Posted by Amitabh Pal on June 16, 2011

The global austerity agenda is encountering a hurdle in Greece: The Greek people aren’t prepared to put up with forced deprivation.

In order to have loans to foreign creditors made good, international institutions, led by the European Union, are demanding ever-harsher assaults on Greek society. But the Greek people have fought back, protesting in huge numbers and causing the near collapse of the Greek government, which has been too willing to go along with creditors’ demands.

These are not just “the usual people that have been participating until now; they are people that have never been in the streets before,” Hara Kouki, a Greek doctoral student, told Amy Goodman. “For the last three weeks, we have had half a million people gathered in the square.”

Certainly, the Greek economy has a lot of structural problems that have caused things to come to this juncture. But the dark side of globalization has added to the country’s woes. The New York Times revealed last year that Goldman Sachs colluded with the Greek government to hide the size of Greece’s debt burden.

And once the country’s troubles began, speculators swarmed in, betting that the government would not be able to make good on its debt and pressuring it to make even more drastic cuts in social spending.

What is the best way out of this impasse?

Mark Weisbrot of the Center for Economic and Policy Research, an astute commentator on global economics, has the right idea: Greece should exit the Euro and let the creditors take a haircut.

“A threat by Greece to jettison the Euro is long overdue, and it should be prepared to carry it out,” writes Weisbrot in the New York Times, contrasting the recent experience of Greece with that of Argentina, which resumed high growth rates after removing the peso’s attachment to the dollar and defaulting on its foreign debt. “As much as the move might cost Greece in the short term, it is very unlikely that such costs would be greater than the many years of recession, stagnation and high unemployment that the European authorities are offering.”

The Greek government needs to put its people ahead of the international investing class. By doing so, it could serve as a role model for Europe and beyond.

If you liked this article by Amitabh Pal, the managing editor of The Progressive magazine, please check out his article entitled "U.S. Still Relies on Nuclear Weapons."

Follow Amitabh Pal @amitpal on Twitter