For what little they might be worth here are a few thoughts about Greece.
My great concern is not what happens if Syriza stick to their guns but what happens if they don’t. If Syriza backs down to Germany and fails to deliver what so many Greek people voted for, I fear people will, in anger and frustration, swing violently from left to right, from Syriza to Golden Dawn.
Many who voted for Syriza did not do so with any great ideological commitment. So I don’t think they would have any great ideological problem abandoning them. For those who have strong ideological beliefs such a switch might seem unthinkable. But for many voters – in every country not just Greece – especially when they are angry and desperate it is about who will deliver. If the left are seen to fail, people will turn to another believable voice who promises action and salvation. In the UK we see this, where UKIP – a party led by ex-Tories (right wing) and which blames most of our ills on immigrants and meddling European bureaucrats – is attracting angry ex-labour voters.
So my concern is a violent swing to the right in Greece. The question is what would happen then? Of course the answer depends on how right wing.
I see several possible scenarios, none of them happy.
Ask yourself if our current leaders, in Europe and America, would really be that upset by a swing to the right? I think they wouldn’t be unhappy at all. Think of how happy our governments are to support the openly ultra-nationalist and neo-fascist government in Ukraine. In Greece I think one of two things would happen. Either the right wing backlash would be tolerated, even if it was publicly held at arm’s length, simply because it would be seen as far better than radical left, or we would behold the ultimate irony of seeing the Greek Generals stepping in to ‘save’ Greece (and Europe) from right wing extremism.
Either of these alternatives would suit America’s ruling elite class, Greece’s most prominent tax avoiders/families (who are, after all, very closely connected to the generals) and the European and German elite who have come to regard democracy as a populist threat to financial stability.
I am left wondering what Syriza could do in the little time left to them before the next financial/political crunch and untill their popularity runs out? I have no inside information so all I can do is think what I might do. In their shoes I would be trying to talk to the other indebted nations about debt cross cancellation. I would be doing all I could to establish a broad based Debt commission to declare which debts I would honour and which I would repudiate as odious and illegal. Of course such a commission would, in effect, lift the lid on all the corruption of the Greek elite for the last 30 years and would implicate many of Europe and America’s most powerful banks. So to do such a thing would require the cooperation of at least some of the police and or army. And that in turn would require very visible and very vociferous public support. It might be Syriza is on the cusp of losing the ability to mobilize such support. I hope not.
Beyond these things I would also be talking as quietly as possible to China and Russia together. One thing Syriza must be working on – at least I hope they are – is a credible means of exiting the Euro and having a viable currency to replace it with. In their shoes I would be talking to China and Russia about possible backing for my new currency. This might seem utterly implausible but then again we live in times when what was implausible yesterday turns out to be tomorrow’s headline.
I have long speculated that China has designs to launch either the Yuan or a new hybrid currency (as a project with Russia and a few other nations) based in part on the Yuan and partly backed by gold, as a rival reserve currency to challenge the dollar. The Chinese have already positioned the Yuan as a settlement currency for dealings with a wide range of its trading partners including Japan, Russian, Iran, Australia and Europe. Just today four of Europe’s big nations, Germany, France, Italy and Britain have all joined the Chinese led development bank, the AIIB, despite very public opposition from Washington. The AIIB is an international development bank and a direct rival to the US-and-dollar-dominated World Bank. So the times are already changing.
Is it really inconceivable for Greece to talk to China about providing backing for a new currency? Greece could peg the new drachma to the Yuan and use the Yuan for both settlement and reserve and switch to the new currency should there ever be one. This would not protect Greece or its currency completely but it would change the dynamic rather dramatically.
You might object that such a move would be far too aggressive. But has China not been moving step by step in this direction for some time? It would not be impossible for China to do. The amount of debt/money involved is not that unmanageable compared to the levels of debt we have become accustomed to since the banking debt crisis began. Europe has not wanted to bail out Greece, not because they couldn’t, but out of fear that it would lead to the other indebted nations with far larger economies and debts, Spain and Italy, who Europe could not afford to bail out, following Greece’s lead. China would have no such problem. They would be simply able to say we are just being neighbourly. Albeit in your back garden. We are trying to help another nation and its people in their hour of need. We are not landing tanks or missiles. We are just helping with a problem you Europeans seem unable or unwilling to solve yourselves.
Certainly China would be saddled with some new debts but it would not have to accept any debts Greece did not want to pay. And those it did accept would be no great increase on their own debts which the world seems quite willing to accept. In return China would have projected their economic and political power right in to the heart of Europe. In China’s position I would present the whole affair to Germany as helping them avoid a crisis for their own banks, and helping to serve notice to Washington that Europe was not theirs to order around. I think this is pretty much the line they might have used over the AIIB agreement.
The remaining question for me is if China will go it alone with the Yuan or work with Russia on a shared reserve currency? At the moment it seems as if China is providing the economic muscle while Russia is providing the military presence in a part of the world (Europe) that China cannot yet reach.
As I have said this is all speculation and thus might well be worthless. On the other hand when the world and its relations of power are changing as they undoubtedly are, it may not be a waste of time to think through various scenarios. Surely it is better than simply believing that the only scenarios worth considering are those which assume the future will be a simple continuation of the past.