Between reform and a black economy

With the publicity focused on the pointless battle in the television landscape…

Between reform and a black economy |

With the publicity focused on the pointless battle in the television landscape, fundamental changes are taking place in the economy, society, politics and interests, of course.

The actions of Greece’s creditors and partners is catalytic, as they systematically remover power and authority from the sinful Greek party politics, by creating enclaves of autonomy and independence from the deficient domestic political system.

The bailout agreements and the third one in particular, which was overwhelmingly voted in under the well-know circumstances, under the threat of an exit not just from the Eurozone but the European Union entirely, are creating circumstances that are entirely alien to Greek political traditions.

Especially over the past few months, the parties and forces which glorified the abolition of the bailouts have been tolerant and supportive of a structural reform unprecedented in intensity and extend, which can only be compared to that of Edward FitzGerald Law after the bankruptcy in1893 and the unfortunate war in 1897.

As we speak the Greek political system is losing control of basic pillars of the economy, specifically the management of collecting public revenue and insurance contributions, the control over public enterprises and organizations, as well as the management of non-performing loans, via which a violent redistribution of the country’s business map will soon take place.

The tax payers are already feeling the pressure from the independent, by now, General Secretariat of Public Revenue, which is operating based on specific standards with the enforcement of measures being automated to a maximum degree.

As soon as the electronic system identifies a debt as being overdue, automatic pressure mechanisms are automatically applied, at first with notifications and then with calls for settling the debt.

The pressure increases when settlement is breached. In this case, the automated enforcement measures are activated once again. Accounts and assets are seized and the debtors are called once more to settle their debts.

Even if they accept the new settlement and pay off the first installments, the restrictive measures are not lifted until the entire debt has been paid. The independent authority also has the right, should it locate non-seized accounts, to automatically collect what is owed without any formalities.

The automated procedures for claiming and collecting debts towards the State may prevent political interventions, but it also makes the revenue mechanism appear monstrous, without any sense of awareness, social or otherwise.

The main pension funds are also going to have a similar automated system for collecting debts.

The independence of the Finance Ministry’s General Secretariat of Public Revenue and the establishment of similar collection mechanisms in the Funds were main prerequisites in the third bailout and were imposed primarily at the demands of the inflexible International Monetary Fund.

The aftereffects of this major reform is already identifiable in large number of small and large businesses which are operating under the major tax and insurance contribution burden, as well as other duties such as paying wages. The pressure is such that it inexorably leads to a “black economy”, as evident by the State’s inability to increase revenue, despite the major hike in taxes and insurance contributions. The tragic irony is that the automated enforcement mechanisms were imposed indiscriminately and under the left government power was transferred to the tax-collectors, the leaders of whom, until recently, accused their opponents of being concessive and submissive to Germany.

However, that is not the only area where power has been handed over. The same happened after all control over the banking system was lost. With Tsipras’ capitulation last summer and the second bank recapitalization, the state lost its majority stake in the banks. Today the Greek banking system is owned by the Europeans and international investment ventures which are not scared off easily.

The Greek businesses with massive loans are treated as cheap commodities and their creators and investors as taints. As soon as the new legislation on the management of non-performing loans is introduced, business foreclosures will begin automatically and the owners will be replaced promptly, as soon as the bank designates the debtor as non-cooperative.

The redistribution of financial forces and interests will take place under the terms of foreign investors – speculators, primarily – without any sense of history, contribution or general value, in the name of a so-called sustainability which bank officers will determine, submitted and under pressure from the “silver” chair.

The third pillar of political power that is being handed over almost without a struggle is that of public enterprises and organizations. With the privatization super fund and the formation of a mixed management board, with both Greek and foreign officers where the latter have veto rights, the until recently state and publicly owned companies will be under the strong supervision and their managements will have to obey to the financial targets set by the super fund.

The consolidation programs will operate on a purely financial basis, with social aspects lost and the neoliberal rational prevailing.

The government which is struggling to control EYDAP, Attica Bank and urban transportation to support its social profile will find itself faced overnight with neoliberal targets and beliefs for the state, which still faces a base of change and political domination.

The fundamental contradiction – an intervention resulting in a fiasco

We are living, one could say, in a period of absolute insanity.

A government primarily comprised of populist forces from the left and right has accepted and is struggling to implement major structural changes and reforms that even Kyriakos Mitsotakis, who is accused being a neo-liberal apologists, would not dare adopt, much less implement.

That is how this structural intervention, however ambitious and great, is at risk of resulting in a fiasco.

Namely it may turn into a caricature of change, to compress the economy and society to such an extent, so it causes waves of reactions, revealing to the greatest extent the contradiction of political origins and targets.

Decline is inevitable as the Left of national struggles and sacrifices that Mr. Tsipras praises is at risk of being recorded in the consciousness of the Greek people as a force of submission and surrender, in complete opposition to the declared positions.

Antonis Karakousis
Originally published in the Sunday print edition

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