Greece is standing up to EU neocolonialism: Greeks will pay 131 billion euros to banks between 2009 and 2014, says IMF

The usurious conditions of the Greek bailout reveals Brussels’ colonial mindset – but Athens is showing citizens can resist

• Costas Douzinas and Petros Papaconstantinou
• guardian.co.uk,Monday 27 June 2011 07.00 BST

After months of attacks on the supposedly feckless Greeks, the western media, intellectuals such Amartya Sen and Jürgen Habermas and the United Nations have finally woken up to the fact that the catastrophic austerity imposed on Greece is unsustainable. It was about time. This is an unprecedented and morally odious type of collective punishment imposed on a majority of Greeks, who did not see a penny from the profligacy of their rulers and who live close to the poverty line.

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1. The bailout of Greece is not a gift or grant but a loan bearing high interest. Crucially, bailout funds are not used to pay civil servants’ salaries and pensions, but to pay off debt held by German and French banks. According to IMF estimates, Greece will pay €131bn in refinancing and interest payments between 2009 and 2014, far more than the initial bailout loan of €110bn. In a magician-like sleight of hand, German and French workers are forced to bail out their national banks, not directly as in the 2008-9 banking bailouts but through the mediation of Greece, which inevitably becomes the target of populist outbursts. The Greek government, on the other hand, was ordered to provoke an economic and social meltdown unimaginable in western Europe in peacetime in order to receive the loans.

2. This unprecedented punishment led to an increase in debt and to permanent economic depression. The European governments now propose to offer a second loan, if Greece accepts an even more odious set of measures and sells off the family silver. Acceptance of these measures has been made a precondition for the payment of the fifth instalment of the initial bailout.

This is blackmail worthy of a backstreet loan shark. The privatisation plan includes the sale of 17% of the public power corporation, the engineroom of growth, which will remove the state’s controlling interest. Under the new plan, foreign emissaries will be assigned to the main ministries and the company set up to privatise public wealth. The market value of this stake is just €400m, because of the stock exchange decline. But the corporation owns 15 power plants and the budget for a new plant about to be built is €1.3bn. This post-Soviet style privatisation will pass valuable public assets to private hands.

3. The loss of economic sovereignty is accompanied by unprecedented attacks on the political and legal integrity of the country. IMF and EU inspectors visit the country on a regular basis, examine the records and dictate policy. Under the new plan, foreign emissaries will be assigned to the main ministries and will run the companies that will privatise the public wealth. Government capitulation is not enough. The European authorities demand that all political parties should accept the new austerity measures before the next loan instalment is paid. Surreptitiously, a new type of colonialism is emerging, in which the Brussels elites treat the European south as undeserving poor or colonial subjects to be reformed and civilised.

Read whole article at: http://www.guardian.co.uk/commentisfree/2011/jun/27/greece-bailout-eu-neocolonialism