No moral high ground for Berlin or Athens

Economies already decimated by austerity are being asked to take more painful actions.

by
    The IMF has saved private bondholders and punished a nation that is under fire from Russian-backed rebels in the country’s east [Reuters]
    The IMF has saved private bondholders and punished a nation that is under fire from Russian-backed rebels in the country’s east [Reuters]

    The longer Europe drags out negotiations for easing Greece’s bailout, the faster it loses the public-relations battle and its credibility.

    Yanis Varoufakis, the unlikely heart-throb, finance minister, fashion icon, has eloquently extolled the virtues of his economic plan for Greece.

    I should say growth plan, for a nation that has been decimated by the disastrous insistence by the troika (IMF, European Union, European Central Bank) on austerity.

    There's no moral high ground for Berlin or Athens. Germany, the biggest debt defaulter of the 20th century, has been the biggest beneficiary of the euro.

    Without it, the country would be $1.2 trillion poorer and there would be 200,000 plus Germans in the unemployment lines. And that doesn't take into consideration the billions in disastrous loans from German banks sent on to the Greeks, which the taxpayer has been forced to shoulder.

    The electorate in Greece has finally punished the gilded elite who dragged the country into the mire.

    But just kicking them into opposition is not enough.

    And now the IMF and EU are foisting another bailout worth $40bn on another European country, Ukraine.

    Frankly speaking, without the IMF’s $17.5bn and whatever other Western institutions chuck in, Ukraine was heading for bankruptcy.

    More austerity

    Kiev devalued its already useless currency by more than 30 percent last week; again the IMF has saved private bondholders and punished a nation that is under fire from Russian-backed rebels in the country’s east.

    The latest loan comes with all the usual caveats that means more austerity.

    Gas prices will need to be raised, state-owned institutions and banks will be asked to undergo restructuring.

    All in all, a lot of people are going to do without heating and a lot more people are going to be unemployed.

    Does the IMF really believe Ukraine can really turn around the economy in four years.

    Christine Lagarde, IMF chief, admits that the loan is "subject to high risks".

    "The main risk, of course, relates to geopolitical developments that may affect market and investor confidence."

    An economy that has already been decimated is being asked to take more painful actions.

    Surely, there should be a growth bailout, where the likes of the World Bank and European Bank of Reconstruction and Developlment swing into action with much needed infrastructure projects.

    If only there was then we wouldn't need words like this from Madame Lagarde: "To help cushion the adjustment, especially for the poorest groups, measures are being taken to strengthen and better target the social safety net."

    SOURCE: Al Jazeera


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