Greece’s Lesson For Russia
By Paul Craig Roberts
“Greece’s debt can now only be
made sustainable through debt relief measures that go far beyond
what Europe has been willing to consider so far.” — International
Monetary Fund
July 17, 2015 "Information
Clearing House"
-
Greece’s lesson for Russia, and for China and
Iran, is to avoid all financial relationships with the West. The
West simply cannot be trusted. Washington is committed to economic
and political hegemony over every other country and uses the Western
financial system for asset freezes, confiscations, and sanctions.
Countries that have independent foreign policies and also have
assets in the West cannot expect Washington to respect their
property rights or their ownership. Washington freezes or steals
countries’ assets, or in the case of France imposes multi-billion
dollar fines, in order to force compliance with Washington’s
policies. Iran, for example, lost the use of $100 billion,
approximately one-fourth of the Iranian GDP, for years simply
because Iran insisted on its rights under the Non-Proliferation
Treaty.
Russian journalists are asking me if Obama’s
willingness to reach a deal with Iran means there is hope a deal can
be reached over Ukraine. The answer is No. Moreover, as I will later
explain, the deal with Iran doesn’t mean much as far as Washington
is concerned.
Three days ago (July 14) a high ranking military
officer, Gen. Paul Selva, the third in about as many days, told the
US Senate that Russia is “an existential threat to this nation (the
US).” Only a few days prior the Senate had heard the same thing from
US Marine commander Joseph Dunford and from the Secretary of the Air
Force. A few days before that, the Chairman of the US Joint Chiefs
of Staff warned of a Russian “hybrid threat.”
Washington is invested heavily in using Ukraine
against Russia. All the conflict there originates with Washington’s
puppet government in Kiev. Russia is blamed for everything,
including the destruction of the Malaysian airliner. Washington has
used false charges to coerce the EU into sanctions against Russia
that are not in the EU’s interest. As Washington has succeeded in
coercing all of Europe to harm Europe’s political and economic
relationships with Russia and to enter into a state of conflict with
Russia, certainly Washington is not going to agree to an Ukrainian
settlement. Even if Washington wanted to do so, as Washington’s
entire position rests on nothing but propaganda, Washington would
have to disavow itself in order to come to an agreement.
Despite everything, Russia’s president and foreign
minister continue to speak of the US and Washington’s EU vassal
states as “our partners.” Perhaps Putin and Lavrov are being
sarcastic. The most certain thing of our time is that Washington and
its vassals are not partners of Russia.
The Wolfowitz doctrine, the basis of US foreign
and military policy, declares
that the rise of Russia or any other country cannot be permitted,
because the US is the Uni-power and cannot tolerate any constraint
on its unilateral actions.
As long as this doctrine reigns in Washington,
neither Russia, China, nor Iran, the nuclear agreement not
withstanding, are safe. As long as Iran has an independent foreign
policy, the nuclear agreement does not protect Iran, because any
significant policy conflict with Washington can produce new
justifications for sanctions.
With the nuclear agreement with Iran comes the
release of Iran’s $100 billion in frozen Western balances. I heard
yesterday a member of the Council for Foreign Relations say that
Iran should invest its released $100 billion in US and Europe
companies. If Iran does this, the Iranian government is setting
itself up for further blackmail. Investing anywhere in the West
means that Iran’s assets can be frozen or confiscated at any time.
if Obama were to dismiss Victoria Nuland, Susan
Rice, and Samantha Power and replace these neoconservatives with
sane diplomats, the outlook would improve. Then Russia, China, and
Iran would have a better possibility of reaching accommodation with
the US on terms other than vassalage.
Russia and China, having emerged from a poorly
functioning communist economic system, naturally regard the West as
a model. It seems China has fallen for Western capitalism head over
heels. Russia perhaps less so, but the economists in these two
countries are the same as the West’s neoliberal economists, which
means that they are unwitting servants of Western financial
imperialism. Thinking mistakenly that they are being true to
economics, they are being true to Washington’s hegemony.
With the deregulation that began in the Clinton
regime, Western capitalism has become socially dysfunctional. In the
US and throughout the West capitalism no longer serves the people.
Capitalism serves the owners and managers of capital and no one
else.
This is why US income inequality is now as bad or
worse than during the “robber baron” era of the 1920s. The 1930s
regulation that made capitalism a functioning economic system has
been repealed. Today in the Western world capitalism is a looting
mechanism. Capitalism not only loots labor, capitalism loots entire
countries, such as Greece which is being forced by the EU to sell of
Greece’s national assets to foreign purchasers.
Before Putin and Lavrov again refer to their
“American partners,” they should reflect on the EU’s lack of good
will toward Greece. When a member of the EU itself is being looted
and driven into the ground by its compatriots, how can Russia,
China, and Iran expect better treatment? If the West has no good
will toward Greece, where is the West’s good will toward Russia?
The Greek government was forced to capitulate to
the EU, despite the support it received from the referendum, because
the Greeks relied on the good will of their European partners and
underestimated the mendacity of the One Percent. The Greek
government did not expect the merciless attitude of its fellow EU
member governments. The Greek government actually thought that its
expert analysis of the Greek debt situation and economy would carry
weight in the negotiations. This expectation left the Greek
government without a backup plan. The Greek government gave no
thought to how to go about leaving the euro and putting in place a
monetary and banking system independent of the euro. The lack of
preparation for exit left the government with no alternative to the
EU’s demands.
The termination of Greece’s fiscal sovereignty is
what is in store for Italy, Spain, and Portugal, and eventually for
France and Germany. As Jean-Claude Trichet, the former head of the
European Central Bank said, the sovereign debt crisis signaled that
it is time to bring Europe beyond a “strict concept of nationhood.”
The next step in the centralization of Europe is political
centralization. The Greek debt crisis is being used to establish the
principle that being a member of the EU means that the country has
lost its sovereignty.
The notion, prevalent in the Western financial
media, that a solution has been imposed on the Greeks is nonsense.
Nothing has been solved. The conditions to which the Greek
government submitted make the debt even less payable. In a short
time the issue will again be before us. As John Maynard Keynes made
clear in 1936 and as every economist knows, driving down consumer
incomes by cutting pensions, employment, wages, and social services,
reduces consumer and investment demand, and thereby GDP, and results
in large budget deficits that have to be covered by borrowing.
Selling pubic assets to foreigners transfers the revenue flows out
of the Greek economy into foreign hands.
Unregulated naked capitalism, has proven in the
21st century to be unable to produce economic growth anywhere in the
West. Consequently, median family incomes are declining. Governments
cover up the decline by underestimating inflation and by not
counting as unemployed discouraged workers who, unable to find jobs,
have ceased looking. By not counting discouraged workers the US is
able to report a 5.2 percent rate of unemployment. Including
discouraged workers brings the unemployment rate to 23.1 percent. A
23 percent rate of unemployment has nothing in common with economic
recovery.
Even the language used in the West is deceptive.
The Greek “bailout” does not bail out Greece. The bailout bails out
the holders of Greek debt. Many of these holders are not Greece’s
original creditors. What the “bailout” does is to make the New York
hedge funds’ bet on the Greek debt pay off for the hedge funds. The
bailout money goes not to Greece but to those who speculated on the
debt being paid. According to news reports, Quantitative Easing by
the ECB has been used to purchase Greek debt from the troubled banks
that made the loans, so the debt issue is no longer a creditor
issue.
China seems unaware of the risk of investing in
the US. China’s new rich are buying up residential communities in
California, forgetting the experience of Japanese-Americans who were
herded into detention camps during Washington’s war with Japan.
Chinese companies are buying US companies and ore deposits in the
US. These acquisitions make China susceptible to blackmail over
foreign policy differences.
The “globalism” that is hyped in the West is
inconsistent with Washington’s unilateralism. No country with assets
inside the Western system can afford to have policy differences with
Washington. The French bank paid the $9 billion fine for disobeying
Washington’s dictate of its lending practices, because the
alternative was the close down of its operations in the United
States. The French government was unable to protect the French bank
from being looted by Washington.
It is testimony to the insouciance of our time
that the stark inconsistency of globalism with American
unilateralism has passed unnoticed.
Dr. Paul Craig Roberts was Assistant Secretary
of the Treasury for Economic Policy and associate editor of the Wall
Street Journal. He was columnist for Business Week, Scripps Howard
News Service, and Creators Syndicate. He has had many university
appointments. His internet columns have attracted a worldwide
following. Roberts' latest books are
The Failure of Laissez Faire Capitalism and
Economic Dissolution of the West
and
How America Was Lost.