There was no little irony yesterday when Angele Merkel and Nicholas Sarkozy announced that Greece might not qualify for the second round of bailout from the European Community. January 10 was the anniversary of the capture of Kleisoura Pass in the Greco-Italian War. On October 28.1940 Mussolini’s army launched a major offensive against Greece. Mussolini had assembled his army on the Albanian border and threatened the Greeks with invasion if they did not allow an Italian occupation of Greece. After the Italians attacked, the Greeks rallied their troops and. despite the larger size and modern equipment of the Italian army managed to drive the Italians out of Greece.  In November 1940 the Greeks launched their own offensive against the Italians. Under the leadership of Lt Gen Georgios Tsolakoglou, Lt Gen Ioannis Pitsikas and Lt Gen Georgios Kosmas, they broke through the Italian Morava–Ivan line and took the city of Korçë and established a front inside of Albania.

Hitler and his generals were appalled at the Italian losses and the humiliation of Mussolini. They began making plans to invade Greece themselves to relieve the Italians. They told Mussolini that he must drive the Greeks out of Albania.

General Alexander Papagos and his generals realised that they couldn’t easily defend the low ground at Korçë and decided to move to the pass at Kleisoura which guarded the entry into that part of Albania. The Italians mustered seven battalions in Albania and deployed, for the first time their new M13 medium tanks of theCentauro Amermoured Division. They attempted to use these tanks in several  frontal attacks on the Greeks but were blown to pieces by the Greek artillery On January 10, 1941, after four days of fierce battles, the Greek infantry divisions (mainly the 5th Division – made up largely of Cretans) finally captured the pass. The Italian headquarters immediately launched counterattacks but their troops were virtually annihilated. The Greeks possessed the pass. It was a famous victory that was hailed across the non-Axis world.

They managed to retain the pass and kept the Italians out of Greece until April 1941 when the German army attacked in force and the Greeks fought bravely for many months in an effort to resist German occupation. On January 10 they demonstrated to the world that Greeks were not afraid of sacrifice and danger and that they would not willingly  be conquered or occupied by the Germans or their henchmen. It was a bad day for Merkel and Sarkozy to insist on Greek capitulation.

Despite the immense sacrifices made by the Greek people in accepting, however grudgingly, the rigours of a policy of austerity and negative growth, these sacrifices appear to be insufficient for the Germans and their French henchmen to do as they promised. In addition to the austerity the Germans and the French have demanded progress on the voluntary restructuring of the Greek debt.

The voluntary restructuring of the Greek debt requires that private sector bondholders agree to lose over half of the value of their assets in a swap for Greek debt. The Greek government reported to them that their  talks with private bondholders on a debt swap, a key aspect to averting default, were progressing but there was no deal yet nor was their likely to be a deal.

There are certainly not enough creditors to fund the deal in its entirety and there is considerable argument between the private debt holders and the providers of credit default insurance as to whether this restructuring write down of debt would qualify as a debt default, triggering the insurance payments.  There is no rational solution to this dilemma posed by Sarkozy and Merkel as there is no fundable ‘half-world’ of debt reduction without default on the terms they propose. The private sector holders will insist that the restructuring counts as default and will trigger payments on their credit default policies. That will mean that the providers of these credit default insurance policies or swaps bear the burden of the losses. This will put the debts firmly back in the hands of French and German banks. This is a slow-playing circular passing of debt without any new capital to refresh the process. It is a wholly illogical approach to the solution of the problems of Greece. One can only hope that the Greeks step back, reflect on the Pass at Kleisoura and tell these new invaders that they are made of stronger stuff and wish them “Tha mou klasseis ta arxhidia".