Story of Suharto’s ‘Iconic’ Photo: Greece debt crisis reminds Financial Colonization theory of West!

On 15 July, Greece parliament passed austerity measures required to secure a fresh bailout of 86 billion euros ($94 billion). Nevertheless, the proceedings were not silky, as expected already, out of 149 lawmakers in Prime Minister Tsipras’s left-wing Syriza party 32 voted against the deal including former finance chief Yanis Varoufakis and six abstained from voting. The reason – deal demands enormous pension cuts and amplification in taxes. But, if you deem these negotiations tough enough, then you are probably missing out on what happened in Indonesia in 1998.

Greece debt crisis reminds Financial Colonization theory of West!

IMF head Michel Camdessus (left) looks on as Indonesian President Suharto signs an agreement in Jakarta in 1998

Story of Suharto’s “iconic” photo

Here is a story of one “iconic” photo that describes how such a crisis occurred 17 years back too but the protagonist of the story then was Indonesia ruled by President Suharto. The book The Dollar Trap written by Eswar Prasad describes the image in detail.

Profound symbolism that envelops the picture: Financial colonization policy of West made Indonesia surrender to the IMF’s callous austerity measures.

The photo demonstrates Indonesian president signing an agreement with International Monetary Fund (IMF) head Michel Camdessus who is sternly standing with arms crossed over shoulder in background with a trivial unsympathetic smile on face and evidently browbeaten Suharto signing agreement leaned on the table.

The kind of austerity and structural reforms that Greece has to observe now makes it to achieve voluntary deflation. Considering the fact Greece is still a part of the euro zone and not an economy with an independent currency, devaluation of euro is out of question.

The only option that exists is wage, price and public spending reduction in order to accomplish competitiveness of any sort. However, this can lead to an economic slowdown. Akin to the past two bailouts of 2010 and 2012, when almost 90% of the money received through troika was spent on lessening of exposure of French and German banks to Greek debt, and only about 10% was injected in the economy; this time too nothing much must be expected. This means the game will prolong for long, maybe entering into fourth bailout soon.

Tale of two beleaguered economies

Suharto signed a deal with IMF so as to thwart his country from entering doldrums. The agreement bound him to do away with monopolies, subsidies, tariffs and tax breaks even for his dream projects.

Soon Indonesia entered a phase of negative growth in 1998. It wasn’t until 1999 that Indonesia experienced positive economic growth. Riots over removed subsidies soon followed, further destabilizing the already beleaguered economy.

Possible exit of Tsipras

Soon after the agreement with IMF, Suharto saw himself shunted out of power after 31 long years of authoritative rule. Tsipras is himself in no better situation even currently.

Astonishingly, 38 Syriza parliamentarians including former Finance Minister Yanis Varoufakis denounced the bailout deal as “a new Versailles Treaty” – the concord that demanded excessive compensation from Germany after its rout in World War I. Tsipras later suspended Finance Minister. Energy Minister Panagiotis Lafazanis and Deputy Labor Minister Dimitris Stratoulis also voted against the deal.

With sizable number of Syriza members against the deal, days ahead appear to be very rough for the party and its premier that arrived in power on anti-austerity-plank. It shouldn’t surprise anyone if elections are called in Greece in coming months considering possible increase in civil unrest in the country following tougher austerity measures.

Ashish Pandey

I am a business and finance journalist who is currently employed at Financial Express and previously at Zee News. My areas of interest include business and foreign policy. You can reach me on Twitter at @ashuvirgo1984 or @eFundsPlus.

You may also like...