So does anybody here know what the great disagreement between the EU and Greece is all about? What are these cuts that Tsipras is so valiantly resisting?
One cut that Tsipras has refused even to discuss is military spending. Europe is asking for a cut of 200,000 extra in military spending but Tsipras won’t even discuss it. Because growing their military is absolutely crucial for the impoverished Greeks right now. As you probably know, Greece has the third largest military expenditure rate in the NATO after the US and the UK relative to the GNP. And that’s just something that Tsipras is not going to sacrifice.
I wonder what military conflict the Greeks are preparing for with such urgency.
No, of course, I don’t wonder. What Tsipras is doing is absolutely transparent.
Clarissa's Blog 
Do you mean lead a putsch?
LikeLike
Turkey is the reason that Greece needs an adequate military force.
Greece and Turkey are nominally NATO allies, but the two countries have long been at odds over the division of Cyprus, as well as the ongoing dispute over the sovereignty of the Aegean Sea, which is between the two countries.
Turkey isn’t going to invade Greece, of course, but Turkey’s air force and navy have a long-standing habit of hassling Greece by invading its airspace and territorial waters, much like Putin’s military is poking around U.S. coasts now. Every time Turkish airplanes or ships enter Greek territory, Greece has to scramble jets and warships, just like the U.S. does with Russian intrusions.
This is NOT a defense of Tsipras — in my opinion Greece should be booted out of the Eurozone — but it’s the reason for Greece’s large military budget.
LikeLike
Yes, absolutely, it’s Cyprus. I’m hearing rumors that someone someone might have promised Cyprus to Tsipras in Tsipras ‘ s recent visit to somewhere somewhere. 🙂
LikeLike
Actually, a military putsch in BOTH Greece and Turkey would be beneficial to the citizens of those countries, and to the West in general, since both countries have incompetent civilian leadership. Alas, won’t happen.
LikeLike
Most obviously, the military is a jobs program for Greeks.
I can’t help but think the large military budget has something to do with Golden Dawn. Golden Dawn isn’t the ruling party, but Tspiras needed it in order to form a government.
Also, Ian Welsh, who you despise as Putinoid, has been predicting that Greece will end up allying with Putin for months.
LikeLike
It’s more like a corruption program for Greece. Greece has been making enormous purchases of military equipment that have resulted in massive corruption scandals. And that’s what Tsipras is refusing to cut.
LikeLike
And unlike Welsh, I didn’t predict this. I always want to believe the best. The people of Greece deserve better than this, so I was hoping that Syriza had something other than the tired old corrupt populism to offer.
LikeLike
That begs the question of what financial help Putin could provide to Greece. He’s not a solution for them at this time.
LikeLike
He can’t provide the kind of financial help that Greece needs to climb out of the hole. It’s not help for Greece that Tsipras is looking for with Putin. It’s help for Tsipras.
LikeLike
Clarissa, I get that you’re not a fan of Tsipras. I don’t know anything about military spending in that region, but I believe what you say about Greek military spending.
However, Greek military spending is irrelevant to the larger economic situation. The economic crisis is real. Further cutting of government spending would only worsen the failure of the Greek economy.
The big picture is that the Greek public, rightly or wrongly, is sick and tired of austerity imposed on Greece by Germany and the rest of Europe. The Greek public has overwhelmingly requested debt forgiveness. Debt forgiveness should not be rejected for emotional reasons, regardless of corruption in Greece and the perfidy of Greek taxpayers.
Debt forgiveness is not a new concept. It has been used many times before to stabilize international economics and trade. As a prominent French economist has recently pointed out, Germany was the beneficiary of probably the largest debt forgiveness project in history, after WWII.
Debt forgiveness is often the high road in international relations. Europe would be cutting off its nose to spite its face if it demands relentless collection of impossible debts. Refusal of debt forgiveness to Germany after World War I was a factor leading to WWII. America’s and Europe’s forgiveness of German debt and infusion of capital after WWII led to a period of relative stability, in Western Europe, at least.
Tsipras, whatever his faults, is the democratically elected leader of Greece. The Greek population has clearly endorsed their leader’s request for debt forgiveness. I hope Europe makes its decision based on what is best for the future of Europe and also the people of Greece, and not on the personalities of European leaders.
LikeLike
Debt forgiveness is problematic because there are so many countries in the EU that are struggling. There is no way that Greek debt can be forgiven but not the Spanish, the Portuguese, etc. And then there are the EU countries that see Spain and Portugal as drowning in riches because they are so much poorer – how is this explained to them? The only result of debt forgiveness to Greece will be immense resentment of other EU countries and the eventual collapse of the union.
And all for what? What is the ultimate goal of putting the EU at such a risk? To allow Greece to buy more weapons? Is that really worth it?
LikeLike
Agreed. Debt forgiveness is problematic. But it is the problem that should be focused on now. It is not wise to use debt as retribution for past transgressions. America and Europe would have been justified in punishing Germany after WWII. In retrospect debt forgiveness was more productive then exacting a pound of flesh. The difficult question of debt forgiveness in Europe needs to be addressed. I can’t say what the correct answer is. The decision needs to be based on the facts and on rational economic analysis. Revenge for past sins is irrelevant.
LikeLike
What makes you think these are past sins, though? Every day there’s a fresh corruption scandal in Spain, Greece, etc.
As for the US helping rebuild Germany after WWII, what are you willing to sacrifice here in the US to enable the another “urbanization official” in Spain to make another million euro on building yet another opera house in the middle of nowhere? Because that’s where the preceding loans to Spain went and there’s zero indication that future loans or gifts or alms will not go to the same place.
LikeLike
Great, great article
http://www.telegraph.co.uk/finance/economics/11724924/Europe-is-blowing-itself-apart-over-Greece-and-nobody-can-stop-it.html
The premise is that Tsipras was hoping for a ‘yes’ vote so he could bow to the will of the people, check out and let the next Greek government oversee the further collapse of the country.
Some details:
“The Europeans intervened behind the scenes to suppress a report by the International Monetary Fund validating Greece’s claim that its debt is “unsustainable”. The IMF concluded that the country not only needs a 30pc haircut to restore viability, but also €52bn of fresh money to claw its way out of crisis”
or
“They thought they were on the cusp of a deal, bad though it was. Mr Tsipras had already made the decision to acquiesce to austerity demands…
Instead they were confronted with a text from the creditors that upped the ante, demanding a rise in VAT on tourist hotels from 7pc (de facto) to 23pc at a single stroke.
Creditors insisted on further pension cuts of 1pc of GDP by next year and a phase out of welfare assistance (EKAS) for poorer pensioners, even though pensions have already been cut by 44pc.
They insisted on fiscal tightening equal to 2pc of GDP in an economy reeling from six years of depression and devastating hysteresis”
LikeLike
Tsipras would have left? Never. This guy will have to be dragged out of the office kicking and screaming if one day the Greeks want to get rid of him.
Plus Putin wouldn’t have let him.
LikeLike
Very good comment at the Telegraph article:
“Put simply, any currency union has to have a mechanism for funding the poorer areas. In the UK and the US that is done by having on-going subsidies, which are essentially cash transfers. In the UK we shift extra money to Scotland, and in the US it’s the Southern states who are the beneficiaries.
Where the EUZ gets it wrong, is insisting that the cash is no more than a loan, and hence expects interest and capital repayment. This means that the poorer area has to somehow become as, if not more, productive than the richer areas. In a perfect world that might be possible, but it seems unlikely. In an imperfect one (called reality), all that happens is the debt stacks up higher and higher until it’s an
unbearable burden – which is where Greece is now. If you think about it, that is the ultimate fate of every member of the EUZ bar one – Germany.”
LikeLike
Let’s not forget that “poorer” Spain and Greece were borrowing like crazy to enrich the enormous corrupt bureaucracy. Even the best, most reasonable system in the world would not be able to absorb such egregious bad faith on the part of several players.
It’s easy to blame the system but let’s remember that these two countries were grievously mismanaging themselves throughout the 20th century. If the EU never existed, they would have been much worse off right now.
LikeLike
These are just reasons that the Euro was one of the most collosol bad ideas in post WWII Europe.
Nothing Spain or Greece did was remotely surprising. It was all completely to be expected and the fact that the EU and lenders didn’t realize this makes them guilty of gross negligence (or great evil in a weird plan to bankrupt the southern countries).
It’s impossible to have currency union between stronger and weaker regions without direct financial aid to the weaker regions (disguised however is needed to soothe bruised pride) otherwise the result is going to be… what’s going on right now.
LikeLike