012 ‘Netanyahu, Lieberman join forces ahead of elections’,
http://www.ynetnews.com/articles/0,7340,L-4297100,00.html ; ‘Nearly six months after shocking the political system by forming a unity government with Kadima, Prime Minister Benjamin Netanyahu has thrown another curve ball and joined forces with Avigdor Lieberman ahead of the upcoming elections. In a press conference held Thursday evening, the two men announced they were uniting the Likud and Yisrael Beiteinu under one ticket. …The move is aimed at creating the largest list in the Knesset elections thus guaranteeing that Netanyahu will form the next government.’

(12) = Haaretz 12 Jan 2012 ‘Supreme Court upholds ban on Palestinians living with Israeli spouses’, http://www.haaretz.com/print-edition/news/supreme-court-upholds-ban-on-palestinians-living-with-israeli-spouses-1.406812

(13) = Ynet news (Israel) 29 Sep 2012 ‘'Turning Bedouin village into Jewish settlement is racist'’, http://www.ynetnews.com/articles/0,7340,L-4287018,00.html

(14) = +972 magazine 02 Oct 2012 ‘Bedouin village in Negev to be destroyed, Jewish settlement to be built on site’, http://972mag.com/bedouin-village-in-negev-to-be-destroyed-jewish-settlement-to-be-built-on-site/56875/

(15) = See this web page and sources for it (please note – the claim on it that child benefit is not given to Israeli Arabs is out of date and inaccurate – I’ve since found out that there used to be a lower rate of child benefit for Israeli Arabs than Israeli Jews, but they have since been equalised – see Haaretz 16 Dec 2009 ‘BoI: Child benefits boost Arab, Haredi birthrates’,
http://www.haaretz.com/print-edition/business/boi-child-benefits-boost-arab-haredi-birthrates-1.2023 )

(16) = BBC News 21 Nov 2010 ‘Abbas rules out talks without full settlement freeze’
http://www.bbc.co.uk/news/world-middle-east-11806747

(17) = Haaretz 25 Dec 2011 ‘Netanyahu: Israel will not negotiate with Palestinians should Hamas join government’, http://www.haaretz.com/news/diplomacy-defense/netanyahu-israel-will-not-negotiate-with-palestinians-should-hamas-join-government-1.403547 ; ‘"If Hamas joins the Palestinian government we will not hold negotiations with the Palestinian Authority," said Netanyahu in a speech at a conference for Israeli ambassadors.’

(18) = Israel National News 06 Feb 2012 ‘Netanyahu to Abbas: 'You Can't Have it Both Ways',
http://www.israelnationalnews.com/News/News.aspx/152462 ; ‘Israel's Prime Minister issued an ultimatum to officials in Ramallah that they must choose between Hamas and peace with Israel…. Prime Minister Binyamin Netanyahu on Monday responded to an agreement signed by Fatah and Hamas in Doha saying the Palestinian Authority "can't have it both ways’

Cuts to welfare and public sector jobs ballooning out of control in Britain

The housing benefit cap and public sector sackings are unfair, un-necessary and risk increasing our national debt, unemployment and homelessness

George Osborne claims welfare spending had to be cut because it has “ballooned” and this is presumably his justification for cutting housing benefit, despite the fact that homelessness charities such as Shelter Scotland say this will increase homelessness.

Welfare spending has certainly increased over the years, but so has spending on everything else, because the economy has over-all grown a great deal over the decades and there’s also been inflation.

The website ukpublicspending.co.uk has compiled tables based on figures released by the government from 2009 on, covering the entire period from 1950 to the present.

These show annual public spending, annual GDP (the output of the economy) and how much was spent on each area of public spending.

Welfare spending as a proportion of public spending fell from 20% in 1997 to 15% by from 2005 to 2009. Compared to the 1970s and 1980s it’s actually fallen significantly from levels of 20 to 30% of annual government spending.Since there has been a recession since the 2008 credit crisis the fact that welfare spending didn't increase in 2009 suggests that, if anything, people made unemployed by the recession are not getting the benefits they need, further depressing demand in the economy and hampering a recovery.

The government’s budget is supposed to be about spreading the cost of cuts fairly, according to ability to bear them. That makes it hard to understand why housing benefit should be capped.

There is certainly waste in the housing benefit budget, but that has been created by Conservative and New Labour governments’ selling off of council housing without building or buying nearly as much new public housing. This has resulted, in a significant minority of cases, to the government paying large amounts out to private landlords, which is the fault of government, not of people who can’t afford to buy or rent their own housing. It could be solved by a mixture of buying and building more council housing and regulating private sector rent levels, rather than capping housing benefit and throwing people onto the street as a result.

Are large scale public sector job cuts necessary and are they wise?

That’s apart from the fact that public sector job cuts on this scale aren’t necessary and aren't wise. What determines the future of government revenues is mostly the performance of the economy, not whether the government is in debt. While it’s not advisable for governments to take on debts that don’t help the economy or prevent severe poverty or suffering for large numbers of people, they can operate with considerable levels of debt. (Look at the US for instance, with decades of a bloated and ever increasing defence budget leading to a vast national debt).

As many economists (and Labour MPs) have warned, sacking large numbers of public sector employees to reduce the budget deficit may actually increase it in the long run by reducing tax revenues, increasing unemployment benefit payments, reducing demand in the economy (i.e sacked public sector workers will buy less goods and services as they won’t be able to afford what they need) and making private sector employees unemployed as the reduced demand means reduced sales for private firms.

The Conservatives claim that large and immediate budget cuts are necessary in order to avoid a crisis like Greece’s, where a rise in interest rates demanded by creditors, combined with speculation by currency traders selling the euro, left the Greek government unable to pay the interest on its debts and the euro falling. Only a bail-out package from other EU members prevented this crisis spreading to the rest of the euro-zone countries.

However Britain’s debt is only 53% of it’s GDP, compared to Greece’s debt of over 110% of it’s GDP, so Greece’s public debt relative to the output of its economy is more than twice as big as Britain’s relative to it’s economy. France and Germany both have government debts of over 70% of their GDP, while Italy's, like Greece's is over 110 of it's GDP.

Osborne's claim in his budget statement that we have the highest deficit in the EU in absolute terms may be true, because we are the largest economy among those with a government deficit, but as a percentage of GDP it's not true.

This is distinct from the annual deficits – the amount being added each year to the debt due to the gap between tax revenues and public spending, – at a bit over 13.6% of GDP in Greece’s case and 11.5% in the case of the UK – i.e the debt of the UK and Greece grew at a similar rate relative to the size of their economies over the last year. However Britain came out of recession this quarter for the first time since the financial crisis of 2008. Governments routinely rack up debts during recessions and by doing so get their economies out of recession, resulting in growth, increased revenues and so the ability to pay off some or all of their debt.

What’s more, while there has certainly been a lot of wasteful spending and we did have a considerable public debt before the credit crisis, Britain’s debt is only as large as it is because of the financial crisis which was caused by a combination of deregulation of the financial sector on both sides of the Atlantic by both ‘left’ and ‘right’ wing governments in the UK and liberals and conservatives in the US.

A ‘third way’ plan by the Clinton administration to make banks and other lending companies give mortgages to people who couldn’t afford to re-pay them also played a role. This was an alternative to building more public housing, which was seen as unacceptably anti-market or socialist.

The British government bailed out the banks for hundreds of billions, took on their debts and suffered reduced tax revenues due to the recession caused by the financial crisis. While they were partly to blame for deregulating banking there was no criticism of deregulation of banking from the Conservative party in the 1990s – they supported it right up the financial crisis.

Osborne plans to cut spending further and faster than any country in the last 50 years; and to do so by sacking 500,000 public sector employees and freezing the pay of the rest, while continuing to fund a pointless war and vast taxpayer subsidies for private arms companies, PFI consortia and privatised rail firms . This looks more like the ideological opposition to public services than hard-headed realism

Other ways to reduce our debts

Of course if it’s possible we should gradually eliminate our annual deficit and start reducing our total amount of debt and annual interest payments on it. It certainly doesn’t make sense to be paying interest on debt for decades if it’s avoidable; and we don't want a continuing deficit leading to ever larger debts and interest payments on them.

However there are lots of ways we could do that without hurting the poorest or in fact anyone but the very richest.

Bringing our troops home from Afghanistan would save a lot of money and a lot of lives. Scrapping or renegotiating private finance initiatives or ‘public private partnerships’ would reduce massive annual costs that aren’t even put on the books, due to an accounting fiddle. Ending public subsidies to privatised rail companies would save even more. If they really are investing in the railways, let them do it from the profits from their fares, which have risen at well above the rate of inflation. Ending export credit guarantees for arms companies like British aerospace would also save money, as would ending military aid to governments which are either dictatorships or whose governments and militaries are involved in the drug trades and death squads (e.g Colombia).

Building more council housing would also reduce the government’s annual housing benefit costs, as maintaining a council house is much cheaper than the rents paid to many private landlords.

Cracking down on tax evasion and tax avoidance by international co-operation with the EU and the OECD to close down tax havens (and even cracking down ourselves on the Channel Islands and the Bahamas) would bring in far more revenues than cracking down on benefit fraud ever has.

Given all that putting caps – and very low caps – on housing benefit, seems downright mean, unfair; like the increase in VAT which is paid at the same rate by everyone, whatever their income.

There are a few fair and progressive elements in the budget – like raising the level of income at which people pay any income tax at all, taking 900,000 of the lowest earners out of tax; and making big cuts in the corporation tax paid by small firms. Unfortunately the housing benefit cap and the VAT rise more than cancel them out.

We’re also developing another problem – that maintaining an environment that humans can survive in reasonably well is not possible in an economic system which demands maximum profit in the short term from every company – and constant, infinite economic growth.