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Varoufakis in Berlin: Stop Squeezing the Greek People!

June 9, 2015 (EIRNS)—Greek Finance Minister Yanis Varoufakis met with German Finance Minister Wolfgang Schäuble in Berlin yesterday, predictably not coming to an agreement because of the Germans’ continued stonewalling. Nevertheless, Varoufakis stressed at a press briefing, he believes that with some good will, an agreement is possible, it can be reached in one night of intense talks, based on the commitment to create relief for the Greek population.

"If we continue squeezing the Greek population, no reforms whatsoever will be ever reached," he said, reiterating what he had already put out in his blog on Sunday; namely, that Merkel should deliver a speech modelled on U.S. Secretary of State James Byrnes’ famous speech of Stuttgart 1946[1] that opened the door to postwar American cooperation with Germany. Merkel should give that speech in Athens or Thessaloniki "or any other Greek city of her choice," he said. It would "mark a sea change, a break with the past five years of adding new loans on top of already unsustainable debt, conditional on further doses of punitive austerity."

After his meeting with Schäuble, Varoufakis addressed an event of the labor federation-linked Hans Boeckler Foundation in Berlin, where he explained what Greece wants, and what the EU has so far refused to discuss seriously:

  1. Create an independent tax authority in Greece, free of interference from politicians or corporations

  2. Debt relief, to give Greece room to breathe and return to growth. He cites Greek debt held by the ECB which matures this summer; if Europe’s bailout funds stepped in and bought the bonds, it would spare Athens from borrowing more money simply to repay creditors. This could also include growth bonds, where repayments would be linked to GDP.

  3. A debt brake, a pledge that Greece would never fall back into the primary deficits that, he stated, caused the crisis in the first place. And he then outlined how the entire Eurozone needs deep reforms, to finally complete the monetary union. We would sign up for that, he says, to avoid a repeat of the last few years.

Concerning the Eurozone as a whole, Varoufakis attacked the euro-bureaucrats for their "creation of a ’tsunami of debt’ from banks in Frankfurt, Paris and Amsterdam to Athens, Dublin and Madrid. " This is the theory of ’surplus recycling’, where cheap credit flowed to the Eurozone periphery to create unsustainable borrowing levels, he said.

[1] The 1946 Jimmy Byrnes speech in Stuttgart was a prelude to the later Marshall Plan. In the speech, Byrnes made clear that Germany should return quickly to full national sovereignty, by drafting an independent constitution and establishing total control over all undisputed German territory. This statement of U.S. policy represented a break from the other occupying powers, who had planned to maintain their separate controls over the occupied zones. Byrnes made clear that Germany would be quickly restored to full territorial and economic integration, as spelled out in the Potsdam Agreement.