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Drachma entails coupons for food, fuel and medicines

16 March 2015 / 19:03:34  GRReporter
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In an extensive interview for the American magazine Jacobin*, SYRIZA MP Costas Lapavitsas, known as the "economic mind" behind the logic to return to the drachma, reveals the economic plan of the left wing in the ruling party, which openly supports such a solution.

In comments for the Greek online edition capital.gr, leader of the Liberal Drassi Party Theodoros Skylakakis explains what this would mean for the Greek economy. It is worth noting that Costas Lapavitsas is not just a member of the left wing of SYRIZA but one of the economic advisers to Prime Minister Alexis Tsipras. Some analysts even define him as a possible next finance minister in the coalition cabinet of SYRIZA and Independent Greeks.

In the interview for Jacobin he describes what would happen in Greece if it returned to the drachma, "The government would have to impose capital controls immediately and it would have to impose bank controls immediately... that is it would have to do what the European Union did in Cyprus. These measures would certainly remain for a long period of time, and some kind of capital controls would be in force continuously ... The introduction of the new currency would require a review of all activities ... It would take an army of lawyers… The contracts in foreign currency would be problematic. These contracts would have to be parked in some special accounts and they would have to be dealt with over a period of time... Naturally, bank nationalization would obviously be immediately necessary...and banks would have to be immediately placed under popular control with workers’ participation ... the bank employee unions would play a role in running the new banks ... fuel, food, medicines ... would require active intervention ... the period would not be easy ... we are talking about rationing."

To the question "And you are relying on the Greek bureaucracy to carry that out in an equitable and efficient manner?" Lapavitsas replies as follows:

"Unfortunately, we are. We have four months. In those four months we can take all sorts of action to prepare... There is already rationing in the country, except that it takes place through the wallet... Large sections of the population are not getting enough to eat ... We are already putting in place mechanisms that could deal with these problems of supply shortage. So that things would not be as difficult as they would have been in 2010 ... The country has a large capacity to produce electricity, it is pretty much close to self-sufficiency. The shortages will be in transport and there rationing will be necessary... A lot of people do not use their cars because they cannot afford to. Things are not going to change for large numbers of people."

Lapavitsas’ plan provides for a change in the geopolitical orientation of Greece. He is clear that the creation of alternative partnerships with countries such as Russia, Venezuela, China and Iran is "absolutely necessary" and adds, "And there is reason to expect good responses from those powers."

In turn, Skylakakis comments, "Economists - "Jacobins", perhaps due to ignorance but more likely because of indifference to the functions of a modern Western-type economy, have not assessed how the real economy would react to such a shock. And it implies the formation of a second market (black trade) that would work in euro; a mass withdrawal of companies to other countries; the destruction of companies with liabilities in foreign currency, which they would be unable to pay; freezing the European aid, which would result in bankruptcy and violations of EU rules in the course of implementation of this plan; countermeasures for the stupid threats like "jihadists with passports of the SYRIZA government in Europe" and the expulsion of Greece from Schengen to the detriment of tourism in the country and more.

Nobody has calculated the decline in the gross domestic product and the scale of economic and social disaster that this plan would cause. But surely it can be argued that if a government of "Jacobins" implemented this plan it would be followed by the international isolation of Greece, the disappearance of all Greek and foreign capital, and the collapse of any trust. The fall in the gross domestic product would be equal to that from the beginning of the crisis to the present day with the difference that it would affect an already exhausted society, and in a much shorter time. This is an economic nightmare that the majority of Greeks reject but some in the left wing of SYRIZA are developing under the inarticulate cries of support from the far-right supporters."

According to Skylakakis, the probability of this plan being implemented is very small. He argues, "Even if it had political support it would collapse under the weight of the reaction of society towards the destruction that it would cause when its implementation began. But even in this case the damage would be huge and it should therefore be avoided."

* The Jacobins led by Robespierre are the most radical group of participants in the French Revolution and they are largely to blame for the "big terror", ending with their own execution. Since then, the term has been used in the Anglo-Saxon world as a definition of far radical formations.

Tags: PoliticsEuroDrachmaCostas LapavitsasLeft wingSYRIZARationingEconomy
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