Third Bailout and the Third Punic War

John Weeks, Guest Blogger

Shock of Syriza Surrender

In an Open Democracy article I argued that there would be no agreement between the Greek government and the Troika.  I took this position because it was (and is) obvious that the most powerful actor within the Troika, the German government, would not agree to any substantial alteration of the austerity program imposed on previous Greek governments.

As a result, Greece’s Syriza government would have no choice but to abandon the eurozone and introduce a national currency. I was correct in my assessment of the inflexibility of the German government and its clients in the eurozone (e.g., Baltic countries and Finland) and the broader European Union (most obviously Poland).

However, due to naivety and/or the triumph of hope over experience, I never entertained the possibility that the Syriza government would capitulate to the Troika.  The capitulation arrived all the more unanticipated because the Syriza government acceded to EU demands more draconian and more of an affront to national sovereignty than those rejected by 61% of voters in the referendum on 5 July.

Carthaginian Terms for Athens

Polybius tells us that at the end of the Second Punic War (218-201 BC) the victorious Romans forced the Carthaginian Senate to accept a peace settlement that among other things required the loser to pay endless tribute to the Roman treasury and reduced the North African city state to a de facto dependency.

The Economist tells us that in order to begin negotiations about a Third Bailout program the Greek government has agreed, among other things, to transfer to the Troika the funds from the sale of public assets (up to €50 billion, though under fire sale pressure that total will never be reached), make immediate budget cuts, and surrender control over all economic policy (especially the public budget).

This post-referendum Troika package accepted by the Greek government adds insult of sovereignty to the injury of austerity (see the scathing assessment by Jürgen Habermas, perhaps Germany’s foremost intellectual, and the black humor in the annotation of the Troika terms by Yanos Varoufakis). The agreement requires the Greek government to clear with the Troika any policy proposal prior to informing the Greek population (details can be found on the EU website).

This requirement brings the end of Greek democracy by any reasonable definition. The role of the Greek parliament is reduced to rubber-stamping policies handed down by the Troika.

In most cases, it is futile to speculate on the motives driving extreme acts, because the perpetrators almost always seek to wrap themselves in the cloak of virtue. However, in this case Donald Tusk blew the Troika cover and revealed all. Mr. Tusk is president of the European Council, described as follows on an EU website (bold in the original),

In pursuit of setting “the EU’s political agenda,” Mr Tusk cemented his right-wing credentials by stating publicly that “I am really afraid of this ideological or political contagion, not financial contagion, of this Greek crisis.”  Lest anyone miss his point, the former Polish prime minister went on to say that his concern was caused by the “radical leftist illusion that you can build some alternative” to the EU’s neoliberal economic model.

He fears that this “illusion” resulted from “wide spread impatience,” which could lead to “the introduction of revolutions” (all quotations from the FT article). Carthage posed an existential threat to Roman power in ancient times. For Mr Tusk and the Troika, the Syriza government posed a radical threat to the recently consolidated neoliberal eurozone.

Expect no “just peace” for the country posing the radical threat. The suffering imposed on the Greek people by the Third Bailout will not be “collateral damage.”  On the contrary, since Greek voters rejected Troika rule by a landslide, the Hellenic citizenry presents a threat far greater than the government it elected. It must be punished to prevent a repeat of such democratic impertinence.

More Economic Decline

On 22 July, prime minister of Greece Alexis Tsipras, speaking during parliamentary debate, pleaded with MPs to approve the Troika-demanded “reforms” in order to begin negotiations for a Third Bailout. In the course of his speech, he stated that he objected to the Troika terms but saw no alternative to accepting them.

It is not surprising that Mr. Tsipras (or any other Greek leader) would object. The Troika pre-bailout package promises further decline and perhaps collapse of the Greek economy. We can be confident that if the Troika grants a Third Bailout the accompanying conditionalities will be no less odious and burdensome than previous ones (see video of Costas Lapavitsas speaking at the recent Democracy Rising meeting in Athens).

The Greek right of centre think-tank Foundation for Economic and Industrial Research (IOBE) predicts that the national economy will decline by 2-2.5% this year and continue to do so into 2016. This estimate is far too optimistic—it fails to include the depressing effect of the budget cuts demanded by the Troika.

Even more bizarre in his optimism is the chairman of the Institute for New Economic Thinking, who believes that the bailout deal is a winner for both sides. This excursion into Cloud-Cuckoo Land verifies that nothing is too reactionary and nonsensical for some (and often many) mainstream economists to endorse.

With the Troika demanding public expenditure cuts to achieve a budget surplus in the near future, it is quite possible that the Greek economy will contract by 5% this year and by that amount in 2016 as well. Since the Troika program will extend over several years, meeting its conditions could at the end of the Third Bailout find the Greek economy in the region of 60% of its 2010 level. FT‘ assistant editor Wolfgang Munchau fears that social upheaval and even insurrection in Greece as further economic disaster unfolds.

History Rhymes

As early as this February, the Guardian called the Troika bailout terms a Carthaginian peace. The Guardian could have pursued its analogy further.

After his defeat by the Roman leader Scipio Africanus at the battle of Zama in 201 BC, the great general Hannibal pleaded with the Carthaginian Senate to accept the draconian peace terms demanded by Rome. Polybius has him say to the Senate, “I beg you … to declare your acceptance of the [peace] proposals unanimously” (The Rise of the Roman Empire, Book XV).

The draconian treaty proved too burdensome for the Carthage Senate to implement. This led to a Third Punic War and yet another Roman victory in 146 BC, over an enemy far weaker after fifty years of austerity due to payment of tribute to the Roman overlords. No treaty ended this third war. The Roman army sacked Carthage, razed it to the ground and sold the population into slavery.

Those in Greece whose hope is that the Third Bailout has bought them time for a better deal with the Troika in the future might reflect on the outcome of the third Punic War.

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