Nearly thirty-five years ago, in a rare moment of truth-speak, President Gerald Ford, participating in a televised pre-election debate with future President Jimmy Carter, denied that the socialist countries of Eastern Europe were “captive nations” under Soviet domination.

Ford, not known for his political acumen, violated one of the cardinal rules of national political campaigns: thou shall not deviate from “truths” held closely by the US ruling class. The media came down on Ford like a ton of bricks; some say his indelicate comment cost him the election.

It is likely that the bumbling Ford misread his cues or suffered a brain lock since he had earlier signed a proclamation designating the week beginning July 13, 1975 as “Captive Nations Week.” Breaking with the unity of thought that ruling elites fight so hard to establish is not easily forgiven, even if it is inadvertent.

Despite the end of the Cold War, sacred and unassailable truths still are a fixture of US political discourse: politicians are not allowed to mention that the Cuban people overwhelmingly support their government; the plight of the Palestinian people – their suffering and hardships – must remain unspoken at all costs; the charge of terrorism must include and be confined to acts against imperialism; and private ownership of assets is always to be preferred over public ownership. These are theological commandments in a country that trumpets its commitment to freedom of thought.

The Real Captive Nations

Though the notion of “captive nations” was one of those ridiculous ideas born from the malignant minds of Cold Warriors, there is no better time than today to find it a precise and appropriate application. Its aptness is one of those sublime ironies that would make the old master, Karl Marx, smile.

In the wake of the most destructive waves of the economic crisis, most nations were left with extraordinary public debt. Bailouts, stimulative spending, and substantially reduced revenues pushed public debt loads dramatically higher, excepting those few countries with sufficient reserves. In a real sense, the assumption of debt was the prescription – the only prescription – for surviving an accelerating mortal spiral of the capitalist system.

But in a capitalist country in the web of a global capitalist system, debt is shorthand for an intimate relationship between borrowers and lenders, a relationship that is easy prey for international banks, hedge funds, and the global enforcers of capitalism, the International Monetary Fund and the World Bank.

The group of weaker, less developed countries of the European Union was one of the most vulnerable targets of financial predation. When the Union was formed in 1993 from the European Economic Community, Ireland, Spain, Portugal, and Greece were late comers and poor sisters to the more highly developed countries of the EU like West Germany, France, Italy and the other northern neighbors that founded the EEC. There was enormous pressure for these countries to achieve a “European” level of development and living standards. By membership, they gained open markets and access to capital. Their relatively low wages gave them somewhat of a competitive advantage within the Union. Despite this “advantage,” they remained the underachievers of Europe – more the quaint vacation destinations for the rich than economic titans.

With the creation of a single currency, the euro, in 1999, and the establishment of the European Central Bank, economic relations between members were reordered. The common currency forced the surrender of individual sovereignty over monetary policy, eliminating an individual state’s ability to adjust exchange rates against other currencies. Further, euro-zone participation was predicated on a strict set of economic (neo-liberal) parameters established by the Treaty of Maastricht. Regulatory constraints were imposed as well. In effect, countries surrendered a great measure of their sovereignty to be a part of the super-state, the EU, the weaker economies surrendering their fate to the economic super-powers of Northern Europe.

For the less developed, membership in the euro-zone was an opportunity for conservative governments to impose neo-liberal changes, justified by the promised prosperity enjoyed by the wealthier member states.

Ireland granted subsidies, lowered corporate taxes and taxes on the wealthy to draw multi-nationals to exploit an educated, but low wage working class. Greece sold off public assets to the tune of 11.1% of GDP between 1998 and 2003. Both were hailed as exemplary team players.

Only Communists and the anti-capitalist left foresaw danger in surrendering sovereignty to the dominant powers in the EU.

With the full blast of economic crisis in 2008, all of the EU-based hopes were dashed. Catching up was off the table and survival was the business at hand. Ireland’s unregulated banks had piled up huge debts, necessitating massive government-funded bailing. The Iberian construction boom fizzled, leaving mountains of debt and massive unemployment.

But Greece was the special case. When the newly elected PASOK government revealed in 2009 that the budget deficit was twice what the previous government had claimed – no doubt for political reasons – the financial predators descended upon the country. Like a pack of wolves attacking the weakest, most vulnerable of the herd, international bankers, equity firms and hedge funds began to bet against Greek debt management, driving the cost of borrowing sky high. They speculated with credit default swaps and against credit default swaps, establishing an upward swing in the costs of financing and re-financing debt and a downward swing in credit ratings. These swings invited further speculation and a further worsening of Greece’s debt position.

Financial writers purposefully overlook these waves of aggression, lest they reveal the continued existence of rampant speculative capital, the very element that brought the global economy down. Instead, they write of Greek corruption, profligacy and financial irresponsibility.

In truth, Greece was the victim of international banks, equity firms and hedge funds – a financial mugging that brought the country to the brink of debt default in May of 2010. And under the guidance of a social democratic government, a government wedded to neo-liberal policies, Greece surrendered unconditionally to the rule of the EU, the ECB and the IMF, accepting a bailout of €110 billion. Greece became a captive nation.

As a condition of EU and IMF servitude, Greece was forced to accept an austerity program that, apart from incalculable human misery, brought the economy down, sinking into depression. Greece is, indeed, a captive nation.

The New York Times
reported on May 16 that unemployment in Greece is approaching 15%, cement production is down 60% since 2006, steel production is down in the last two years, Athens has experienced a 25% increase in homelessness, and food kitchens are flourishing. Public sector jobs, wages and benefits have been slashed deeply. The human costs of this austerity program are only beginning to set in, while the cuts promise to retard Greece’s ability to raise tax revenue for both human services and debt repayment. The Greek government announced in April that it will seek an additional €3 billion in cuts. Currently, 6.7% of the declining Greek GDP goes to debt service, a figure inevitably growing as the economy shrinks and the cost of debt increases. These are the consequences facing a nation captured in the web of the EU, ECB and the IMF.

This is not merely extortion, but a wholesale commandeering of the Greek economy, and consequently, its political and social life. Recently, EU leaders demanded that the two predominant bourgeois parties of Greece meet and agree to continuing EU policy after the October, 2013 end of the PASOK government’s term. Dutifully, they met, though they could reach no agreement. Nonetheless, PASOK offered another €22 billion in cuts and tax increases to appease the EU lords of the manor.

But the EU game plan is not merely to bring Greece to its knees, but to steal its physical assets. The EU is demanding a fire sale of public assets, a massive privatization of the shared wealth of Greek society. So far, the appeasing PASOK government has entertained a €71 billion sell-off, with ports, airports, transport, power, water, motorways, gambling companies and telecommunications under consideration for heavily discounted sale to foreign investors. While this might momentarily appease the financial vultures, the massive loss of future revenue to the Greek government will only further cripple the Greek economy.

With glee, the IMF has noted that there is additionally a potential €200-300 billion of Greek property available for pillage, including the Olympic facilities and military properties. Will the Parthenon be next?

Greece has not known such domination by foreign powers since the Nazi occupation. As then, the only option is resistance.

Like a Nazi “Reichsbevollmächtigter,” the plenipotentiary of the EU is currently debating Greece’s fate. Understanding that Greece will be unable to pay or refinance the €66 billion in loans that will come due in 2012 (foreign bank lending to Greece declined 19% in 2010), the leaders are debating the best way to pick over the bones of the Greek economy. On one hand, the ECB threatens to cut off Greek banks (they borrowed €88 billion from the ECB in March) if the government attempts to modify its debt in any way. On the other hand, the euro-powerhouses, Germany and France, endorse loan restructuring in lieu of an additional bailout as requested by the Greek government. Neither option treats Greece as other than a satrapy.

The Other Captive Nations?

For the mainstream media, the enslavement of Greece is simply an aberration, a condition invited by Greek irresponsibility or a tragedy loosed by the gods of mythology. In reality, Greece’s plight is clearly the model for the other weak sisters in the EU. Ireland accepted a bailout that came with austerity provisos that mirrored Greece’s package and resulted in a dramatic decline in Irish living standards. With over a hundred billion euros in non-performing loans, a total that grew substantially from 2009, Irish banks continue to hang by a thread, inviting further extortionate intervention by the EU. They borrow even more than Greek banks from the ECB. And the yield on Irish bonds is 7.5% – a record level – above comparable German bonds. More austerity looms.

Portugal’s economy is reeling with at least a 2% annual decline in GDP projected for this and next year thanks to a severe austerity program. A €78 billion EU bailout is forthcoming, assuredly with further austerity and privatization demands from the EU lords. At the same time, Portugal is in the midst of a severe political crisis.

Spain, the next country in the sights of international financial predators, is also politically shaky with recent municipal elections rocking the ruling party. Spain’s 21% unemployment and stagnant economy thwart the country’s ability to contain and reduce its debt. While Spanish national debt trails the other three countries as a percentage of GDP, it is widely known that much Spanish regional and municipal debt has been hidden, unreported in official figures. The ruling “Socialist” Party has embarked on a severe preemptive program of budget cuts, layoffs, flexible work rules and other austerity measures that will only hasten the EU wolves to Spain’s door.

Even Italy, one of the old-guard members of the EU, may prove to be a candidate for captive-nation status. On May 20, Standard and Poor’s lowered the Italian public debt – $1.9 trillion – to negative status.

Resistance, not Collaboration

Facing captive nation or neo-colonial status imposed by their northern neighbors and the EU administration, the southern European countries have no option but to resist. Social democratic and conservative parties offer no road but collaboration. Like their Nazi-era predecessors, these Vichy-like leaders attempt to appease their masters while quelling the rising of the people. Trapped in the neo-liberal bubble and with no alternative vision, they enable the developed European powers to achieve the domination that the fascists of the last century sought through military means.

Resistance, however, means refusing the terms and conditions imposed by great powers. It means ignoring the debt – placing it aside, isolated from national accounts, as the “too big to fail” international banks did at the height of the crisis. It means threatening default if national sovereignty is not respected.

Resistance means rejecting the undemocratic nature of the EU and its institutions. If this means leaving the euro-zone and the imperious rule of the ECB, then captive nations should well entertain this option.

Resistance means formulating a new vision of a democratic, peoples’ Europe free from the domination of capital and elite rule. Of course this is a vision that projects socialism as the ultimate goal of rational, humane social relationships.

In Greece, this project is borne by the peoples’ movement of PAME and the militants of the Greek Communist Party. They, like their counterparts in the resistance to Nazi occupation, stand resolutely against the EU political and economic “occupiers,” rallying the masses to fight collaboration.

In Portugal and Spain, mass movements of workers and youth have taken to the streets in defiance of the bankruptcy of social democracy and the pain of EU-imposed austerity bringing joblessness and poverty. Hopefully, class-based organizations and Communists will continue to struggle to provide a visionary focus to their anger.

Those of us who stand in solidarity with the emerging European resistance should heed their experience. The wolves of financial predation are at our doors, too. The debt scam – the principal weapon of ruling class warfare today – threatens all of us.