Tag Archives: capital controls

SYRIZA is trying to limit popular discontent against its capitulation to EU and relaxes capital controls in banking

SYRIZA is trying to limit popular discontent against its capitulation to EU and relaxes capital controls in banking

 

Stavros Mavroudeas

 

diagram

On Sunday (19-7-2015) the SYRIZA-ANEL government announced that the ‘banking holiday’ imposed 21 days ago will be lifted and banks will re-open. Also, there will be a relaxation of the stringent capital controls imposed (see http://www.presstv.ir/Detail/2015/07/19/420892/Greece-banks-shutdown-debt-crisis).

This is an economic and political damage limitation move.

First, capital controls were in fact imposed on Greece by the ECB as it curtailed its provision of liquidity to Greek banks. ECB did so, in close co-operation with the EU, in order to coerce SYRIZA to accept the troika (EU-ECB-IMF) austerity program and implement it unconditionally.

Second, capital controls caused serious economic and political problems. The already gravely wounded by the troika austerity program Greek economy took a severe hit because of the additional problems in financing its activities. It is estimated that ECB’s curtailing of liquidity cost more than 3bn euros. In political terms the climax from a limited liquidity to fully blown capital controls signified a blatant imperialist intervention by the EU in the affairs of Greece. The ECB, as the long arm of the troika, obliged the foolish and wavering SYRIZA government to impose the unpopular capital controls the very week before the crucial referendum of the 5th of July. With this move it tried to blackmail the Greek people and coerce them to vote for YES (that is for capitulating to the insolent demands of the EU). However, this blackmail backfired as the mass of working people and lower middle strata – that constitute the vast majority of the Greek population – voted for NO. However, the very next day of this resounding referendum result, SYRIZA betrayed it, realigned itself with the pro-EU and pro-business opposition parties and proceeded to agree to a third 3-year troika austerity program (https://stavrosmavroudeas.wordpress.com/2015/07/16/2856/). This causes a growing rift between SYRIZA (who is becoming another EU-subservient austerity government) and the vast popular majority.

Third, in order to ameliorate these problems, SYRIZA – working in tandem this time with the EU – relaxes capital controls. As it faces popular discontent it tries, first, to realign itself with the business interests hit by the restriction of finance and, second, to placate the common people whose everyday lives have been disrupted by the freezing of their mediocre deposits.

The outcome of this damage limitation move is dubious. With the 3rd austerity program the Greek economy is led into further recession and the working people and the middle strata will pay the costs. With or without capital controls popular support for SYRIZA is withering away.

 

* Stavros Mavroudeas is a Professor of Political Economy in the Economics Department of the University of Macedonia.

e-mail: smavro@uom.edu.gr

web: https://stavrosmavroudeas.wordpress.com

Published in COUNTERPUNCH

http://www.counterpunch.org/2015/07/20/syriza-tries-to-limit-popular-discontent-against-its-capitulation-to-eu-and-relaxes-capital-controls-in-banking/

 

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An intervention in today’s (19-7-2015) TV Press site about the economic and political consequences of the capital controls and SYRIZA’s betrayal of the popular will

Pensioners wait for the opening of the National Bank of Greece in central Athens, July 16, 2015. (© AP) Greeks face cash withdrawal limits.

Pensioners wait for the opening of the National Bank of Greece in central Athens, July 16, 2015. (© AP) Greeks face cash withdrawal limits.

Greek banks are scheduled to reopen on Monday following a three-week shutdown as the country struggles with a debt and finance crisis.

The Greek government, in a decree issued on Saturday, kept the daily cash withdrawal limit at 60 euros (65 dollars) but added a weekly limit, meaning that a depositor who does not withdraw cash on a certain day can take out 120 euros (130 dollars) the next day, and so on, up to 420 euros (455 dollars) a week.

Moreover, bank customers will still not be able to cash checks, and only have to deposit them into their accounts. There would also be a block on capital transfers abroad with their credit or cash cards, as well as restrictions on opening new accounts or activating dormant ones.

Greece decided to close banks on June 29 to prevent a bank run or cash transfers abroad.

The forced three-week closure has reportedly cost the country’s embattled economy almost 3.0 billion euros (3.3 billion dollars).

Greek President Prokopis Pavlopoulos (L) administers the secular oath to the new members of the government during a swearing-in ceremony at the Presidential Palace in Athens, Greece, July 18, 2015. (© AP)

 

Greek Prime Minister Alexis Tsipras earlier reshuffled his cabinet to remove those members who were opposed to a new loan approved for the country.

Fresh-faced government-friendly cabinet members were sworn in on Saturday.

Over 30 lawmakers out of the 149 ones from the ruling Syriza Party disapproved austerity measures demanded by creditors in a recent vote in the parliament.

Greece’s former finance minister, Yanis Varoufakis, who resigned amid mounting pressure on him by the government over his disapproval of the austerity measures, has cast doubt on the government’s ability to employ the unpopular fiscal reforms.

A smashed ATM machine is seen next to the entrance of a bank office in central Athens, Greece, on July 16, 2015 following clashes during an anti-austerity protest the night before. (© AFP)

 

In an exclusive interview with Press TV on Sunday, Stavros Mavroudeas, a professor of political economy at the University of Macedonia in Greece, said, “Capital controls on Greece have created serious economic and political problems. Economic losses are estimated at more than 3 billion euros for the Greek economy.”

Mavroudeas added, “The political problems are even more severe. The EU imposed capital controls on Greek banking sector in a blatant imperialist intervention… It obliged Greece to adopt capital controls in order to quest the Greek electorate to vote for ‘Yes’ in the last referendum. That is to vote for submitting fro capitulating to the demands of the EU.”

“The political blackmail backfired as the vast majority of the people voted for ‘No’ in the referendum. However, immediately afterwards, Syriza reneged on the referendum, and accepted a third troika austerity program,” he pointed out.

On Friday, the European Union (EU) formally approved a short-term loan of 7.16 billion euros (7.77 billion US dollars) to debt-wracked Greece as Athens and its creditors are working to reach an agreement on a new bailout package.

Greece received two bailouts worth a total of 240 billion euros (272 billion dollars) in 2010 and 2012 from its troika of international lenders – the European Commission, the International Monetary Fund (IMF) and the European Central Bank – following the 2009 economic crisis.

A debate in The Debate of Press TV on the Greek crisis, 17-6-2015

The Iranian international news service Press TV in its Debate focused on the Greek crisis. I was ivited to participate in it together with L.Padolski from Washington.

This is the video of the event:

 

A small lapsus on my behalf: at some point I erroneously said that the Greek economy has already lost 46% of its GDP (instead of 26% that is the correct number). It was an unintented verbal error.