THE International Monetary Fund has warned that Greece’s debts are on an ‘explosive path’ in its first annual review of the country’s economy since 2013.
The IMF warned on Tuesday that ‘Greece cannot be expected to grow out of its debt problem, even with full implementation of reforms.’ It finds that even if Greece successfully implements all of its financial and economic reforms its debt is projected to fall from 179% of GDP a year ago to 160% of GDP by 2030, ‘but become explosive thereafter’.
Despite Eurogroup statements that the Greek bailout is sustainable, the IMF estimates that by 2060 its debts will amount to a crushing 275% of GDP. The crux of the matter is that the IMF is not willing to engage in further bailouts at a time when, despite Eurogroup protestations, Germany does not want to keep sending its cash to Athens.
The IMF however called on Europe to provide ‘significant debt relief’ to Greece – despite Greece’s EU creditors ruling out any further relief before the current rescue programme expires in 2018.
Jeroen Dijsselbloem, the Eurogroup President, repeated his position on Tuesday, saying there would be no Greek debt forgiveness. The deepening divisions over the Greek debt crisis mean that the IMF will not be involved in the next phase of the ‘Greek rescue’ – a key condition for backing from the German and Dutch parliaments for a further bail-out.
Meanwhile, German Chancellor Merkel is fighting for her political life. Germany without the IMF will not be able to send funds directly to Greece, since the German right wing is winning support for its line that further payments will be a forced bailout of the lazy Greeks by hardworking Germans.
The developing crisis is expected to explode in July when Greece is due to repay some 7bn euros to its creditors – money the country cannot pay unless it gets a fresh injection of bailout cash to pay it with.
The Greek debt crisis, along with the crisis of the Italian banks, and the growing political crises in France, Holland and Germany, plus the continuing Brexit revolution in the UK, has seen Merkel face demands at home to end Greek aid, and abroad, on her trip to Poland, hear demands for treaty changes to restore the powers of national governments.
She had to argue against those who want treaty changes to ‘proceed very cautiously’ since the EU faced a growing number of major threats to its existence. Poland and other EU members are calling for a return to the union’s founding principles, i.e. a free trade zone with power residing in the nation states not the EU Commission.
It was pointed out to Merkel that an EU ‘concept paper’ launched ahead of the 60th Anniversary celebrations of the Treaty of Rome next month did not contain a single mention of the member states, only the EU institutions.
Meanwhile, three months before the final round of France’s presidential election, international investors are concerned about the strong showing of National Front candidate Marine Le Pen, who has promised to take France out of the eurozone and to hold a referendum on EU membership.
Greece itself is up in arms, with different sections of workers and farmers striking against savage cuts in jobs, wages and pensions, with farmers blockading the roads with tractors. At the same time tens of thousands of refugees are now ‘imprisoned’ in special concentration camps, where they are freezing to death in the cold.
Greek workers condemn the Syriza government as the traitors that sold them out to the European Union, and nothing more than the administrators of the Brussels cuts and privatisation programmes. Throughout the EU, the movement to quit the EU and break it up is becoming more and more powerful, as the Italian and Spanish banks groan under massive debts.
The working class of Europe is now being driven along the road of revolution – that is to smash the EU and replace it with the Socialist United States of Europe. What this situation requires is the building of sections of the International Committee of the Fourth International in every country to lead the struggle for the Socialist United States of Europe to its victory.
