Fear is a powerful human emotion. Fear of the unknown surely played a significant part in Syriza’s humiliating climbdown and surrender of what national sovereignty had remained to Greece.
Fear is a powerful emotion if consenting to become a colony, agreeing to sell off your country and further immiserating millions is a preferable option to taking back your independence.
Perhaps the signal that was not given due consideration was Prime Minister Alexis Tsipras’ statement on July 10 that “we have no mandate to leave the euro.” The Syriza-led government also had no mandate for the continuation, much less the intensification, of austerity. Five and a half months into an administration that could have been used to prepare Greece for a different path instead marked time in futile negotiations, allowing the country’s economic crisis to develop to the point where the troika could dictate any terms it wanted.
And make no mistake: There is glee in corporate boardrooms, trading floors, banks and the government ministries that serve them that a Leftist government has committed itself to the harshest austerity terms.
Fira at Santorini Island, Greece (photo by Yoo Chung)
A good example of this comes from the late 1990s, when dissident Kim Dae-jong won election as president of South Korea as the first candidate of the Left to win office, only to immediately impose an austerity program imposed by the International Monetary Fund. President Kim’s candidacy had been opposed by the U.S. government, which had supported a series of military dictators, but likely was pleased in the end that he won since it demoralized his supporters and provided a priceless propaganda prop for the idea that there is no alternative to neoliberalism.
Although the agreement imposed on Greece by the troika — the European Central Bank, the European Commission and the International Monetary Fund — is indeed a coup, as the instantly popular Twitter hashtag proclaims, it shouldn’t be looked at simplistically as a German diktat. That is not because smaller countries like Finland and Slovakia aligned themselves with Germany in the manner of schoolyard kids standing next to the playground bully so as to not be the next target, but because the German government is acting as the European enforcement wing of international capital.
The upside down world of money over people
It is a neoliberal world indeed when entire countries are bled dry to safeguard bankers’ profits and doing so is presented as the highest moral duty. The human face might have been German Finance Minister Wolfgang Schäuble in the role of Dr. Evil, but the minister is no more than a physical embodiment of powerful social and economic forces. Forces of human creation but not necessarily in human control.
So let us not over-simplify and place all blame at the feet of Syriza by declaring the party “opportunists” or whatever word of opprobrium one wishes. Nor should there be illusions that walking away from the euro, canceling the debt and the resulting cutoff from financial markets would be an easy road to take, even if, in the long term, it is the road that should have been traveled. Socialism in one country is not possible in one small country. Socialism in a single big country would be extremely difficult, if the entire might of the capitalist world were arrayed against it.
There are no Greek solutions for Greece, there are only European or international solutions.
Nonetheless, somebody has to go first. Finding allies is indispensable for any Greek turn from the eurozone to have a chance at success. It does not appear that Syriza looked beyond the European Union for allies. In an interview with the New Statesman, former Greek Finance Minister Yanis Varoufakis, when asked if the government attempted to work with the governments of other indebted eurozone countries, gave this answer:
“The answer is no, and the reason is very simple: from the very beginning those particular countries made it abundantly clear that they were the most energetic enemies of our government, from the very beginning. And the reason of course was their greatest nightmare was our success: were we to succeed in negotiating a better deal for Greece, that would of course obliterate them politically, they would have to answer to their own people why they didn’t negotiate like we were doing.”
Fear of offending the more powerful and internalizing the “moral” hectoring they deliver at every opportunity. Guaranteeing bank profits is somehow more “moral” than the health and well-being of entire countries. Social Democrats have absorbed this ideology as thoroughly as conservatives.
In the same interview, Mr. Varoufakis, recounting that his counterparts, the other eurozone financial ministers, refused to negotiate or even engage intellectually with him from the start, was asked why the government kept talking until the summer. His reply:
“Well one doesn’t have an alternative. Our government was elected with a mandate to negotiate. So our first mandate was to create the space and time to have a negotiation and reach another agreement. That was our mandate — our mandate was to negotiate, it was not to come to blows with our creditors. … The negotiations took ages, because the other side was refusing to negotiate. They insisted on a ‘comprehensive agreement,’ which meant they wanted to talk about everything. My interpretation is that when you want to talk about everything, you don’t want to talk about anything. But we went along with that.”
Eurozone membership or an end to austerity
Yes, Syriza was elected with a mandate to negotiate; that follows from Greek majority popular opinion that the country should remain within the eurozone. But there was also a mandate that austerity be brought to an end. Syriza proved unable to resolve this contradiction: Greece can end austerity or be in the eurozone, but not both at the same time.
What we do make of Prime Minister Tsipras declaration, “An end of the blackmail,” issued in late June at the time of his decision to call a referendum on austerity. In his statement, referencing the troika negotiators, he said:
“They asked the Greek government to accept a proposal that accumulates a new unsustainable burden on the Greek people and undermines the recovery of the Greek economy and society, a proposal that not only perpetuates the state of uncertainty but accentuates social inequalities even more.”
The vote went ahead, against direct orders by European governments, and Greeks voted 61 percent to 39 against the terms offered. A week later, the Tsipras government agreed to terms that were worse — the harshest austerity yet imposed. So much for democracy. And make no mistake, this deal is consistent with the “structural adjustment” that the IMF has imposed across the global South.
Prime Minister Tsipras’ final set of concessions in exchange for a fresh bailout was an undiluted structural adjustment. Included in the Greek “reform” package were:
- Allowing greater wage inequality and a fall in wages as a percentage of gross domestic product through 2019.
- Raising the pension age to 67 and increasing the health care contribution of pensioners by 50 percent.
- Gutting labor laws through a “review [of] the whole range of existing labour market arrangements, taking into account best practices elsewhere in Europe.” In other words, loosening worker protections.
- An “irreversible” privatization of the electricity provider.
- Privatization of the country’s ports, airports and much else.
The nearly immediate answer was “No, still not enough.”
The prime minister said the popular referendum would strength his negotiating hand. So in the end, what concession did he extract? The fund that will supervise the fire sale of Greek assets, in which the rules will be set by the troika, will be managed from Greece instead of the tax haven Luxembourg.
Hurray.
The Greek government has committed itself to sell off state assets worth €50 billion, with half the total to be used to recapitalize Greek banks and the half to pay down Greek debts. Not one euro toward social welfare!
Resistance continues
Although the government appears to have the approval of Greece’s corporate parties, including New Democracy and Pasok, it does not have the support of all of Syriza. The latter’s Left Platform calls for a “radical reform” of the banking system, the complete halt of austerity policies, an exit from the euro and a writedown of most of Greece’s debt. Outside of Syriza, Antarsya calls for the nationalization of the banks and an exit from the eurozone. A general strike has been called for July 15. And there is no shortage of ideas on alternatives to austerity.
The online news site Greek Reporter summarizes the Left Platform’s expectations of the benefits should its program be adopted:
“An exit from the Eurozone would generate further benefits according to the proposal. Namely, the restoration of financial liquidity, a sustainable growth program based on private investment, the rebuilding of the internal economy to reduce dependence on imports, an increase in exports, independence from the European Central Bank, its policies and restrictions and finally the utilization of unused resources to create rapid growth so as to protect against the first difficult months following the Grexit. The document also concedes that an exit from the Eurozone should have been prepared by SYRIZA but was not.”
Instead, the prime minister says he is choosing a bad choice over a catastrophic choice. Those are the only two choices that the European Union, a project in which rule by finance replaces democracy, can offer.
As assuredly as with nature, politics hates a vacuum. If the Left is not going to offer an alternative to the tightening hegemony of the most powerful industrialists and financiers — the “market” is nothing more than their interests — then the gates to the authoritarian Right, even fascism, are thrown wide open. In a separate interview, Mr. Varoufakis gave this warning:
“In parliament I have to sit looking at the right hand side of the auditorium, where 10 Nazis sit, representing Golden Dawn. If our party, Syriza, that has cultivated so much hope in Greece … if we betray this hope and bow our heads to this new form of postmodern occupation, then I cannot see any other possible outcome than the further strengthening of Golden Dawn. They will inherit the mantle of the anti-austerity drive, tragically. The project of a European democracy, of a united European democratic union, has just suffered a major catastrophe.”
Europe’s capitalists, who established the European Union as a mechanism to tighten their control over the continent and force U.S.-style policies on their societies beyond popular control, won’t be ruffled by that conclusion. But will the world’s working people be?
Systemic Disorder 
Reblogged this on jmondaygossip.
good. but the finance minister ought to have had a serious in depth draft of a plan after all these months? to leave the Euro.. otherwise it is all BS he is saying now… five people met to talk about it?
that is the main hole in the all situation. no plan means accept all the troika propose. Is this wrong? You almost get to articulate this…
Syriza, as a whole, doesn’t have an alternative plan. And, to be fair, the European Central Bank tightening the screws on Greek banks, and the exodus of money out of Greek banks, have put Greece in a dire situation where something had to be done. I am not doubting Alexis Tsipras’ sincerity that he felt he had no alternative to something bad over something catastrophic, but that Syriza did not take office with a plan is a factor in Greece reaching the point it has reached.
If staying in the eurozone is elevated to a principal above all else, then signing over your sovereignty for a new bailout is perhaps a reasonable course, given the totality of circumstances. But why should the euro be at that level of importance? There are psychological issues here, specifically the desire of the Greek people to “remain part of Europe,” which seems, in part, to be defined by being part of the monetary union. There are nine countries that are part of the European Union but retain their own currencies. They are surely part of Europe, too.
I confess to not having followed the Greek issue very closely. After reading several of your posts on the subject, I decided to do a little bit of research. My take right now (subject to change, of course) is that you may be focusing too much on the troika and not paying enough attention to governance issues in Greece. In other words, it seems that you are portraying the Greeks as victims of the international bankers. It appears to me, from what little I’ve read on the subject, that there is another side to the crisis that doesn’t get much exposure. That side is that the Greek government is plagued with corruption and inefficiency, the result of which is a reluctance on the part of its citizens to participate (we’re getting there, too!). How does this play into the current crisis? It is all well and good to frame this argument in anti-capitalist terms, but it appears that some of the worst offenders are right at home. No doubt, the 39% who voted in favor of the bailout package stand to benefit enormously from the terms of the package.
It bothers me that Syriza hasn’t come out with a plan to solve the problem. It appears to lurch from crisis to crisis without a game plan, similar to the political parties in this country. Opposing terms demanded by creditors is one thing; presenting a plan to solve the problem is quite another.
In my Internet travels seeking more information about the crisis, I came across the blog Greek Default Watch. I’d be interested in your opinion about what the author has to say.
Starting with your last paragraph, I was rather unimpressed with the author of Greek Default Watch. He simply re-iterates the standard lines promulgated by the corporate media, except he at least has sympathy for the Greek people instead of the snide condescending common to corporate-media reports.
But he, and you, do make valid points in noting the corruption of past Greek governments. Both New Democracy (Greece’s Republicans) and Pasok (Greece’s Democrats) did not cover themselves in glory when alternating in office and it was New Democracy, in league with Goldman Sachs, that cooked the books in the first place to enable Greece to enter the eurozone. An entry that has proven to be a disaster for the country.
But we really don’t get at the root of the problem unless we look at Greece’s capitalists. Remember that Greece’s shipping industry, the country’s most important, has it written in the constitution that it doesn’t pay taxes! Much of Greek industry is controlled by oligarchs, who pay far less than they should in taxes and spirit most of their gains out of the country. Greek capitalism is corrupt and inefficient, and the corruption of past Greek governments can’t be separated from the fact that, prior to Syriza’s election, the Greek government had been wholly captured by Greek’s oligarchs.
Greeks actually work the most hours of any people within the European Union. I did some research on this in 2012 for one of my first blog posts and found that Greeks not only work far more hours than Germans, for example, but at the time earned 73 percent of what Germans earned. That spread has surely widened since then because Greek wages have dropped significantly.
So, yes, there are internal factors that have helped bring Greece to its present predicament. But those internal factors are powered by its capitalists, not altogether different than how the capitalists of typical capitalist countries possess decisive influence over their governments.
What is perhaps unique to Greece within the global North is the degree to which small businesses still predominate in everyday commerce. The many mom-and-pop shops, however, are going to find the future more difficult should all the “reforms” the troika wish to impose actually go through because those reforms are designed to force open Greece’s economy to multi-national capital. So if you believe that small, local businesses should be supported over faceless chain stores, the new bailout terms are not good.
“But those internal factors are powered by its capitalists, not altogether different than how the capitalists of typical capitalist countries possess decisive influence over their governments.”
Ah, yes. That puts any opposition to the oligarchs’ agenda between a rock and a hard place. No wonder there is such a large underground economy and disregard for paying taxes in Greece – the very survival of a good percentage of the population depends upon such activities.
Is this the future of the United States, also?
I’ll be interested to read your thoughts on the Zero Hedge article.
There have been some interesting posts over at Zero Hedge rehabilitated ex-Greek finance minister Varouvakis. They hint at the real reasons he was forced to resign. He claims he spent the past month warning the Greek cabinet that the ECB would close Greece’s banks to force a deal. When they did, he was prepared to do three things: issue euro-denominated IOUs; apply a “haircut” to the bonds Greek issued to the ECB in 2012, reducing Greece’s debt; and seize control of the Bank of Greece from the ECB. Reports suggest this was what cost him his job.
According to Zero Hedge, none of these moves would have constituted a Grexit but they would have threatened it. Varoufakis was confident that Greece could not be expelled by the Eurogroup; there is no legal provision for such a move. But only by making Grexit possible could Greece win a better deal. And Varoufakis thought the referendum offered Syriza the mandate they needed to strike with such bold moves – or at least to announce them.
He hinted at this plan on the eve of the referendum, and reports later suggested this was what cost him his job. He offered a clearer explanation.
http://www.zerohedge.com/news/2015-07-13/yanis-varoufakis-merkels-control-over-eurogroup-absolute-they-are-beyond-law
The Zero Hedge report centers on the New Statesman interview that I linked to in my post. An interesting read, as Yanis Varoufakis is now freer to talk. The ex-finance minister gives this account of leaving the euro at the start of Syriza’s election:
There is no doubt that a return to the drachma would cause pain in the short term, and neither the finance minister nor anybody else could guarantee that it would work. It did work for Argentina, as I have previously wrote, but Argentina had advantages that Greece doesn’t have, plus it didn’t have the expense of printing a new currency. Argentina merely had to end its peg with the U.S. dollar, a structure that acted the same as a common currency but could be broken at any time.
Still, I see no basis for any guarantee that Greece remaining in the euro and being forced to accept more austerity will “work.” It certainly hasn’t. But perhaps it was felt that it is better to go with the devil you know than an unknown one.
Not that the Greeks need my assistance, but wouldn’t it be possible to print drachmas while still tied to the Euro and then peg the drachma to the Euro so that the Argentine option was at least on the table? I’m sure I’m not the only follower here who has trouble wrapping their minds around the complexities of international finance.
It is damned complex, that is for sure. Pegging a new drachma to the euro is an interesting idea, and doing so (at a devaluation of 20 percent) forms the basis of the conception of economist Costas Lapavitsas, himself a Syriza member.
To repeat a summary of his ideas that I wrote in an April blog post, Professor Lapavitsas argues that, although getting rid of capitalism is what is needed in the long term, for now getting rid of austerity is what is necessary and that is impossible within the framework of the eurozone. He believes that a negotiated exit from the euro would be the best solution. This would include a 50 percent debt write-off and that the devaluation of the drachma be limited to 20 percent through an agreement with the E.U. to tie its value to the euro; that is, the drachma would not be traded freely as currencies customarily do.
There are doubts that such a drachma valuation is possible. How a currency peg ordinarily works is continual intervention in foreign-exchange markets. For example, Argentina did not make an agreement with the U.S. Treasury. What it did was continually buy its pesos in foreign-exchange markets to prop up the price, thereby keeping it even with the dollar. If traders deem a pegged currency over-valued, however, the country wishing to maintain the peg has to keep spending in order to offset traders selling. Eventually, this isn’t possible anymore; it is too much of a drain on the treasury.
An agreement to keep a new drachma pegged to the euro at a 20 percent discount — meaning the drachma would not trade freely — is technically possible but, to the best of my understanding, would require an agreement with the keepers of the euro and I am doubtful the high priests of finance would agree.
A newly issued drachma would naturally be valued at one to one with the euro, but a freely traded drachma would be pounded in the forex markets, quite possibly losing two-thirds or more of its value. Losing two-thirds of its value would mean that one euro now equals three drachmas. That means Greeks can’t afford imports any more but Greek exports and vacationing in Greece are really cheap. Greece would have no choice but to re-start production in as many areas as possible, and export products where it has strengths. Such a currency devaluation, which would be a form of inflation, would produce a lot of pain in the short term. In the long term, it might be the best way for Greece.
Opinion generally is that Greece would have a more difficult time righting itself than Argentina did the early 2000s, and that opinion is reasonable. But staying on the path it has been taking definitely means many more years of punishing depression.
Ah, the Left. The Washington Generals of 21st century politics.
The Greeks have much more leverage than is admitted. They are depicted as helpless and hopeless because of the enormity of their debt to the hegemons of the EU, centering around Deutschland. But I remember the New York Times headline indicating that as soon as Greece voted NO to austerity, Germany “blinked”, and even suggested a temporary Grexit. At first, a creditor dominates a debtor, until the debt becomes enormous enough that the creditor has to worry about the unwillingness or inability to pay back or even continue to service the debt opens up a major threat. When debt service is at the point that the interest cannot be paid except out of new loans, the creditor is in a lot of trouble. The creditor is addicted to getting back the whole package, even though a partial foregiveness leading to a partial repayment is the most that the creditor can expect.
The so-called debts are a fraud, a result of fraction reserve banking, in which central banks lend out a multiple of their reserve, hooking all the debtors into paying interest on money that does not really exist, with an appetite that in the not-very-long-run swallows up the productive economy. The population gets ever poorer, high finance gets richer and richer, and the greater that gap becomes, the more the poor owe the superrich. This is greatly underestimated by a twisted Marxism which underplays rapacious high finance and remains fixated on a class struggle narrowed to factory workers versus factory owners.
Of course, the Greek people cannot make a move unless they regain sovereign control over their national currency. A structure that does not control national currency has no right to call itself a government, and a country with no government is defenseless against surrounding predators.
In fact, an example of that, also moving to bankruptcy with no currency of its own is Puerto Rico, which is called a free associated state, meaning colonial slavery.
Even the mighty U.S. of A. is more and more becoming a colony of high finance, around the mechanism of the Federal Reserve Bank, artificially propping up the stock and bond markets while everything else sinks in quicksand and clutches petro-notes.
I like your analysis, Joel. I’m sure you would agree with me that there are almost as many Marxists as there are followers of Marx. I do agree that many Marxists have a very impoverished view of Marx because they reduce his complex arguments to a ossified definition of class struggle. I always tell people, if they’re interested (which 99% are not), that Marx was not a Marxist. There is a class struggle, no doubt, but it is a lot more complicated than it is usually portrayed.
Excellent post SD. The solution may come as Athens burns in the current wildfires. Best to slash and burn so the corporations can start fresh.
It’s called “disaster capitalism” for a reason …
I recommended your blog to another blogger recently on this same topic for understanding the nuts and bolts of capitalism. http://deconstructingmyths.com/2015/07/04/its-all-greek-to-me/
Your post is far comprehensive than mine and I credit your writings with helping me to see the petrified forest for the trees when it comes to global capitalism.
Thank you for your kinds words, Jeff. I always enjoy your vivid commentaries, and hope you will find the time to write more, even if only rarely, while you work your way through law school.