Why Greece May Exit EU, Join BRICS
Rumors have begun rising of Greece leaving the European Union and joining BRICS, the alliance of Brazil, Russia, India, China, and South Africa – considered the world’s emerging economies. Combined, BRICS includes 40% of the globe’s population and 20% of the gross world product.
Here’s a look at why Greek Prime Minister Alexis Tsipras may be moving Greece that way, and how it could benefit Greece as well as BRICS, particularly Russia and China.
A Savvy Tsipras
EU leaders have tried to paint Tsipras as a political newcomer who doesn’t understand how to negotiate and is leading Greece into a failed state. What they know is this: He’s a savvy politician who won’t capitulate to their bullying as they try to keep Greece under the Troika’s (European Commission, European Central Bank, and International Monetary Fund) dictatorial control, leaving the small country in depression with unpayable debt, eventually having to sell the Greek citizenry’s natural resources to international investors. The Troika has tried to assure Greece’s demise by imposing austerity, which has proven not to work, and in fact, be a killer in nations where implemented.
The reality is this: Tsipras, who turns 41 later this month, joined the Communist Youth of Greece and organized politics when he was still in high school, where he rose to public prominence supporting students’ right to publically protest. He’s been involved with the Communist Party and politics ever since, and used that base to carry him and Syriza into power in January. Having become prime minister, he’s engineered his plan to turn Greece further from the Troika and the EU, which could lead his country toward and into BRICS.
When elected earlier this year, Tsipras basically had a contradictory mandate: to end austerity and to stay in the EU. He’s smart enough to know that isn’t possible. So he seems to have manipulated the politics in ways to end austerity, but gradually lead Greece away from the EU while saying he’s not.
First, he brought in Yanis Varoufakis as finance minister to negotiate with the Eurozone’s finance ministers on a possible new bailout for Greece. He knew that Varoufakis is a brilliant economist and academic (professor at the University of Texas). He’s not a politician, and he doesn’t bullshit or take it from others. The EU dictators couldn’t stand him. When Tsipras had seen Varoufakis do his deal, he then had him step away from negotiations. But Varoufakis had become popular with the Greeks, and his mantra of the EU’s game being “extend and pretend” helped, it appears, to convince Greece’s citizenry to challenge the EU.
Once Tsipras had fought the EU enough, with the creditors refusing to rework a loan plan that would give Greece some breathing room to try and grow a depressed economy, Tsipras took the issue back to the Greek voters. That was last Sunday. He had come into power with just over 40% of the vote. In last week’s vote, his “No” position on the Troika’s demands received over 60% backing, solidifying his control of Greece’s fate.
Last spring, German Chancellor Angela Merkel, frustrated with Greece’s negotiation approach, snapped how the EU would be fine if Greece left, Russian President Vladimir Putin jumped at that opening. He contacted Tsipras and offered possible financial help. Tsipras immediately took an April trip to Moscow, meeting with Putin, who had been dealing for a year with sanctions imposed by the U.S. and EU, and military threats from NATO.
It appeared at the time that nothing came from the talks, but looks can be deceiving. The meeting was merely an introduction to the possibility of Greece leaving the EU and joining BRICS.
As of today, Tuesday, July 7, Tsipras has frustrated EU leaders by showing up at an emergency meeting without a new plan, which they had said they wanted. He’s promised to present one Wednesday, still publicly indicating a desire to stay in the EU.
But analysts are beginning more and more to see where this could be going, particularly those who have preached all along that Greece should say it can’t pay it’s debt and walk away. Then renew its old currency, the drachma, and begin trading with new partners.
This would lead to economic pain for Greece, but the country has already been experiencing depression and high unemployment (25% nationally, and 60% among young people), with pensioners already suffering from 40% cuts, with the Troika demanding more.
Meanwhile, this could be the key for bringing Greece into BRICS, perhaps with some immediate relief:
BRICS members last year took a major step in opposing the IMF and other Western banking interests, which we wrote about for The Clyde Fitch Report. It formed two multi-billion-dollar funding structures to promote cooperative economic development independent of the West. The first is the New Development Bank, started with $50 billion and expected to quickly expand to $100 billion. The second is a crisis lending fund of $100 billion, called the Contingent Reserve Arrangement.
In the next week, BRICS reps will be meeting, and will activate these two funds. That could make money readily available to assist Greece, if BRICS decides to do so. It might also hurry Tsipras’s decision of whether to bid Greece’s loan debts and the EU adieu.
Word has come late today that Merkel is deciding to become more lenient in demands on Greece. That’s wise on her part, but it may come too late.
A big fear for Merkel is that, should Greece’s revolt against the EU produce an exit, it could lead the EU’s other suffering economies to walk away from their loan debts. Spain, Portugal, Italy, and Ireland all are suffering from economic struggles. That would lead to an unraveling of the EU.
BRICS, meanwhile, could begin looking to investment deals with Greece that could result in building businesses and plants and employing Greeks. And that, in turn, could lead to investments in the other countries that step away from the EU.
That, in turn, could lead to an unraveling of NATO. The North Atlantic Treaty Organization is serving as Washington’s chief military threat to Russia. But polls show that citizens of Europe, who’s countries are partners with the U.S. in NATO, oppose challenging Russia militarily. And EU countries are also finding it difficult to financially support NATO, leaving that primarily to Washington.
So, while the EU is trying to spin the lie that Greece isn’t that important to Europe’s future, Tsipras realizes it is, and can use last week’s Greek vote and support — and a possible melding with BRICS — as strong political weights to demand respect from the EU, or to move away from it.