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Greece’s debt ‘unsustainable’ says IMF, warns of coming crisis, calls for debt relief

Confidential IMF report warns current bailout ‘unsustainable’, with Greece public debt spiralling out of control, and no amount of reform capable of fixing the situation.

Alexander Mercouris

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The Financial Times is reporting that a confidential IMF report is saying that Greece’s public debt is ‘unsustainable’ and is set to spiral to three times the size of Greece’s annual economic output, and that Greece’s economy cannot be expected to grow out of its debt problem.

Anyone genuinely familiar with the situation in Greece, and who is able to look objectively at the situation there, can see that this is so.  I recently wrote for The Duran my impressions of the state of the country after a short visit there in November.  I made the point that despite claims that the economy was growing, all the indications on the contrary were that the situation is actually deteriorating.

Here is how the Financial Times summarises the IMF report

Greece faces what is likely to be an “explosive” surge in its public debt levels that within decades will mean it will owe almost three times the country’s annual economic output unless given significant debt relief, the International Monetary Fund has warned in a confidential report.  The new report was prepared by IMF staff ahead of a February 6 board meeting to discuss the fund’s participation in an EU-led €86bn bailout of Greece and signals the continuing hard line the IMF is taking on debt relief for Athens. It offers a bleaker view of Greece’s economic dilemmas than an analysis prepared last year, warning that the debt load is “highly unsustainable” and would not improve even if it implemented further reforms recommended by the fund.

The origins of the Greek debt crisis unquestionably lie in the gross economic mismanagement of successive Greek governments stretching back to the Papandreou era of the 1980s, but growing to baroque proportions during the Karamanlis era from 2004 to 2009.  It is also obviously true that Greece was wrong to join the eurozone when it did, and that it was – to put it mildly – ‘economical with the truth’ in describing its economic situation to the European authorities in Brussels and Frankfurt.
Repeatedly saying this has however become something of an alibi for the European authorities, and for Angela Merkel’s government in particular, in explaining away their own responsibility for the economic catastrophe that has been wreaked on the country.
Not only did they prefer to believe in the rosy economic picture Greek governments were giving them – disregarding the warnings which I know for a fact they were repeatedly given in private both by their own officials and by some Greek officials, and also by numerous private individuals – but once the debt crisis in Greece rose to the surface in the aftermath of the world financial crisis of 2008, they refused to acknowledge the obvious reality that Greece was bankrupt, and acted instead as if Greece was facing nothing more than a short term crisis of liquidity, which could be fixed by further lending.
The result was that instead of Greece being left alone to restructure its debt in IMF brokered negotiations with its creditors – as it both could and should have done – it instead took on even more debt, with its existing debt however transformed from debt it owed private banks into debt it owed other European governments.
Since the debt is now owed to governments who are accountable for their lending to Greece to their electorates, it is politically speaking almost impossible for Greece to be forgiven it, a fact that became only too obvious during the negotiations staged by Tsipras’s hapless government over the course of 2015.
The Financial Times is making the point that as the IMF is now close to recognising that Greece’s debt is unsustainable it is reaching the point where its own rules prohibit it from participating in the current bailout
That assessment would, under the fund’s own rules, prohibit the IMF from taking part financially in the current bailout, something countries such as Germany have made a condition of their own support.  “Even with these ambitious polices in place, Greece cannot grow out of its debt problem,” IMF staff warned in the report, seen by the Financial Times and drafted as part of the fund’s annual review of member economies. “Greece requires substantial debt relief from its European partners to restore debt sustainability.”
The problem is that “agreeing the substantial debt relief from European partners to restore debt sustainability” is politically almost impossible in the light of the German, France and Dutch elections which are due this year.
Angela Merkel – the European politician most responsible for the present disastrous policy – would surely balk at presenting the German electorate with such an admission of her own failure, whilst in France Marine Le Pen – who has contested the sense of the Greek bailouts all along – would rightly say her stance has been vindicated, whilst in The Netherlands – where the anti-European movement led by Geert Wilders is currently leading in the polls – such a move would be if possible politically even more toxic.
Logically, if European governments cannot agree the debt relief the IMF says is needed, then the IMF should pull out of the current bailout, leaving Greece in default, at which point the bailout would finally unravel.
That would actually be an advance over the present ‘unsustainable’ position we have now.
Greece would presumably have to leave the euro, but that is anyway essential if Greece’s economy is to regain competitiveness.  Whilst the short term disruption – and the suffering it would cause – would no doubt be immense, ways exist to deal with it and over time Greece would finally have the space it needs for its economy to recover.
Unfortunately the consistent story of the Greek debt crisis is that instead of the necessary decisions being taken botched compromises are instead at the last moment cobbled together to safeguard the integrity of the euro project and the reputations of European policy makers – of Angela Merkel’s above all – who are in the end responsible for the disaster.  The result is that the crisis continues and just goes on getting worse.
The latest IMF memorandum looks like a bid to try to force the hands of European politicians before whatever window there is for debt relief closes because of the pending German and Dutch elections.
Unfortunately on past experience it is unlikely to work.  European politicians – too frightened of their electorates to do otherwise – will almost certainly resist giving Greece the amount of debt relief the IMF’s experts consider sufficient to make a real difference, whilst the IMF’s Board has consistently shown itself unwilling to call the Europeans’ bluff by pulling out of the bailout, even though that is what its own rules requires.
The most likely result therefore is that the present ‘unsustainable’ situation will continue – with the crisis again sugarcoated for a few more by some unsatisfactory compromise – until the final breakdown eventually occurs, by which time I seriously wonder how much of Greece will be left.

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Canada to Pay Heavy Price for Trudeau’s Groupie Role in US Banditry Against China

Trudeau would had to have known about the impending plot to snatch Huawei CFO Wanzhou and moreover that he personally signed off on it.

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Authored by Finian Cunningham via The Strategic Culture Foundation:


You do have to wonder about the political savvy of Canadian Prime Minister Justin Trudeau and his government. The furious fallout from China over the arrest of a senior telecoms executive is going to do severe damage to Canadian national interests.

Trudeau’s fawning over American demands is already rebounding very badly for Canada’s economy and its international image.

The Canadian arrest – on behalf of Washington – of Meng Wanzhou, chief financial officer of Chinese telecom giant Huawei, seems a blatant case of the Americans acting politically and vindictively. If the Americans are seen to be acting like bandits, then the Canadians are their flunkies.

Wanzhou was detained on December 1 by Canadian federal police as she was boarding a commercial airliner in Vancouver. She was reportedly handcuffed and led away in a humiliating manner which has shocked the Chinese government, media and public.

The business executive has since been released on a $7.4 million bail bond, pending further legal proceedings. She is effectively being kept under house arrest in Canada with electronic ankle tagging.

To add insult to injury, it is not even clear what Wanzhou is being prosecuted for. The US authorities have claimed that she is guilty of breaching American sanctions against Iran by conducting telecoms business with Tehran. It is presumed that the Canadians arrested Wanzhou at the request of the Americans. But so far a US extradition warrant has not been filed. That could take months. In the meantime, the Chinese businesswoman will be living under curfew, her freedom denied.

Canadian legal expert Christopher Black says there is no juridical case for Wanzhou’s detention. The issue of US sanctions on Iran is irrelevant and has no grounds in international law. It is simply the Americans applying their questionable national laws on a third party. Black contends that Canada has therefore no obligation whatsoever to impose those US laws regarding Iran in its territory, especially given that Ottawa and Beijing have their own separate bilateral diplomatic relations.

In any case, what the real issue is about is the Americans using legal mechanisms to intimidate and beat up commercial rivals. For months now, Washington has made it clear that it is targeting Chinese telecoms rivals as commercial competitors in a strategic sector. US claims about China using telecoms for “spying” and “infiltrating” American national security are bogus propaganda ruses to undermine these commercial rivals through foul means.

It also seems clear from US President Donald Trump’s unsubtle comments this week to Reuters, saying he would “personally intervene” in the Meng case “if it helped trade talks with China”, that the Huawei executive is being dangled like a bargaining chip. It was a tacit admission by Trump that the Americans really don’t have a legal case against her.

Canada’s foreign minister Chrystia Freeland bounced into damage limitation mode following Trump’s thuggish comments. She said that the case should not be “politicized” and that the legal proceedings should not be tampered with. How ironic is that?

The whole affair has been politicized from the very beginning. Meng’s arrest, or as Christopher Black calls it “hostage-taking”, is driven by Washington’s agenda of harassment against China for commercial reasons, under a legal pretext purportedly about Iranian sanctions.

When Trump revealed the cynical expediency of him “helping to free Wanzhou”, then the Canadians realized they were also being exposed for the flunkies that they are for American banditry. That’s why Freeland was obliged to quickly adopt the fastidious pretense of legal probity.

Canadian premier Justin Trudeau has claimed that he wasn’t aware of the American request for Wanzhou’s detention. Trudeau is being pseudo. For such a high-profile infringement against a senior Chinese business leader, Ottawa must have been fully briefed by the Americans. Christopher Black, the legal expert, believes that Trudeau would had to have known about the impending plot to snatch Wanzhou and moreover that he personally signed off on it.

What Trudeau and his government intended to get out of performing this sordid role for American thuggery is far from clear. Maybe after being verbally mauled by Trump as “weak and dishonest” at the G7 summit earlier this year, in June, Trudeau decided it was best to roll over and be a good little puppy for the Americans in their dirty deed against China.

But already it has since emerged that Canada is going to pay a very heavy price indeed for such dubious service to Washington. Beijing has warned that it will take retaliation against both Washington and Ottawa. And it is Ottawa that is more vulnerable to severe repercussions.

This week saw two Canadian citizens, one a former diplomat, detained in China on spying charges.

Canadian business analysts are also warning that Beijing can inflict harsh economic penalties on Ottawa. An incensed Chinese public have begun boycotting Canadian exports and sensitive Canadian investments in China are now at risk from being blocked by Beijing. A proposed free trade deal that was being negotiated between Ottawa and Beijing now looks dead in the water.

And if Trudeau’s government caves in to the excruciating economic pressure brought to bear by Beijing and then abides by China’s demand to immediately release Meng Wanzhou, Ottawa will look like a pathetic, gutless lackey to Washington. Canada’s reputation of being a liberal, independent state will be shredded. Even then the Chinese are unlikely to forget Trudeau’s treachery.

With comic irony, there’s a cringemaking personal dimension to this unseemly saga.

During the 197os when Trudeau’s mother Margaret was a thirty-something socialite heading for divorce from his father, then Prime Minister Pierre Trudeau, she was often in the gossip media for indiscretions at nightclubs. Rolling Stones guitarist Keith Richards claims in his autobiography that Margaret Trudeau was a groupie for the band, having flings with Mick Jagger and Ronnie Wood. Her racy escapades and louche lifestyle brought shame to many Canadians.

Poor Margaret Trudeau later wound up divorced, disgraced, financially broke and scraping a living from scribbling tell-all books.

Justin, her eldest son, is finding out that being a groupie for Washington’s banditry is also bringing disrepute for him and his country.

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US Commits To “Indefinite” Occupation Of Syria; Controls Region The Size Of Croatia

Raqqa is beginning to look more and more like Baghdad circa 2005.

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Via Zerohedge


“We don’t want the Americans. It’s occupation” — a Syrian resident in US-controlled Raqqa told Stars and Stripes military newspaper. This as the Washington Post noted this week that “U.S. troops will now stay in Syria indefinitely, controlling a third of the country and facing peril on many fronts.”

Like the “forever war” in Afghanistan, will we be having the same discussion over the indefinite occupation of Syria stretching two decades from now? A new unusually frank assessment in Stars and Stripes bluntly lays out the basic facts concerning the White House decision to “stay the course” until the war’s close:

That decision puts U.S. troops in overall control, perhaps indefinitely, of an area comprising nearly a third of Syria, a vast expanse of mostly desert terrain roughly the size of Louisiana.

The Pentagon does not say how many troops are there. Officially, they number 503, but earlier this year an official let slip that the true number may be closer to 4,000

A prior New Yorker piece described the US-occupied area east of the Euphrates as “an area about the size of Croatia.” With no Congressional vote, no public debate, and not even so much as an official presidential address to the nation, the United States is settling in for another endless occupation of sovereign foreign soil while relying on the now very familiar post-911 AUMF fig leaf of “legality”.

Like the American public and even some Pentagon officials of late have been pointing out for years regarding Afghanistan, do US forces on the ground even know what the mission is? The mission may be undefined and remain ambiguously to “counter Iran”, yet the dangers and potential for major loss in blood and treasure loom larger than ever.

According to Stars and Stripes the dangerous cross-section of powder keg conflicts and geopolitical players means “a new war” is on the horizon:

The new mission raises new questions, about the role they will play and whether their presence will risk becoming a magnet for regional conflict and insurgency.

The area is surrounded by powers hostile both to the U.S. presence and the aspirations of the Kurds, who are governing the majority-Arab area in pursuit of a leftist ideology formulated by an imprisoned Turkish Kurdish leader. Signs that the Islamic State is starting to regroup and rumblings of discontent within the Arab community point to the threat of an insurgency.

Without the presence of U.S. troops, these dangers would almost certainly ignite a new war right away, said Ilham Ahmed, a senior official with the Self-Administration of North and East Syria, as the self-styled government of the area is called.

“They have to stay. If they leave and there isn’t a solution for Syria, it will be catastrophic,” she said.

But staying also heralds risk, and already the challenges are starting to mount.
So a US-backed local politician says the US can’t leave or there will be war, while American defense officials simultaneously recognize they are occupying the very center of an impending insurgency from hell — all of which fits the textbook definition of quagmire perfectly.

The New Yorker: “The United States has built a dozen or more bases from Manbij to Al-Hasakah, including four airfields, and American-backed forces now control all of Syria east of the Euphrates, an area about the size of Croatia.”

But in September the White House announced a realignment of its official priorities in Syria, namely to act “as a bulwark against Iran’s expanding influence.” This means the continued potential and likelihood of war with Syria, Iran, and Russia in the region is ever present, per Stripes:

Syrian government troops and Iranian proxy fighters are to the south and west. They have threatened to take the area back by force, in pursuit of President Bashar Assad’s pledge to bring all of Syria under government control.

Already signs of an Iraq-style insurgency targeting US forces in eastern Syria are beginning to emerge.

In Raqqa, the largest Syrian city at the heart of US occupation and reconstruction efforts, the Stripes report finds the following:

The anger on the streets is palpable. Some residents are openly hostile to foreign visitors, which is rare in other towns and cities freed from Islamic State control in Syria and Iraq. Even those who support the presence of the U.S. military and the SDF say they are resentful that the United States and its partners in the anti-ISIS coalition that bombed the city aren’t helping to rebuild.

And many appear not to support their new rulers.

We don’t want the Americans. It’s occupation,” said one man, a tailor, who didn’t want to give his name because he feared the consequences of speaking his mind. “I don’t know why they had to use such a huge number of weapons and destroy the city. Yes, ISIS was here, but we paid the price. They have a responsibility.”

Recent reports out of the Pentagon suggests defense officials simply want to throw more money into US efforts in Syria, which are further focused on training and supplying the so-called Syrian Democratic Forces (or Kurdish/YPG-dominated SDF), which threatens confrontation with Turkey as its forces continue making preparations for a planned attack on Kurdish enclaves in Syria this week.

Meanwhile, Raqqa is beginning to look more and more like Baghdad circa 2005:

Everyone says the streets are not safe now. Recent months have seen an uptick in assassinations and kidnappings, mostly targeting members of the security forces or people who work with the local council. But some critics of the authorities have been gunned down, too, and at night there are abductions and robberies.

As America settles in for yet another endless and “indefinite” occupation of a Middle East country, perhaps all that remains is for the president to land on an aircraft carrier with “Mission Accomplished” banners flying overhead?

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The real reason Western media & CIA turned against Saudi MBS

The problem with MBS isn’t that he is a mass murdering war criminal, it is that he is too “independent” for the United States’ liking.

RT

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Via RT…


Forces are aligning against Saudi Arabia’s Crown Prince, lead by elements within the CIA and strong players in the mainstream media. But what is really behind this deterioration in relationship, and what are its implications?

Following the brutal murder of Washington Post columnist Jamal Khashoggi, western media and various entities, including the CIA, appear to have turned their back on Saudi Crown Prince Mohammad Bin Salman (MBS). In response to the scandal, the Guardian released a video which its celebutante, Owen Jones, captioned“Saudi Arabia is one of the biggest threats on Earth. Time to stop propping up its repulsive regime.”

The Guardian was not alone in its condemnation. “It’s high time to end Saudi impunity,” wrote Hana Al-Khamri in Al-Jazeera. “It’s time for Saudi Arabia to tell the truth on Jamal Khashoggi,” the Washington Post’s Editorial Board argued. Politico called it “the tragedy of Jamal Khashoggi.”

Even shadowy think-tanks like the Council on Foreign Relations (CFR) and the Atlantic Council released articles criticising Saudi Arabia in the wake of Khashoggi’s death.

A number of companies began backing away from Saudi money after the journalist’s death, including the world’s largest media companies such as the New York Times, the Economist’s editor-in-chief Zanny Minton Beddoes, Arianna Huffington, CNN, CNBC, the Financial Times, Bloomberg, Google Cloud CEO, just to name a few.

The CIA concluded that MBS personally ordered Khashoggi’s death, and was reportedly quite open in its provision of this assessment. Antonio Guterres, secretary-general of the UN, also took time out of his schedule to express concern over Saudi Arabia’s confirmation of the killing.

At the time of the scandal, former CIA director John Brennan went on MSNBC to state that the Khashoggi’s death would be the downfall of MBS. Furthermore, the US Senate just voted in favour of ending American involvement in Saudi Arabia’s war in Yemen (a somewhat symbolic victory, though this is a topic for another article), but nonetheless was a clear stab at MBS personally.

The only person who appeared to continue to uphold America’s unfaltering support for MBS, even after all the publicly made evidence against MBS, was the US president himself. So after years of bombarding Yemen, sponsoring terror groups across the Middle East, Asia, the Pacific and beyond, why is it only now that there has been mounting opposition to Saudi Arabia’s leadership? Let’s just bear in mind that western media had spent years investing in a heavy PR campaign to paint MBS as a “reformer.”

Former national security adviser under Barack Obama’s second term, Susan Rice, wrote an article in the New York Times, in which she called MBS a “partner we can’t depend on.” Rice concludes that MBS is “not and can no longer be viewed as a reliable partner of the United States and our allies.” But why is this? Is it because MBS is responsible for some of the most egregious human rights abuses inside his own kingdom as well as in Yemen? Is it because of MBS’ support for groups such as ISIS and al-Qaeda? No, according to Rice, we “should not rupture our important relationship with the kingdom, but we must make it clear it cannot be business as usual so long as Prince Mohammad continues to wield unlimited power.”

One will observe that the latter segment of Rice’s article almost mirrors former CIA director Brennan’s word on MSNBC word for word who stated that:

“I think ultimately this is going to come out. And it’s very important for us to maintain the relations with Saudi Arabia. And if it’s Mohammed bin Salman who’s the cancer here, well, we need to be able to find ways to eliminate the cancer and to move forward with this relationship that is critical to regional stability and our national interests.”

In reality, this is probably the issue that western media and government advisors have taken up with MBS. Aside from the fact he allegedly held a huge hand in the brutal murder of one of their own establishment journalists (Saudi Arabia reportedly tortured and killed another journalist not long after Khashoggi, but western media was eerily silent on this incident) MBS is not opposed for his reckless disregard for human rights. With insight into Rice’s mindset, we actually learn that if the US were to punish MBS, he would be likely to “behave more irresponsibly to demonstrate his independence and exact retribution against his erstwhile Western partners.”

You see, the problem with MBS isn’t that he is a mass murdering war criminal, it is that he is too “independent” for the United States’ liking.

Last week, Saudi Arabia and the other major oil producers met in Vienna at the year’s final big OPEC meeting of the year. As Foreign Policy notes, Saudi Arabia remains the largest oil producer inside OPEC but has to contend with the US and Russia who are “pumping oil at record levels.” Together, the three countries are the world’s biggest oil producers, meaning any coordinated decision made between these three nations can be somewhat monumental.

However, it appears that one of these three nations will end up drawing the short end of the stick as the other two begin forming a closer alliance. As Foreign Policy explains:

“But Saudi Arabia has bigger game in mind at Vienna than just stabilizing oil prices. Recognizing that it can’t shape the global oil market by itself anymore but rather needs the cooperation of Russia, Saudi Arabia is hoping to formalize an ad hoc agreement between OPEC and Moscow that began in 2016, a time when dirt-cheap oil also posed a threat to oil-dependent regimes. That informal agreement expires at the end of the year, but the Saudis would like to make Russia’s participation with the cartel more permanent.”

Russian officials have been signalling their intention to formalise this agreement for quite some time now. Given the hysteria in western media about any and all things Russian, it is not too much of a stretch to suggest that this is the kind of news that is not sitting too well with the powers-that-be.

Earlier this year, Russia and Saudi Arabia announced that it would “institutionalize” the two-year-old bilateral agreement to coordinate oil production targets in order to maintain an edge on the global market.

While US president Trump has been supportive and incredibly defensive of MBS during this “crisis”, the truth is that the US only has itself to blame. It was not all too long ago that Trump announced that he had told Saudi King Salman that his kingdom would not last two weeks without US support.

Saudi Arabia is learning for themselves quite quickly that, ultimately, it may pay not to have all its eggs in one geopolitical superpower basket.

Saudi Arabia has been increasingly interested in Moscow since King Salman made a historic visit to Moscow in October 2017. While Trump has openly bragged about his record-breaking arms deals with the Saudis, the blunt truth is that the $110 billion arms agreements were reportedly only ever letters of interest or intent, but not actual contracts. As such, the US-Saudi arms deal is still yet to be locked in, all the while Saudi Arabia is negotiating with Russia for its S-400 air defence system. This is, as the Washington Post notes, despite repeated US requests to Saudi Arabia for it disavow its interest in Russia’s arms.

The economic threat that an “independent” Saudi Arabia under MBS’ leadership poses to Washington runs deeper than meets the eye and may indeed have a domino effect. According to CNN, Russia and Saudi Arabia “are engaged in an intense battle over who will be the top supplier to China, a major energy importer with an insatiable appetite for crude.”

The unveiling of China’s petro-yuan poses a major headache for Washington and its control over Saudi Arabia as well.According to Carl Weinberg, chief economist and managing director at High-Frequency Economics, China will “compel”Saudi Arabia to trade oil in Chinese yuan instead of US dollars. One must bear in mind that China has now surpassed the US as the “biggest oil importer on the planet,” these direct attacks on the US dollar will have huge implications for its current world reserve status.

If Saudi Arabia jumps on board China’s petro-yuan, the rest of OPEC will eventually follow, and the US might be left with no choice but to declare all of these countries in need of some vital freedom and democracy.

Therefore, ousting MBS and replacing him with a Crown Prince who doesn’t stray too far from the tree that is US imperialism may put a dent in pending relationships with Saudi Arabia and Washington’s adversaries, Russia and China.

Once we get over the certainty that the US media and the CIA are not against MBS for his long-list of human rights abuses, the question then becomes: why – why now, and in this manner, have they decided to put the spotlight on MBS and expose him exactly for what he is.

Clearly, the driving force behind this media outrage is a bit more complex than first meets the eye.

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