Nicole Prévost Logan

During the last week of February 2015, intense negotiations took place between the Greek government and the three members of the “Troika” – the International Monetary Fund (IMF), the Central European Bank (CEB) and the Eurozone.  On Feb. 27, the Bundestag, by a massive majority, approved the four month extension of aid to Greece.

It looked very much like a “déjà vu”scenario: Greece deep in debt, Greece kept alive thanks to several rounds of loans, Greece repeating its promises to curb public spending, and put a stop to fraud, corruption and tax avoidance.  The creditors, however, wanted to give the new government of Alexis Tsipras. a chance to prove itself.  The objective was to strike a compromise between austerity reforms and measures granting some respite to the most vulnerable segment of the population.  The Greek government had five days left before running out of money.

Greek Prime Minister Alexis Tsipras

Greece joined the Eurozone on Jan. 1, 2001.  Before 2000, the Greek deficit was about 13 percent of the Gross Domestic Product (GDP.)  By some miracle, in order to meet the criteria for joining the European Union (EU), the deficit was brought down to 3 percent, or more precisely to 3.07 percent.  Eurostat, the statistical office of the EU, the Organization for Economic Co-operation and Development (OECD) and other organizations, pondered over the figures.  The situation was confusing, especially after the Goldman Sachs experts helped Greece with some “creative accounting” by deducting currency swaps and derivatives amounting to 2.8 billion from the calculation of the deficit.

Before 2012, Greece’s creditors were mostly private banks, such as the Société Générale in France.  In March of that year, the banks agreed to cancel 70 percent of their loan or 107 billion.  In 2010 and 2012, the “Troika” granted two rounds of loans, amounting respectively to 110 and 141 billion.  Germany supports 30 percent of the Greek loan, France 23 percent (or 40 billion) and Italy 20 percent.  The participation of the Eurozone members is proportional to the size of their population.  The loans’s maturity is 30 years, 10 percent of the loan carries zero interest and the remainder has interest as low as 2 percent in 2015.  It is important to note these facts in order to counter a lot of disinformation available on the internet.

The discussions, held in Brussels, went well until the disastrous final press conference when the new Greek minister of finances Yanis Varoujakis posturing as a cool Bruce Willis, (to use the Le Monde expression) first demanded that the “Troika” change its name and then asked for a “restructuring” of the debt.  His tour of European capitals, ending in Berlin (where he should have started) was not much appreciated by the German Minister of Finance Wolfgang Schauble, who commented, “We agreed not to agree.”  Varoujakis retorted, “We did not even agree not to agree.”

At a time when refugees and migrants try desperately to reach Europe, the immigration policy of the Tsipras’s recently-elected Syriza party is quite unsettling.  Their plan calls for the retention centers, where refugees and migrants have been held until now, to be turned into “open centers;” to grant citizenship to 150,000 second generation children born in Greece; and to provide housing, schooling and medical care.  How are these programs going to be financed?  The wall built to protect the border between Turkey and Greece fell into disrepair after recent floods.  Maintaining this wall is not a priority announced the government.

There is pretty much a consensus about Greece’s inability to ever pay back its debt.  The creation of the European Funds of Stability and Finances in 2013 to “mutualize” the debt will help Europe absorb the Greek default with more serenity.

But it is far from a done deal.  In four months, before your know it, there will be fierce opposition to write off the debt.  Countries like Portugal or Spain are struggling through austerity and are are not about to continue bailing out Greece.

Nicole Prévost Logan

About the author: Nicole Prévost Logan divides her time between Essex and Paris, spending summers in the former and winters in the latter.  She writes a regular column for us from her Paris home where her topics will include politics, economy, social unrest — mostly in France — but also in other European countries.  She also covers a variety of art exhibits and the performing arts in Europe.  Logan is the author of ‘Forever on the Road: A Franco-American Family’s Thirty Years in the Foreign Service,’ an autobiography of her life as the wife of an overseas diplomat, who lived in 10 foreign countries on three continents.  Her experiences during her foreign service life included being in Lebanon when civil war erupted, excavating a medieval city in Moscow and spending a week under house arrest in Guinea.

Nicole Prévost Logan

In January 2015, in a forceful declaration, French president François Hollande officially announced a break with the Socialist program, which had been the basis of his 2012 presidential campaign.  It was a sharp turn toward a more liberal, market-oriented policy.  The Loi Macron, named after the young (33-year-old) Minister of Economy Emmanuel Macron, was to embody the new trend.

Emmanuel Macron

Expecting that the law would not pass, the government decided to use a joker – the article 49.3.  It was a gamble since, in the event that the motion de censure (vote of no confidence) of the opposition succeeded, the government of Manuel Valls would be disavowed and fall.  But the motion de censure received only 234 votes when it needed the absolute majority of 289.  The law passed.

The article 49.3 is included in the constitution of the Fifth Republic.  It allows the government to act in force to push a text through the Parliament without the need of a vote. It is a powerful but dangerous device.  It has been used 82 times since 1958.

The last time was in 2006 when Dominique de Villepin, under the presidency of Jacques Chirac, tried to promote the Contrat Premiere Embauche, or CPE (first hiring contract). The students demonstrated in the streets.  Shortly thereafter the CPE received national funerals.  The champion of article 49.3 was Michel Rocard who in the late 1980s used it 28 times.

After 200 hours of consultations and 1,500 amendments granted by the government, it looked as though each article had been accepted separately.  And yet, by the time of the final vote on Feb. 17, the far right (Front National), the far left (Front de Gauche), most of the right (UMP), and the 40 Frondeurs, or splinter group from within the Socialist party, joined in an alliance to put road blocks to stop the government’s proposal. Manuel Valls and Emmanuel Macron made their concluding speeches among jeers and interruptions.  On the face of many deputies could be seen a rather despicable sarcasm.

In fact, the manoeuvre of the government deserves to be applauded since, to push a text in force, was the only way for the Executive to succeed.  The Loi Macron reperesents an enormous task attempting to reform the fabric of French society.  It meant dismantling the century-old system of privileges and protected niches enjoyed by whole segments of the population, including the five million civil servants, known as notaires — in France, notaires are a specific type of French attorneys overseeing all legal transaction while collecting taxes on behalf of the government, doctors, veterinarians, taxi drivers, auction houses officials, etc.

All the professions are regulated and benefit from a a special satus.  The right to work on Sundays, and allowing intercities busses were hard-won victories.  Only indirectly, the Loi Macron dealt with unemployment and ways to jump-start the economy.

The law is insufficient and has its defects, but is a step in the right direction. It represents a real effort to bring changes and to satisfy Brussels. Angela Merkel, in Paris for more discussions about the Ukraine, expressed her satisfaction.

Nicole Prévost Logan

About the author: Nicole Prévost Logan divides her time between Essex and Paris, spending summers in the former and winters in the latter.  She writes a regular column for us from her Paris home where her topics will include politics, economy, social unrest — mostly in France — but also in other European countries.  She also covers a variety of art exhibits and the performing arts in Europe.  Logan is the author of ‘Forever on the Road: A Franco-American Family’s Thirty Years in the Foreign Service,’ an autobiography of her life as the wife of an overseas diplomat, who lived in 10 foreign countries on three continents.  Her experiences during her foreign service life included being in Lebanon when civil war erupted, excavating a medieval city in Moscow and spending a week under house arrest in Guinea.