Behind the Greek Crisis

Exclusive: The usual narrative of the Greek economic tragedy is that the country is paying for its past profligacy, but there is deeper back story of political repression fueled by major powers intervening in Greece and contributing to a dysfunctional political system, recalls ex-U.S. diplomat William R. Polk.

By William R. Polk

Focusing exclusively on the monetary aspects of the Greek crisis the media misses much of what disturbs the Greeks and also what might make a solution possible.

For over half a century, Greeks have lived in perilous times. In the 1930s, they lived under a brutal dictatorship that modeled itself on Nazi Germany, employing Gestapo-like secret police and sending critics off to an island concentration camp. Then a curious thing happened: Benito Mussolini invaded the country.

Alexis Tsipras, leader of Greece's Syriza party. (Photo credit: FrangiscoDer)

Alexis Tsipras, leader of Greece’s Syriza party. (Photo credit: FrangiscoDer)

Challenged to protect their self-respect and their country, Greeks put aside their hatred of the Metaxis dictatorship and rallied to fight the foreign invaders. The Greeks did such a good job of defending their country that Adolf Hitler had to put off his invasion of Russia to rescue the Italians. That move probably saved Josef Stalin since the delay forced the Wehrmacht to fight in Russia’s mud, snow and ice for which they had not prepared. But, ironically, it also saved the Metaxis dictatorship and the monarchy. The king and all the senior Greek officials fled to British-occupied Egypt and, as new allies, they were declared part of the “Free World.”

Meanwhile, in Greece, the Germans looted much of the industry, shipping and food stuffs. The Greeks began to starve. As Mussolini remarked, “the Germans have taken from the Greeks even their shoelaces”

Then, the Greeks began to fight back. In October 1942, they set up a resistance movement that within two years became the largest in Europe. When France could claim less than 20,000 partisans, the Greek resistance movement had enrolled about 2 million and was holding down at least two divisions of German soldiers. And they did it without outside help.

As the war’s outcome became apparent, British Prime Minister Winston Churchill was determined to return Greece to the prewar rule of the monarchy and the old regime. He was motivated by fear of Communist influence within the resistance movement.

Churchill tried to get the Anglo-American army that was getting ready to invade Italy to attack Greece instead. Indeed, he tried so hard to change the war plan that he almost broke up the Allied military alliance; when he failed, he threw all the soldiers he still controlled into Greece and precipitated a civil war that tore the country apart. The Underground leaders were outsmarted and their movement was smashed. The bureaucracy, police and programs of the prewar dictatorship resumed control.

After the war, with Britain out of money and no longer able to sustain its policy, London turned Greece over to the Americans who announced the “Truman Doctrine” and poured in money to prevent a leftist victory. American money temporarily won the day, but the heavy hand of the former regime created a new generation of would-be democrats who challenged the dictatorship.

This is the theme beautifully evoked in Costa Gavras’ film “Z,” starring Yves Montagne. As the film shows, the liberal movement of the early 1960s was overwhelmed by a new military dictatorship, “the rule of the colonels.”

When the military junta was overthrown in 1974, Greece enjoyed a brief period of “normality,” but none of the deep fissures in the society had been healed. Regardless of what political party chose the ministers, the self-perpetuating bureaucracy was still in control. Corruption was rife. And, most important of all, Greece had become a political system that Aristotle would have called an oligarchy.

The very rich used their money to create for themselves a virtual state within the state. They extended their power into every niche of the economy and so arranged the banking system that it became essentially extra-territorialized. Piraeus harbor was filled with mega-yachts owned by people who paid no taxes and London was partly owned by people who fattened off the Greek economy. The “smart money” of Greece was stashed abroad.

The Current Crisis

This state of affairs might have lasted many more years, but when Greece joined the European Union in 1981, European (mainly German) bankers saw an opportunity:  they flocked into Greece to offer loans. Even those Greeks who had insufficient income to justify loans grabbed them. Then, the lenders began to demand repayment. Shocked, businesses began to cut back. Unemployment increased. Opportunities vanished.

There is really no chance that the loans will be repaid. They should never have been offered and never should have been accepted. To stay afloat, the government has cut back on public services (except for the military) and the people have suffered. In the 2004 elections, the Greeks had not yet suffered enough to vote for the radical coalition led by the “Unity” (SYRIZA) party. Only 3.3 percent of the voters did.

Then, after the 2008 financial crash came years of worsening hardship, disapproval of all politicians and anger. It was popular anger, feeling misled by the bankers and by their own foolishness. There was also hopelessness as Greeks realized that they had no way out and began to turn to SYRIZA. After a series of failed attempts to secure a mandate, SYRIZA won the 2015 election with 36.3 percent of the vote and 249 out of 300 members of Parliament.

Today, the conditions that impelled that vote are even more urgent: the national income of Greece is down about 25 percent and unemployment among younger workers is over 50 percent. So where does that leave the negotiators?

Faced with German and EU demands for more austerity, the Greeks are angry. They have deep memories of hatred against the Germans (this time, not soldiers but bankers). They have been, time after time, traduced by their own politicians. Prime Minister Alexis Tsipras must know that if he is charged with a “sell-out,” his career is finished.

And the bail-out package offered by the International Monetary Fund and the European Central Bank is heavily weighted against Greece. Greeks also see their option of exiting the Euro as similar to stances taken by Britain and Sweden in not joining in the first place although a painful adjustment for the Greek economy would be expected if Greece undertakes an unprecedented departure from the European currency.

However, unless the IMF and ECB offer a real chance for a better life for Greeks by forgiving most of the debts, I believe that the Greeks might well vote on Sunday to reject the austerity demands and leave the Euro.

William R. Polk is a veteran foreign policy consultant, author and professor who taught Middle Eastern studies at Harvard. President John F. Kennedy appointed Polk to the State Department’s Policy Planning Council where he served during the Cuban Missile Crisis. His books include: Violent Politics: Insurgency and Terrorism; Understanding Iraq; Understanding Iran; Personal History: Living in Interesting Times; Distant Thunder: Reflections on the Dangers of Our Times; and Humpty Dumpty: The Fate of Regime Change.

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19 comments for “Behind the Greek Crisis

  1. max
    July 12, 2015 at 9:40 am

    Corruption by all parties. Pure and simple and profitable.

  2. Evan Pezas
    July 7, 2015 at 6:03 am

    What Mr Polk misses in the current crisis and protects the socialist government of PASOK and Andreas Papandreou is to mention that after joining the EOK then the large assistant packages that were meant for the Greek infrastructure were wasted by the PASOK regime.
    Only that point makes his general analysis completely biased and loose all credibility.

  3. Arnaldo Spicacci
    July 5, 2015 at 10:06 am

    Interesting article. It just misses the part that a loan by a bank is just debt creation without any dispossession by the banks. It is just a subtle way to take possession of other people’s wealth.

  4. Otton Bexaron
    July 4, 2015 at 2:19 pm

    NATO member Greece with a population of 11 million maintains a 125,000 military in 500 bases: To protects itself against “lose gun” fellow NATO “partner” Turkey.

  5. Ron Jones
    July 3, 2015 at 5:26 pm

    I showed this article to a knowledgeable Greek friend, Paris Tsekouras, and this is his response.

    1) Metaxas, not Metaxis.

    2) Whether the role of Greece in WWII was significant in that particular way (namely that it stalled the operation Barbarossa) is debated by historians.

    3) Even in such a brief historical review, the mention of the very rich should have included the shipowners, who did not exactly fatten off the Greek economy, although their connections with the state are, indeed, described accurately.

    4) The sudden ease of getting a low interest loan appeared after the introduction of the euro, much more than with the entrance to the (then) EEC in 1981.

    5) In 2004 the crisis was lurking but hardly a significant portion of the population was suffering, let alone suffering enough to opt for a leftist vote.

    6) SYRIZA does not mean “unity”. It’s just an acronym.

    7) They got 149 MPs, not 249.

    8) No Greek in their right mind ever put the drachma in the same balance with the krona and the pound sterling. In other words, back in 2000 and even today, most people still put their trust in ceding national sovereignty over the currency.

    Other than that, I agree with everything written there. However, despite the 3000 year long history rhetoric so ingrained in modern Greek discourse, most people don’t care that much about what happened 30 years ago. The urgency of the present reality is what affects them. And maybe it’s better that way.

  6. incontinent reader
    July 3, 2015 at 4:26 pm

    My untutored sense is that Greece does have a serious plan to dig itself out of the hole, and that it depends on buying enough time to develop its national assets- for example, its offshore natural gas fields, and the pipeline connection from Turkish Stream to Macedonia that Russia has agreed to help finance, and an expansion of the Port of Piraeus currently in process which China would like to use as its Silk Road entree into Southern Europe. The latter two also presuppose that Greece would remain in the EU as a member in good standing, so it is a tricky balancing act on theirs and Greece’s part. The Germans, Americans and the EU leadership in Brussels on the other hand seem to prefer keeping Greece on its knees and in a political and economic strait jacket. So, I would be reluctant to blame Tsipras or Varoufakis for selling out right now- and, if for some reason, Greece does end up exiting the Euro, I would expect that at that point Russia and China would assist Greece, but not earlier if such assistance would complicate Greece’s membership in, and China’s dealings with the EU. And certainly, why commit funds if Greece can somehow work it out with the other EU members.

  7. Mark
    July 3, 2015 at 10:28 am

    Capitalism is not unlimited in a world with finite resources.

    To lend or borrow money in an amount that, with interest added, is an impossible amount to repay through the limited and finite economic system — is the same as wishing reality was something other than what it is — hoping for the impossible that the loans can be repaid without disrupting the system.

    But if the loan amounts and interest charged are so great that servicing the debt does not leave the borrowers enough to live on, who will buy the goods the borrowers produce, assuming they are still producing? This reality has already induced a downward cycle among businesses with inadequate sales that can no longer pay their bills and are forced out of business — luxuries go down first and then necessities.

    With the exception of socialized or nationalized systems of resource ownership and development, governments produce nothing but laws to extract taxes and reallocate the funds away from the actual producers — as is happening in Greece while they now hand all profits over to the banks.

    If further economic collapse in Greece is unavoidable, then the sooner it does collapse the sooner the Greeks pain will be over. The EU and world economy is tied together with Greece in such a way, like a row of lined up dominoes, that what’s best for the Greeks may not be best for others who will be put in exactly the same predicament as the Greece are now — and indeed we all soon could be.

    The bankers are not acting responsibly in looking out for their own best interests nor for the interests of the world’s society in general. They have essentially administered and abused the banking industry to enslave a large portion of the worlds population.

    Who is now going to stop them with so many brainwashed and indoctrinated believers that consume and flourish off their unfettered self-regulating capitalism propaganda?

    It was deregulating the banks over decades the precipitated the beginning of this current downward spiral which was already in existence but escaped widespread notice until it could no longer be hidden in 2008…

  8. Peter Loeb
    July 3, 2015 at 5:50 am

    GREECE AND THE RESISTANCE

    With thanks to W.R. Polk for considerable historical perspective.

    Most of this is included in Joyce and Gabriel Kolko’s landmark work,
    THE LIMITS OF POWER… The British involvement is there called
    an “invasion” and it was successful. The resistance appealed to
    Russia for assistance and were politely turned down flat. (If “flat” can
    be “polite”.) Stalin and the USSR recognized that “possession is
    nine tenths of the law” and did not become involved in the Anglo-
    American wars in its sphere of influence. Understandably, the USSR
    as a part of “the Allies” expected that the other partners would
    recognize the USSR’s predominance in its sphere of influence.
    This expectation was unfulfilled by the West.

    The Kolkos’ analysis of the various resistance movements is
    an intricate one. I am thankful that it was not included by
    Mr. Polk. It may be obvious to Greeks but is a challenge
    to everyone else.

    —Peter Loeb, Boston, MA, USA

    —-Peter Loeb, Boston, MA, USA

  9. Abe
    July 3, 2015 at 2:34 am

    What we have witnessed since is what can only be called a clown show, one in which the laugh is on the Greek people and EU citizens as a whole. The ones laughing, as often is so, are the mega banks and Troika–ECB, IMF and EU. Behind the Troika, almost invisible, are the Greek oligarchs who have robbed the state coffers of hundreds of billions over the years, tucking it away in numbered Swiss and Lichtenstein secret bank accounts, avoiding paying a single penny tax to support their nation. And it is looking more and more as though the “leftist” economist, Varoufakis’s role is that of a Trojan Horse for the destruction of the entire Eurozone by the bankers and those Greek oligarchs. Next after Greece Italy looks poised to become victim, and that will put the entire Euro in a crisis that is today unimaginable.

    What Stinks about Varoufakis and the Whole Greek Mess?
    By F. William Engdahl
    http://journal-neo.org/2015/07/03/what-stinks-about-varoufakis-and-the-whole-greek-mess/

  10. Joe Tedesky
    July 2, 2015 at 9:49 pm

    Say what you will about Alexis Tsipras, but at least he put to his fellow Greeks a referendum vote whether to accept or decline the EU/IMF ultimatum. This is more than can be said of how our U.S. Government is ‘Fast Tracking’ the TTP trade agreement, without any popular vote. Isn’t it appropriate that the Greeks who refined democracy, should be the ones to rely on it at a time like this? Is it not sad that the U.S. Government should sneak one by it’s people, and throw democracy to wind?

    http://www.counterpunch.org/2015/07/02/the-birthplace-greece-v-the-farce-the-united-states-of-democracy/

    • F. G. Sanford
      July 3, 2015 at 4:37 am

      The “big stick” that Tsipras brought to the table was the threat of the Grexit. That threat was to be used as the bargaining chip to end austerity and get debt relief while remaining in the Euro/EU system. That was the democratic mandate the Greek people voted for when they elected Syriza. Now, Tsipras and Varoufakis have insisted that they intend to remain in the Euro system. Any deal they can get now will, in the long run, involve more austerity than was on the table before Syriza was elected. The referendum is pointless, because without the threat of Grexit, Syriza has no alternative bargaining position. Rather than offering Greeks a “democratic” alternative, it appears that Syriza has engineered a surrender to the Eurogarch big money capitalists. Whether they vote yes or no, they’ll still be worse off than they were before. It looks like Tsipras blew his chance, and this is all just window dressing.

      • Brad Owen
        July 3, 2015 at 10:41 am

        Webster Tarpley spelled out a rational way for Greece to proceed, should the Troika remain obstinate. The Executive Intelligence Review folks are saying it’s the Troika and The City and The Street that have really serious & fatal financial problems (as in total bankruptcy), not Greece, their intended prey to forestall their own “Day-of-Reckoning”, and that their position is pure bluff, with nothing real to back it up.

  11. F. G. Sanford
    July 2, 2015 at 6:48 pm

    What Mr. Polk appears to have avoided in this fine article is the NATO manipulation of Greek defense spending. Greece has the highest defense outlay based on GDP of any of the NATO countries, and a huge chunk of the loans foisted on Greece have been to maintain an unrealistic defense budget. German, French, Great Britain and U.S. arms manufacturers have all profited handsomely from this suicidal deal with the devil, and the fear induced motivation behind it has been the “threat” from – NATO ally – Turkey. Despite the oft mentioned “Article Five”, here we have NATO countries being exploited based on “threats” from other NATO countries in order to enrich U.S. and other Great Power arms manufacturers. Now, the same strategy is being used to coerce the Baltic states into unrealistic defense outlays using Ukraine and the “threat” of Russian “aggression”. This promises to eventually embroil them in the same cycle of debt service and consequent austerity at the expense of their national interests, which their uninformed, duped and exploited populations will be groomed to believe is all Russia’s fault – a great recipe for war fever. The “Battle of Athens”, in which Churchill ordered his troops to fire on Greek partisans because they were “communists” was regarded at the time as an atrocity. This was part of Churchill’s duplicitous but failed strategy to retain the “empire”. It was a massacre which resulted in handing over thousands of Greek patriots to Nazi collaborators who tortured, murdered and imprisoned them. This episode was widely condemned in the U.S. Congress, and it is not a secret. The legacy the Allies left Greece was thirty years of horrific misery based on the notion that fascists were somehow preferable to the left-leaning partisans. It appears they are following the same strategy again with an economic program to prop up German vulture finance capitalists and arms manufacturers. The Baltic states are being led down the same primrose path. Unless Greece finds the courage to dump the EU and its unsustainable defense budget, there is only misery on the horizon.

    http://www.opednews.com/articles/Greek-Crisis-Awaits-Other-by-Finian-Cunningham-Allies_Austerity_Crisis_Debt-150702-377.html

  12. Ae
    July 2, 2015 at 6:25 pm

    “Greece is being hit.” There’s no question about it. Sure, Greece made mistakes, your leaders made some mistakes, but the people didn’t really make the mistakes, and now the people are being asked to pay for the mistakes made by their leaders, often in cahoots with the big banks. So, people make tremendous amounts of money off of these so-called “mistakes,” and now, the people who didn’t make the mistakes are being asked to pay the price. That’s consistent around the world: We’ve seen it in Latin America. We’ve seen it in Asia. We’ve seen it in so many places around the world.

    […] part of the game: convince people that they’re wrong, that they’re inferior. The corporatocracy is incredibly good at that, whether it is back during the Vietnam War, convincing the world that the North Vietnamese were evil; today it’s the Muslims. It’s a policy of them versus us: We are good. We are right. We do everything right. You’re wrong. And in this case, all of this energy has been directed at the Greek people to say “you’re lazy; you didn’t do the right thing; you didn’t follow the right policies,” when in actuality, an awful lot of the blame needs to be laid on the financial community that encouraged Greece to go down this route. And I would say that we have something very similar going on in the United States, where people here are being led to believe that because their house is being foreclosed that they were stupid, that they bought the wrong houses; they overspent themselves.

    The fact of the matter is their bankers told them to do this, and around the world, we’ve come to trust bankers – or we used to. In the United States, we never believed that a banker would tell us to buy a $500,000 house if in fact we could really only afford a $300,000 house. We thought it was in the bank’s interest not to foreclose. But that changed a few years ago, and bankers told people who they knew could only afford a $300,000 house to buy a $500,000 house.

    “Tighten your belt, in a few years that house will be worth a million dollars; you’ll make a lot of money” . . . in fact, the value of the house went down; the market dropped out; the banks foreclosed on these houses, repackaged them, and sold them again. Double whammy. The people were told, “you were stupid; you were greedy; why did you buy such an expensive house?” But in actuality, the bankers told them to do this, and we’ve grown up to believe that we can trust our bankers. Something very similar on a larger scale happened in so many countries around the world, including Greece.

    An Economic Hit Man Speaks Out:
    John Perkins on How Greece Has Fallen Victim to “Economic Hit Men”
    By Michael Nevradakis

  13. Bob Van Noy
    July 2, 2015 at 3:58 pm

    Thank you William R. Polk, and thanks again Robert Parry and Consortium News.

    Philosophers may debate Truth, but what interests me is how The Truth, in context, jumps off the page (or in this case the screen). I wasn’t aware of the Greek history that you (William Polk) described, but I am aware that many of our contemporary problems are in response to the British seeking Empire and our own mistakes in the same direction (Empire or exceptionalism).
    I also appreciate your essays of several days ago and I am studying them. Thanks again.

  14. James
    July 2, 2015 at 1:27 pm

    Excellent background information. Thank you. Makes me so angry that we are not getting this in the mainstream press!

    • DaveJoe
      July 2, 2015 at 2:18 pm

      James: If you want to be informed then the first step you can take is to stop watching/reading mainstream media products.

      • Garrett Connelly
        July 2, 2015 at 5:57 pm

        There is no such thing as main stream press, this term is used erroneously to describe corporatist brainwashing.

    • July 13, 2015 at 10:47 am

      Dr Polk will be a guest on my radio show tonight. You can tune in online at http://www.kpft.org and you can see the details at http://www.markbebawi.com

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