Misjudgment and poor policy choices have led to the Greek crisis and Ukrainian conflict.
Yanis Varoufakis, the Greek finance minister, has become a bit of a cult figure and even a sex icon. With his bald head, untucked shirt and clever turn of phrase, he has become the center of attention for many who want to throw a gauntlet to the status quo. In a smashingly brilliant article in The Guardian, he makes a complex argument for preserving “repugnant European capitalism” in order to buy time to formulate an alternative.
Varoufakis points out that the democratic deficit combined with a faulty monetary union has put European economies in permanent recession. However, he worries that the crisis might unleash regressive forces and lead to a bloodbath. He declares himself to be an “erratic Marxist” who blames two spectacular mistakes of his hero for the left’s current ineffectiveness. First, Marx did not take into account the adage that power corrupts and his disciples might turn tyrants. Second, the mathematical fanaticism of his model failed to take into account that human labor is impossible to quantify, paving the path for errors and authoritarianism.
Varoufakis’ beliefs are important because a third meeting is starting in Brussels to solve the stalemate over the Greek crisis. The Greek economist has clearly been traumatized by Margaret Thatcher and does not want to pursue a radical agenda. He believes the left is not ready to fill the gap should the current system collapse. Therefore, Varoufakis does not want dramatic change. Yet the existing bailout deal expires at the end of February and Greece will run out of money, unless it comes to some terms with its creditors. Greece has formally requested a six-month extension to its eurozone loan agreement. Germany has foolishly rejected it.
Right from the start of the crisis, it was clear that the Greeks would never have the money to repay their debts. Just as the Greeks had been reckless debtors, the Germans had been lazy lenders who failed to conduct due diligence. Greek debt should have been renegotiated to a realistic level and Germans should have forgiven some loans or, in other words, taken a haircut. Instead, the bailout was predicated on the absurd notion that Greece would follow the austerity program prescribed by the International Monetary Fund (IMF) and grow miraculously to pay back its debt. So, good money was thrown after bad only to kick the can down the road. The chickens have come home to roost.
The pretence that creditor rights are inviolable has led to bailouts in both Europe and the United States. Banks that made bad loans were bailed out. While this may have prevented a depression, it also benefitted financiers inordinately. It led to capitalism on the upside and socialism on the downside. During good times, the bankers claimed multimillion dollar bonuses. During bad times, the taxpayer got stuck with the bill. Furthermore, central banks unleashed a torrent of money to grease the wheels of the economy. This has led to an increase in the prices of assets. So, those who owned property in London or shares in Facebook got richer. Others were crushed by debt. We are seeing a return to medieval-era inequality. It is to protest against this crazy economic order that the Greeks voted in a new government. It has promised to end austerity and, therefore, is unlikely to accept the existing bailout deal. It is high time for Berlin and Brussels to stop flogging a dead horse and propose a new deal. The future of the euro and the European Union (EU) hangs in the balance.
Ukrainian troops retreated from Debaltseve, a strategic railway hub in the east of the country. Now the rebels control a crucial swath of territory from Luhansk to Donetsk. European leaders may be jumping up and down in woolly underwear but are not likely to achieve much apart from breaking a sweat. In the United Kingdom, a committee in the House of Lords has stated that Europe “sleepwalked” into the crisis. After the financial crisis, European countries have been skimping on their foreign ministries. Neither the UK, nor the EU has “robust analytical ability” when it comes to large parts of the world in general and Russia in particular.
The US is more interested in challenging China in Asia. It is closing bases in Europe. The Greek crisis threatens to wreck the euro. Europe is aging and its economy is in the doldrums. More importantly, Europeans do not want to fight. European leaders have overplayed a bad hand. Russia believes that Russians in eastern Ukraine have the same right to self-determination that the Ukrainians exercised for themselves. They are more willing to fight for their kinsmen. The Europeans are not even keen on sanctions. After all, London and Paris profit from investments by Russian oligarchs seeking safe havens. In fact, Europeans do not even want Ukrainian refugees to flood their countries. The Russians have called Europe’s bluff as shelling continues in eastern Ukraine in violation of the ceasefire agreement. The Baltic republics are increasingly nervous, and drama in Ukraine is weakening an already feeble eurozone economy.
President Francois Hollande has used Article 49.3 of the French constitution to impose reforms through decree. To resuscitate the French economy, Sunday trading rules will be liberalized, disputed sackings will be resolved speedily and the legal profession will face greater competition. With Napoleonic flair, Prime Minister Manuel Valls declared that “authority is needed to put the country back on track.” Now, the French National Assembly can only undo the law by passing a no confidence vote against the government. Needless to say, divisions in French politics are deepening.
Three governments bombed Islamist rebels this week. Egypt and Syria conducted air strikes against the Islamic State (IS). The former retaliated after IS beheaded 21 Egyptian Christians in Libya. Syria’s Assad regime is now poised to take back Aleppo, a key city close to the Turkish border. Nigerian planes attacked Boko Haram in the northeast Borno state as part of a four-nation offensive involving Nigeria, Niger, Cameroon and Chad. Disorder is increasing and new battles are breaking out between states and non-state actors. Colonial edifices are crumbling and some states will not survive in their current form.
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[seperator style=”style1″]A Love Letter to Young American Muslims[/seperator]
In a letter to American Muslims, Maria Khwaja Bazi reflects on rising Islamophobia and the murders of Deah, Yusor and Razan in Chapel Hill.
Dear MSA kids,
I was 17 on September 11, 2001. It was fall of my senior year of high school, and I was worried about a US History exam. I wore a scarf and performed the afternoon prayer in our school’s library.
They wheeled a TV with a live news broadcast into our room. I looked at the person next to me, a handsome Greek junior, for reassurance, but his eyes were on the screen, watching the Twin Towers fall over and over again. All I remember is Ms. Thompson, our history teacher, repeating, “Things will never be the same.”
They never were. The next day, in a local sandwich shop with my two (white) best friends, a lady threw a glass at me and screamed, “Go home, we don’t want you here!” I am home, I wanted to tell her, I am home. Read more
[seperator style=”style1″]China Can Become the World’s Most Entrepreneurial Economy[/seperator]
China’s economic growth might be slowing, but the number of private businesses starting up is only just beginning.
After decades of the fastest economic growth in the world, China’s economy has started to slow down. This is perhaps inevitable, given an average annual growth rate of around 10% was sustained for almost 30 years following the economic reforms introduced by Deng Xiaoping in the late 1970s.
But one area where China continues to develop is in the number of private enterprises being started. China simplified the process for registering businesses in February 2014, and since then there has been a huge leap in the number of new registrations. According to the State Administration for Industry and Commerce, there were nearly 3.7 million new registrations in 2014, an increase of 46% on 2013.
These private businesses have driven China’s economic growth in recent decades, and their future prospects play an important role in the country’s continued transition to becoming the world’s largest economy. Read more
[seperator style=”style1″]Saudi Arabia and Oman Have Different Experiences With Extremism[/seperator]
Saudi Arabia and Oman possess differing national identities, varied social and cultural roots, and divergent approaches to tolerance that may explain their different experiences with extremism. US Ambassador Gary Grappo explains why.
The Kingdom of Saudi Arabia and Sultanate of Oman share significant characteristics: language; basic religious heritage; geographic proximity; a remarkably rapid growth in economic development and prosperity; a dependence on oil and gas income; and elements of Bedouin and tribal culture.
However, there are significant differences. And it is those differences, when viewed in light of those foundational similarities, that may account for the two countries’ differing experiences with violent extremism.
The importance of these nations to and of their relationships with the United States and the West is well-known. Moreover, those relationships with the US are historic. With Saudi Arabia, these ties date back to just a few years after the founding of the modern state in 1932, while Oman’s began just a few decades after the founding of America. Read more
[seperator style=”style1″]How Cuba’s Health Care Sector Aims to Gain a Greater Foothold[/seperator]
Cuba’s high-quality, low-cost health care system makes it an attractive destination for medical tourism and biotech.
Routinely touted as the greatest achievement of the Cuban Revolution alongside universal education, Cuba’s health care system has extended beyond the island’s shores to represent one of the country’s biggest exports. Professional services carried out by Cuban doctors and nurses — who number some 37,000 working in 77 countries — are generating foreign exchange to the tune of $8 billion a year, Cuban officials say.
Cuban doctors and nurses are dispatched in “medical brigades” to far-flung countries ravaged by war and disease that are ill equipped to face humanitarian crises without external support, including earthquake-shattered Haiti and Ebola-stricken Liberia.
Cuban health workers are also sent to nations in Africa, Asia, Latin America and the Caribbean that lack sufficient medical professionals to meet their own needs. These countries compensate Cuba with oil (in the case of Venezuela), good-will and cash. Read more
[seperator style=”style1″]Sectarian Violence Threatens An Already Unstable Pakistan[/seperator]
Sectarian violence in Pakistan is nothing new, but its growth in recent years is troubling.
The Pakistani Taliban have claimed responsibility for a suicide bombing on a Shiite mosque on February 13. The atrocity in Peshawar left at least 20 dead and over 60 injured.
This is the latest act of sectarian violence, which has been on the rise in Pakistan. Just over two weeks ago, a man walked into a mosque in Shikarpur and asked for directions before detonating a device rigged with “steel pellets, ball bearings, and shrapnel to maximize damage.” Over 60 people were killed in the terrorist attack, which happened in Sindh Province, about 290 miles north of Karachi.
The bombing in Shikarpur was so intense that it was heard from over a mile away and caused the ground to shake. It was the deadliest sectarian bombing in Pakistan in over two years. The government declared a day of mourning, and protesters took to the streets of Karachi. Read more
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.