Greece is grabbing headlines all over the world. There was a recent referendum where an overwhelming majority of Greeks voted “No” to conditions for another bailout. Greek banks are running out of money and Greek people are limited to withdrawing a maximum of 60 euros per day. Negotiations have become increasingly hostile as impending deadlines approach. The aim of this article is to discuss the manner by which Greece got itself into this predicament.
There was a widespread culture of tax evasion in Greece. It was very easy for some people to understate their taxable earnings. There was also a problem with corruption when it came tax collection. In February 2015, Haris Theoharis, a member of the Greek parliament said that because of tax evasion, every year Greece was missing out on “between €10bn and €20bn in revenue”.
In short, Greek Government spending rose rapidly before the crisis. A good example is Greek wages. The BBC reported that “Public sector wages, for example, rose 50% between 1999 and 2007 – far faster than in most other Eurozone countries.”
The EU stability and growth pact requires each member state to stay within a certain limit when it comes to government deficit. This limit is 3% of GDP. Greek governments decided the only way to meet this target was to conceal some of its borrowing. However, when the financial crisis hit- there was no longer a place to hide. In 2009 Greece announced it had been understating the amount of government deficit. And after it did this, according to the New York Times it was “shut out from borrowing in the financial markets.”
Taken together, the rising spending, low tax revenue and less borrowing meant that debt levels in Greece were rising. They rose so much that Greece was no longer able to repay these growing debts- and so needed a bailout.
The Role of Creditors
The three institutions responsible for bailing out Greece are described as the Troika. They are: the European Central Bank (ECB), the European Commission and the International Monetary Fund (IMF). These institutions decided they would bail out Greece, but in return they called for reform- namely in the form of major austerity measures. These reforms crippled the Greek economy. GDP fell continuously until 2014 and unemployment rocketed- it is now at around 25%.
The Syriza Government
In January 2015, the radical left wing Syriza party was elected to govern Greece. They were elected as an alternative to austerity and their leader Alexis Tsipras openly opposed the austerity measures Greece had been forced to take. He took a hard line with the creditors and ruffled a few feathers across Europe. Despite this, both sides seemed to be inching towards a deal. All this changed when Tsipras called the referendum. After the “No” vote, where an overwhelming majority of Greek people voted against bailout conditions proposed by “the troika”- the situation seems more uncertain than ever. Greece is a country known for its shipping industry. Mr Tspiras’s brinkmanship is taking it into uncharted waters.
And although most people’s sights are fixed firmly on what happens to Greece in the future, it is worth stepping back into the past to see that numerous mistakes were made. Hopefully, in light of these events lessons will be learned, by both the parties involved and those looking back at these events in the future. However, as we see more and more reports about the suffering of ordinary people, we realise that these lessons have been learned the hard way.
BP and Iraq Sign Development Deal for Kirkuk Oil Fields
Iraqi Government and British energy giant BP have signed an agreement for the future development of the Kirkuk oil fields in Northern Iraq.
A statement on the Iraqi Oil Ministry’s website said the “memorandum of understanding” between the government and the London-based oil company would enable further development of the oil fields as well as “to open a new page of work” for the North Oil Company, a subsidiary of the Oil Ministry, on “solid foundations”.
BP Director, Michael Townsend, said the company would conduct the necessary surveys and prepare the required statistics. He claims the company will increase production by 750,000 barrels of oil a day.
The Kirkuk Oil Field, discovered in 1927, is one of the largest oil fields in the world, producing half of Iraq’s oil exports, a reported million barrels a day. However, it has also been a wellspring for local instability: the fields had been seized in 2014 by the Kurdistan Regional Government, who piped oil across the Turkish border, a few hundred kilometres to the north. The fields were only retaken by government forces in October 2017.
Baghdad is attempting to reassert its authority throughout its provinces and according to Iraq’s Minister for Oil, Jahbar Ali al-Allaibi, Thursday’s announcement will “speed up the rehabilitation process”.
During the Saddam Hussein era, the fields suffered irrecoverable damage due to poor management. Excess production was reinjected back into the ground making Kirkuk’s oil thicker and therefore harder to extract.
On Wednesday al-Allaibi met with Britain’s ambassador, John Wilkes, where according to the ministry’s website, they talked about joint cooperation between the two countries in the oil and gas industry.
Trump’s Presidency and Russian Relationship: The Future
Much has been said about Donald J. Trump’s love affair with Russia. Questions deserve a thorough and honest investigation. As distasteful and risky it may be, the best outcome of the enquiry is accusations continue to swirl, Trump limps through three more years, and in 2020, he is crushed at the ballot box. The world moves on. If removed from office, odds are Trump whips his base into a frenzy. Only the height and duration of civil unrest is in question. A worse case is that Trump emerges emboldened, eager to settle Putin’s longstanding challenge.
Putin Mocks Trump
The competition is real. Putin’s economic and political dominance gnaws Trump. Putin knows this. So, he taunts the President and dares Trump to employ the same ruthless tactics he exploited to consolidate power and possibly become the world’s richest man. Since Trump only sees green, he took the bait. The race is on to be the world’s first trillionaire.
Russia’s population is 142 million. Its $3.86trn translates into a measly $26,900 per capita GDP. In contrast, the 326 million people of the United States generate $18.62trn in GDP, nearly five times Russia’s total. The US per capita GDP of $57,600 more than doubles Russia’s. Despite Russia’s meek economy and reports that Putin has embezzled up to $200bn in assets, Putin remains incredibly popular in Russia.
The apathy regarding this unparalleled heist makes Trump and Putin salivate over what they could jointly pilfer from the world economy. To advance their contest, the pair will identify a common threat. US-Russia relations will warm. Under the guise of “Peace through strength,” Russian sanctions will be lifted, and the Magnitsky Act repealed.
The administrative state in retreat, animal spirits will run wild. Trump’s name will be emblazoned across the globe. Countries desperate for jobs will be compelled to forge deals sponsored by Putin and Trump. Ethics be damned, the race to the bottom of the $120trn global economy will prompt a wave of corruption never seen before. Every facet of human decency will be compromised: environmental regulations, free and fair-trade by-laws, intellectual property, and human rights protections. The collusion is real.
In time, complicity will turn to double-crossing. It’s the Trump-Putin way. Makeshift “me-first” trade deals will collapse. Boycotts, divestitures and sanctions will be commonplace. Cooperation will evaporate. New political boundaries will be drawn with little world condemnation.
It doesn’t have to happen this way. Patience is a virtue. The checks and balances of the three branches of government are powerful mechanisms to thwart overt corruption.
Yet, for the impatient who seek Trump’s impeachment or removal via the 25th Amendment, be careful what you wish for. Only Trump can tame his army. To assume Trump will plead mercy at the feet of the administrative state contradicts Trump’s lifelong persona. He will relentlessly counterpunch and encourage his followers to do likewise. The short and long-term political and social risks are astronomical.
If Trump stems the tide, consolidates power and aggressively partakes in Putin’s race for two terms, the risks outstrip his forced removal. The consequences will be multi-generational.
Rope-a-Dope Is the Key to Containing Trump
The only path that possibly prevents extensive collateral damage is to check Trump into policy oblivion. Legislators must play rope-a-dope for as long as it takes, even three years if necessary. If Democrats take back both houses in 2018, the tactic will not set up Trump and his base for a final knock-out punch in 2020. For that to occur, numerous members of the GOP must join the effort. They too must throw periodic jabs at Trump then absorb a barrage Trump’s counterpunches.
With foes in every corner, even Trump – the self-proclaimed greatest counterpuncher in history—and his base will wear themselves out well before 2020. Then the decisive knockout punch can be delivered at the ballot box—without collateral damage.
Trump is severely wounded. If he gracefully and peacefully surrenders the Presidency, great. But don’t expect it. Rope-a-dope deployed by both parties is the countries best hope for a peaceful end to the Trump Presidency. Any other scenario risks the once unthinkable; an ‘American Spring’.
May Meets Macron
The UK prime minister agreed to pay £44.5m towards tighter border security at Calais.
Editor’s Remarks: The French president arrived in the UK for the Anglo-French summit amid widespread complaints from the Tory party about just why Britain is paying another £44.5m for tighter security in France. One Tory MP pointed out that this addition brings the total figure the UK has paid to France in recent years up to £170m. France, meanwhile, says that the amount is necessary because the migrants in Calais are trying to get to the UK, who must, therefore, contribute towards their costs. The talks were also consumed by the imminent task of reaching consensus over the UK’s trade deal with the UK after Brexit goes through.
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