The New Colonialism: Greece and Ukraine
Greece and Ukraine represent the development of a
new, more direct management of wealth extraction.
By Jack Rasmus
September 07, 2015 "Information
Clearing House" - "teleSur"
-A new form of colonialism is emerging in
Europe. Not colonialism imposed by military conquest and occupation,
as in the 19th century. Not even the more efficient form of economic
colonialism pioneered by the U.S. in the post-1945 period, where the
costs of direct administration and military occupation were replaced
with compliant local elites allowed to share in the wealth extracted
in exchange for being allowed to rule on behalf of the colonizers.
In the 21st century, it is “colonialism by means of financial asset
transfer.” It is colony wealth extraction by colonizing country
managers, assigned to directly administer the processes in the
colony by which financial assets are to be transferred. This new
form of colonialism by direct management plus financial wealth
transfer is now emerging in Greece and Ukraine.
Behind the appearance of the recent Greek debt deal is the reality
of European bankers and their institutions — the European
Commission, European Central Bank, IMF, and European Stability
Mechanism (ESM) — who will soon assume direct management of the
operation of the economy, according to the Memorandum of
Understanding, MoU, signed August 14, 2015, by Greece and the
Troika. The MoU spells out direct management in various ways. In the
case of Ukraine, it is even more direct. U.S. and European shadow
bankers were installed by U.S.-Europe last December 2014 as
Ukraine’s finance and economic ministers. They have been directly
managing Ukraine’s economy on a day-to-day basis ever since.
The new colonialism as financial asset transfer takes several
practical forms: as wealth transfer in the form of interest payments
on ever rising debt, in firesales of government assets sold directly
to the colonizer’s investors and bankers, and in the de facto
takeover the colony’s banking system and bank assets in order to
transfer wealth to shareholders of the colonizing country’s private
bankers and investors.
The Case of Greece
The recent third debt deal signed August 14, 2015, between Greece
and the Troika of European economic institutions adds another $98
billion to Greece’s debt, raising Greece’s total debt to more than
$400 billion. Nearly all the $98 billion is earmarked for debt
payments and to recapitalize the Greek banks. Wealth is extracted in
the form of Greeks producing more, or cutting spending and raising
taxes more, in order to create what’s called a primary surplus from
which interest and principal is to be paid.
The Greeks aren’t going to have their goods produced and sold
cheaper to Germany to re-export at higher price and profit — i.e.
19th century colonialism. Multinational corporations aren’t going to
relocate to Greece so they can pay cheaper wages, lower costs, and
then re-export to the rest of the world for profit — i.e. U.S. late
20th century colonialism. The Greeks are going to work harder and
for less in order to generate a surplus that will return to the
Troika institutions in the form of interest payments on the
ever-rising debt they owe. The Troika are the intermediaries, the
debt collectors, the State-Agency representatives of bankers and
investors on behalf of whom they collect the debt payments. They are
supra-state bodies and the new agents of financial wealth extraction
and transfer.
The Greek-Troika MoU defines in detail the direct management as well
as what and how the wealth will be extracted and transferred. The
MoU begins by stating explicitly that no legislation or other
action, however minor, by Greece’s political institutions can be
taken without prior approval of the Troika. The Troika thus has veto
power over virtually all policy measures in Greece, all legislative
or executive agency decisions, and by all levels of government.
Furthermore, Greece will no longer have a fiscal policy. The Troika
will define the budget. It will oversee the writing of a budget. The
MoU calls for a total restructuring of Greek taxes and spending that
must occur in the new budget. Greece gets to write its budget, but
only if that budget is the budget the Troika wants. And Troika
representatives will monitor compliance to ensure that Greece
adheres to the Troika’s budget. Every Greek agency and every Greek
Parliament legislative committee will thus have its ‘Troika
Commissar’ looking over its shoulder on an almost daily basis.
The MoU states the Troika also has the power to appoint “independent
consultants” to the Boards of Greeks banks. Many old bank board
members will be removed. Troika appointees will now manage the Greek
banks on a day-to-day basis, in other words. Greek bank subsidiaries
and branches outside Greece will be “privatized,” i.e. sold off to
other Euro banks. The Greek banks are thus now Greek in name only.
They will become appendages and de facto subsidiaries of northern
Euro banks working behind the veil of the Troika and at the shoulder
of their Greek banker counterparts.The several tens of billions of
dollars allocated to recapitalize the Greek banks will reside in
Luxembourg banks, not in Greece. Greece no longer has a monetary
policy; the Troika has.
The World Bank will redesign the Greek welfare system and a new
social safety net system. New appointees to run the Labor Ministry,
after approved by the Troika, will “rationalize the education
system” (i.e. teacher layoffs and wage cuts). The new, Troika vetted
Labor Minister will implement the proposals of Troika “independent
consultants” to limit “industrial actions” (i.e. strikes) and
collective bargaining and will, following consultants’
recommendations, institute new rules for collective dismissals (i.e.
mass layoffs). Pensions will be cut, retirement ages raised,
workers’ health care contributions increased, local governments made
more efficient (layoffs, wage cuts), and the entire legal system
overhauled.
The $50 billion Privatization of Greek Government Assets Fund will
remain in Greece. However, it will operate “under the supervision of
the relevant European institutions,” according to the MOU. The
Troika will decide what is to be privatized and sold at what (firesale)
price to which of its favored investors. In the meantime,
privatization sales in progress or identified will be accelerated.
The Case of Ukraine
In Ukraine’s case, only once U.S. and Euro bankers were installed as
Ministers of Finance and Economics last December 2014, were more
loans promised to Ukraine. The U.S. and E.U. put in another $4
billion in January, and the IMF quickly announced the new $40
billion deal in February. After the $40 billion, Ukraine’s debt rose
from $12 billion in 2007 to $100 billion in 2015. The new $100
billion debt will mean a massive increase in financial wealth
extraction in the form of interest payments on that $100 billion.
Another form of transfer will occur in the accelerating of
privatizations. No fewer than 342 former government enterprise
companies are slated for sale in 2015, including power plants,
mines, 13 ports, and even farms. The sales will likely occur at
firesale prices, benefiting U.S. and European “friends” of the new
US and European ministers. So too will the sale of Ukraine private
companies approved by the new Ministers. One of every five are
technically bankrupt and unable to refinance $10 billion in
corporate junk bond debt. Many will default, the best scooped up by
U.S. and EU shadow bankers and multinational corporations. What both
Greece and Ukraine represent is the development of new more direct
management of wealth extraction, and the transfer of that wealth in
the form of financial assets. In past government debt bailouts, the
IMF and other institutions set parameters for what the bailed out
country must do. But the country was left to carry out the plan. No
longer. It’s now direct management to ensure the colony does not
balk or delay on the transfer of financial assets enabled by ever
rising debt.
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