Defending Social Investment in Greece: Nicaragua's ALBA Example

“I will if you will.” That is the basis of almost all successful human relationships at every level. If the other side won't, then you do something else. Anything else is wishful thinking likely to end in failure, disappointment and recrimination. Politicians like President Vladimir Putin and President Xi Jinping understand this fundamental human reality. Other leaders, apparently including Greek Prime Minister Alexis Tsipras and his colleagues, ignore that basic relationship and suffer humiliating defeat as a result.

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For now, the Greek government has accepted the kind of quasi-colonial terms imposed by the U.S .government in the first decades of the 20th Century on countries throughout Central America and the Caribbean. Back then, the U.S. government sent in its military to enforce the appropriation of tax and customs revenues in payment of sovereign debt owed to Wall Street. At the time, U.S. Marine commander General Smedley Butler was very clear about his role as a gangster-like enforcer and wrote about it in his book “War Is a Racket.”

The economist Michael Hudson has pointed out that, these days, there is no need for the NATO countries to invade Greece to secure debt repayments for their banks. They shift the private banks' debt onto their own taxpayers and then threaten to shut down the victim country's cash flow via isolation from the Western financial system. This threat was enough to force compliance from Ireland and Cyprus. Now it has worked with Greece. Even so, the referendum in Greece on July 5 showed that the instinctive sovereign response of the Greek people, at least, is to do something else.

Most Western opinion argues against Greece leaving the Eurozone. The arguments against tend to focus on both the hardship such a move would bring for most people in Greece and on the technical complexity of setting up possible alternative arrangements. In fact, people in Greece have already suffered five years of severe economic repression. Given the chance, they and their international allies would certainly work out a sovereign future for themselves, just as people in Latin America have done.

The obvious examples are Argentina and the main countries of the Bolivarian Alliance of the Americas: Bolivia, Cuba, Ecuador, Nicaragua and Venezuela. In Nicaragua's case, that was the global significance of General Augusto Sandino's war between 1927 and 1934 against U.S. military occupation. Decades later, on July 19, 1979, the Sandinista Popular Revolution overthrew 45 years of brutal, U.S. government-supported dictatorship by the family of Anastasio Somoza.

In retaliation, President Ronald Reagan applied economic sanctions and a covert terrorist war to crush Nicaragua's unwelcome example of sovereign independence. After the Sandinista government lost the 1990 national elections, U.S. supported right-wing governments began a 16-year long policy program of privatizations and public spending cuts under the heavy hand of IMF and World Bank supervision. By 2006 Nicaragua's productive economy was sliding toward virtual collapse.

In January 2007, the Sandinista party returned to office led by President Daniel Ortega. Now, after just eight years, his Sandinista government has once again set an example of how to resist the tyranny of Western neocolonial capitalist doctrine. Nicaragua has turned its economy around with the same kind of program the Syriza government wanted to implement in Greece. But Syriza was blocked from doing so by the European Union and the IMF, effectively the governments of NATO member countries.

President Ortega's Sandinista government prioritized small and medium sized businesses and cooperatives, broadened its trade and investment relationships and promoted major investment in infrastructure. It did so despite being obligated to submit to IMF supervision of its public spending until 2013. President Ortega's January 2007 decision to join the Bolivarian Alliance of the Americas (ALBA) opened up a parallel line of credit out of reach of the IMF enforcers.

Venezuela's PDVSA State energy giant formed a private sector joint venture with Nicaragua's State oil company. The joint company, ALBANISA, imports oil from PDVSA on preferential terms paying 50  down and 50 percent over 20 years at 2 percent annual interest. The main condition of the agreement is that the second 50 percent has to be invested in productive and social programs. That second 50 percent is paid into a government aligned but private financial institution, the Caja Rural Nacional, a savings cooperative with a strong record of managing funds for social and agricultural production projects.

CARUNA manages the funds by allocating around one-third to social investment programs and two-thirds to productive credits mainly for agriculture and food production. The income generated from the credits for production finances the social investment programs. In Nicaragua's case, this has meant that the government has been able indirectly to finance social spending and agricultural credit valued at over US$450 million a year. The Nicaraguan government's budget for 2015 is a little over US$2 billion.

By contrast, the Greek government's budget is around US$12 billion. Greek energy imports are about US$17 billion a year. An arrangement between Syriza's government in Greece and sympathetic energy suppliers, like Russia's state energy corporations, could well work on a similar basis to ALBA's experience in Nicaragua. That outcome would facilitate over US$1 billion, or even more, for social spending and small business credit in Greece. On that basis Syriza could finally implement the program of government it was elected on but which has been completely blocked by the European Union and the IMF.

Whatever happens, political developments in Greece will take their course regardless. Most important now for Greece and its government is how they will protect their vulnerable population slumping deeper into impoverishment thanks to the extortion imposed by the European Union's gangster authorities and their accomplices in the International Monetary Fund. In practice, the Greek government has indeed been negotiating against the civilian arm of the NATO military alliance.

The Washington based IMF has always been the global financial enforcer of the US government and its allies. Under Mario Draghi former managing director of Goldman Sachs, the European Central Bank is run by Wall Street proxies. The European Commission is run by Jean Claude Juncker, formerly the longest serving European Union Prime Minister in the fiscal paradise of Luxemburg. Neoliberal Eurogroup President Jeroen Dijsselbloem, who came to prominence as a socialist in Holland, directed the destructive “bail-in” of Cyprus.

Cyprus also suffered the standard euro-zone austerity program of public spending cuts. The “bail-in” both undermined confidence in the Cyprus banking system and set an intimidating precedent for other Eurozone governments with intractable debt problems. The Greek government believed they could reverse that precedent in their case and they were proved spectacularly wrong. With this latest assault on a sovereign member country, the European Union has categorically abandoned its claim to a democratic vision based on human solidarity.For observers always sceptical of the European Union's claims, that reality has been obvious ever since NATO country attacks on Serbia, their attempted coup in Venezuela, the invasion of Iraq, the coup in Haiti, and their attacks on Ivory Coast and Libya. Events in Syria and Ukraine have underlined it. If the Greek people are to cope with the catastrophe now upon them, their clearest successful alternative is the experience developed since 2004 by ALBA, based on the strategic anti-imperialist vision of Fidel Castro and Hugo Chávez.
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"Tortilla con Sal is an anti-imperialist collective based in Nicaragua producing information in various media on national, regional and international affairs. In Nicaragua, we work closely with grass roots community organizations and cooperatives. We strongly support the policies of sovereign national development and regional integration based on peace and solidarity promoted by the member countries of ALBA."
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