The transcript of Dialogos Radio’s interview with the economist and General Secretary of Greece’s United Popular Front (EPAM) Dimitris Kazakis. This interview aired on our broadcasts for the week of April 14-20, 2016. Find the podcast of this interview here.
MN: Joining us today on Dialogos Radio and the Dialogos Interview Series is economist, analyst, and the general secretary of Greece’s United Popular Front Dimitris Kazakis, who will speak to us today about the latest economic and political developments in Greece and about the hot-button issue of the refugee and migrant crisis in Greece and Europe. Dimitri, thank you for joining us once again.
DK: Thank you for having me.
MN: Before discussing economic developments in Greece, let’s first speak about the refugee and migrant crisis. You have spoken extensively about this issue and I wanted to begin by asking you about the recent deal that was reached between the European Union and Turkey, which was co-signed by the Greek government. Is this agreement legal and is it enforceable, and what does international law have to say about the issue?
DK: No, it is not legal. This is not just my opinion. It is a legal issue which has to do with international law and international treaties, such as the 1951 Geneva Convention on refugees and all of the treaties which followed from that. This agreement is not legal, and this accusation has been made by the UNHCR, the UN Refugee Agency. What this agreement does is it rolls back the clock in terms of how refugees and migrants are treated to the inter-war period and to the manner in which the League of Nations and the great powers of that era handled the movements of refugees which had been displaced during that time.
I believe, however, based on the events that are unfolding, that today’s situation is even worse than that of the inter-war period. I fear that the refugee and migrant crisis, at least in the manner that it is being approached by the European Union and Turkey, is quickly turning into a hostage situation. These people are being held hostage. They are the hostages of various power structures, and not just the European Union or Turkey, but other, invisible powers as well, which have come into Europe based on the rationale that they would be assisting with the refugee issue. This situation today reminds me very much of what we saw take place in Rwanda during the 1990s or in the Sudetenland during the inter-war period, when refugees and migrants were indeed used to spread the conflict over an even wider area. This, of course, worries us, because no one is collecting information, no one is identifying or certifying these populations. There are reports that many of these migrants were part of groups which were fighting as mercenaries in Syria. This is a very significant issue, and that is why I fear that sooner or later—nobody knows exactly when—the refugee and migrant crisis will be transformed into a full-fledged hostage situation. This, of course, creates a wider problem for Southeastern Europe and for Europe as a whole.
MN: Were there other options that the Greek government could have followed instead of this agreement? Could Greece, for instance, have enacted direct measures against Turkey?
DK: Of course. The first thing that could have been done would be to deal directly with the human trafficking taking place out of Turkey, sending these refugees and migrants in to Greece without anybody knowing who they are or for what reasons these populations are being sent to Europe. There are many accusations, including from King Abdullah II of Jordan and from numerous international organizations. Greece could have implemented sanctions against Turkey, such as prohibiting goods coming from Turkey to be transported via Greece, either by sea or by land. Greece could have significantly reduced the number of permits it issued to Turkey, allowing its goods to flow through Greece.
Secondly, Greece could have filed official claims to various international organizations, not just the United Nations but also, for instance, with the International Maritime Organization, regarding the manner in which Turkey is treating the migrants and refugees and transporting them, by sea, into Greece. This would enable those organizations to take action and to enact measures against Turkey, in order for this situation to be stopped.
Thirdly, Turkey has been classified as an “unsafe” country for refugees and migrants. Why do we tolerate this situation? Why does the international community tolerate this, and why does Europe actually support what Turkey is doing, especially through the recent agreement which was signed? Something which Greece could have done and which we have been arguing in favor of for a while now is for Greece to leave the Senghen and Dublin 2 treaties. These two agreements indeed violate international standards for the treatment of migrants and refugees. Moreover, these agreements are being violated in practice today, by the European Union itself. Each member-state is closing is borders at will, as we have seen.
Finally, Greece should go ahead and identify everyone who enters its territory, in accordance with international norms and with the assistance of the UNHCR, to treat these people in accordance with international treaties and protocols, and for all those who are determined to be refugees, legally speaking, to grant them their asylum papers as foreseen by international law and to allow them to freely travel to any country they wish, as foreseen by the UN’s Geneva Convention of 1951. To keep these people stranded within Greece is illegal and indeed racist, and the only reason why this is happening is to not give these people any legal status or certification, allowing them to be treated in any way that the powers see fit.
MN: Does the NATO presence as well as the presence of Turkish police and military officials in the Aegean region actually protect Greece, as well as the refugees and migrants?
DK: Of course not. This was proven by the large naval force which the European Union formed during the summer and fall of 2015, with the supposed goal of halting human trafficking of refugees and migrants from North Africa towards the European Union, and primarily Italy, Spain, and to a lesser extent France. What happened in reality? Absolutely nothing. After major scandals which broke out following the sinking and the mass murder of refugees and migrants who were being transported at sea, this naval force was dissolved. It was proven that you cannot combat this issue, and particularly the issue of human trafficking, with military and naval means. The human trafficking operates from within the heart of Europe and is closely tied with the banking system, as well as the existing networks of weapons traffickers, drug traffickers, and of course, human traffickers. Therefore, the manner in which you can combat this problem is by doing so within your own borders and in cooperation with other countries and their police forces. You cannot fight this problem at sea, and especially not through military means.
Therefore, NATO has no role to play in the refugee and migrant issue. The real reason that NATO is involved is so that it can take over operational control of the Aegean Sea. What we have been saying from the beginning is that this is a blatant violation of the national, sovereign interests of Greece. Under what basis and with what authority does a Cold War-era power, one which time and time again has started wars and gotten involved in military conflicts, take over operational control of the Aegean? What this does is it transforms the Aegean Sea into another battleground of the major powers, as the goal of NATO is clearly not to protect the migrants and the refugees. NATO’s goal is to confront Russia. We have seen this yet again in recent days, after the re-emergence of an old conflict in Armenia and Azerbaijan. What did NATO do in response? It expanded its presence into the Black Sea. This alone shows why NATO was granted operational control of the Aegean.
The second issue is the presence of Turkish security forces on the Greek islands. This is inexcusable. Not even Greece’s military government of the 1960s and 1970s dared to allow such a thing, but we are seeing it take place today with a government of so-called “leftist,” “patriotic” and “anti-memorandum” parties in Greece. This was authorized without a law being passed in the Greek parliament, as required by Article 27, Paragraph 2 of the Greek constitution. These Turkish security forces were illegally allowed to be stationed on the Aegean islands, and they are doing whatever they please without local political or military authorities having any idea about what their role is. And of course, the objective of the Turkish security forces is not to deal with the refugee and migrant issue, but rather, with the identification of military and civilian targets on these islands, which begs the question: what is ultimately their goal?
MN: We are on the air with economist, analyst, and the general secretary of Greece’s United Popular Front Dimitris Kazakis here on Dialogos Radio and the Dialogos Interview Series. Greece has frequently been threatened with being ejected from the Schengen treaty, as a result of the ongoing refugee and migrant issue. Would such a development though actually be destructive for Greece, as has been often portrayed by Greece’s politicians and by the Greek media?
DK: No, absolutely not. On the contrary, this would allow us—if, of course, we had a government which respected its citizens, the country, and which acted in a sovereign manner—to operate within the context of international law. The Senghen treaty is not compatible with international law as a whole. It is not based on the principle of reciprocity. It is not in harmony with the international treaties which Greece and the other European countries have signed. That is why Greece should unilaterally leave this treaty. This would allow us to handle these issues in accordance with our national interest and in accordance with the international treaties which Greece is party to. The Senghen treaty, as well as the Dublin 2 regulation, were passed in order to allow the European Union to bypass the international obligations of the European countries with regard to issues of human rights and the handling of refugee and migrant crises. This is why these agreements were created and why Greece must drop out of these agreements at once. If Greece still possessed its sovereignty as a nation, and had a government which was truly democratic and truly acted in the national interest, these issues could have been dealt with with much greater ease and there would be no problem today. I don’t understand how countries such as Jordan, which has accepted close to two million refugees, and Lebanon, which has accepted over 1,250,00 refugees which are housed in various camps, are able to operate in harmony with the UNHCR, at least as far as we know. There have been no problems or difficulties reported from these areas. So why are there such problems in Greece? These problems exist in Greece because we are not operating in accordance with international law and international treaties. Instead, we are enforcing the interests and the orders of Berlin and Brussels. This must immediately stop.
MN: Let’s focus now on ongoing political and economic developments. We recently heard about the high-profile leaks of IMF discussions regarding Greece and the ongoing so-called negotiations that are taking place, and this was followed by the even more high-profile leak of the so-called Panama Papers. What are your initial reactions to these recent developments?
DK: My personal opinion on the matter is that these leaks did not contribute anything substantial to contemporary political discourse, in Greece and worldwide. Firstly because the leak which regarded the supposed IMF negotiations in Greece did not reveal anything new. Everyone knows the IMF’s positions and the manner in which they operate. Indeed, they have revealed these positions publicly in the past, therefore the leaks did not present to us anything new. Despite this, I do believe that the leaks were planned out and authorized in advance. It is pretty obvious that this was the case, and they had to do with the fact that Germany is fiercely opposing the IMF’s proposal, or its encouragement, if you will, for a large write-off of Greece’s debt and for a greater emphasis to be placed on a different set of so-called “reforms,” as the IMF calls them, which would have more to do with privatizations and the selling off of the country and less to do with the meeting of fiscal targets.
The SYRIZA government made a big deal out of the IMF’s position. Indeed, when Greek defense minister Panos Kammenos visited Washington on March 20, he made a big fuss over accepting the IMF’s proposals. Here we see a conflict. Mr. Kammenos wants to be the IMF’s man in Greece, while Greek prime minister Alexis Tsipras wants to be German Chancellor Angela Merkel’s man in Greece. Merkel’s position is against any write-down of the Greek debt, not even in the manner in which the so-called “debt haircut” took place with the PSI agreement of 2012.
Of course, the proposals put forth by the IMF do not constitute a solution for Greece, by any means. But what they do reveal is a schism between Washington and Berlin, and the SYRIZA government in Greece has chosen to align itself with Berlin. Now, in terms of what will follow, most likely we will see a fourth memorandum agreement based on the proposals of German finance minister Wolfgang Schauble and the introduction of a dual or parallel currency in Greece. That is why the Germans do not want the IMF to be involved with this matter. That is what we are likely seeing arise out of this conflict, in addition to the desire to distract the public and to fool the people into thinking that SYRIZA is engaged in “fierce” negotiations with the IMF and other nonsense like this. All of this is pure nonsense, for the consumption of those who still believe that the SYRIZA government is capable of conducting even a cursory negotiation with Greece’s best interests in mind.
MN: And despite these recent leaks and despite the IMF and its negative role being exposed publicly once more, we still see the Greek government sitting at the same table with the IMF and the other lenders…
DK: Of course. And not just this, but let’s not forget that the IMF is not participating in the third memorandum agreement which was signed, or in the funding mechanism for the third memorandum. That being the case, could somebody please explain to me why legislation has been passed and signed into law which requires that any political decision that is made in Greece by any government or by the parliament, must be first sent to the IMF, the European Commission, and the European Central Bank, who must then agree on these proposals before they can be passed? This is part of the third memorandum agreement which was signed into law in Greece on August 14, 2015 and which has been published in the Greek government’s bulletin. Could somebody please explain to me how the Greek government is supposed to clash with the IMF when this very same government has signed an agreement in which the IMF is not officially participating in, but where the IMF still has the power to accept or reject political decisions made in Greece, in advance? The subservience of the Greek government has surpassed even that of the Quisling regime. We need to come up with new terminology for what this government is doing and for what this government’s ministers are signing off upon.
MN: Do you believe that the current SYRIZA-led government will stay in power for much longer?
DK: I believe that there are only two ways for this government to leave power. The first way is under the orders of its bosses in Berlin and Brussels. Once they have signed off on everything and completed their mission, since as we know they are nothing more than the agents of Angela Merkel, Jean-Claude Juncker, Donald Tusk and the rest of them, plus the bankers. That is one way that they will leave. The other way will be if the Greek people demand it. The political situation in Greece at this time does not lend itself to calm and orderly political developments or with the will and desire of the Greek people. Political decisions in Greece at this time have to do with Greece’s big bosses. They are the ones who decide when elections will take place and in what manner. The only way in which this situation can change is if the Greek people find a way not just to express their disapproval and their anger over what is happening, but find a way to overturn this government, and as soon as possible. The Greek people have a responsibility to do this, before we see the situation get even worse. And these worse days which will follow will not have to do with Greece’s economy, but with Greece’s national security.
MN: We are on the air with economist, analyst, and the general secretary of Greece’s United Popular Front Dimitris Kazakis here on Dialogos Radio and the Dialogos Interview Series. You mentioned the issue of the potential introduction of a dual or parallel currency system in Greece a few moments ago, and we have been seeing recently the touting of Yanis Varoufakis and Zoe Konstantopoulou as future “saviors” of Greece. They have signed off on the so-called “Plan B for Europe,” which, if I am not mistaken, calls for the introduction of a parallel currency regime in Greece. Is this indeed the case, and what would a parallel currency mean for Greece?
DK: There is no economist who would support a parallel currency. Anyone who knows anything about economics could not support a parallel currency, and this has been the case since ancient times. Anyone who supports a parallel currency is either a con artist and common criminal who is supporting interests which are in opposition to the interest of the people, or he is completely clueless about economics and therefore dangerous as well. What Mr. Varoufakis wanted, and the orders he was given to implement during the time that he was still Greece’s finance minister, was to prepare Greece for the introduction of a so-called “alternative currency.” This so-called “alternative currency” would resemble the IOUs which were introduced in the state of California in 2009. This is why James Galbraith was chosen to lead a team, largely comprised of officers from Goldman Sachs and which was hired by the Greek government with taxpayer money, to prepare the way for the introduction of a parallel currency, of an IOU following the example of California.
The IOUs introduced in California had catastrophic consequences, so you can imagine what the consequences would be in a country like Greece today, with an economy in the condition that it is in, if such IOUs were introduced. What prevented their introduction, however, was an unforeseen event: the 62% who voted “no” to further austerity in the referendum of July 5, 2015. The powers that be feared a social uprising if they introduced an “alternative currency” at that time, and they therefore decided to introduce the third memorandum instead, to completely stifle any dissent, and then to potentially bring in the “alternative currency” at some later date. And what they have done is to parade out their various representatives, from both the right and the left, such as the self-proclaimed “radical Marxist” Yanis Varoufakis, who does not want to hear a thing about returning to a national, domestic currency but who continues to parrot in favor of an “alternative currency,” a solution which has been rejected as far back as ancient times, in the production titled “The Frogs” by Aristophanes. Varoufakis, being culturally illiterate, does not know about this, nor does he seem to be aware of Gresham’s Law, which is an economic principle which explains why parallel currencies do not work, as has been seen historically with the catastrophic example of “bimetalism,” for instance.
Then we have Mrs. Konstantopoulou, who keeps saying that “democracy will solve our problems,” but who seems to ignore the fact that democracy does not give you anything to eat. You need to be able to feed yourself first to have democracy, and not the other way around. Then we have Basil Markezinis, Sir Basil if I am not mistaken, who came out recently in favor of a parallel currency. Then we have Mr. Karatzaferis, who has reemerged in Greece’s political landscape just in case he manages to fool some gullible voters into voting for him one more time, following his treasonous acts as part of the Papademos government, for which they should have been tried. All of these individuals are now being paraded in order to create support for the so-called “alternative currency,” as well as other individuals from both the left and the right, in an effort to fool the people into thinking that this is the solution. Why are all these individuals appearing on the political forefront all of a sudden? It is to pave the way for the so-called “Schauble solution.” Now whether or not this so-called “Schauble solution” will involve Varoufakis, Kyriakos Mitsotakis, and/or some permutation of the current SYRIZA government, remains to be seen. I can’t say that I know. What’s important though is that it needs to be made clear that a national currency, which is issued by the government as the sole legal tender, the one and only authorized legal tender within an economy, is different from a parallel currency, and that the goal of a national currency would be to finance the national income. That is the goal, and not to finance the well-being of the banksters. A national currency would bring investments, employment, and so forth. But a national currency has to be issued by the state, as Abraham Lincoln had stated just months before his assassination. That’s what a national currency is, and it us upon this structure that a democracy can be formed, because otherwise, you will not be able to control the small group of people who will be producing currency and who therefore will have control over the manner in which your economy is financed and your economy operates.
MN: There are many who believe that if Greece enforced more strictly all of the memorandum agreements that it has signed, it would be just like Ireland and Cyprus are today, countries that are presented as “success stories” for having completed their memorandum programs. Is this indeed the case though?
DK: No, of course not. Those who are saying such things do not know what is happening in these two countries. On paper yes, they have completed the memorandum agreements. However, in Ireland for instance, austerity policies are now being enforced which are much harsher than those which were being enforced with the memorandums. Secondly, taxation in Ireland has skyrocketed, even on such basic goods such as water, and as a result many households have cut off their water supply, as they are unable to pay for it. This is a direct result of the very high and inelastic taxation which is being enforced on basic goods such as water and electricity, with the goal of repaying the increased debts the country has incurred due to its banking system, debts which were thrust upon the shoulders of Ireland’s taxpayers.
Thirdly, when the memorandum agreement was still in force, the skyrocketing household debt in Ireland created an opening for the banks and the hedge funds to take over the property of the people of Ireland. What we are seeing now in Ireland is a barrage of home auctions and foreclosures, which has led to an ever-growing problem of homelessness, who are being supported by local municipalities and shelters. I don’t know how such a situation could be deemed a “success story.”
MN: And there is a tremendous wave of migration out of Ireland as well…
DK: Yes, absolutely. One in four people in Ireland has left the country, in search of an opportunity to make a living elsewhere. Ireland, at this time, in terms of the level of investment in the country, is below even Greece, and this is a country which just a few years ago was nicknamed the “Celtic tiger” and had a very high level of investment. Today, investment in Ireland amounts to less than 7% of GDP. This is a figure lower than Yemen, which is a country that is currently embroiled in war.
Now, as for Cyprus, we are talking about an unprecedented catastrophe. Cyprus, historically, never had an unemployment rate which surpassed 7%. Today it is more than double that percentage, officially. There was never a problem of temporary or seasonal employment in Cyprus. Today, 50% of employment in Cyprus falls under that category. There was never a problem of only being able to find part-time employment in Cyprus. Today, over 15% of the working population of Cyprus is employed part-time and is unable to find full-time employment. Average incomes have sunk like a rock in Cyprus, and more and more people in Cyprus have mortgaged their homes. Though at one time the people of Cyprus had high incomes and a high level of savings in the bank, now they find themselves having mortgaged their homes and unable to service these loans. A property massacre of sorts, a wave of foreclosures of private property in Cyprus is looming, but this is being held back until the infamous “national problem” of Cyprus, the occupation of over one-third of the island by Turkey, is “solved,” through the implementation of a new version of the so-called “Annan Plan,” which would downgrade the sovereign nation of Cyprus into a “community” that would be equal to the “community” which has been formed in the occupied territories of Cyprus. This will lead to the creation of a so-called federation, a sort of hybrid state, which will have no chance of being able to function politically, nationally, and of course, economically. That’s what is happening in Cyprus today. Cyprus today finds itself in its worst economic condition since the Turkish “Attila” invasion of 1974. It has, in essence, been forced to sustain a new “Attila,” the “Attila” of the European Union, and the unfortunate thing is that if the people of Cyprus, just like the people of Greece, don’t do something, the country will not survive.
MN: We are on the air with economist, analyst, and the general secretary of Greece’s United Popular Front Dimitris Kazakis here on Dialogos Radio and the Dialogos Interview Series. You continue to advocate in favor of Greece departing from both the Eurozone and the European Union, and you also support the unilateral write-off of Greece’s debt. What are the steps which Greece could follow in order to accomplish this, and what does international law have to say about the issue?
DK: What we need to understand is that an occupation regime has been forced upon Greece, one which is slowly but surely being transformed into a military occupation as well, in addition to the economic, political, and national occupation which already exist. How was such an occupation implemented? It began with the infamous loan agreements which Greece signed not with the IMF, but with the European Union. These loan agreements stripped from Greece a basic sovereign right which exists under international law, for national immunity in the exercise of national sovereignty. With the third memorandum agreement which was signed, national sovereignty was completely stripped from Greece.
So what is the first thing that Greece should do? Greece should implement the UN charter and international treaties which consider national sovereignty the foundation upon which a nation-state is formed, and to renounce any agreement which strips the country of its sovereignty. We are talking here about the loan agreements, which are connected with ¾ths of Greece’s national debt today and which are connected to the so-called European bailout mechanism. Greece or any country cannot consider as legal any obligations which threaten the country with the stripping of its national sovereignty. It is as if war has been declared against the country. Is it even fathomable that a sovereign country could accept such agreements? If it does, it means that it is a colony, which is exactly what has happened in Greece. In fact, Greece is worse than a colony. So this is the basis upon Greece should make its first move.
Now, the remaining 25% of the debt belongs to banks which have flat-out stolen and looted from the Greek people. This is a matter which, quite simply, can be solved by the justice system. You put the justice system to work investigating and analyzing all of the money which has gone to the banking system. We are talking about vast sums of money here. To give an example, during the first six months of 2015, during which time the supposedly “fierce” negotiations were taking place with the Tsipras-led government in Greece, Greek banks received from the European Emergency Liquidity Assistance fund, the so-called ELA, and from Mario Draghi a total of 94 billion euros. Where did all of this money go? Supposedly, this money went to cover bank deposits which were fleeing the country. Okay, well, that only amounts to 43 billion euros. We were also told that some funds were used to secure everyday liquidity. Okay, well that amounts to another two billion euros, for a total of 45 billion. Even if we round it up to 50 billion, where did the remaining 45 billion euros go? Why is nobody being held accountable for this? Who owes this money? This money was loaned from Mr. Draghi with an interest rate that indeed was much higher than the normal interbank rate and it is owed by the Greek taxpayer, because this money was loaned with the guarantee that it would be covered by Greek taxpayers. Why isn’t anyone being held responsible for this? Why isn’t anyone being held to account for what happened to these funds? Therefore, what needs to happen? Prosecutors need to get involved, to investigate what happened, and to quite simply eliminate this debt from Greece’s ledger, after all those who stole and looted this money are tried and convicted by the justice system and with the full extent of the law. In this way, the entirety of this debt would be written off. Not even a cent would be owed. Where would Greece owe money? To Goldman Sachs, which speculated against Greece and which has been investigated by U.S. authorities for its role in the Greek crisis? Why do we accept this? We are their victims, why do we accept this? We accept this because, evidently, Greece’s politicians have made deals with Goldman Sachs to split the proceeds. But just because our politicians are thieves and con artists, does it mean that we have to pay for the damage that they inflict? No. They must be tried and the debt must be written off. In this way, we will not even have to deal with the issues of odious debt or whatever else is foreseen by international law. Greece’s debt is more crude, if you will. It is illegal, and it is the product of illegal acts which took place against the Greek people and the Greek state. Therefore, this is the way to deal with the issue of the debt.
From that point forward, one thing which Greece must not do is to borrow on the global markets ever again. Greece should never again borrow from the global markets. There is a neoliberal theory which states that it is impossible for a nation-state to not borrow. This is nonsense. Nation-states borrow in the international markets for the sole purpose of covering up the black holes created by politicians and the looting which has taken place from national coffers on behalf of the political parties in power and the interest groups which are supported by these political parties. A national economy has no need for borrowing on the international markets, on its own.
When a national economy does need to borrow money, it can do so through internal borrowing whenever necessary. And the only reason to borrow is this: to make investments, actual investments not to feed major contractors and government cronies, but bona fide investments which are the result of careful planning, upon which an economic cost-benefit analysis has been performed, in order to ensure that the money that is being borrowed will be repaid from the investment itself, and not by forcing the taxpayers to forever stick their hands further into their pockets. National borrowing can only take place in this way. Therefore it follows that we do not need to ever emerge onto the global financial markets to borrow. We have no need to borrow money to pay pensions and salaries and all of these things. We have been borrowing all this time to pay the usurious interest rates to the lenders, and to pay for the criminal actions and looting of the national coffers by politicians and their cronies. That is why Greece was borrowing. It is time for this situation to end. We have to create a new economy and a new state apparatus which will operate in the interests of citizens, which will make their lives easier, which will protect workers and which will present a stable environment for entrepreneurs and businesses to operate, which would allow them to grow their businesses and develop their ideas. But which business owner are we talking about? We are not talking about the corrupt oligarchs who have relied upon the government to do business. We are talking about businesspeople who assume risk and who make investments in production and development, who respect their workers instead of treating them as slaves. This is what we mean, and this is the way forward for us.
MN: From that point forward, how could this transition back to a national currency, this Eurozone exit, take place while avoiding the catastrophic devaluation of the new currency that some are predicting?
DK: What I have been saying from the beginning is that everything you hear about what would happen if we returned to a national currency, will actually happen if we remain in the Eurozone. Yes, there will be a catastrophic devaluation if Greece departs from the euro, but it will be the euro which is devalued and not the new national currency of Greece! To give you an example, when, in late June of 2015, the referendum was announced in Greece and set for July 5th, within that one-week period which followed the euro was absolutely battered in the international markets. The European Central Bank was forced to pour over 800 billion euros into the financial markets in order to stabilize the exchange rate of the euro versus the dollar. What this shows us is that the euro is an incredibly unstable currency, and this is the case for a number of reasons, including the fact that its internal architecture is collapsing.
Therefore, it follows that if Greece left, if Greece said “we’re leaving,” what an attack would follow against the euro in the international markets. It would be an attack on such a scale that I am not certain that any amount of liquidity which the European Central Bank would pour into the markets would be enough to stabilize the 1 to 1 exchange rate which it desires to maintain with the dollar. Therefore the issue is not a potential devaluation of the new national currency of Greece. The problem would be that the new national currency of Greece should not in any way be pegged to the euro, because then it will follow the downward spiral of the euro, just as a result of all of the short-selling of the euro which will take place once Greece leaves the Eurozone. This short-selling alone will not allow the euro to recover. Instead, it will be stabilized, if at all, by the European Central Bank at a rate of 40% to 50% of the value of the dollar and it will be subject to repeated and systematic attacks in the international marketplace as investors speculate which will be the next country to leave the Eurozone, whether it will be Italy or Spain or anyone else. This speculation will be enough for the euro to be unable to recover.
Thereafter, the issue will be this: the path will have been paved for Greece’s new national currency to stabilize itself. Why will it stabilize itself? There are two primary reasons. The first reason is that the country and its economy will recover, and the quicker you recover on the basis of productivity and production, the faster your currency will stabilize. The second reason is that there will be a lot of capital which is currently parked in the Eurozone, which will seek to find a “safe haven” of sorts and to flee the increasingly unstable euro. They will look for a “safe haven,” and Greece’s new national currency, which will be outside of the international Forex system and not traded in the international marketplace, will be one such “safe haven” for capital that is looking to flee the Eurozone, at least for the first few years. As a result, it is actually quite possible, and indeed the most likely scenario, to see upward pressures on the value of the new national currency of Greece. This is indeed problematic for a national economy, especially one that is recovering, but this problem is more easily dealt with than if the opposite were true. This is reality based on today’s conditions, and not any of the nonsense one usually hears.
But even if the new national currency of Greece were to devalue, due to various pressures that it might face, so what? Norway devalued its currency, the Norwegian Krone, by 40% within the past year. And what happened? Did the Norwegian economy collapse? Is it facing the problems that Greece or indeed Germany and the rest of the Eurozone are facing? No. In fact, the Norwegian economy is performing better than every other European economy. Why is this the case? It is the case because it has a stable productive base and its currency provides real purchasing power domestically and real income for its people. As long as these two factors exist, an economy can withstand any devaluation.
MN: We are on the air with economist, analyst, and the general secretary of Greece’s United Popular Front Dimitris Kazakis here on Dialogos Radio and the Dialogos Interview Series. There are many, however, who argue that Greece could not return to a national currency because it lacks a production base, as they claim, because it relies upon imports, because it would be shut out of the international markets and so on. How do you respond to these arguments and how could the Greek economy sustain itself after departure from the Eurozone, particularly in the first few months after leaving?
DK: Greece lost its productive base when it was inducted into the European Economic Community, as it was known at that time, and later into the European Union. This was the death blow for the Greek economy. It is true that we did not have a particularly strong productive base even before that, but whatever productive base did exist was lost once we entered the European Union. We lost our dynamic agricultural base, which produced a surplus of goods up until the 1980s when we entered the European Economic Community and Greek farmers were absolutely battered, and secondly, we lost our industrial base. In order to recover our agriculture and industry, we need to enforce protectionist measures. Without protectionism, there cannot be production in any economy. However, the protectionist measures that we will enforce need to be selective and to ensure competitiveness, to provide for a truly competitive framework instead of simply protecting the profits of domestic oligarchs. We need to allow our productive capacity to grow and develop, for investment to take place in entrepreneurship and development in the private sector under conditions which protect against unfair competition or the monopoly conditions created by foreign multinationals or Greek and foreign trusts and cartels. We need to protect our producers from these trusts and cartels, either from outside our borders or from within our own economy. Only in this way can we recover our productive base. To say that we need to recover our production first and then leave the Eurozone is foolish. Anyone who argues this either does not know what they are talking about, which means that they are dangerous, or they are simply fooling the people with the goal of maintaining the status quo and a situation in which we are going from bad to worse.
The question, of course, remains: could we even restart our economy? Of course we can. Right now, at this moment, the Central Bank of Greece has approximately 42 billion euros in foreign currency reserves and deposits in its coffers. This is 42 billion euros which could be used as Greece’s foreign currency reserves. In addition, the investment portfolios of Greece’s banks contain, at this time, convertible securities, primarily bonds issued by Britain and Luxembourg, totaling 56 billion euros. This 56 billion euros, plus the other 42 billion euros, total 98 billion euros of total foreign currency reserves. Greece, each year, needs approximately 20 billion dollars for its inelastic imports, for goods such as industrial equipment, fuel, and basic needs such as medicine. When you therefore have approximately 100 billion dollars in foreign currency reserves, you could go 4 or even 5 years without even one tourist setting foot in Greece and leaving behind foreign currency, without even one export taking place, without even one contract for the shipping and transport of goods taking place within the Greek economy, that would provide foreign currency reserves for the Greek economy. Such a far-fetched situation could only take place under conditions of complete and total warfare. We do not believe that this is a scenario that is likely to take place, and indeed the conditions are not there for such a scenario to materialize. If such a thing happened in Greece, then the European Union and particularly the countries of northern and central Europe will be the ones that are hit the hardest and will collapse, because approximately 60% of goods which are transferred from the east to the west pass through Greece. If there is a war in Greece, if anyone provokes war with Greece, the markets of central and northern Europe will collapse. Consumer prices will skyrocket and the European economy, which is already facing catastrophic deflationary pressures, will collapse. Let’s not forget that Greece represents 0.28% of global GDP. Therefore, we do not believe that such a scenario will take place.
In the meantime, Greece has the ability to stand on its own feet. Greece, even today, has 98% self-sufficiency in terms of its food production, and it also has self-sufficiency in terms of energy production as well, with plenty of cheap lignite for the production of electricity. Therefore we would have no problem undertaking an orderly transition to a national currency, which would allow for a quick recovery of the Greek economy, based exclusively on its own internal dynamism and strengths but which would be outward-looking, as we will, at last, be able to develop trading relations with any country, instead of operating as an economic protectorate of Germany.
MN: In closing, where can our listeners find out more information about the United Popular Front, its five basic principles, its proposals for a return to a national currency, and about your daily radio program as well?
DK: There is, first of all, the main website of the United Popular Front, which you could visit in order to find out all of the details that you need about our activities throughout Greece. The address is www.epamhellas.gr. There is also the online radio station www.e-roi.gr, where I host a daily radio program, from Monday to Friday, from 2 pm to 3:30 or 4 pm Greek time, depending on that day’s developments. This radio station also is the home of numerous other radio programs which will allow the listener to not just learn about what is happening in terms of economic and political developments, but also about Greek culture, education, and music. This is important, because Greece and its culture and people are being attacked on multiple fronts, not just economically and socially, but also culturally and on a historical basis as well. Finally, there is also the newspaper, “Anapoda,” which is currently published monthly and which we soon hope to start publishing every two weeks, which further presents our views and positions and analysis as to what is happening in Greece.
MN: Well Mr. Kazakis, thank you very much for taking the time to speak with us today here on Dialogos Radio and the Dialogos Interview Series, and thank you for your analysis as well.
DK: I thank you as well.
Please excuse any typos or errors which may exist within this transcript.