Interview: George Gilson
A rising star in the German Left Party (DIE LINKE), MP Sahra Wagenknecht charges hat Europe is using the blackmail potential of markets to force fiscal policy and political change on countries
THE ONLY thing German Chancellor Angela Merkel and Sahra Wagenknecht have in common is that they are both women raised in the former East Germany. With stunning oratory, the 42-year-old leftist MP has often ripped into the chancellor, saying that the banks are the key beneficiaries of the huge bailout deals. In an interview with the Athens News, Wagenknecht charges that Merkel is using the markets, with blackmail, to push killer austerity programmes that are doomed to economic failure. Advocating an overhaul of the role of the European Central Bank, she argues that surplus countries like Germany should finance programmes to build up the industrial base of deficit countries, such as Greece.Athens News: Many Greeks believe that the harsh a u s t e r i t y programme imposed by Germany and the EU has created a vicious circle of borrowing, namely taxes-recession-unemployment, that will destroy the middle class, and some view this as a new German occupation. Is there some truth to this?
Sahra Wagenknecht: This impression is correct. Cutbacks in wages, pensions and social security inevitably lead to a reduction in demand. Cutbacks on a scale as demanded from Greece lead to a distinct recession. The last one-and-a-half years have proven that. Do you think that the overwhelming power of the markets is undermining democracy in Europe, and if so, what can be done to repair this?
I would say that Merkel is using the markets in order to prescribe wage and social dumping as a solution for the countries in question. In order to change this approach, the political situation in Germany has to change. Otherwise, chances are slim that this false policy is going to change - even though alternatives are possible.
Public financing must be liberated from the dictates of the financial markets. This is possible if states are able to borrow money with favourable interest rates via a public bank. This bank in turn is to be refinanced by the European Central Bank. That way, financial markets could no longer serve as instruments of blackmail.You voted against the bailout packages in the Bundestag. How will countries like Greece survive without such loans?
A question in return: How is Greece to survive on those so-called rescue packages and the forced cutback programmes? Up to now the billions have only been used in order to bail out banks and private creditors. If a right rescue policy exists, you cannot opt for a wrong one.Are we moving from a European Germany to a German Europe, where all must follow the German model of absolute fiscal discipline?
Unfortunately, this is the way it looks. In the meantime, Merkel has dictated a killer cutback programme also for Italy - the third largest economy in the eurozone. This programme is to be monitored by the European Commission and the International Monetary Fund. Any Italian government will be forced to implement this programme. The future policy in Italy is going to be dictated by undemocratic European institutions as well as by German Chancellor Angela Merkel and French President Nicolas Sarkozy.What do you think Europe is expecting from the new Greek coalition government and is it something Greece can deliver?
The ruling policy in Europe is to expect an implementation down to dotting the i of the cutback policy that Greece has been dictated upon to enforce - this means a continuation of false policy. Against the background of this continuing blackmail, it is difficult to come up with constructive proposals for the new Greek government. It stands with its back to the wall.
The reintroduction of the drachma would lead to a worsening of the social and economic situation. In my view, however, it would be important for Greece to enhance its capacities to effectively levy and collect taxes from the rich and the big companies. In order to do so it would first be essential to invest money to create the necessary financial institutions. The Greek coalition government was set in motion by an EU ultimatum on November 6 and something similar is happening in Italy. Will the EU and the markets now have authority to implement regime change in countries that face bankruptcy?
Yes, apparently in these times of crises, the ruling policy in Europe is using the blackmail potential of the financial markets to facilitate short-term government changes. This is undemocratic and not acceptable - and this is true even though indeed it is nice that [Italian Prime Minister] Berlusconi is gone at long last.We've heard a lot of threats from Merkel, Sarkozy, EU Finance Commissioner Olli Rehn and others that Greece could be expelled from the eurozone. Is Greece's eurozone membership truly in jeopardy? Wouldn't Greece's expulsion have possibly as disastrous an effect on the euro as on Greece?
Expelling Greece is formally and legally impossible. However, suspending the euro rescue credits would have the same effect. Greece would then be forced to reintroduce the drachma. It seems that this possibility is used as a bargaining chip on the highest political level. This is completely irresponsible. A state bankruptcy accompanied by the reintroduction of the drachma under the existing conditions would be an invitation to the markets to start attacks on other countries in the eurozone.Many argue that Germany is profiting most from the euro, as Germany's surpluses are tied to the trade deficits of the south. Does the EU have a duty to invest in development projects that can create jobs and development in Greece, and not just solar energy programmes that benefit only Germany, as many charge?
Of course. This is the crucial point. Without the buildup of the Greek external debt, Germany's export-oriented industry would have never been able to realise its enormous surplus in trade with Greece. This is also true with regard to the German trade with other countries. Excessive indebtedness is always a partial responsibility of the creditor as well. This is why Germany has to be forced to strengthen its domestic demand. Also, on the other hand, special programmes - to be financed by the surplus countries - must be set up to strengthen the industrial basis of the deficit countries. The euro will only have a future if the crisis is solved with solidarity [among EU countries].