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Why Greek Debt Is Also An Environmental Time Bomb

Kozani's coal mine in northern Greece
Kozani's coal mine in northern Greece
Stefano Balbi*

Greeks are used to making history, and they're at it again. What will last month's election victory of Alexis Tsipras and his anti-austerity Syriza party mean for the future beyond Greece? And more specifically, could it mark a turning point for the urgent global issue of environmental change?

A not-so-subtle fil rouge exists between economic and ecological debts. Too long blinded by the paradigm of economic growth, modern society has failed to see this connection. But now, the situation in Greece may be able to help a wider public reconnect the dots.

The changing global environmental situation is not only about climate change — currently a dead-end debate. A crucial study on planetary boundaries from the Stockholm Resilience Centre has demonstrated how economies have led societies to cross several other critical environmental thresholds: for example, biodiversity losses and nitrogen pollution. Others, fast approaching, include ocean acidification, land conversion to cropland, water consumption and phosphorus pollution.

If dimensions such as ozone depletion, thanks to a working international environmental treaty, are under control, others are not yet fully quantified, and don't look good. This is the case with the concentration of aerosols in the atmosphere and with toxic substances (such as plastic) in the environment. Any of these boundaries, once crossed, imply abrupt changes in Earth-system processes, changes that could put our civilization as we know it at risk.

Why are human economies crossing these boundaries? In a nutshell, economies need to consume environmental resources to grow. Even though some neoliberal economic research is attempting to prove that growth can be decoupled from natural resource consumption through innovation, nobody has offered any empirical data to prove it. The reason is simple: They can't. As Joseph Stiglitz famously said, "The invisible hand simply doesn't exist." If it existed, it would be giving us the middle finger by now. We have to face the fact that "green growth" is another fancy buzzword, coined to perpetuate the neoliberal agenda.

Our technology is indeed improving efficiency and therefore reducing some key natural resources consumption. However, we are also increasing our absolute consumption with the help of such factors as programmed obsolescence and population growth.

Why does every government need to pursue economic growth, at any cost and with no end in sight? Even in countries where a solid state is clearly physiological, strategies were devised to keep the dictatorship of growth alive. For example, European countries such as Italy, Spain and Britain recently included prostitution and illegal drugs in their national accounts for the first time, in order to meet "international standards" for measuring economic performance.

[rebelmouse-image 27088621 alt="""" original_size="869x579" expand=1]

Coal mine in Kozani, northern Greece — Photo: Francesco Anselmi/Contrasto

The reasons why countries succumb to the dictatorship of growth vary, but two stand out, and they both relate to public spending. First, growth is a substitute for income equality. As long as a country's economy is growing, there's hope for a widespread rise in wealth and thus no need for a fair distribution of resources. Public expense doesn't need to be high because public services can be supplied by the private sector and high levels of inequality are tolerated by the population. Secondly, growth makes sovereign debt sustainable. As long as a country's economy is growing, that country demonstrates it can pay back its creditors. So a country with a strong welfare state, which needs to borrow money to keep the public services functioning, is obliged to keep growing; otherwise public expenses need to be cut — or it could become what we can call a debt slave.

The making of a debt slave

How is debt slavery created? Here's a simplified storyline. First, an economy starts growing too slowly. This will eventually happen to any economy according to the basic laws of physics, but fluctuations happen due to unpredictable economic or geopolitical factors. At that point, the amount of national debt, and who owns it, become crucial. If debt is very high compared to the national balance, and mainly owned by international players, the situation becomes dangerous: debt, initially created to finance a welfare state, becomes an unbearable burden. Organizations such as the World Bank and International Monetary Fund start to point fingers at inefficiencies, corruption and unnecessary government expenses.

I'm not arguing that corruption doesn't exist, or that government efficiency shouldn't be improved. I'm saying that this argument is the hook for debt slavery.

At that point, a government can play the devaluation card by injecting money in the market at the cost of inflation, but it will probably be forced to dismantle the welfare state and sell its pieces to the private sector. Then the financial market, led by globalized investment banks whose aim is skyrocketing interest rates, jump on the prey.

Now the sovereign debt has a very bad outlook, interest rates have increased considerably and the country's debt is even more expensive than before. There's no way for the government to calm down the creditors, because they know that it would be impossible to pay back all the debt, even by selling all public assets. The country is at the mercy of international creditors, fully debt-enslaved. Any government in such a situation would sign any agreement with the international financial institutions just to survive.

Common refrain

This short tale may sound familiar to most readers in their fifties. Ask Bruce Cockburn why he wrote this expand=1] song during the 1980s. In those times there were still social movements asking for the debt cancellation of African countries. Nowadays, while Western creditors have not yet given up on Africa, most of the continent is basically being "land-grabbed" by China.

The novelty here is simply that the debt has traveled northward. The European PIIGS (Portugal, Italy, Ireland, Greece, Spain) countries have all been under financial pressures since the 2008 economic crisis, but Greece is the true guinea pig of the so-called Troika, having lost any monetary or economic sovereignty. The consequences are well known, and include the rise of radical right and left parties. To different extents this has been happening in most of the southern European countries. The resulting parties incarnate the bottom-up expansion of a movement of self-protection of the southern European people, especially from the disappearing middle classes.

[rebelmouse-image 27088622 alt="""" original_size="871x582" expand=1]

In Kozani, northern Greece — Photo: Francesco Anselmi/Contrasto

Last month, the left-wing Syriza party won the Greek election under the mandate of renegotiating the sovereign debt. Similar situations are growing in Spain (Podemos) and Italy (Five Star Movement). Surprising many, Greek Prime Minister Alexis Tsipras appointed a well-prepared Finance Minister Yanis Varoufakis, to implement the economic plan the party ran with. One of his first proposals — swapping the debt held by its Eurozone creditors for bonds with payments linked to economic growth — can be the first move for cracking the debt-enslaving mechanism. Although most neoliberal economic analysts won't agree, if the Greeks continue standing boldly as they are doing, this option could become the only viable way to avoid breaking the European (monetary) Union. This is a cost that nobody — and especially the European Central Bank, as shown by Mario Draghi's latest actions — is willing to pay. Furthermore, many mainstream economists — such as the 18 who recently wrote a letter to the Financial Times — are likely to accept the idea, on the basis that it could supply a powerful incentive to pursue pro-growth policies.

On the contrary, any scientist who has understood the work of Nicholas Georgescu-Roegen knows very well that growth is no longer the path to improve society. Growth is actually responsible for the global environmental changes that we are experiencing. The only way to stop it is to escape from the labyrinth of debt. The "Greek job" is truly an elegant way to unveil this perverse mechanism.

There is a chance — a small one — that a new Trojan horse will succeed in scratching the surface of a (neoliberal) wall built on the dictatorship of debt, the speculations of financial markets on the nations, the pursuit of growth at all costs and the indiscriminate consumption of natural resources.

*Stefano Balbi is a researcher at the Basque Centre For Climate Change (BC3). The views expressed here are his own and do not represent the views of the BC3

Francesco Anselmi is a photographer with the Contrasto photo agency

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FOCUS: Russia-Ukraine War

How Vulnerable Are The Russians In Crimea?

Ukraine has stepped up attacks on the occupied Crimean peninsula, and Russia is doing all within its power to deny how vulnerable it has become.

Photograph of the Russian Black Sea Fleet headquarters with smoke rising above it after a Ukrainian missile strike.

September 22, 2023, Sevastopol, Crimea, Russia: Smoke rises over the Russian Black Sea Fleet headquarters after a Ukrainian missile strike.

Kyrylo Danylchenko

This article was updated Sept. 26, 2023 at 6:00 p.m.

Russian authorities are making a concerted effort to downplay and even deny the recent missile strikes in Russia-occupied Crimea.

Stay up-to-date with the latest on the Russia-Ukraine war, with our exclusive international coverage.

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Media coverage in Russia of these events has been intentionally subdued, with top military spokesperson Igor Konashenkov offering no response to an attack on Russian Black Sea Fleet headquarters in the Crimean city of Sevastopol, or the alleged downing last week of Russian Su-24 aircraft by Ukrainian Air Defense.

The response from this and other strikes on the Crimean peninsula and surrounding waters of the Black Sea has alternated between complete silence and propagating falsehoods. One notable example of the latter was the claim that the Russian headquarters building of the Black Sea fleet that was hit Friday was empty and that the multiple explosions were mere routine training exercises.

Ukraine claimed on Monday that the attack killed Admiral Viktor Sokolov, the commander of Russia's Black Sea Fleet. "After the strike on the headquarters of the Russian Black Sea Fleet, 34 officers died, including the commander of the Russian Black Sea Fleet. Another 105 occupiers were wounded. The headquarters building cannot be restored," the Ukrainian special forces said via Telegram.

But Sokolov was seen on state television on Tuesday, just one day after Ukraine claimed he'd been killed. The Russian Defense Ministry released footage of the admiral partaking in a video conference with top admirals and chiefs, including Defense Minister Sergei Shoigu, though there was no verification of the date of the event.

Moscow has been similarly obtuse following other reports of missiles strikes this month on Crimea. Russian authorities have declared that all missiles have been intercepted by a submarine and a structure called "VDK Minsk", which itself was severely damaged following a Ukrainian airstrike on Sept. 13. The Russians likewise dismissed reports of a fire at the headquarters of the Black Sea Fleet, attributing it to a mundane explosion caused by swamp gas.

Kremlin spokesman Dmitry Peskov has refrained from commenting on the military situation in Crimea and elsewhere, continuing to repeat that everything is “proceeding as planned.”

Why is Crimea such a touchy topic? And why is it proving to be so hard to defend?

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