The transcript of Dialogos Radio’s interview with economist Leonidas Vatikiotis.  This interview aired on our broadcasts for the week of January 9-15, 2015. Find the podcast of this interview here.

ΜΝ: Joining us today on Dialogos Radio and the Dialogos Interview Series for the first interview of the new year is the well-known economist and analyst Leonidas Vatikiotis. Happy new year first of all, and thank you for joining us today.

LB: Good morning, Michael, thank you very much for the invitation.

ΜΝ: We left off before the holidays in the midst of the election for a new president of the Hellenic Republic, and we are now in the new year and in the midst of a snap parliamentary election in Greece. There are many government politicians, pro-government analysts, and many Greek and international media outlets who keep talking about the irresponsible, as they call it, stance of the opposition in not voting in favor of the government’s candidate for the presidency of the republic and for no averting these snap elections. How do you view this issue?

LB: To characterize as irresponsible a position adopted by several political parties that are represented in parliament, simply because they exercised their constitutional right not to vote for the government’s candidate for the presidency, is an insult to even the most basic democratic ideals. Syriza, the Communist Party of Greece, and the Independent Greeks exercised their constitutional right, and if we want to get to the heart of the matter, what Greek society as well as the political parties in parliament learned from this is that the government did not wish to simply extend its term in office. We were told that the government wished, through the election of its candidate for the presidency of the republic, Mr. Stavros Dimas, to extend its hold on power and complete its full four-year term. However, what the government of Antonis Samaras and Vaggelis Venizelos also wanted was, essentially, the acceptance by Greek society of a new, and more severe, memorandum agreement. We should note where the negotiations between the Greek government and its lenders left off, at the Eurogroup meeting on December 8th. At that time, the Eurozone refused to continue negotiations to complete its review of the Greek economy, pending the election of a new government in Greece. On December 8th, the negotiation cycle which began during the summer of 2014 came to a close, and this was a period during which the government and the prime minister himself, Antonis Samaras, proclaimed that Greece had emerged from the crisis, that the memorandum agreements were a thing of the past, and that better days were ahead, that troika oversight of the Greek economy, which had been in place since May of 2010, would cease. The intentions of Greece’s lenders, however, were quite different: the troika leaked to the press that Greece still needed to ratify over 1,000 measures which it had agreed to with the troika but which had not yet been passed legislatively through the Greek parliament. This was the point where the Samaras-Venizelos government did not continue its negotiations, knowing that there was no way that it could fulfill the demands of the troika and pass these measures through parliament. We should remember what these demands were and why these negotiations came to a standstill…the demands included the outlawing of strikes, the increase of tax rates in Greece’s periphery, many measures which would have led to a new period of even harsher austerity for Greece. The government of Samaras and Venizelos was already on very fragile footing, we knew that it did not have the political power to pass these new measures into law because, quite simply, the government’s own members of parliament would not vote for them, knowing that they would not be re-elected if they did, and so, Greece’s creditors, in December, demanded that these new measures be adopted by a new government with a popular mandate. And we could understand that at this stage, the Samaras government, no longer possessed the legitimacy to pass and to enforce these new measures and that it would be faced with a new wave of popular unrest. This is the context in which early elections were declared in Greece.

MN: We are on the air with economist Leonidas Vatikiotis here on Dialogos Radio and the Dialogos Interview Series …Mr. Vatikiotis, we’ve been hearing as of late that the recession, or depression, in Greece has stopped, that Greece experienced some modest growth in 2014, indeed at the highest rate in the Eurozone. How do you view the economic state of the country leading up to the elections?

LB: Certainly, the economic depression which Greece was experiencing came to a close, on paper. Greece experienced a severe depression, deeper still than the Great Depression in the United States. Greece lost 25% of its GDP since 2008, the year the crisis began, and no other country has lost such a high percentage of its GDP during peacetime in history. It was a tremendous shock for Greek society and especially for the younger generations which had taken for granted economic progress, the growth in incomes, and so forth. The reality though is that the entire foundation of the Greek economy has been altered. Yes, the GDP has stopped shrinking and it is certain that it will begin to increase, even if at a paltry rate of 0-1% per year. This, however, means nothing as far as incomes are concerned. Why is this the case? During all of the previous years, pensions, salaries, unemployment benefits, and labor rights were all decimated. It is estimated that, on average, salaries and wages in Greece have declined by 40%. Here we should also state that the Greek economy did not start from the same levels as a Germany or a Sweden. In other words, Greece was not a high-income country to begin with. Back in 2009 and 2008 and 2007, one of the dominant topics was the so-called “G700” or “700 Euro generation,” a new generation of youth which was well-educated but which lacked steady employment, benefits, or prospects. In fact, in the last interview given by George Papandreou before his election in 2009, when he won with 45% of the vote, he presented his policies for combating chronic unemployment amongst the youth. We need to stress this because there is a lot of talk about how salaries were a bit high in Greece and in the European south more broadly, prior to the crisis, which is in fact not true. This claim comes across more as an attempt to excuse the inexcusable. It presents as logical and necessary, as a “correction” of sorts, the reduction in wages which took place. What we have now is a reality where people receive salaries of 450 Euros per month, even 200 and 300 Euros per month. Large retail chains, which are indeed profitable, hire employees on a part-time basis at 250 Euros per month, and we know quite well that part-time employment often extends to 6, 7, 8 hour days without extra pay, and without management having to answer to anybody about this. We also have an unemployment rate which has steadied itself at 26%, with the Greek economy now being obliged to support itself on the basis of a very low rate of employment. We are talking about unemployment which has hit the youth especially hard, and particularly young women, while we have also seen a wave of migration out of the country, consisting primarily of college-educated graduates of Greek universities, particularly engineers and doctors, but also lawyers and economists, who are abandoning Greece by the thousands each year, for Germany, Northern Europe, the Gulf states and the United States, quite simply because these people, who are very highly educated, cannot find work in their fields in Greece. The construction sector in Greece has collapsed, research does not take place, university budgets have been slashed by as much as 60-70%, and therefore, there is no employment prospect in the fields of academia, and thousands of young graduates abandon Greece, something which of course has a hugely negative impact on Greece’s prospects for rebounding from the crisis. This also shows that the unemployment rate of 26% is, in fact, much larger, because the available employment pool has also shrunk with the departure of so many thousands of young people. What we should also keep in mind is that we have witnessed the expansion of short-term, highly flexible labor. In other words, even new job positions that have been created in recent years are a far cry from jobs which provide a steady eight-hour workday and with secure benefits, such as health insurance. The conclusion one comes to, therefore, is that while Greece may, on paper, be emerging from the crisis and from the sharp declines of its GDP by 6-7% per year, but the new situation which now exists does nothing for the working classes and for retirees, except that they have lost fundamental rights which they once possessed, and are now forced to endure a lower standard of living compared to prior to the crisis.

ΜΝ: We’re speaking with economist and analyst Leonidas Vatikiotis here on Dialogos Radio and the Dialogos Interview Series… let’s turn now to the economic platform put forth by Syriza. There have been many promises made to abolish the new property tax that the government levied, to return the minimum wage to pre-crisis levels, and to negotiate the reduction of Greece’s national debt within the Eurozone mechanism, while we have also seen an about-face of sorts towards Syriza by a number of economists. In your opinion, is Syriza’s economic program feasible and is it enough to turn the economic situation around in Greece?

LB: The declarations made by Alexis Tsipras at the Thessaloniki International Fair in September, and this past weekend at his party conference, were declarations for things which obviously need to happen, such as the restoration of the minimum wage back to 751 Euros per month, the abolition of the regressive income tax (ENFIA), which taxes a small inner-city apartment at the same rate as the mansions of the elite, and other similar declarations which are socially necessary and which need to be implemented in order to boost the incomes of the poor, the working classes which experienced the brunt of the negative impact of the crisis of the past seven years. At the same time, if you would like my opinion, these promises are not enough. What must happen, and what Syriza had promised in the past, such as at its 2013 party conference, are bolder, more radical moves, which would put a complete stop to the death spiral of austerity which Greece has been enduring in recent years. For example, one such necessary and radical measure, is the write-off of the majority of Greece’s national debt. In my opinion, no economic measure to help the working classes can be enforced in reality if the Greek government, whichever Greek government this is, does not take a brave decision to declare a stoppage of payments on the public debt. Let me give you one example to illustrate what I mean: in Greece, out of approximately 1.4 million people who are unemployed, only approximately 12% actually receive unemployment benefits. The remainder, the 88% of the unemployed, does not receive even one euro. What do these people do? They become beggars. Knowing very well how Greek society is structured, we have 1.2 million people who are asking parents, children, relatives, and neighbors for money, so they can survive literally with just a piece of bread. The call to expand unemployment benefits, and we’re talking about 360 euros per month, to all unemployed persons, will result in an expenditure of 6 billion euros per year. That’s how much this measure would cost at the present time. 6 billion euros also happens to represent exactly the amount of money that the Greek state, meaning the Greek taxpayer, will pay in 2015 just on interest alone, not for the repayment of bonds or the issuance of new bonds. We understand therefore that even such a popular measure, if it is to be implemented, has to be accompanied by a very brave decision such as the declaration of a stoppage of payments, which must happen, in my opinion, on a unilateral basis, based on the sovereign rights that every country possesses and without taking into account the position of Greece’s lenders, in other words, Germany and the European Union, unless of course we take into account their huge, criminal responsibilities for the present state of affairs in Greece. I insist upon this point, on the necessity of a unilateral stoppage of payments, for the following reason: if we look at the write-off of Greek public debt which took place in 2012, the so-called PSI or “haircut,” and compare it to other write-offs which have taken place in the recent past, we will notice the following paradox: in 2012 approximately 150 billion euros of Greek public debt was written off. In other countries which proceeded with debt write-offs, such as Ecuador, Iceland in 2012, Russia, Argentina in 2001, these countries wrote off a smaller percentage of their total debt. And what happened in these countries, indeed from the year following the write-offs? Unemployment fell sharply and growth rates exploded. In Greece, however, we saw the opposite. Because the terms Greece agreed to were imposed by its lenders, by Merkel and the bankers, the result was that Greece is, in fact, more heavily indebted today than it was in 2012. 150 billion euros of debt was written off, and yet today Greece’s national debt totals 321 billion euros, whereas in 2010 it was 299 billion euros. In other words, the primary result of the restructuring of Greece’s debt, as it was implemented by Greece’s lenders, is for Greece to be more heavily indebted to those same lenders today. The second and more important consequence of this, in my opinion, is the fact that the social impacts of this write-off were huge. We need to remember that Greece’s insurance funds alone lost approximately 14 billion euros as a result of the write-off. The Greek insurance system essentially was shuttered as a result, and since then, all of the reductions in pensions, the increases in the retirement age, all seem like a logical consequence following the write-down. But it’s not just this: the lenders also imposed draconian austerity measures on Greece on top of that, in order to accept this deal. In light of this very bitter, very dramatic experience which Greece endured in recent years at the hands of its creditors, I firmly believe that no reasoning can take place with these parties, who bear such a huge responsibility for the crisis in Greece and the sharp decline in incomes. The Greek state, just like any other country, has the right to unilaterally make decisions that it deems necessary and to unilaterally impose them upon its creditors. Let’s note that those who seem to think that this is somehow unethical should remember that, in the preceding years, Greece’s lenders had no qualms about imposing, on a unilateral basis, their demands on Greece, measures which the Greek government then implemented. Did Greece truly have a say in the PSI agreement? Did Greece and its successive governments have a say with regards to the memorandum agreements or on what basis the bond exchange or the write-down of Greece’s national debt would take place? Greece had no say in any of these matters. Decisions were made by the International Monetary Fund (IMF), the Eurozone commissioners, they were presented to Greece, and Greece simply ratified them into law, despite the overwhelming opposition of the Greek populace. Therefore, Greece could respond with its own unilateral measures and this is something that the next Greek government should do.

ΜΝ: We are on the air with economist Leonidas Vatikiotis here on Dialogos Radio and the Dialogos Interview Series…Mr. Vatikiotis, in recent weeks, the issue of a Greek departure from the Eurozone has once again come to the forefront. Despite the fact that Syriza publicly states that it is strongly in favor of Greece remaining in the Eurozone, there are many who still maintain that Greece must leave. On the other hand, some voices from within the European Union are stating that there is no mechanism through which a member-state can depart from the Eurozone. What are your views regarding the issue of a possible Eurozone departure, and what actually is the case in terms of the Eurozone’s policy regarding a possible departure?

LV: Here we must first state that this specula which is currently taking place regarding a possible “grexit” is meant to create a climate of fear. The current New Democracy government, if it genuinely wished to participate in the pre-election dialogue in good faith, would be obliged to come out and to state that its party platform includes new reductions to salaries and benefits to the elderly, for instance. But instead of doing this and committing political suicide, they instead point the finger at Syriza and claim that it is the party whose policies will impoverish Greece, and they equate this impoverishment with an exit from the Eurozone. There is a lot of political trickery taking place on this issue. One such instance has to do with the fact that Syriza, unfortunately in my opinion, has pledged to keep Greece within the Eurozone. Another instance has to do with the equation between impoverishment and a Eurozone departure, when what has already been proven is that remaining within the Eurozone results in impoverishment, through the reduction of salaries, the privatization of public resources, the reduction in national sovereignty, and the conversion of an economically well-developed country into a protectorate, into a postmodern colony, such as in the case of Greece. The current government chooses not to open up a new space of public debate in good faith regarding the euro, how beneficial it is and how necessary it really is, and instead, what the government is doing is to create a climate of fear and panic, betting that this will have an impact on certain segments of Greek society. You know, if such a discourse did take place, then everyone who back in the year 2000, when Greece was admitted into the Eurozone, promised all sorts of fantastic benefits, would now have to explain themselves. All one has to do is to go back and read the proclamations that were being made by politicians from both PASOK and New Democracy back then, as to the heady benefits that Greece would experience from its participation in the common currency, the many benefits for Greek farmers, for Greek workers, for Greek entrepreneurs. The only thing we have seen in reality, one decade later, is that the common currency wrecked the Greek economy. Essentially, Greece turned into a backwater periphery of Germany. German imports flooded the Greek market, wrecking local production, even in sectors where Greece had a comparative advantage, such as shipbuilding. With political decisions that were made, the European Union, and in essence Germany, with the criminal collaboration of Greek politicians such as former finance minister Mr. Papakonstantinou, who served under Papandreou, and former defense minister Mr. Venizelos, Greece’s shipyards were shut down and their business instead flowed to German shipyards. We understand, therefore, that the Greek economy did not benefit, that Greek workers did not benefit from the Euro. These are reasons, if you will, which make it necessary, even at this stage, for Greece to depart from the Eurozone. And not only that: Greece, in my opinion, should also depart from the European Union for one additional and simple reason: as long as Greece remains within the European Union, it will not have any ability to raise salaries and pensions, because it is now European Union policy for each member-state to maintain a balanced budget, while deficits are completely forbidden. One does not need to be an expert or to know the entire history of global economics to understand how many countries, including even the United States, have managed to stay afloat, in contrast to what has been happening in Europe. They’ve done so by running deficits, which they then are able to fund. As long as the European Union continues to impose balanced budgets and in fact even levying fines on countries which violate this dictat, then it will be impossible to implement any growth policies and for workers to benefit from a portion of the fruits of their labor. All one needs to perform is a simple equation: even with Greece’s current GDP of 182 billion euros, if that is divided amongst a population of 11 million, it comes out to approximately 16,000 euros per year, per capita. Right now, there are not many households in Greece with a monthly income of 1,500 Euros per month. As a result, what I want to say is that it is still possible, even today, for a redistribution of wealth to take place in Greece, but such an action is explicitly forbidden by the European Union. The reality is that the Eurozone was indeed created without any exit option. In my opinion, this is akin to an architect designing a beautiful, modern building with no exits for its residents. It is unheard of for a union of nations to not provide an exit clause in case of a national emergency. It belies a complete lack of planning and foresight. So there is indeed no process in place for a member-state to depart from the Eurozone. However, this does not mean that Greece or any country is forced to remain within this insane asylum, as the Eurozone has sometimes been described. Each member-state has the absolute right to undertake a cost-benefit analysis regarding staying in the Eurozone or not, and has the right to implement the decisions that it deems to be best for its own people, without any regard for the consequences this decision may have for other countries. This should not come across as indifferent or unethical in any way. Germany, when it decides to implement policies which result in the shutdown of Spanish shipyards or light industry in Italy, does not concern itself as to what the impacts will be on Spanish laborers or on unemployment in the south of Italy. The same thing is true of Greece. I don’t understand why smaller countries should engage in this show of faux solidarity and why they should take into account the concerns of a country like Germany, when Germany unilaterally and with quite a dose of discreetness, proceeds with the implementation of policies which are destructive for these same countries but which are in the interests of Germany’s major industries.

MN: We’re speaking with economist and analyst Leonidas Vatikiotis here on Dialogos Radio and the Dialogos Interview Series… A few months ago, you were a candidate in the European parliamentary elections with the Antarsya political party…will Antarsya be participating in the upcoming elections, and as a follow-up, what do you foresee, politically, for Greece following the January 25th elections?

LB: Antarsya will be participating in the elections of the 25th of January, asking for the votes of Greek laborers, the youth, and the elderly, for many reasons. First, we aim to enter parliament in order to express the struggles, the desires, and the needs of the Greek people for a better life. The most important thing for us, in our opinion, is not so much what will take place in parliament in the coming months or years, but instead, the development of new social struggles, of new popular pressures which will result in policies which will represent a true change from the depressing reality of the present. And this is what we are trying to accomplish today. The conditions exist in Greece today for the development of an “early spring,” and I am not referring to the results of the January 25th elections. The conditions exist for the Greek people to once again take the lead in the developments which will take place in their own country, to overcome the pessimism, the defeatism, the misery which they have experienced since 2012, in comparison to the period between 2010 and 2012. The period which will follow will certainly have in store for us many unpredictable events, and the Greek people can once again come out onto the streets and impose their own conditions and essentially overturn the policies of austerity and regain the right to their own livelihoods.

MN: Mr. Vatikiotis, thank you very much for taking the time to speak with us today here on Dialogos Radio and the Dialogos Interview Series.

LB: Thank you very much.

Please excuse any typos or errors which may exist within this transcript.