Greece Defies Eurogroup Bailout Demand

Monday’s meeting of the Eurogroup, comprised of the euro area finance ministers, on Greek and European debt ended abruptly and with no result when Greece summarily rejected a “Draft Statement” which would have merely extended the bank bailout and anti-Greece austerity conditions. These conditions have resulted in a Greek GDP drop of more than 20% over the past four years, and drastically impoverished the country’s population. The new government has been proposing that the European Union institutions agree to a debt writedown as was implemented by the 1953 London Debt Conference for German debt, along with measures to restore growth as were successful in Germany at that time.

Greece’s determination, backed by anti-austerity demonstrations across Europe and 80% support for the government in the country, was restated in a New York Times op-ed yesterday by Finance Minister Yanis Varoufakis. He wrote that Greece has established “red lines” against austerity and will not cross them even if it is offered no assistance.

“We are determined to clash with mighty vested interests,”

Varoufakis wrote, no doubt referring to Wall Street and European megabanks which dumped their debt on Greek taxpayers via the 2009 and 2011 bailouts.

The Eurogroup’s refusal to discuss the Greek proposals stands in shocking contrast to its pledge of at least $2.1 billion direct aid for the completely bankrupt government in Kiev, Ukraine, and additional indirect participation in a $17.5 billion IMF loan. The total $40 billion package for Ukraine, recommended Feb. 12 by IMF Managing Director Christine Lagarde, is itself astonishing. Ukraine is bankrupt, publicly states it cannot pay its debts, has an economy contracting at 8%/year, a 28.5% inflation rate and 23% central bank discount loan rate. The fact that the Kiev government and its backers say it is at war with Russia, seemed to be enough for the IMF’s Lagarde.

The euro currency fell by three-quarters of a cent after the breakup of the debt negotiations with Greece, resuming a slide which had paused while they were occurring over the past two weeks.

Potential backing beyond Europe for the Greek government’s fight was again indicated by the invitation to China just received by Greek Foreign Minister Nikos Kotzias.

In the United States, three Democratic Members of Congress — Dina Titus of Nevada, Niki Tsongas of Massachusetts and John Sarbanes of Maryland — wrote to President Obama Feb. 16 that “it is important for the United States to stand by Greece’s side and use their influence, where possible, to help Greece create a new path to economic prosperity.” Their letter is reported by the Greek Reporter website.