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European Union is fully to blame for a possible Grexit…opting for punishment instead of compromise

The European Union’s failure over Greece is in full swing. If the Greeks vote no, a Greek exit is possible and the European Union is fully to blame for its choice to inflict exit as punishment.

Alex Christoforou

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Post by Clive Crook, originally appeared on Bloombergview.

In my more than 30 years writing about politics and economics, I have never before witnessed such an episode of sustained, self-righteous, ruinous and dissembling incompetence — and I’m not talking about Alexis Tsipras and Syriza. As the damage mounts, the effort to rewrite the history of the European Union’s abject failure over Greece is already underway. Pending a fuller postmortem, a little clarity on the immediate issues is in order.

On Monday, European Commission President Jean-Claude Juncker said at a news conference that he’d been betrayed by the Greek government.

The creditor institutions, he said, had shown flexibility and sought compromise. Their most recent offer involved no wage cuts, he emphasized, and no pension cuts; it was a package that created “more social fairness.” Tsipras had misled Greeks about what the creditors were asking. The talks were getting somewhere. Agreement on this package could have been reached “easily” if Tsipras hadn’t collapsed the process early Saturday by calling a referendum.

What an outrageous passel of distortion. Since these talks began five months ago, both sides have budged, but Tsipras has given vastly more ground than the creditors. In particular, he was ready to accede to more fiscal austerity — a huge climbdown on his part. True, the last offer requires a slightly milder profile of primary budget surpluses than the creditors initially demanded; nonetheless, it still calls for severely (and irrationally) tight fiscal policy.

In contrast, the creditors have refused to climb down on the question of including debt relief in the current talks, absurdly insisting that this is an issue for later. On Tuesday, Tsipras made his most desperate attempt yet to bring the issue forward.

Far from expressing any desire to compromise, dominant voices among the creditors — notably German Finance Minister Wolfgang Schaeuble, who often seemed to be calling the shots — have maintained throughout that there is nothing to discuss. The program already in place had to be completed, and that was that.

Yes, the program had failed. No, it wouldn’t achieve debt sustainability. Absolutely, it was pointlessly grinding down Greek living standards even further. What did that have to do with it?

Juncker says the last offer made no demand for wage cuts. Really? The offer says the “wage grid” should be modernized, including “decompressing the [public sector] wage distribution.” On the face of it, decompressing involves cuts. If the creditors were calling for public-sector wages to be decompressed upward perhaps they should have made this clear. Regardless, the increases in value-added taxes demanded by the creditors mean lower real wages, public and private alike. As for no pension cuts, the creditors called for phasing out new early-retirement penalties and the so-called social solidarity payment for the poorest pensioners. Those are cuts.

The creditors called for a lot else, too. Remember that the Greek economy is on its knees. Living standards have collapsed and the unemployment rate is 25 percent. Now read the offer document, and see if you think the advance in “social fairness” that Juncker stressed at his news conference shines through.

But I haven’t mentioned the biggest distortion of all. Noticing for the first time that Greece has EU citizens within its borders, Juncker addressed them directly on the subject of the July 5 referendum. Greeks will be asked whether they accept the offer presented by the creditors — an offer, by the way, that the creditors say no longer stands. “No [to the offer that no longer exists] would mean that Greece is saying no to Europe,” Juncker explained. President Francois Hollande of France clarified: The vote would determine “whether the Greeks want to stay in the euro zone.”

Nonsense. There’s no doubt that Greeks want to stay in the euro system — though I find it increasingly difficult to see why. If Greece leaves the system, it won’t be because Greeks decide to leave; it will be because Europe decides to kick them out.

This isn’t just semantics. There’s no reason, in law or logic, why a Greek default necessitates an exit from the euro. The European Central Bank pulls this trigger by choosing — choosing, please note — to withhold its services as lender of last resort to the Greek banking system. That is what it did this week. That is what shut the banks and, in short order, will force the Greek authorities to start issuing a parallel currency in the form of IOUs.

A truly independent ECB, willing to do whatever it takes to defend the euro system, could have announced that it would keep supplying Greek banks with liquidity. If the Greek banks are deemed in due course to be insolvent (which hasn’t happened yet), that doesn’t have to trigger an exit, either. Europe has the wherewithal and a bank-rescue mechanism that would allow the banks to be taken over and recapitalized. These options are foreclosed because the supposedly apolitical ECB has let Europe’s finance ministers use it as a hammer to extract fiscal concessions from Greece.

Nobody ever imagined that a government default in Europe would dictate ejection from the euro zone. The very possibility would have been correctly recognized as a fatal defect in the design of the system.

If the Greeks vote no, a Greek exit is a possible and even likely consequence. But if it happens, the reason won’t be that Greece chose to go. The reason will be that the European Union and its politicized central bank chose to inflict exit as punishment.

References:

http://www.bloombergview.com/articles/2015-07-01/europe-wants-to-punish-greece-with-exit

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Peace on Korean Peninsula within reach, if only Trump can remove Pompeo & Bolton (Video)

The Duran Quick Take: Episode 152.

Alex Christoforou

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RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou discuss the results of the Putin-Kim summit in Vladivostok, Russia, aimed at boosting bilateral ties between the two neighboring countries, as well as working to contribute to a final peace settlement on the Korean peninsula.

Putin’s meeting with Kim may prove to be a pivotal diplomatic moment, as North Korea continues to work towards normalizing ties with the U.S. amidst ongoing denuclearization talks with the Trump White House.

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Via the BBC…

Russian President Vladimir Putin has said North Korean leader Kim Jong-un needs international security guarantees if he is to end his nuclear programme.

Such guarantees would need to be offered within a multinational framework, he added, following talks near Vladivostok in Russia’s far east.

Mr Kim praised the summit as a “very meaningful one-on-one exchange”.

Mr Putin said North Korea’s leader was “fairly open” and had “talked freely on all issues that were on the agenda”.

The meeting followed the breakdown of talks between the US and North Korea in February, when Mr Kim met US President Donald Trump in the Vietnamese capital Hanoi.

Those talks reportedly stalled over North Korea’s demand for full economic sanctions relief in return for some denuclearisation commitments – a deal the US was not willing to make.

Speaking after the talks on Thursday, Mr Putin said he wanted to see full denuclearisation on the Korean peninsula.

But he said this could only be achieved through respect for international law.

“We need to restore the power of international law, to return to a state where international law, not the law of the strongest, determines the situation in the world,” he said.

Mr Kim greeted Russian officials warmly when he arrived in Russia on Wednesday.

The North Korean leader was entertained by a brass band in Vladivostok before he got inside a car flanked by bodyguards, who – in now familiar scenes – jogged alongside the vehicle as it departed.

What do we know about the summit?

According to the Russian presidential spokesman, Dmitry Peskov, the Kremlin believes the six-party talks on North Korea, which are currently stalled, are the only efficient way of addressing the issue of nuclear weapons on the peninsula.

Those talks, which began in 2003, involve the two Koreas as well as China, Japan, Russia and the US.

“There are no other efficient international mechanisms at the moment,” Mr Peskov told reporters on Wednesday.

“But, on the other hand, efforts are being made by other countries. Here all efforts merit support as long as they really aim at de-nuclearisation and resolving the problem of the two Koreas.”

What do both sides want?

This visit is being widely viewed as an opportunity for North Korea to show it has powerful allies following the breakdown of the talks with the US in February.

The country has blamed US Secretary of State Mike Pompeo for the collapse of the Hanoi summit. Earlier this month North Korea demanded that Mr Pompeo be removed from nuclear talks, accusing him of “talking nonsense” and asking for someone “more careful” to replace him.

The summit is also an opportunity for Pyongyang to show that its economic future does not depend solely on the US. Mr Kim may try to put pressure on Moscow to ease sanctions.

Analysts say the summit is an opportunity for Russia to show that it is an important player on the Korean peninsula.

President Putin has been eager to meet the North Korean leader for quite some time. Yet amid the two Trump-Kim summits, the Kremlin has been somewhat sidelined.

Russia, like the US and China, is uncomfortable with North Korea being a nuclear state.

How close are Russia and North Korea?

During the Cold War, the Soviet Union (of which Russia is the main successor state) maintained close military and trade links with its communist ally, North Korea, for ideological and strategic reasons.

After the Soviet Union collapsed in 1991, trade links with post-communist Russia shrank and North Korea leaned towards China as its main ally.

Under President Putin, Russia recovered economically and in 2014 he wrote off most of North Korea’s Soviet-era debt in a major goodwill gesture.

While it is arguable how much leverage Russia has with the North today, the communist state still regards it as one of the least hostile foreign powers.

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Putin meets Kim for the first time (Video)

The Duran Quick Take: Episode 151.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris take a look at the historic meeting between Russian President Vladimir Putin and North Korean leader Kim Jong Un in the city of Vladivostok in the Russian Far East.

The meeting marks the first ever summit between the two leaders.

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Via RT…

Leaders of Russia and North Korea sat down for a historic summit in Vladivostok, expressing hope it will revive the peace process in the Korean Peninsula and talks on normalizing relations with the US.

The summit on Russky Island, just off Vladivostok, started a little late because President Vladimir Putin’s flight was delayed. North Korean leader Kim Jong-un had made the trip by train, arriving on Wednesday.

In brief public remarks before the talks, the two leaders expressed hope the summit will help move forward the reconciliation process in the Korean Peninsula. Putin welcomed Kim’s contributions to “normalizing relations” with the US and opening a dialogue with South Korea.

Kim said he hoped the Vladivostok summit would be a “milestone” in the talks about denuclearizing the Korean Peninsula, but also build upon “traditionally friendly ties” between Russia and North Korea.

The North Korean leader also made a point of thanking Putin for flying all the way to Vladivostok for the meeting. The Far East Russian city is only 129 kilometers from the border with North Korea.

The historic summit takes place less than two months after Kim’s second summit with US President Donald Trump in Hanoi fell apart without a breakthrough on denuclearization. The US rejected North Korea’s request for partial sanctions relief in return for moves to dismantle nuclear and missile programs; Washington insists on full disarmament before any sanctions are removed.

Denuclearization of the Korean Peninsula is the main subject of the Kim-Putin summit, but there will also be talks about bilateral relations, trade, and humanitarian aid. The first one-on-one meeting is scheduled to last about an hour, followed by further consultations involving other government officials.

Following the summit, Putin is scheduled to visit China.

 

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Kim And Putin: Changing The State Of The Board In Korea

The future of Korea could be decided by these two men today.

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Authored by Tom Luongo:


Today is a big day for Korea. The first face-to-face summit of Russian President Vladimir Putin and North Korean Leader Kim Jong-un takes place.

At the same time the 2nd annual Belt and Road Forum kicks off in Beijing.

This meeting between Putin and Kim has been in the works for a while but rumors of it only surfaced last week. But don’t let the idea that this was put together at the last minute fool you.

It wasn’t.

The future of Korea could be decided by these two men today.

I know that sounds bold. But hear me out.

And while no one seems to think this meeting is important or that anything of substance will come from it I do. It is exactly the kind of surprise that Putin loves to spring on the world without notice and by doing so change the board state of geopolitics.

  • Russia’s entrance into Syria in 2015, two days after Putin’s historic speech at the U.N. General Assembly
  • 2018’s State of the Union address where he announced hypersonic missiles, embarrassing the U.S. Militiary-Industrial Complex which accelerated the Bolton Doctrine of subjugating the world
  • Flying 2 TU-160 nuclear-armed bombers to Venezuela, creating panic in D.C. leading to the ham-fisted regime change operations there.
  • Nationalization of Yukos.
  • The operation to secure Crimea from U.S. invasion by marines aboard the U.S.S Donald Cook during the Ukrainian uprising against Viktor Yanukovich.

Both Putin and Chinese Premier Xi Jinping are angry at the breakdown of the talks in Hanoi back in February. It was clear that everyone expected that meeting to be a rubber stamp on a deal already agreed to by all parties involved.

In fact the two meetings between Kim and Trump were only possible because Trump convinced them of his sincerity to resolve the ‘denuclearization’ of North Korea which would clear a path to rapid reunification.

It’s why they went along with the U.S.’s increased sanctions on North Korea as administered through the U.N. in 2017.

That John Bolton and Mike Pompeo destroyed those talks and Trump was unwilling or unable (who cares at this point, frankly, useless piece of crap that he is) to stop them embarrassed and betrayed them.

They are now done with Trump.

He’ll get nothing from either of them or Kim until Trump can prove he’s in charge of his administration, which he, clearly, is not.

And they will be moving forward with their own agenda for security and Asian economic integration. So I don’t think the timing of this meeting with that of the Belt and Road Forum is an accident.

And that means moving forward on solving the Korea problem without Trump.

It is clear from the rhetoric of Putin’s top diplomat, the irreplaceable Sergei Lavrov, that Russia’s patience is over. They are no longer interested in what Trump wants and they will now treat the U.S. as a threat, having upped their military stance towards the U.S. to that of “Threat.”

If Bolton wants anything from Russia at this point he best be prepared to start a war or piss off.

This is also why Russia took the gloves off with Ukraine in the run up to the Presidential elections, cutting off energy and machinery exports with Ukraine.

To put paid Putin’s growing impatience with U.S. policies, he just issued the order to allow residents of Lugansk and Donetsk People’s Republics to apply for Russian passports.

This will send Bolton into apoplexy. Angela Merkel of Germany will be none too pleased either. Putin is now playing hardball after years of unfailing politeness.

It’s also why Lavrov finalized arms and port deals all over the Middle East in recent weeks, including those with Lebanon, Egypt, Turkey and India.

Bolton, Pompeo and Pence are ideologues. Trump is a typical Baby Boomer, who lives in a bubble of his own design and believes in an America that never existed.

None of them truly understand the fires they are stoking and simply believe in the Manifest Destiny of the U.S. to rule the world over a dim and barbaric world.

Putin, Xi, Rouhani in Iran and Kim in North Korea are pragmatic men. They understand the realities they live in. This is why I see Putin willing tomorrow to sit down with Kim and flaunt the U.N. sanctions and begin the investment process into North Korea that should have begun last year.

Putin would not be making these moves if he didn’t feel that Bolton was all bark and no bite when it came to actual war with Russia. He also knows that Germany needs him more than he needs Germany so despite the feet-dragging and rhetoric Nordstream 2 will go forward.

Trade is expanding between them despite the continued sanctions.

Putin may be willing to cut a deal with President-elect Zelensky on gas transit later in the year but only if the shelling of the LPR and DPR stops and he guarantees no more incidents in the Sea of Azov. This would also mollify Merkel a bit and make it easier for her politically to get Nordstream 2 over the finish line.

There are moments in history when people go too far. Bolton and Pompeo went too far in Hanoi. He will pay the price now. Putin and Kim will likely agree to something in Vladivostok that no one is expecting and won’t look like much at first.

But the reality is this summit itself marks a turning point in this story that will end with the U.S. being, in Trump’s transactional parlance, a “price taker” since it has so thoroughly failed at being a “price maker.”

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