“We will not be a colony” – “Nem leszünk gyarmat” – read the main banner of the January 21 Budapest rally. Many commentators and journalists started scratching their heads, wondering what was that message really all about. We have also tried to provide a possible explanation, exploring the role of the foreign press, admittedly though several others exist as well. However the threat of a colonial status is now openly raised in the mainstream press. Not for Hungary of course, but another member of the European Union, Greece. There were reports of a proposal by Germany that the budgetary competence of Greece is to be taken away. There are also talks of a new EU-appointed overseer who would have to approve any major spending item as well. But this latest report goes way beyond all of that:
The Financial Times reports:
1. Absolute priority to debt service. Greece has to legally commit itself to giving absolute priority to future debt service. This commitment has to be legally enshrined by the Greek Parliament. State revenues are to be used first and foremost for debt service, only any remaining revenue may be used to finance primary expenditure. This will reassure public and private creditors that the Hellenic Republic will honour its comittments after PSI and will positively influence market access.
De facto elimination of the possibility of a default would make the threat of a non-disbursement of a GRC II tranche much more credible. If a future tranche is not disbursed, Greece can not threaten its lenders with a default, but will instead have to accept further cuts in primary expenditures as the only possible consequence of any non-disbursement.
In this situation everyone would be assured that Greece pays up no matter what and Greece couldn’t threaten anyone with a possible default any more. Sounds good in theory if you are a creditor, right? But what if you are a Greek citizen? A Forbes contributor writes:
That is absolutely astonishing. These are harsher terms than the British Empire ever imposed, even backed up by gunboats and the Royal Navy. Imposed on anyone at all that is, not just whatever tussles were had with Greece.
An “all good efforts” committment to debt repayment is usual enough but an absolute one simply unheard of. It does, quite literally, say that if there’s an outbreak of plague that sweeps through the country (or any other disaster you might like to think of) then Greece has to repay the debts before offering health care to its own citizens at a time of national disaster.
So now we have a crystal clear understanding of the proposal for the Greek situation: Colonial status, with terms harsher than ever imposed under actual colonialism. The legal framework they are proposing is also unclear. Let’s say the Greek parliament passes a law that says that debt payments have absolute priority. So what? A next parliament elected in 2016 or any future election can just as easily repeal that law. Constitutional amendments would work the same way, unless they propose a wording that demands some insane increase in the requirements for further change. But even then they could be undone later. In any case there are limits to how much government service can you cut. Things like healthcare, education and police funding cannot be cut over certain limits, otherwise a good part of the population would just flat out leave the country and move to a place with more tolerable conditions.
But the intent is clear: transfer all available resources to the debt service and take all decisions on budgetary matters away from Greece. “In politics and history, a colony is a territory under the immediate political control of another state. ”
If the proposal goes through like this, Greece would have to be regarded as basically a de facto colony.
Perhaps the pro-government demonstrators in Budapest were onto something?
Hungarian Digest 