This past week, a number of discussions have arisen on various blogs regarding the role of a country’s Central Bank and more particularly, how the ECB has been fulfilling its role.
One thing that makes the ECB different from all other Central Banks in the world is that the ECB is the de facto central bank for a number of countries at the same time. In addition, the “political master” of the ECB is not a sovereign, democratically elected government (please do not try to remind me about the ECB’s, so-called, independence!).
One of the roles that the ECB has quietly assumed is that it has become the “economic hitman” of the Eurozone. This role, of course, is not openly advertised. Nevertheless, objective analysis of certain events that have happened in the EMU over the past few years seems to lead towards this conclusion. Now, after we have witnessed the events surrounding the banking crisis in Greece recently, this conclusion is finally confirmed. In particular, questions are now being raised regarding the part that the Governor of the Bank of Greece, Yannis Stournaras, played in shaping the events of the past few months.
Aris Chatzistefanou is a Greek journalist and documentary filmmaker. He is the founder of Infowar and its associated web-site info-war.gr. Die Zeit has described him as The Michael Moore of Greece.
Aris wrote the following article that sounds more like a conspiracy theory than a statement of facts. However, I find nothing to be able to contradict his assertion…..do you?
by Aris Chatzistefanou (3 Aug 2015)
What was the trend in the last decade of the 20th century that ensured the dominance of neoliberal doctrines of capitalism across the planet? If your first response is the collapse of the former USSR and the Eastern bloc, think again. Behind the facade of the celebrations and observations about the alleged domination of liberal bourgeois democracy, one of the biggest attacks was taking place, by proxy, on the right of peoples to control the economy of their country.
Sawing off the branch on which it sat, the political establishment across the world began to offer different levels of independence to central banks. The political establishment obeyed the dominant view among market participants that politicians, who gained electoral power, were the cause of extreme cyclical fluctuations in the economy. This effect could only be balanced by an independent central banker. Besides the branch on which they were sitting, the politicians were also sawing down the tree of democracy. “The independence of central banks”, Naomi Klein explained to me a few years ago, “is the mechanism by which markets demonstrate to the politicians that ‘they cannot play with the market’s toys’. It is the most important evidence that the markets are in an open war with democracy.”
The European Central Bank was not an exception in this situation and it soon became the most ruthless “economic killer” that acted on behalf of the commercial banks in countries such as Germany. Using the central bankers of member countries like a “fifth column”, the ECB managed to impose its control on parliaments of weak countries, when needed, to overrule the governments that did not cooperate.
The fact that the European Union lacks political control mechanisms on such institutions, means that those institutions are completely uncontrolled. In the USA, where the FED enjoys similar “independence”, it would be considered unthinkable for the central banker to come into conflict with the interests of the federal government, refusing, for example, to buy Treasury Bonds to help the national economy to emerge from a crisis. Unlike in the Eurozone, the ECB has refused several times to listen to the wishes of even the Eurogroup, declaring allegiance only to Berlin or to specific financial institutions.
As Barroso’s former adviser Philippe Legrain revealed to the Greek Truth Commission for Public Debt, the refusal of the ECB’s previous president, Jean-Claude Trichet to consider any potential restructuring of Greek debt in 2010, was aimed solely at rescuing certain French and German banks which were particularly exposed to Greek debt.
As the debt crisis deepened, and the economies of the Eurozone region became hostages of their respective central banks, the ECB clearly took on the role of an “economic hitman”. In the same way that Washington had access to the CIA in previous decades to ensure its dominance in South America, Berlin began in 2008 to entrust “destabilization operations” to the ECB. The dress rehearsal was held in Ireland in 2010 when Trichet openly threatened the Irish government that the ECB would suspend its funding to the banking system thus forcing Ireland to exit the Eurozone, if it did not accept the “offer” of loans from the EU and IMF and the imposition of harsh austerity measures. The final statement in this agreement called upon the Irish taxpayers to be liable for an amount of EUR 64 billion, or about 14,000 euros per Irish citizen.
This implicit “coup” was repeated successfully in Cyprus when Berlin decided to dismantle the regional financial havens and gather control of “black money” into the more controlled parts of Europe. And, of course, the same threats from the ECB were repeated several times in Greece every time the terms of new loan agreements had to be set.
The mechanism of the ECB, in tandem with the central bankers of the member countries of the Eurozone, were now completely out of control and were interfering in the internal politics of sovereign states. The next step, namely the overthrow of an elected prime minister, was to occur just in a matter of time and was first tested in Italy.
In the summer of 2011, with a simple ultimatum letter to Silvio Berlusconi, Trichet and Draghi called for the imposition of harsh austerity measures before the ECB would buy the bonds of the Italian State. This was intended to save the country from imminent bankruptcy. Serving specific sections of the bourgeoisie in Italy, which was suffocating under the monetary policy of Berlin, Berlusconi spoke openly about the possibility of the exit of Italy from the Eurozone. This led to several bankers within and outside of Italy asking for his head on a plate.
As the Financial Times revealed last year, in the same summer of 2011, Italian President Giorgio Napolitano called the office of the technocrat and former employee of Goldman Sachs, Mario Monti, and in absolute secrecy asked him whether he would be ready to replace the elected prime minister. According to the Financial Times, the message given to Monti was that he would be called to take over the leadership of the government when the spread of Italian bonds, which at that time ranged at 200 units, exceeded 300. The soaring spread and the precipitation of Italian bonds was done through a series of skilful movements by the then ECB President, Mario Draghi (coincidentally or not, also another former executive of Goldman Sachs).
The ECB was now sending a clear message that, if any government did not follow their instructions, they would risk ending up in the dustbin of history in a very short time. (coincidentally, with another user of this phrase, George Papandreou).
[editor’s note: The Second Congress of the Soviets took place in October 1917. The representatives of all Russian parties were called to ratify the Bolshevik’s seizure of power that took place only a few days earlier.
Those who objected to the seizure of power and thought it was illegal, walked out of the congress before the resolution was passed, knowing that their voice would not be heard anyway and thinking that the Bolshevik government would fall soon after.
As they were leaving the assembly hall, Leon Trotsky shouted after them: “You are pitiful isolated individuals; you are bankrupt; your role is played out. Go where you belong from now on — into the dustbin of history!”
The phrase, “dustbin of history” has often been used by Greek politicians and in the Greek media. During a speech in Sep 2013, Greece’s then prime minister, Antonis Samaras, said that the worst of the Greek crisis was almost over and he reassured Greeks that the debt-stricken nation’s longest recession would soon be consigned to the dustbin of history].
The work of the ECB would, of course, not be such a success without the active support of the central bankers of the member countries of the EMU, which in most cases act as agents of the decision-makers in Frankfurt central headquarters. This, of course, has nothing to do with any form of personal treason but is a reflection of the prevailing balance between the economic elite of the member countries of the Eurozone and the powerful economic centers of Europe. The more the bourgeoisie in a Eurozone country are dependent and parasitic, the more the man who is the central banker will express his allegiance to the ECB. The celebrated “independence” of the ECB virtually ensures that it is not accountable to any democratically elected institution and thus it is attached to the strongest (and most lucrative) section of the economic elite.
There were, of course, a few times when the government of a country, which for various reasons, decided to deviate from the mandate of the ECB and became preoccupied with their local central banker. The right-wing government of Hungary battled for months to force the central bank governor Andras Seymour to leave his position, through which functioned essentially the representation of the country’s creditors. The EU and the ECB used their entire arsenal to prevent the removal of Seymour, going so far as to threaten Hungary with suspended voting rights in all institutions. At that time, it is remembered (unacceptable without doubt) that there was government interference in the freedom of the press, which until then had not bothered anyone in the corridors of power in Brussels.
In order to force Seymour to resign, the Hungarian government cut Seymour’s salary by 75% and put their own people into some of the posts of the central bank. In vain. The central banker left eventually only when his term ended and after the “independence” of the central bank gave him the opportunity to fight the interests of his own country using one of the most critical posts of the Hungarian economy.
The government of Cyprus also found itself in open war with their central banker. With the outbreak of the crisis in 2012, there was a coldness in relations between President Christofias and the central banker, Athanasios Orfanides. This evolved into conflict when Christofias realized suddenly that he did not control the banking system of the country at the crucial moments of modern Cypriot history. Once again, of course, Frankfurt spoke openly on the side of their own man who then exerted pressure to impose new austerity measures. Christofias even tried to refer Orfanides to the general prosecutor (accused of manipulation of official data) to try achieve his removal, but it was already too late.
The question that naturally arises is: Why did the SYRIZA government not understand any of this when it left Stournaras in charge of the Greek economy?”
Disclaimer: This is a translation of the original article which was written in Greek. I am responsible for all errors and deviations from the original text and, for that, I apologise. This is not my intention. Any recommendations for corrections are gladly welcome.