There is a moral obligation to rise up against the blatant lies underlying the feigned solidarity purportedly shown by the leaders of the strongest countries in the Eurozone toward the Greeks and those in other now fragile countries (Ireland, Portugal, Spain…). The basic facts contradict their statements, which have been continuously served up by the dominant media.

Many media sources repeat the same old story, that Greece has been given a substantial amount of aid. For example, Hans-Werner Sinn, [1] one of the most influential economists in Germany, and an advisor to Angela Merkel’s government, did not hesitate to assert in an interview to CNBC television programme that: “Greece has received 115 Marshall Plans” [2]

Le Monde published a long interview with Hans-Werner Sinn where he stated: “Greece has already received 460 billion euros through various mechanisms. The aid already given to Greece represents the equivalent of 214% of its GDP GDP

Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. , or nearly ten times more than what Germany received under the Marshall plan Marshall Plan A programme of economic reconstruction proposed in 1947 by the US State Secretary, George C. Marshall. With a budget of 12.5 billion dollars (more than 80 billion dollars in current terms) composed of donations and long-term loans, the Marshall Plan enabled 16 countries (notably France, the UK, Italy and the Scandinavian countries) to finance their reconstruction after the Second World War. . Berlin has provided nearly one fourth of the aid given to Greece, (115 billion euros), which represents at least ten Marshall plans, or two and a half times the London Agreement.” [3]

His calculation is entirely wrong. Greece has received no such financing, and what it has received cannot seriously be considered as aid. Hans-Werner Sinn scandalously equates the Germany at the end of World War II, brought about by the Nazis, and the Greece of the 2000s. In addition, he fails to mention the sums rightly claimed from Germany by Greece in reparation for the damages caused by the Nazi occupation, [4] as well as the loan Nazi Germany forced Greece to give it. So Germany’s debt to Greece after World War II amounted to at least 100 billion euros. As we learn on the website ‘A l’encontre’, on the basis of research by Karl Heinz Roth, a historian of the pillage of Europe when it was occupied by Nazi Germany: [5] “Germany only paid Greece one sixtieth (1.67%) of the reparations owed to make up for the massive destruction caused by the occupation from1941 to 1944.”

A series of solid arguments must be advanced to demonstrate the intellectual dishonesty of the statements made by Hans-Werner Sinn, German leaders, and the media services supporting them. The following arguments are not only true for Greece. A similar argument could be made for certain points concerning the so-called aid provided to the former Eastern Bloc countries, which are now part of the European Union, and to Portugal, Ireland, and Spain among others. But as we shall see in Part Three of this series of articles, relations between Germany and Greece are rooted in history and should be carefully scrutinized.

I. The so-called “aid” plans serve the interests of private banks, not those of the Greek people

The “aid” plans that have been set up since 2010 have first of all served the interests of private banks in the richest countries in the Eurozone, which had considerably increased their loans to both the private sector and public authorities in Greece in the 2000s. The loans granted to Greece by the Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.



IMF : https://www.ecb.europa.eu/home/html/index.en.html since 2010 have been used to pay back private Western banks, and have enabled them to minimize their losses as they withdraw from Greece. They were also used to recapitalise some private Greek banks, some of which are subsidiaries of foreign banks, French ones in particular.

2. The loans granted to Greece are profitable… beyond the Greek borders!

The loans granted to Greece under the aegis of the Troika are remunerated. The different countries participating in these loans are making money. When the first loan of 110 billion euros was adopted, Christine Lagarde, who was the French finance minister at the time, [11] announced that France was lending to Greece at 5% while at the same time borrowing at a much lower rate.

The situation was so scandalous — a high interest rate was also applied to Ireland from November 2010 and to Portugal from May 2011 — that the lending governments and the European Commission decided in July 2011 that the rate paid by Greece must be reduced [12]. What a confession ! Although this decision has been enacted, the difference between the borrowing rate at which the lending countries find finance and the rate demanded from Greece remains significant.

In the face of Greek government protests and the deep popular discontent expressed by strong social mobilizations in Greece, the lending countries finally agreed to give the country a discount on the income they receive from Athens [13] — on condition that the difference still be used for debt repayments.

The Eurozone crisis reduces the cost of debt for Germany and the other strong countries

That’s not all. The dominant Eurozone countries profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. from the miseries of the periphery (Greece, Ireland, Portugal, Spain and those countries of the former Eastern Bloc which are now members of the EU). The aggravation of the Eurozone crisis, due to policies applied by its leaders and not to external phenomena, results in capital movements from the Periphery towards the Centre. France, Germany, Austria, Belgium, Finland, Luxembourg and the Netherlands profit from it in the form of a great reduction in the cost of financing their debts.

On the 1 January 2010 (before the Greek and Eurozone crises) the cost to Germany of emitting ten-year bonds was 3.4%. On the 23 May 2012 the cost had fallen to 1.4%, a reduction of 60% in the cost of financing. [14] According to the French financial daily ’Les Echos’, “a rough calculation shows that the savings on this reduced interest rate amount to 63 billion euros” [15] This is to be compared to the loan of 15 billion euros (of the 110 billion promised by the group of creditors) that were effectively lent (with interest – see above) by Germany to Greece between May 2010 and December 2011, within the framework of the first Troika “aid” plan. The total of German promises to Greece, taking into account the European decisions between 2010 and 2012, amounts to 67 billion euros. Despite the 63 billion euros already saved, as calculated by ‘Les Echos’, the greater part of this amount has not yet been remitted.

We have mentioned the 6- and 10-year rate for German borrowing. If we take the two-year rate, Germany issued bonds for this period on the 23 May 2012 at zero interest. [16] At the beginning of the year Germany borrowed 3.9 billion euros at negative interest rates. The newspaper ’Le Soir’ noted on 23 May 2012: “Investors will receive, in six months time, a slightly reduced repayment on their loan (less 0.0112%)”. [17]

If there happened to be a grain of truth in the flow of lies concerning Greece, Spain or Portugal we should read that Greece enables Germany and other strong Eurozone countries to make considerable savings. To the list of advantages reaped by Germany and the other strong European Union countries should be added the following elements.

4.Privatisation programmes to the advantage of the strong countries’ private enterprises

The austerity policies imposed on Greece contain vast programmes of privatisation. [18] The big groups, particularly French and German, have been able to take advantage of the give-away prices practised on the sale of public property.

‘A l’encontre’ website cites and comments on a long interview given by Costas Mitropoulos, one of the people managing the Greek privatisation programme, to the French language Swiss daily ’Le Temps’ on 7 April 2012: “The offices of the ’Hellenic Republic Asset Asset Something belonging to an individual or a business that has value or the power to earn money (FT). The opposite of assets are liabilities, that is the part of the balance sheet reflecting a company’s resources (the capital contributed by the partners, provisions for contingencies and charges, as well as the outstanding debts). Development Fund’ in Athens are next door to a museum of Athenian history. This is highly symbolic, as the process of privatisations put into place by a score of experts under the direction of the ex-banker Costas Mitropoulos, is bound to change the face of Greece.” He added: “It is to this fund, created at the demand of the EU, that the Greek State is gradually transferring the properties, concessions and holdings to be released for acquisition. According to initial EU plans, fifty billion euros are to be collected by the end of 2017.” Costas Mitropoulos said in Geneva, “The transfer of properties to our funds by the Greek State has accelerated”. He goes on: “The first message we wish to get across is : we are not the Greek State. We are an independent privatisation fund that now owns 3% of Greek territory. We have a three-year mandate. We are protected from political interference.”

The journalist from ’Le Temps’ insists: “Are you really, though? Privatisations anywhere in the world are always very political and the Greek State, which remains present in the capital of numerous companies, has a very bad reputation..”

The reply is unequivocal: “As a banker I have presided over one of the biggest privatisations in Greece: the purchase of the Greek pharmaceutical group ’Specifica’ by the international group Watson for close to 400 million euros. I know the rules: to interest an investor in the purchase of a Greek group today, he must be able to expect to triple or quadruple his outlay. One euro invested must return three or four.” [19]

5. The sacrifices imposed on the workers enable the containment of protest movements in countries of the Centre

The social defeats inflicted on Greek workers (and also on Irish, Portuguese and Spanish, and more) put the Austrian, Belgian, Dutch, French, German and other workers on the defensive. Union organisers are dubious about confrontation. They wonder how they can argue for pay increases if in a country like Greece, Eurozone member, wages are being reduced by 20% or more. Among the North European unions (notably in Finland), we note with consternation, that some good is seen in the TSCG (Treaty on Stability, Coordination and Governance) and austerity policies as they are seen as reinforcing good state budget management.

More on the 1953 London Agreement on German debt and on the Marshall Plan

As indicated in the article ’Greece-Germany: who owes who? (Part 1) London 1953: cancellation of the German debt’, the terms of this agreement are radically different from the manner in which Greece is treated today. The conditions were united for West Germany to develop rapidly and to reconstruct its industrial apparatus. Not only was Germany’s non war debt reduced by more than 60%, but the payment of war debts and compensation to civilian war victims and States was suspended until a later, unspecified date: in fact, until the reunification of the two German States which came about in 1990 and the peace treaty signed in Moscow the same year with France, the United States, the USSR and the United Kingdom. The burden of war compensation on the German economy was thus, for a long time, deferred. On the other hand Germany has always refused to follow up any requests from Greece for payment of the compensation due.

Contrary to what happened at the end of the World War I, the Western powers preferred to avoid putting too great a burden of unsustainable debt payments on the German economy after World War II, considering this had favoured the ascension to power of the Nazi regime. They also wanted an economically strong (although disarmed and militarily occupied) West Germany in face of the Soviet Union and its allies. This was not a consideration for Greece and the other peripheral countries of the EU.

To achieve this objective, not only was the debt burden alleviated and Germany given economic assistance in the form of donations, but it was also allowed to apply policies totally favourable to its economic expansion. The big private industrial groups were allowed to consolidate — those same companies that had played a key role in the military adventure of the World War I, then in support of the Nazis, in the genocide of the Jews, the Gypsies and other people, in the pillage of occupied and/or annexed countries, in military production and in the gigantic logistical effort of World War II. Germany was able to develop impressive national infrastructures and support its industry so that internal demand could be satisfied and foreign markets conquered. Germany was even allowed to pay a large part of its remaining obligations in its own national currency. To understand this we must consider the situation that resulted from the 1953 London Agreement. Germany reimbursed a part of its debt to Belgium, the UK and France incurred between the wars in deutsche marks. These had no value, at that time, on the currency markets. Belgium and France got rid of them quickly by buying German produce and so contributed to the reconstruction of Germany as a great industrial power.

Now Greece, and also Estonia, Ireland, Portugal, Slovenia, Spain and other peripheral European countries, for their part, must reimburse their debt with euros that they do not have because of their commercial deficits with the strong Eurozone countries. At the same time, the dominant Eurozone powers impose, through the European Commission and the adopted treaties, policies that prevent the satisfaction of internal demand let alone their export demand. If they still want to export, they are subjected to still more pressure on their wages. This compresses domestic demand still further and accentuates the recession. The privatisation projects deal the final blow against their industrial apparatus, their infrastructures and their heritage in general.

To get out of this impasse it is necessary to implement economic and social measures in radical rupture with today’s policies, as much within a national context as at the European level. An emergency crisis programme is therefore required. [20]

Next episode : Greece-Germany: who owes who? (Part 3) considers the refusal by the German leaders to pay compensation to the Greek people for the consequences of Nazi occupation.

Translated by Mike Krolikowski, Charles La Via and Vicki Briault