SHARMINI PERIES: Welcome to the Dimitri Lascaris Report on The Real News Network. I'm Sharmini
Peries coming to you from Baltimore.
Prime Minister of Greece Alexis Tsipras is saying that Greece is being singled out when
it comes to debt negotiations. By that he means that nation-states in similar situations,
such as Ireland, Portugal, and Ukraine, for example, did not receive the same level of
scrutinization or reprisal when it comes to their debt negotiations. Further, the Greek
lenders are also calling for a surplus of 1 percent this year, which analysts say would
require a lot of austerity measures. They then want to see a surplus of 2 percent in
2016 and 3 percent in 2017 to reach 3.5 percent of GDP by 2018. Yet Greece has tabled measures
to address the debt, which is not being accepted by the lenders.
Joining us now from London to discuss all of this is Dimitri Lascaris. Dimitri is a
partner with the Canadian law firm Siskinds, where he heads the firm's securities class
actions practice. Dimitri, welcome back to The Real News Network.
DIMITRI LASCARIS: Always a pleasure, Sharmini.
PERIES: So let's begin by talking about what's on the table. What has Greece tabled in terms
of the solution here?
LASCARIS: Well the primary, the number that's probably the most important to look at, is
the primary surplus targets which you mentioned. As you've indicated, Greece has agreed to
a primary surplus of 1 percent this year, 2 percent 2016, 3 percent 2017, and 3.5 percent
for 2018 to 2022. The primary surplus is essentially the government revenues minus its expenses
when interest on the national debt is excluded, and this is the number that drives all the
other policies.
So you know, you're quite correct that the IMF and the EC and ECB and Greece are in agreement
now on what those targets should be. Greece has essentially accepted what the Troika demanded.
The difference between them, and particularly between the IMF and Greece, is as to whether
the specific proposals, revenue generating and expenditure slashing proposals will result
in Greece achieving those surplus targets. Greece says that they will and the IMF says
they won't. And the primary bones of contention are around pensions and taxation.
And so--before I go into those two subjects I want to say one thing. Greece is currently
projected to post a 0.7 percent deficit this year, and we're halfway through the year.
So for Greece to achieve in 2015 a 1 percent primary surplus, it would have to engage in
quite severe forms of austerity for the balance of the year. And this would be done in an
economy, as we all know, that is deeply depressed, where the unemployment rate is higher than
it was at the height of the great depression in the United States in the '30s, it's at
26.6 percent. The economy has experienced since 2010 a 27 percent contraction, which
is the greatest economic contraction in peacetime suffered by a developed state ever. And so
for the government to have to engage in extreme forms of austerity in these circumstances
is quite extraordinary. But as I say, the IMF is not satisfied that the measures being
proposed by Greece will help it to achieve that primary surplus of 1 percent this year
and going forward the other targets that have been agreed to.
So that takes us to the main bones of contention, and the first one is pensions. In order to
achieve a savings of 1 percent of GDP or 1.8 billion Euros starting in 2016, which is what
the IMF has demanded, the IMF wants a complete overhaul of the pension reforms, or so-called
reforms that were proposed by Greece, in an 11-page document submitted to the Troika on
Monday of this week. And specifically, rather than gradually raising the effective retirement
age to 67 by 2025 as Athens had proposed, the IMF wants the increase in the retirement
age accelerated to 2022. originally Athens had shot for an acceleration by 2036, so when
it agreed to 2025 it was already making a very significant concession, but the IMF is
not satisfied with that.
The IMF plan would also allow for retirement at 62 for only those persons who had paid
into the pension system for 40 years, so that would really affect a small percentage of
the population. Effectively, the vast majority of the population would be subjected to a
retirement age of 67 by 2022, if the IMF has its way. The IMF also is demanding the phase
out of something called the solidarity grant, which is a special top-up payment given to
the poorer pensioners. It wants that phased out by 2017. The original Greek proposal started
the phase out in 2018, it would have abolished it by 2020. Let's recall that pensions have
been decreased in Greece by 40 percent since 2010, and that 45 percent of pensioners in
Greece are receiving a pension that places them below the poverty line. So again, this
phase out would hit poor pensioners quite hard.
PERIES: And that is being reflected on the streets of Athens as we speak. Can you comment
on that as well, and then end your point, what you were about to say.
LASCARIS: Sure. As word began to leak out that the Syriza government was going to capitulate
on its red line on pensions, pensioners in Greece quite understandably became irate and
began to converge on Athens. In the last couple of days there were buses coming in from the
countryside from smaller urban centers to the capital, and there was a protest in central
Athens by thousands of pensioners, many of whom were saying quite movingly, we have been
placed on the brink of poverty, many of us are living in poverty. And to subject us to
further cuts is simply inhumane and we won't stand for it. And some aged, quite older pensioners
were quoted in the press. They were in tears and it was really a, a rather heartbreaking
situation.
When the IMF says, as it has said in the last few weeks, that it isn't seeking to impose
further burdens on the poorest pensioners, that's simply not true. The effect of these
measures will be to hit those pensioners very hard. And it's really a, I think a testimony
to the extraordinary pressure that the Greek government is under that despite its progressive
leanings it has been prepared to accede to this, and nonetheless the IMF is not satisfied.
PERIES: So in a rapid de-escalation in terms of Syriza's commitment to the people, and
having been elected only for the last six months, it has come to this in terms of their
offering up cuts and austerity in order to resolve the situation. Why are they being
so desperate in what they're tabling, as far as Syriza is concerned here?
LASCARIS: Well, if you're referring to why Syriza appears to be desperate I think that's
because the leadership of the party, and this is not true I think of the left wing of the
party, the leadership of the party seems to be persuaded that a refusal to accede to these
demands, these rather inhumane demands by the Troika, will result in no further bailout
monies being advanced to Greece, which would precipitate a default on Greece's debt, and
that that would likely result in Greece being expelled or forced to withdraw from the Eurozone
and possibly from the European Union as well. And they are convinced, the leadership of
Syriza, that this would be a worse outcome for the population of Greece than acceding
to these demands.
And as I've said many times, I think they're quite mistaken about that. There would be
short-term pain, there's no doubt about that. But a well planned withdraw from the Eurozone,
which would include capital controls, nationalization of the banking system, would in the longer
run enable the Greek government to devalue its currency, to increase the competitiveness
of Greek exports, to regain sovereignty over its social policies, its social spending,
and would have great benefits for the population on a long-term basis. Unfortunately the leadership
of the party is not of that view, and they are inclined to select what they regard as
the lesser of two evils, which is capitulation, unfortunately.
PERIES: And is there any thinking on the part of the Syriza leadership that this is a temporary
stopgap measure, and then they're buying time, which is what a lot of people on the left
LASCARIS: The question is what is going to--that may well be their thinking. But the question
is what is going to be achieved in the months ahead if they capitulate to these demands?
There's really no reasonable prospect in my view that the core countries of the Eurozone,
who dictate the direction of the Eurozone, namely Germany, France, and other economies
of the north, for example the Netherlands, are going to alter their attitude towards
the question of austerity.
You know, even within the so-called social democratic parties of the core states, Germany,
France, the Netherlands, there is I think a die-hard commitment to a fundamentally neoliberal
perspective on these issues and the whole concept of austerity. So that even if for
example Merkel's party were to be replaced by the social democrats in Germany, you wouldn't
see a substantive change. You would have a continuation of these policies. In fact, in
France you have a supposedly left-wing party in power, and they have been demanding these
concessions from Greece, in effect in agreement with the government of Angela Merkel.
So what is going to happen in the next several months or years that will make the playing
field more favorable for Syriza and parties--other anti-austerity parties in Europe? I don't
see that happening, unfortunately. So I don't think there's any real benefit in trying to
buy a few months of time, a few months of time, or even a few years of time.
And in fact, there are structural defects in the Eurozone. That's widely acknowledge.
And there's no political will on the part of the Eurozone to rectify those structural
defects. And in fact what you'd need to do that is a very, a much higher level of political
and economic integration. There's just no appetite for that, with the political elite
in the core countries. And absent of much higher a degree of integration, political
and economic, ultimately the Eurozone will collapse. The monetary union will not survive.
And so one has to ask, what ultimately is Syriza trying to achieve by keeping the country
within the Eurozone for the time being?
So I think these are very big-picture questions that the government has to ponder very carefully.
And in the interim it's continuing to make concessions, more severe concessions. Concessions
that are ultimately going to increase poverty within Greece. Increase the debt-to-GDP ratio,
decrease the sustainability of Greek debt, and the longer-term benefits of that are highly
questionable at this stage.
PERIES: Perhaps we should have a debate on this issue of accepting the lenders' terms
or exiting in our next session with you, Dimitri.
LASCARIS: Yes, and I would welcome that, and I think that that's fundamentally the problem,
Sharmini. In Greece, there hasn't been a mature, objective debate about an exit. And until
that debate happens, the population is not in a position to make an informed choice about
whether it's better off in or outside of the Eurozone.
PERIES: So let's take that up in our next discussion, Dimitri. Thank you so much for
joining us.
LASCARIS: Will do. Thank you.
PERIES: And thank you for joining us on The Real News Network.