Predator ‘Institutions’ Knew Their Offer to Greece Was Made To Fail

The German newspaper Suddeutsche Zeitung obtained documents leaked by Bundestag deputies, which were an analysis by the IMF of the European creditors’ “last offer” to Greece on June 26. Intended to explain the offer to legislators who could have to vote on it, the analysis actually showed that the “really very generous” [per Angela Merkel] ultimatum plan, could never have gotten Greece below a debt/GDP ratio of 125%, with continuously deepening austerity sapping its economy and people. The analysis was published in full in the London Guardian July 1.

Of course, the creditors’ loyal staffs tried to blame their analysis of the plan’s guaranteed failure, on the Syriza government in Greece. “It is clear that the policy slippages and uncertainties of the last months have made the achievement of the 2012 targets [for debt/GDP ratios—ed.] impossible under any scenario,” they recited dutifully.

But even making the most optimistic, discredited, actually absurd assumptions about the deeper tax, wage, and pension austerity leading to rapid growth in the rest of this decade, the plan would not “work.” “Under all the scenarios looked at by the Troika,” wrote the Guardian, which all assume a third bailout program, Greece has no chance of meeting the target of reducing its debt” which was set in 2012. Its “unsustainable” level of debt would continue at least until 2030.

The reason this failure was planned — and why the IMF et al. thought the Bundestag would vote for it nonetheless — was in order to allow Greece no debt write-down. As the Guardian notes in its lead, “The documents … support Greece’s argument that it needs substantial debt relief for a lasting economic recovery.” Anything, including asking European parliaments to vote for a debt-payment plan self-described as unworkable, was preferable, for the Troika, to allowing Greece the kind of debt write-down given to Germany in 1953.

What was the really very generous plan? Greece was to achieve a primary budget surplus of 1% of GDP this year, rapidly rising to 3.5% of GDP (7 billion euros) by 2018; it was to raise VAT taxes by 2 billion euros immediately; cut annual pension payments by 2 billion euros immediately and cap them permanently; rescind the temporary increase in minimum wages; sell off state-owned islands, ports, etc. to raise 15 billion euros by 2016; etc.

Greek Prime Minister Tsipras effectively threw the vote on this made-to-fail plan from the Bundestag to the Greek population by referendum.