3 May 2012, 11:36

Day of wrath in Europe

Day of wrath in Europe
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Interview with Dr. Gregory Papanikos, President of the Athens Institute for Education and Research.

Dr. Papanikos, it looks like the major issue of the protest was the austerity measures, is my understanding correct?

Yes, you are right, particularly in the south European countries which are Spain, Portugal, even France but in France they have elections on Sunday, Italy. But May 1 reactions, they are always the same, in Turkey as well. So, it is very common because May 1 is the Trade Union’s day, it commemorates something that happened hundreds of years ago in Chicago.

Remember we spoke about it something like six months ago?

Yes, and the Europeans were worrying that Greece could not get money from the IMF and I told that there will be no problem for voting in the Parliament. And now we have elections on Sunday, by the way, in three-four days. Everything was quiet yesterday, at least in Athens because they expect the election results. So, the demonstrations were very quiet, there were not a lot of people but 5 000 maximum. I think it is going to calm down because a lot of people in Greece understand that this is not something that is idiosyncratic to Greeks, it is not something special to Greece because some people think that the Greek politicians may damage, of course this is true, but if it happens in other countries as well, like Italy, Spain and Portugal, so you cannot blame the Greek politicians for what is going on right now in France. Look at Hollande, what he is proposing. He is proposing something that we’ve been saying in Greece three or four years ago that you cannot have a very strict monetary policy, austerity measures in other words, without at the same time providing the means for development.

Well, that’s true. That’s the reason why we are taking a broader look at the whole of the European situation. By the way, the interesting thing you said just now is that this holiday is actually more than a century old. But doesn’t it look like the whole idea of integration, developing in such a way that it resulted in something like those problems, and by the way these are not only the problems of Europe, because you might well know that we in my country are experiencing similar problems, I mean processes that are now developing both in the European Union and Russia, and the United States, some of the integrated units in the global arena. Do you happen sometimes to get an impression that the old values are replaced by something like…

I think it is money. Like the Germans, they say that they would borrow in the international market with a rate which is close to 1% and then they will lend this money to Greece, and that I think is about the government’s relationships now, for a rate of 5%. So, because they have the credibility, they can. You know how these people are called. If you borrow money at a rate of 1% and then you lend this at the rate of 5%, sooner or later people will find out that you exploit them. The Chinese as well, they invest most of their money in the United States, they have money and they loan it at the market’s rate, I mean nobody can blame them. Look what happened with the Comic-Con during the Soviet Union times, they were selling gas to the other partners at rate which was below the international market.

Yes, true! It was much lower.

The reason was because they were interested in being a part of a unity. This has broken but I’m not sure whether Russians or the European Union, or the Germans by maximizing short run benefits, like in 1-3 years, they do not undermine long term benefits.

I’m suggesting crazy things. One of the craziest things is that Greece's problem cannot be solved unless Turkey becomes a full member of the Eurozone, not of the European Union because we are isolated here, we are in a long distance from Brussels. Now, the countries that benefit because of the common currency are the ones that are very close to large country, that is Germany. But if Turkey with millions of people, would become a full member of the Eurozone that will be a salvation for Greece and a long term solution for the Greece's economic problems.

But if you say that to the Germans, let’s accept that Turks have applied to become the full members, they’ll raise the issue of Cyprus. They’ll say first solve the problem of Cyprus and then Turkey can become a member. That is politics but behind that politics they have a great economic interest. Germany sells weapons to all the countries around the world – to Turkey, to Greece as well. So, they give us the loans to buy their weapons and some of them are not very good by the way. And they blackmail, and they say that because we are the European Union partners, they are not opulent. They criticize Greece as being corrupted but the most corrupt nation in the world is Germans, believe it or not, and they criticize Russia being corrupt as well. But the Siemens is a number one corrupted company in the world.

Oh, really!

Look what happens in the United States, they have fines all over the world, but they are backed by the German Government. Just put in the Internet’s search “Siemens corruption” and you will see what happened in Nigeria, what happened in the United States, what happened in Greece.

Dr. Papanikos, aren’t we getting to another issue from a very unusual angle? Doesn’t it actually imply that with the business playing increasingly important role in the global politics, business practices are now penetrating deeper into political practices, like you said corruption in Siemens. But the corruption practices are not unusual for businesses, for transnational corporations, are they?

You will be surprised, you know how they write-off their expenses – they put them in the public relations account. In the States the Government has secret funds so to speak, so they can pay some things. But they have these secret funds for themselves so they act as a supranational organization. And they come to Greece and they bribe the minister for example, you see. It is as simple as that. And they call it public relations share funds, and they are not forced to disclose unless there are court orders or something.

Germans appear in the world as being purified because they are the Protestants and the Protestants, they think that they are the best in the world. And I’m using that as a political term, not as a religious term. They are the most corrupt nation in the world, I believe, especially with their companies around the world, not in Greece only, in United States as well. Of course the other companies do the same thing.

The solution is first of all the political change. The Social Democrats, they have lost in so many different countries. It is not an accident that you have Holland, Austria, Germany, France, Italy, Spain and Portugal right now with conservative governments. They think that all the solutions will come by having free business, and here is the problem. They think that by opening up competition, but they don’t open a competition, they protect the big companies. If we open up a competition there is no problem but they protect their big companies and that is a problem. If they allow for all their frames to be in competition, even tourism.

TUI for example, they have the monopoly power in Europe. They determine who is coming to Greece. TUI it is a very big tour operator. So, just by one decision they can take millions of tourists outside of Greece and send them to Turkey or to any other country, you see. We don’t have something similar with Russia. And this year we will have a record of tourists coming from Russia because they do not depend on these tour operators that can change the flow of tourists and of course they can blackmail the countries. They say – either you give us this or one million tourists will not come to Greece this year. And they call it a free competition. This violates the competition law of the European Union but nobody cares about that, they are protected by their governments.

Coming back to the 1st of May, I don’t think that the demonstration was very big to tell you the truth. I was expecting more mobilization, especially in Greece. In Athens it was very quiet.

People are obviously looking forward to Sunday election.

That’s right. Not only here, in France also.

And the amazing thing is that in France people seem to be so disillusioned in Mr. Sarkozy’s policies.

Sarkozy likes nap discussions. I think he is very busy with Carlo Bruni. But in any case I think that France promises something that might be a solution and actually it will be a countervailing force against Merkel. And Merkel has elections by the way next year. And look what happened to a conservative force in Holland. In the beginning they thought that is Greece. Something went wrong but Greece is one of the smallest countries in the European Union, percentage of the GDP is less than in whatever country of the Europe. And they thought that we are the ones that move the world. But now they found out that they have the same problems as well. Of course you can’t continue blaming Greece. How can you explain that Spain, Portugal, even Holland now have problems because of Greece. Of course you can do that but this is a very dangerous game that they play. But the small country cannot create so many problems. Now of course they have realized that something is wrong with the whole system and they have to solve it. I know what is wrong and the solution is very easy.

What?

I’ll tell you. Look at the exchange rate between euro and dollar. In 1991 when the whole business started the exchange rate was at parity – one dollar could buy one euro. In 2008 at the pick of the prerecession period it was a month that the US dollar was at 1.6 to a euro, 60% more. And now it is still 35-40% more. The reason that the euro is so expensive is because the Germans, along with the Dutch, Luxemburg and Austria, they control the European Central Bank monetary policy. And they follow a very strict monetary policy and of course if you follow a very strict monetary policy the exchange rate appreciates.

And this is the reason why Greece suffers because Greece is based upon tourism. Now, if the euro is strong, not only the non-euro countries do not come to Greece but even the Germans. They find it cheaper to go in any other country except Greece. You see, this is a problem. Greece would have never had that problem if the exchange rates were at parity with the US dollar. We lost billions of euros. I can remind you that after the Olympic Games, that were very successful in 2004, because of the euro effect the tourism in Greece was very small because if you ask the Americans to pay 40-50% more than in the previous year, because that were the rates, they won’t come, they find it expensive.

I think the solution is to follow a better exchange rate policy. Now of course it is 1.3 at euro but it should go 1.2 I think. This is the solution because we cannot explain why the euro is appreciated so much, it cannot be explained by the economic fundamentals.

Well, that brings us the fundamental question which would take ages to discuss – which is primary politics or economics? It is just hanging in the air.

If you use the word political economy then you solve your problem. You have an existential problem about politics and economics. The way you stated the subject, it is good to study and divide the levels – we need the economic, we need the political science. But when you analyze the society, you cannot do it only through economics, you have to take politics, you even have to take into consideration religion. Take the relations between Greece and Russia for example. The Greek Orthodox element is very important. Take the relations between countries of the Muslim block, their religion is very important for them. So, even religion is an important element in determining relations between countries. It is the reality.

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