Former Greek Finance Minister: Bailout Deal Is ‘Fiscal Waterboarding’

The former Greek finance minister issued a line-by-line takedown of the debt deal that Greek lawmakers are considering Wednesday.

GettyImages-479661660
GettyImages-479661660

Former Greek Finance Minister Yanis Varoufakis is arguably the most divisive figure in the seemingly never-ending Greek debt crisis. In the run-up to Greece’s missed IMF June 30 payment deadline, he compared modern Germans to Nazis. He resigned hours after the Greek people rejected European austerity demands in a July 5 referendum. The most vocal critic of the burgeoning bailout deal, he went on holiday before the Greek Parliament overruled its people and capitulated to Europe’s strict austerity demands last Friday.

Now, as the Greek Parliament prepares for a key vote necessary to free up a third, three-year bailout of between 82 billion and 86 billion euros, or $91.5 billion and $96 billion, he’s giving his opinion of the deal. To put it mildly, Varoufakis -- a member of Greek Prime Minister Alexis Tsipras’s far-left Syriza party -- doesn’t like it very much.

In a line-by-line takedown of the July 12 agreement, posted to his blog on Wednesday, Varoufakis accuses Europe of everything from trying to make Greeks “inhuman” to attempting to destroy the Greek economy. He said that the deal forces Greek employers to lower wages and that it gives Greece’s creditors -- the IMF, the European Commission, and the European Central Bank -- de facto control over the Greek government.

Former Greek Finance Minister Yanis Varoufakis is arguably the most divisive figure in the seemingly never-ending Greek debt crisis. In the run-up to Greece’s missed IMF June 30 payment deadline, he compared modern Germans to Nazis. He resigned hours after the Greek people rejected European austerity demands in a July 5 referendum. The most vocal critic of the burgeoning bailout deal, he went on holiday before the Greek Parliament overruled its people and capitulated to Europe’s strict austerity demands last Friday.

Now, as the Greek Parliament prepares for a key vote necessary to free up a third, three-year bailout of between 82 billion and 86 billion euros, or $91.5 billion and $96 billion, he’s giving his opinion of the deal. To put it mildly, Varoufakis — a member of Greek Prime Minister Alexis Tsipras’s far-left Syriza party — doesn’t like it very much.

In a line-by-line takedown of the July 12 agreement, posted to his blog on Wednesday, Varoufakis accuses Europe of everything from trying to make Greeks “inhuman” to attempting to destroy the Greek economy. He said that the deal forces Greek employers to lower wages and that it gives Greece’s creditors — the IMF, the European Commission, and the European Central Bank — de facto control over the Greek government.

You can read the full document here. I’ve listed some highlights below (typos are from the original). Varoufakis’s comments are bolded.

On the overall agreement:

The Euro Summit stresses the crucial need to rebuild trust with the Greek authorities [i.e. the Greek government must introduce new stringent austerity directed at the weakest Greeks that have already suffered grossly].

A euro area Member State requesting financial assistance from the ESM [the European fund that would provide bailout funds] is expected to address, wherever possible, a similar request to the IMF This is a precondition for the Eurogroup to agree on a new ESM programme. Therefore Greece will request continued IMF support (monitoring and financing) from March 2016 [i.e. Berlin continues to believe that the Commission cannot be trusted to ‘police’ Europe’s own ‘bailout’ programs].

Given the need to rebuild trust with Greece, the Euro Summit welcomes the commitments of the Greek authorities to legislate without delay a first set of measures [i.e. Greece must subject itself to fiscal waterboarding, even before any financing is offered].

On what the Greek Parliament is voting on Wednesday:

the streamlining of the VAT system [i.e. making it more regressive, through rate rises that encourage more VAT evasion] and the broadening of the tax base to increase revenue [i.e. dealing a major blow at the only Greek growth industry — tourism].

On what Greeks must do by July 22:

The adoption of the Code of Civil Procedure, which is a major overhaul of procedures and arrangements for the civil justice system and can significantly accelerate the judicial process and reduce costs [i.e. foreclosures, evictions and liquidation of thousands of homes and businesses who are not in a position to keep up with their mortgages/loans.]

In order to form the basis for a successful conclusion of the MoU, the Greek offer of reform measures needs to be seriously strengthened to take into account the strongly deteriorated economic and fiscal position of the country during the last year [i.e. the Syriza government must accept the lie that it, and not the asphyxiation tactics of the creditors, caused the sharp economic deterioration of the past six months – the victim is being asked to take the blame by the on behalf of the villain.]

The Greek government needs to formally commit to strengthening their proposals [i.e. to make them more regressive and more inhuman] in a number of areas identified by the Institutions.

To fully normalize working methods with the Institutions, including the necessary work on the ground in Athens, to improve programme implementation and monitoring [i.e. The Troika strikes back and demands that the Greek government invite it to return to Athens as Conqueror – the Carthaginian Peace in all its glory.]

The Euro Summit takes note of the possible programme financing needs of between EUR 82 and 86bn, as assessed by the Institutions [i.e. the Eurogroup conjured up a huge number, well above what is necessary, in order to signal the debt restructuring is out and that debt bondage ad infinitum is the name of the game.]

The Euro Summit stresses that nominal haircuts on the debt cannot be undertaken [N.b. The Syriza government has been suggesting, since January, a moderate debt restructure, with no haircuts, maximizing the expected net present value of Greece’s repayments to creditors’ – which was rejected by the Troika because their aim was, simply, to humiliate Syriza.]

Photo credit: Christopher Furlong/Getty Images

See Also: Is It Time for the U.S. to Issue a Digital Dollar?

More from Foreign Policy

Oleg Salyukov salutes to soldiers during Russia’s Victory Day parade.
Oleg Salyukov salutes to soldiers during Russia’s Victory Day parade.

Stop Falling for Russia’s Delusions of Perpetual Victory

The best sources on the war are the Ukrainians on the ground.

A fire rages at the Central Research Institute of the Aerospace Defense Forces in Tver, Russia
A fire rages at the Central Research Institute of the Aerospace Defense Forces in Tver, Russia

Could Sabotage Stop Putin From Using the Nuclear Option?

If the West is behind mysterious fires in Russia, the ongoing—but deniable—threat could deter Putin from escalating.

China's Foreign Minister Wang Yi is received by his Kenyan counterpart, Raychelle Omamo, in Mombasa, Kenya.
China's Foreign Minister Wang Yi is received by his Kenyan counterpart, Raychelle Omamo, in Mombasa, Kenya.

While America Slept, China Became Indispensable

Washington has long ignored much of the world. Beijing hasn’t.

A bulldozer demolishes an illegal structure during a joint anti-encroachment drive conducted by North Delhi Municipal Corporation
A bulldozer demolishes an illegal structure during a joint anti-encroachment drive conducted by North Delhi Municipal Corporation

The World Ignored Russia’s Delusions. It Shouldn’t Make the Same Mistake With India.

Hindu nationalist ideologues in New Delhi are flirting with a dangerous revisionist history of South Asia.