A mainstream columnist in the Financial Times has advised the Greek government to stand firm, use imaginative financial techniques to get round blackmail from the eurozone and ECB leaders, and to stop payments on debt to bodies like the ECB and the European Financial Stabilisation Fund.
On 16 February, Wolfgang Münchau wrote: “My advice to [Greek finance minister] Yanis Varoufakis,” he continued, “would be to ignore the exasperated looks and veiled threats and stand firm. He is a member of the first government in the eurozone with a democratic mandate to stand up to an utterly dysfunctional policy regime that has proved economically illiterate and politically unsustainable. For the eurozone to survive with the current geographic remit, this regime needs to go.”
The Greek government, he wrote, “should stick with their position not to accept a continuation of the existing financial support programme.” In so doing they would no longer be bound by “self-defeating policy targets such as the contractual requirement to run a primary budget surplus of 3 per cent of gross domestic product. For a country with mass unemployment, such a target is insane. It would, of course, be better for this nonsense to stop while Greece remains in the euro zone. But the most important thing is that it has to stop.”
The “most sensible” evasive option for the Greek government, wrote Münchau, is the introduction of a kind of parallel currency consisting of government-backed IOUs. This might be physical notes, or maybe just electronic credits, circulating in parallel to the euro. He cites other conservative economists as recommending this option.
“Once this system is in place”, notes Münchau, “you can default on the official European creditors. What can they do? They cannot eject you from the eurozone. They have no legal means to do so. They cannot kick you out of the EU either”.
Münchau concludes that Greece should seek to avoid an exit from the euro zone. But: “The worse-case scenario would be for the Greek government to blink first, and accept defeat... If Syriza were to be co-opted into the policy consensus, the only political party left to oppose these policies would be Golden Dawn, a neo-Nazi party”.
The leaders of Germany’s trade unions have put out a statement opposing the attempted “blackmail” of the new Greek government. The statement is blandly worded, but significant from a union leadership which is usually conservative.
“Serious negotiations with the new Greek government must get under way, without any attempts at blackmail, in order to open up economic and social prospects for the country beyond the failed austerity policy... Europe must not persist in pursuing, at the expense of the Greek population, a policy that has been decisively rejected by the majority of Greek voters. Just carrying on regardless is no longer an option!
“The political upheaval in Greece must be turned into an opportunity to establish a democratic and social Europe!”