Fear takes root in Syriza

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)

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?

The straitjacket of austerity tightens on Syriza

The contradiction of putting an end to austerity and remaining within the eurozone has manifested itself in full force for Greece. At this early stage, it is alarmist to argue that Syriza has “sold out” nor is it realistic to proclaim that Syriza has achieved “victory” in its negotiations.

How Syriza uses the four months until the extended bailout program expires in June, and what Greece’s governing party will do once this period ends, will begin to reveal to what extent Greece can put an end to austerity and Syriza can make good on implementing the program that carried it to victory in January’s elections. That is surely the minimum amount of time necessary to begin to make any judgment on Syriza as it is tightly boxed in by circumstances not of its making.

Athens (photo by A. Savin)

Athens (photo by A. Savin)

It is difficult to avoid the belief that New Democracy intended to hand Syriza a poisoned chalice. Although corporate-media commentary at the time almost uniformly suggested that New Democracy, Greece’s main Right-wing party, was taking a reasonable gamble that it could successfully get its candidate elected as president by parliament, attempting this seemed more an act of suicide. The party had moved up the presidential election, and its failure to seat its candidate automatically triggered early parliamentary elections. There was no reasonable chance of its presidential candidate winning, and little chance of it retaining its parliamentary majority once fresh general elections were triggered.

Parties ordinarily don’t intentionally bring down their own government. But with a series of large debt repayments due in 2015 from February to July, the difficulty of making those payments and the rising anger of the Greek people at their immiseration, going into opposition and ducking responsibility for their own policies must have seemed tempting.

Tightening the financial screws

Syriza has no easy task, nor have Europe’s dominant institutions made it any easier. A week after Syriza took power, the European Central Bank said it would cease accepting Greek government bonds or government-guaranteed debts as collateral for loans to Greek banks. This effectively cut off the main source of financing for Greek banks. The ECB, in its supervisory capacity, also prohibited Greek banks from further loaning money to the Greek government, cutting off another source of funding.

This sudden action of the European Central Bank constitutes a “noose around Greece’s neck,” writes Ellen Brown in her Web of Debt blog:

“The ECB will not accept Greek bonds as collateral for the central bank liquidity all banks need, until the new Syriza government accepts the very stringent austerity program imposed by the troika (the [European] Commission, ECB and IMF). That means selling off public assets (including ports, airports, electric and petroleum companies), slashing salaries and pensions, drastically increasing taxes and dismantling social services, while creating special funds to save the banking system. …

Not just Greek banks but all banks are reliant on central bank liquidity, because they are all technically insolvent. They all lend money they don’t have. They rely on being able to borrow from other banks, the money market, or the central bank as needed to balance their books. The central bank (which has the power to print money) is the ultimate backstop in this sleight of hand. If that source of liquidity dries up, the banks go down.”

The result of this power play was a cash-flow problem for the government and Greek banks. It also triggered an exodus of capital out of the country, Mark Weisbrot writes:

“This move was clearly made in bad faith, since there was no bureaucratic or other reason to do this; it was more than three weeks before the deadline for the decision. Predictably, the cut off spurred a huge outflow of capital from the Greek banking system, destabilizing the economy and sending financial markets plummeting. … The European authorities appeared to be hoping that a ‘shock and awe’ assault on the Greek economy would force the new government to immediately capitulate.”

With an estimated €20 billion of bank deposits believed to have been taken out of the country from December through late February, and the impossibility of paying off debt while continuing to have enough money to run the government, Syriza’s room for maneuver rapidly shrank.

Bailouts for banks, not people

What is crucial is to understand that the “troika” bailed out large multi-national banks, in particular German and French banks, and are now asking Greek working people to pay for it.

Through 2009, Greek debt was mostly held by European banks; French and German banks alone held more than 40 percent of Greek debt. The €227 billion of loans from the European Union and International Monetary Fund that have since gone to Greece were used to pay large financial institutions elsewhere. By one estimate, only €15 billion has gone to state operations; none after 2012. The Greek government has been a pass-through, taking the loans given it and promptly sending it to financiers.

There are more payments coming soon. Greece is due to pay €450 million to the IMF on April 9 and €7 billion to the IMF and European Central Bank in July, among other deadlines. Because Syriza remains committed to retaining the euro as Greece’s currency, reflecting majority Greek opinion, it remains committed to paying off its debt, which can only be accomplished through cutting government services and spending. This is the pitiless logic of austerity.

Unlike the previous New Democracy and Pasok governments, Syriza has not completely surrendered. Last month, two bills were passed in parliament that subsidize electricity, food and housing. Prime Minister Alexis Tsipras has called the extended-bailout measures an “interim agreement” and that the government will not ask for a third bailout when the program ends in June. He also vows that making Greece’s wealthy pay taxes will be a centerpiece of reform.

Nonetheless, Syriza has made major concessions, agreeing in February to continued supervision by the troika and that it would refrain from any “unilateral action.” It also failed to get any reduction in its debt, and must pass an inspection by the troika in late April before it receives any of the money agreed in February, when the bailout extension was signed. Syriza was required to submit a list of reforms that must be approved. It did so on March 27; negotiations are continuing but the list was met with initial disapproval for not giving the troika everything it wants.

Among those reforms are a series of tax measures estimated to raise an additional €3.7 billion in revenue for the government, including cracking down on tax avoidance by the wealthy and on smuggling. But there is also another major concession, allowing the privatization of Greece’s most important port, at Piraeus, to go ahead despite promises to halt all privatizations. That is estimated to raise another €1.5 billion. A Chinese state-run shipping company seeks to buy a two-thirds stake.

Still insisting red lines will not be crossed

Syriza continues to declare that it will prioritize working people over debt repayment. The international economic affairs minister, Euclid Tsakalotos, told The Guardian:

“Our top priority remains payment of salaries and pensions. If they demand a 30% cut in pensions, for example, they do not want a compromise.”

The austerity that has been imposed has resulted in a contraction in gross domestic product of 25 percent, unemployment above 25 percent, a fall in real wages of 30 percent and a reduction in industrial output of 35 percent. And the size of the foreign debt has risen!

There is no way out of this without renouncing at least some of the debt, and doing so means leaving the eurozone and re-adopting its old national currency, the drachma. There should be no illusions that doing so will be free of pain. Left to the tender mercies of speculators, the drachma could conceivably lose 75 to 80 percent of its value in a short period of time. Assuming that a re-instituted drachma is initially valued at one euro, this would mean that imported goods will cost the equivalent of three or four euros instead of one, a drastic inflation.

Such a drastic currency devaluation would presumably spur a big increase in local production, because Greeks would need to produce internally to make up for being able to buy far less products from outside the country. It would also give a boost to exports, because Greek goods would now be cheap. This is the “Argentina option,” so called because Argentina followed this path in the early 2000s, almost immediately improving its economy. But the Argentine government did nothing that touched capitalist relations, and of late the country has suffered from mounting difficulties.

Is leaving the eurozone necessarily the question?

Thus there are Left, even Marxist, economists who do not believe Greece should leave the eurozone but rather go ahead with nationalizations and other measures anyway. So the debate over euro versus drachma does not fall along clear-cut lines. For example, a prominent economist elected to parliament on the Syriza ticket, Costas Lapavitsas, argues that Keynesian measures are what are possible in the immediate moment but that Greece must drop the euro. Another prominent economist, Michael Roberts, argues for an immediate Marxist-inspired program but that Greece should retain the euro.

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.

Capital controls and immediate nationalization of banks would be necessary as part of this proposed program. Rationing would be inevitable for a time, but Professor Lapavitsas argues that rationing already exists “through the wallet” as millions of Greeks can not afford even basic necessities. Crucially, he says that all this would be carried out with workers’ control (a factor missing in Argentina); bank employee unions should have a role in running the nationalized banks. Unused productive capacity would soon kick-start the economy, he said:

“What you’ve got to appreciate, though, is this: devaluation would not work simply, or mostly, through exports. It would work through the domestic market, more than exports. At the moment, there are vast unused resources in Greece. … There are vast unused resources across the country! Small and medium enterprises will come to life immediately if there was a devaluation. There is enough small-scale capital to do that. The revival of the economy, the return of demand and production, will be very rapid, and it will take place primarily through that. … I have — and econometric studies I’ve seen confirm it — little doubt that small and medium enterprises will allow a return of Greece to a reasonable productive state within a very short period of time, a couple of years.”

Professor Roberts, on the other hand, argues that it is “extremely unlikely” that the drachma would depreciate by only 20 percent, and that a larger devaluation and rising prices would offset any gains from cheaper exports. He wrote:

“Greek capitalism is no position to turn things round with its own currency. Greek capital will be saddled with huge euro debts following devaluation and it won’t be able to export enough to stop the Greek economy dropping (further) into an abyss and taking its people with it. [A Greek exit] also means not just leaving the euro but also the EU and without any reciprocal trade arrangements that Switzerland has, for example.”

Bank nationalization and a public takeover of strategic industries should be at the center of any Greek plan to raise investment and growth, Professor Roberts argues. Although in favor of Keynesian prescriptions such as progressive taxation and labor rights, these measures should be geared toward a larger project of replacing capitalism, not to try to make capitalism work, in or out of the eurozone. But he acknowledged that should his program be adopted, Greece might be expelled from the euro anyway.

There are no guarantees. Professor Lapavitsas’ belief that a drachma devaluation can be held to 20 percent seems overly optimistic and Professor Roberts’ belief that Greek must leave the European Union (and thus have trade cut off) were it to drop the euro seems overly pessimistic. Whatever direction Greece takes, however, it can’t travel as far as it needs to on its own. An economy drastically remodeled on a democratic basis is the only solution in the long term, but such a country would face severe pressure from capitalist governments seeking to destroy it.

Greece must create links with countries attempting to move past capitalism, such as those in Latin America, and must be joined by other European countries traveling the same path. Greece can’t be a socialist island in a global sea of capitalism. There are only international solutions, not Greek solutions, to Greece’s problems. The capitalist alternative is to continue to be immiserated for the sake of private profit, the same fate as the overwhelming majority of humanity.

Will a Syriza victory be the first blow against austerity?

Is the first step toward the unraveling of European austerity about to begin, courtesy of Greek voters? The future direction of the European Union certainly won’t turn merely on the results of Greece’s January 25 parliamentary election, nor will the world slip off its axis if the expected Syriza victory materializes.

Nonetheless, the first blow has to be struck some time, by somebody. If Syriza does take office and if it can hold firm against the withering pressure that it will immediately be subjected to, an alternative to financial industry diktats could provide an example elsewhere in the E.U., particularly within the eurozone. That example can not be taken up too soon, given the many economic weapons likely to be deployed against a Syriza-led Greece. (Perhaps in Spain, where Podemos, the party organized a year ago by the Indignados movement, already is a near three-way dead heat with Spain’s biggest parties, Popular and Socialist, according to recent polling.) There is no Greek solution to Greece’s economic collapse, only a European solution.

View of Vikos Gorge, Greece (photo by Skamnelis)

View of Vikos Gorge, Greece (photo by Skamnelis)

As the Greek parliament was in the process of failing to elect a new president last month, thereby triggering automatic parliamentary elections, Syriza issued this statement about the New Democracy/Pasok coalition government that had continued to impose punishing austerity:

“The only option left to them is the policy of fear and terrorization of the society, the creation of false dilemmas and fake polarization. This option is triggered by the fact that the government as well as the dominant economic and media system and forces inside and outside the country are very well aware that they have a lot to lose.”

Such fear-mongering won’t only come from the Greek establishment. European governments have alternated between ordering Greek voters to vote for pro-austerity parties and to insisting that both a Greek exit from the eurozone and any changes to Greece’s debt obligations are unthinkable. These have not only come from German Finance Minister Wolfgang Schäuble, as would be expected, but from French President François Hollande, continuing his journey to becoming Paris’ Monsieur 1%.

Certainly the financiers who hold decisive power over the undemocratic institutions of the European Union, nor their representatives such as Finance Minister Schäuble, can be expected to welcome the basic self-description of Syriza’s intentions:

“Syriza insists strongly on its position that it will abolish the memoranda signed with the Troika of lenders when it assumes office and will re-negotiate the loans. At the same time it will promote a programme of social and economical reconstruction, aiming at development that promotes human needs and well-being and respects nature. … Syriza is fighting for the re-foundation of Europe away from artificial divisions and cold-war alliances such as NATO. As for the E.U., Syriza denounces the dominant extreme neoliberal and euro-atlantic policies and believes that they must and can be transformed radically in the direction of a democratic, social, peaceful, ecological and feminist Europe, open to a socialist and democratic future.”

Putting forth a program of reforms

Syriza — the Coalition of the Radical Left — re-constituted itself as a single party at its first congress in July 2013. Nearly 500 organizations were represented at the congress, which elected Alexis Tsipras as party president and a 201-member central committee. Close to 20 groups comprised Syriza prior to this congress (when it was formally a coalition), most of which remain as part of the party while a few became “allied groups.” The party includes Trotskyist, Maoist, Eurocommunist and other non-orthodox communist Leftist groups, but that does not mean it intends to implement a revolutionary program.

The “Thessaloniki Program,” announced last September by Mr. Tsipras in the Greek city of that name, promises that Syriza will:

  • Re-negotiate the national debt and a “haircut” on the foreign debt.
  • Impose higher taxation on the rich.
  • Raise salaries for some low-paid employees.
  • Abolish a recently enacted property tax.
  • Provide more money for the municipalities and the local authorities.
  • Create 300,000 new jobs.
  • Re-open public radio and television, which were summarily shut by the outgoing government.
  • Establish a new national development bank.
  • Restore Greece’s previous monthly minimum wage of €751.

Ilias Milonas, a member of the Left Platform grouping within Syriza writing on The Socialist Network web site, in pointing out that the Thessaloniki Program consists of reforms that fall short of effecting a necessary structural change, said:

“In the Syriza leadership’s programme also absent is the most crucial matter of the nationalisation of the banks, a policy that was decided on at the last congress of Syriza – almost all the banks in Greece have been privatised in recent years. We believe that there is not one programme that can be implemented without the nationalisation of the banking system along with and the rest of the economic system. In contrast, the leadership’s proposal for the establishment of a New Development Bank with a budget of one billion Euros is like planting a tree in the Sahara in the hope of greening the desert. Indeed, all they propose for the banks is a vague form of “social control.”

Even within Germany, the Left Party advocates a nationalization of banks, so Syriza doing so would not be outlandish (especially as public control of banking and the elimination of speculation are prerequisites for a democratic economy). And a restoration of the previous Greek minimum wage of €751 a month is not living in luxury — at current exchange rates, that’s US$893 or £589. Nobody is living well on that.

The program, Mr. Tsipras said, is to cost about €13.5 billion. The Greek newspaper To Vima reports that, of that total, about €2 billion would go toward addressing the humanitarian crisis, €6.5 billion would be used in measures to help restore the economy (with an estimated €3 billion toward benefits), and €5 billion would be invested in restoring employment. This cost is six percent of the total of the loans by the troika (the European Commission, European Central Bank and International Monetary Fund).

Debt relief for Germany

These reforms — which would do nothing to challenge the prevailing power relations and amount to a program of Keynesian initiatives — are nonetheless presented as the crazy schemes of dreamers. “Every new government needs to fulfil the contractual agreements of its predecessors. … But if Greece goes in another direction then that’s going to be a difficult situation,” Finance Minister Schäuble said, as reported by Reuters. Well, no need for any more elections, then.

Most of all, it would be some sort of moral outrage, scream European leaders and echoed by the corporate media on both sides of the Atlantic. Conveniently overlooked is the huge debt forgiveness given to Germany after World War II, which surely helped the Federal Republic recover. Germany’s pre-war debt amounted to 22.6 billion marks, including interest, and its postwar debt was estimated at 16.2 billion marks, according to the Committee for the Abolition of Third World Debt. Yet the U.S., the U.K. and France agreed in 1953 to forgive nearly two-thirds of that total, and allowed Germany to negotiate payment schedules in cases of financial difficulty. On top of that, the allies voluntarily reduced the amount of goods they would export into the Federal Republic so that it could reduce its trade deficit and give a boost to its internal manufacturers.

Syriza argues, not unreasonably, that what was done for Germany in 1953 should be done for Greece today. And, although debt writedowns and aid programs such as the Marshall Plan went toward raising living standards of Germans, the €227 billion of loans that have gone to Greece benefits large financial institutions elsewhere, none more so than German and French banks. By one estimate, only €15 billion has gone to state operations; none after 2012. The Greek government has been a pass-through, taking the loans given it and promptly sending it the financiers who own the debt. At the end of 2008, more than 50 percent of the debt was owed to banks in Germany, France and Italy alone.

The troika has not been propping up the Greek government, it has been propping up Europe’s banks and financial houses.

That derives from the neoliberal concept is that people exist to serve markets rather than markets existing to serve people. Entire countries have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the global North on the South through institutions like the IMF; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to pass the money to financiers, often from their own country.

If it looks like a depression, talks like a depression …

What has Greece received from the troika’s loans? Greek gross domestic product has contracted by 25 percent, unemployment is above 25 percent, real wages have fallen by 30 percent and industrial output has declined by 35 percent. The country’s foreign debt has actually risen, to 175 percent of GDP from approximately 130 percent in 2009. This is what the International Monetary Fund hailed as “progress” two years ago!

Just as “the market” dictates a race to the bottom for labor, the harshest terms that can be imposed are mandated for debtors, always wrapped in a hypocritical, sanctimonious “morality.” German Chancellor Angela Merkel is not stubborn nor obsessed with Weimar-era inflation, as she is sometimes portrayed; she is simply reminding other national political leaders that economic harmonization will conform to the tightest policy among them and Germany so happens to have that tightest policy. This is the will of the “market” to which they chained themselves.

None of the eurozone’s national leaders are reducible to “puppets,” but their perceived national interests are distorted by whatever consensus their industrialist and financiers arrive at. Big industrialists and financiers dominate their societies through control of the mass media and a range of other institutions to the point that their preferred policies become, through repetition, the dominant ideas across society and the ideas adopted by the political leaders who become dependent on them. Their aggregate interests constitute the “market.”

Greece can not be a socialist island in a capitalist Europe, nor can any other country; that understanding is reflected in Syriza’s program. What might a different Europe look like? Various non-orthodox economists have proposed programs, some envisioning Greece remaining in the eurozone and some envisioning Greece dropping the euro and returning to the drachma. What these programs have in common is a vision of a European-wide economic restructuring.

To summarize some of these ideas: The E.U. should be leveraged to internationalize the resistance of working people; full employment demanded as an explicit goal; banks should become publicly owned and democratically controlled so that capital is directed toward socially useful investment instead of speculation; a highly progressive taxation system should be coordinated at the E.U. level; wages raised to account for improved productivity that has, for three decades, gone to capitalists; governments should default at least some of their debts to banks; bank deposits should be guaranteed; and there should be more investment in education to enhance future productivity.

Impossible? In a capitalist Europe, yes. But in a better world, these kinds of ideas would simply be common sense. Why shouldn’t they be?

Greece’s depression is IMF’s idea of ‘progress’

The International Monetary Fund congratulated itself last week for the splendid job it is doing in Greece, declaring the country “is making progress in overcoming deep-seated problems.” With an unemployment rate of 27.2 percent, an economy that has shrunk by at least 20 percent and children going hungry, one has to shudder at the thought of what a lack of success might look like.

Temple of Zeus photo by Andreas Trepte (www.photo-natur.de)

Temple of Zeus photo by Andreas Trepte (www.photo-natur.de)

The depression in Greece is the logical conclusion of austerity, but while Greece is the first in Europe to arrive it is not alone — the composite eurozone unemployment rate reached a record 12.1 percent in March. The eurozone unemployment rate rose to 24 percent for men and women below the age of 25; the European Union-wide rate is nearly as high.

The IMF’s solution? Eliminate more jobs. In its latest report on Greece, issued on May 3 following its latest inspection visit, the IMF graciously mentioned that Greece’s wealthy don’t pay taxes:

“Very little progress has been made in tackling Greece’s notorious tax evasion. The rich and self-employed are simply not paying their fair share, which has forced an excessive reliance on across-the-board expenditure cuts and higher taxes on those earning a salary or a pension.”

But the IMF report quickly followed up by grumbling that:

“[T]he over-staffed public sector has been spared, because of a taboo against dismissals.”

Perhaps you will not fall off your chair in shock, but it is the latter of these two concerns that gets the attention when the IMF gave its verdict on what it expects the Greek government to do:

“A strong recovery will need to be built primarily on deepening structural reforms. … The government’s welcome public commitment to improving the business environment and accelerating privatization now needs to be matched with results.”

Diktats masquerading as democracy

Those bland-sounding words take on deeper meaning when we examine the “structural reforms” already imposed on Greece by the IMF, the European Commission and the European Central Bank, the “troika” that dictates Greek policy. In February 2012, for instance, the Greek government agreed to reduce the already low minimum wage by more than 20 percent, to freeze all public-sector wages until the unemployment rate falls below 10 percent and to deep cuts in pensions.

The Greek minimum wage is €751 per month (equivalent to US$990 or £636). How well could you live on such a sum?

Overall, wages have fallen 40 percent and health care spending has been cut 25 percent. Meanwhile, most of the money released by the troika goes straight back to lenders, not for internal relief. As a result of this austerity, it is no surprise that retail sales in Greece have declined by 30 percent over the past three years and an estimated 150,000 small businesses have closed. Poverty has become so widespread that an estimated 10 percent of Greek’s children go to school hungry.

All this in a country where its biggest and wealthiest industry, shipping, pays no taxes — its tax-free status guaranteed in the constitution. Greece’s wealthy pay little or no taxes, stashing their cash outside the country. Government employees are the people who can’t evade paying their taxes — yet they are the ones scapegoated for economic troubles. (A common pattern in many countries.)

The IMF made no mention of its own role in bringing about this depression in the May 3 report, instead blaming a “lack of confidence” for Greece’s struggles:

“Looking over the period 2010–2012, the much deeper than expected recession was overwhelmingly due to a progressive loss of confidence. … With fiscal adjustment set to remain a drag on GDP growth for several years to come, the key challenge is to generate the improvement in confidence needed for a recovery in investment to begin to more than offset this drag. This cannot happen unless Greece can secure broad domestic support for the program and the political stability that would come with this.”

Yes, if only Greeks would believe that hunger is a sign of progress, everything would be better! In lieu of a sudden spasm of optimism, generating “broad support” for bleeding the country dry to pay back financiers who made reckless gambles might be difficult.

Ideology masquerading as economics

Although it might be tempting to note that doing the same thing over and over while expecting different results is unreasonable, reasonableness is besides the point here: Austerity programs are designed with ideology in mind, not with economics based on the real world. One clue to this is that “structural re-adjustment” programs invariably demand sell-offs of public assets — holding fire sales of state enterprises means private capital can scoop them up at very low prices, and profit nicely from doing so at public expense.

The neoliberal concept is that people exist to serve markets rather than markets existing to serve people. Entire countries have been harnessed to the dictates of “markets.” This has long been the pattern imposed by the North on the South through institutions like the IMF; now the stronger countries of the North are imposing it on their weaker neighbors. Taxpayers in those stronger countries are on the hook, also, as some of their taxes go toward the bailout funds, for which bailed-out countries are merely a conduit to pass the money to financiers, often from their own country. Much of the money Europeans lent to Greece was used to bail out German and French speculators.

The race to the bottom, of which austerity programs and the continual shifting of production to locations with ever lower wages constitute crucial components, represents an intensification of market dominance over human life. It is also a result of a scramble to maintain profits, which have been under continual pressure from the economic crisis.

But neoliberalism is not the product of a cabal “hijacking” economies or governments; it is the natural progression of a system that insists “markets” should be the arbiter of all human problems and the model for social relations and institutions. Capitalist markets are not neutral abstractions perched loftily above the Earth; they are the aggregate interests of the wealthiest industrialists and financiers as expressed through the corporations and other institutions they control.

“Markets” dictate that school children faint at their desk due to hunger while billionaires grab ever more. We can do better than this.

There are no national solutions for Greece, or any other country

There is no Greek solution to Greece’s crisis. There can be only an international solution. However that solution unfolds, the day when a radically different course, a clear alternative to austerity, can no longer be avoided is perhaps drawing closer.

Aware of their dwindling support and the increasing desire among Greeks for a different course, the two “left of center” parties propping up the pro-austerity right-wing government of Greece may yet balk at committing a final suicide.

Four days after the expiration of a deadline handed down by European Union finance ministers, the leaders of Pasok and the Democratic Left were still refusing to fully agree to demands for yet another round of cuts and labor “reforms,” the standard euphemism for eliminating job protections. Those leaders’ reluctance to agree to terms with Prime Minister Antonis Samaras, and their apparent ending of talks (at least for the moment) on October 23, adds more uncertainty to the already conflicting signals coming from the Greek government.

The “troika” — the International Monetary Fund, the European Central Bank and the European Commission — have been unyielding in insisting that Greece impose more austerity on its citizens in exchange for the latest tranche of financing totaling €31.5 billion.

On the one hand, we have Mr. Samaras, head of the conservative New Democracy party, saying at last week’s European Union summit that Greece will be broke next month without the latest loan installment, yet declaring:

“The economy and society are at their limits, the bloodline of the economy that is liquidity is at point zero; unemployment has reached nightmarish levels and every Greek is facing a personal tragedy.”

On the other hand, the Greek finance minister, Yiannis Stournaras, in an October 22 speech to the Greek parliament, declared the country’s nightmare does not reside in the austerity cuts demanded in exchange for fresh loans, but rather in not imposing the cuts:

“The cost for the country will be boundless if we don’t get the €31.5bn installment. … If we don’t get the loan people will go hungry.”

Perhaps the finance minister, one of the “technocrats” who hold most portfolios in the current government, is unaware that Greeks already are starving. Several rounds of imposed austerity has brought only misery to the people of Greece. Here are some of the results:

  • Overall unemployment is at 25 percent.
  • Youth employment is at 55 percent.
  • Average wages have been cut 40 percent.
  • Cuts to the health care system of 25 percent since 2009.
  • Economy has shrunk 18.4 percent since 2008.

The years of austerity were supposed to turn around the Greek economy, yet the deficits only become larger. The country’s deficit for 2011 is now estimated to have been 9.4% and its debt has widened to 171% of gross domestic product. If more people are thrown out of work and those still employed take home less, then less can be bought and less taxes will be paid.

Although the International Monetary Fund quietly admitted earlier this month that austerity does not work, the troika is holding to a hard line in demanding still more austerity measures. Greece is expected to come up with another €13.5 billion in cuts. The troika demands implementing a six-day working week; further cuts to the minimum wage; further reductions to pensions; “increased flexibility” of work schedules; tens of thousands of government workers and professors be laid off; and income-tax rate gradations flattened, which would increase the tax burden on those who aren’t wealthy.

The latest €31.5 billion installment won’t be going to Greeks; virtually all of it will go to banks. A conservative Greek newspaper, Kathimerini, reported (based on a leak from Pasok) that Germany’s finance ministry demanded that an escrow account be set up that would ship money to the European Central Bank. The proposed escrow account would not only be the recipient of all the bailout money, but Greece’s tax revenues would also sent there.

To put this in plain language, Greece would be reduced to a vassal state in which it had no control over its finances and its tax revenues would be used to pay banks instead of for government functions.

European Union finance ministers had demanded, as long ago as February 2012, that such an escrow account be set up for bailout money, but the extension to Greece’s internal revenue is something new. Kathimerini quoted Germany’s finance minister, Wolfgang Schäuble, as declaring:

“In the last program [for Greece] we introduced mechanisms; we need to strengthen those in the sense of control mechanisms, perhaps also automatic stabilizers.”

The “automatic stabilizers” are measures that would automatically further cut Greek government spending beyond whatever is agreed if the deficit grows wider. Given that austerity will lead to less revenue, a wider deficit is the likely outcome. Seeming to draw a line, Democratic Left leader Fotis Kouvelis on October 23, following the impasse in talks with Samaras, added still more contradiction to the government coalition’s signals. Kathimerini reported:

“ ‘If the unacceptable demands of the troika are met, they will increase sackings, unemployment and the recession,’ said Kouvelis, adding that he felt the troika was aiming to ‘flatten’ any working rights that remain.”

It must be asked, however, why Mr. Kouvelis’ Democratic Left, and Pasok, are propping up Mr. Samaras’ pro-austerity government, since such goals have long been in place. Mr. Samaras’ New Democracy — Greece’s leading big-business party — has strong links with European capital and has no basic disagreement with the ruthless austerity being imposed across the continent despite the prime minister’s public worry that the Greek “economy and society are at their limits.”

The waves of strikes that have washed over Greece is a development that Samaras can’t fail to notice. Yet he and his government have nothing to offer other than more austerity; the “troika” certainly has nothing else to offer. A radically different course is necessary. Greece can not survive as an island unto itself — to repeat, there is no Greek solution to Greece’s problems, only an international solution. Financiers and industrialists operate internationally, and working people have no alternative to uniting across borders in order to defend themselves.

That does not, however, mean that Greece can’t adopt new programs internally. The main political current offering a radically different program is Syriza, the Coalition of the Radical Left, the largest opposition party and which currently leads in polls. In a talk last summer, a Syriza representative laid out a different course:

“The reversal of the descent towards degradation and marginalization cannot be achieved without the implementation of a radical program of reforms and transformations of the state, the political system and the entire ‘body’ of the Greek social formation. … [T]he crisis we are living through is a crisis of the system itself, rather than simply a management crisis of the system. Everything must change: the political system, the state, the relation of the citizen with the state and with politics. Consequently, the way out cannot be found in a return to some version of the past. The way out lies in opening up new paths to new productive and consumption paradigms, to new forms of real democracy, to new social arrangements based on equality and solidarity, the respect of human dignity and the environment.”

Among the highlights of Syriza’s program are:

  • New taxation policies to lessen the burdens on low-income people and small businesses to make taxation more fair and to eliminate the large problem of the “black market” whereby many Greeks don’t pay taxes.
  • Elimination of the “clientist” system that rests on the “inside dealing” of the two-party system (New Democracy and Pasok) through a drastic overhaul of the administrative system and empowerment of citizens through bottom-up and top-down changes.
  • New institutions of workers’ control and social control to increase day-to-day democracy and accountability.
  • Democratic planning involving the parliament, the scientific community and society at large, linked to specific policies.
  • Development of long-term plans to reconstruct the economy on the basis of increased bargaining power for labor; reducing dependence on imports and external borrowing, supporting employment and respecting the environment; and building a society of justice, full employment and solidarity, with an enhanced and equal position in the European and international division of labor.
  • Changing the banking system to support the real economy and a targeted productive reconstruction, establishing public control over banking, and recapitalizing banks through the issuing of ordinary voting shares.

Such a program is by no means “revolutionary,” and Syriza supporters don’t claim it is. But such a program (which has much more to it than the above summation) is no mere reform, either; rather, it offers a radically different way of organizing Greek society tomorrow that can be built with the bricks of today. This program also keeps Greece connected to Europe; Greece can’t prosper in isolation.

Present-day Europe, in the form of a European Union dominated by the unaccountable and undemocratic European Central Bank, is not capable of becoming a platform for such a program as outlined by Syriza. Ultimately, Greeks, Europeans and everybody else can only prosper in a democratic system geared toward social good, public accountability and an economy oriented toward full participation and the development of all men and women.

The dismantling of the current structure of the E.U., one-sided trade agreements, international financial institutions and the immense power concentrated in corporate hands will have to be mirrored everywhere. If we are living in a globalized world, then the world’s salvation can only be on a global basis.

You can vote as bankers dictate, but is that democracy?

By Pete Dolack

Voters in Greece sort of voted as they were ordered to by European financiers and banking officials. Or least enough voters did so for them to declare victory.

The stability that financiers and banking officials cherish, however, appears elusive. Greece will have a new austerity government although anti-austerity parties won a majority of votes. For, to put it in the current Greek terminology, the pro-“memorandum” parties earned only 42 percent of the vote between them. Yet those two parties, New Democracy and Pasok, won a majority of seats in Greece’s parliament.

Those parties, along with coalition partner Democratic Left, will govern for now, but they will not rule.

The 50-seat bonus given to the first-place finisher, a peculiarity of Greek electoral law, did what it is intended to do — make the formation of a government easier. Without the bonus, there would have been too much fragmentation and the likelihood of a third election in as many months. As it is, the June 17 re-vote provided a vivid illustration of a bitterly divided country, although the vote was more consolidated than was the May 6 vote.

New Democracy, Greece’s major party of the Right, won 30 percent of the vote this time as opposed to 19 percent a month ago; Syriza, the Coalition of the Radical Left, won 27 percent of the vote as opposed to 17 percent a month ago. At bottom, such consolidation probably reflects more than any other factor the relentless pressure applied by officials of the European Central Bank, the European Union apparatus, the Bundesbank (Germany’s central bank) and finance capital in general. They quickly served notice that the pressure is not off when they demanded the formation of a government to their liking.

Before the results were official, the finance ministers of the countries using the euro as their common currency (referring to themselves as the “Eurogroup”) issued a statement that declared the election “should allow for the formation of a government that will carry the support of the electorate to bring Greece back on a path of sustainable growth. … The Eurogroup therefore looks forward to the swift formation of a new Greek government that will take ownership of the adjustment programme to which Greece and the Eurogroup earlier this year committed themselves. The Eurogroup expects the [lending] institutions to return to Athens as soon as a new government is in place to exchange views with the new government on the way forward and prepare the first review under the second adjustment programme.”

European Union officials were said to be insisting on the largest possible coalition, although New Democracy and Pasok, Greece’s discredited parties who formerly alternated in government, do have a majority of seats by themselves thanks to New Democracy’s 50-seat first-place bonus. Double-talk promises by the two parties that there is no alternative to continuing with the “memorandum” (as the agreement with the European Commission, European Central Bank and International Monetary Fund is called in Greece) was paired with their insisting they would negotiate new terms.

In essence, New Democracy and Pasok said, “Vote for us and we’ll get more loans and better terms.” But let’s parse the finance ministers’ statement above. The key passage is their “expectation” that the “Greek government that will take ownership of the adjustment programme,” making sure to note that Greece has “committed” itself. Minor tinkering with the details aside, that means stick with the (austerity) plan. Considering the highly politicized state of Greeks these days, the number who voted for one of the two austerity parties out of fear induced by the daily warnings of economic armaggedon must surely be higher than those who believed the unrealistic promises. The statement given by the finance ministers isn’t any different from what they, and the financiers whom they represent, had repeatedly delivered in the five weeks between elections.

Banking officials realize they have to “reward” Greeks for voting as they were told, and will make minor concessions, mostly likely by extending some repayment periods. The basic program, however, is not going to change, as German Chancellor Angela Merkel made clear in a proclamation at the Group of 20 summit a day after the election: “There can be no loosening of the reform steps.”

The translation of Chancellor Merkel’s statement is that the “markets” — financiers in the form of investment bankers, bond traders, hedge-fund managers and other speculators — will be making the decisions. That is consistent with her insistence that further “relief” from mounting debt depends on a willingness to subordinate further to financiers and central banks. Chancellor Merkel is not a stubborn holdout nor obsessed with Weimar-era inflation as she is often portrayed; she is simply reminding other national political leaders that any eurozone harmonization will conform to the tightest policy among them and Germany has that tightest policy. The “markets” insist on it.

The choice facing not only Greeks but all peoples living in eurozone countries is to accept the logic of capitalist development or to mount a coordinated, cross-border fightback. Accepting the logic of E.U. capitalism is to accept that financiers and central bankers will continue to impose austerity and the inevitability of relinquishing the power to make political decisions to them so that decisions are made by unaccountable bureaucrats in a supra-national governing structure rather than by national governments subject to elections.

Not that elections are currently decisive. The new Greek government will govern, but it will not rule. That was made clear last year, when former Prime Minister Georgios Papandreou dared to suggest a popular referendum on austerity plans. The Guardian reported at the time that Chancellor Merkel and then-French President Nicolas Sarkozy “summoned” the Greek prime minster to a meeting to inform him there would no referendum. There wasn’t. What did happen was a dictated revision to the Greek constitution mandating that repayment of debt would supersede any other government spending.

Markets aren’t voted upon. But, again, markets are the amalgamation and distillation of the most powerful big capitalists, and it is those interests that will not be put to a referendum. New Democracy and Pasok had already submitted to this power and, having made their commitment, can do nothing other than go on submitting to it.

There are far from the first. Here are two quick examples. When the Sandinistas stood for re-election in 1989, Nicaragua had endured several years of debilitating terrorism and economic sabotage from the Contras and their U.S. organizers. There was no ambiguity here: the United States told Nicaraguans to vote out the Sandinistas or the war will continue. Weary Nicaraguans voted to end the war and for a coalition that dangled promises of U.S. aid in exchange for voting as they were told. The war did end, but no more than a tiny fraction of the promised aid was delivered. Nonetheless, the anti-Sandinista coalition, having made its commitment, carried out the dictated privatization that was a windfall to foreign capitalists because the state properties were sold well below market value — the price for what aid did arrive.

A second example is South Korea. Austerity was imposed on that country as the dissident leader against military dictatorship, Kim Dae-jung, became South Korea’s first opposition president at the end of 1997. Speculators had fueled construction booms and stock-market bubbles across Southeast Asia in the mid-1990s, causing an inflation in the local currencies until it was no longer profitable to speculate on the exchange rates. At that point, speculators pulled their money out, causing the value of those currencies to plunge and triggering the region’s 1997 economic collapse. Countries such as Thailand had to impose harsh austerity, including widespread layoffs, in exchange for loans needed after the collapse. President Kim took office two weeks after South Korea accepted loans with similar conditions, and although the United States had failed in its effort to defeat him, “market discipline” did more to neutralize him and demoralize his supporters than direct U.S. political pressure could have done.

No single country can stand outside the forces of capitalism. Syriza, had it finished first and been able to form a government, could not simply delink Greece. Syriza’s voters unambiguously sought an end to austerity, an end to immiserating an entire country to maintain financiers’ profits and the renouncement of the memorandum including a halt to debt payments. A Syriza-led government could do those things, but would still be forced to maneuver within the parameters of the world capitalist system.

It is estimated that the Greek government is owed 45 billion euros in unpaid taxes. On top of that total, many wealthy Greeks and some middle class Greeks who work in the private sector pay little or no taxes. Greece’s most powerful industrial sector, the shipping industry, pays no taxes and has its tax-free status enshrined in the constitution. New Democracy’s base is the wealthy and others who don’t pay taxes. The party’s backers would not tolerate a change and have a network of links with international capitalists intertwining their interests.

Syriza and the other Left parties in Greece could require them to pay taxes, but the ease with which the wealthy can move their assets and bank accounts to other countries would greatly diminish the effect. Inevitably, nationalization of key industries would move on to the agenda, and that would bring to the fore a serious questioning of the capitalist system.

That system can’t be challenged by any one country, certainly not one as small as Greece. A credible challenge can only be a multi-national challenge. And a challenge to austerity, or the larger system that imposes it, will not take place in the ballot booth.

For the past several weeks, Greece had been on a knife edge, a political Schrödinger’s cat. Accepting the memorandum, rejecting the memorandum. The latest election gives the appearance of acceptance at the same time more voted to reject. A stalemate. But that is not any more stable. Greece can not accept and reject simultaneously. If the choice, finally, is to reject, then the rejection can only be an international rejection. The world’s financiers and industrialists are united across borders; the rest of us must be as well.

We may be Greek working people, British working people, U.S. working people, Argentine working people, and so forth, but we share a common humanity — the basis on which to join together. It is Greece today but it will be you tomorrow.

NAFTA and European Union: Different sides of the Atlantic but same function

By Pete Dolack

The logic of the multi-national euro currency is tighter economic integration and loss of popular sovereignty. Unless the eurozone breaks up and its users return to their own national currencies, pressure will be built by the “markets” for further centralization and harmonization of rules. In plain language, tightened control by big capitalists.

The eurozone, functionally, is much the same as the North American Free Trade Agreement across the Atlantic. NAFTA makes corporate profiteering paramount by eroding the ability of the governments within it to enforce regulations; places decision-making in the hands of unaccountable and undemocratic arbitration boards convened by either the commercial arm of the United Nations or the World Bank; and elevates the interests of large corporations and financiers above all other human considerations.

(There are the occasional conspiracy-mongers who claim that NAFTA is a precursor to the dismantling of the United States in favor of some “North American republic” and that the dollar will be eliminated in favor of a regional currency, but besides the fact that these feverish Right-wing conspiracies are laughable on their face they completely ignore the fact that U.S. capitalism needs U.S. military might, that the world capitalist system needs a center with the requisite financial and military clout to act as the enforcer, that the U.S. relies on the dominance of its national currency to be able to run budget and trade deficits, and that the nationalistic U.S. public would rise up, in arms if necessary, against any such idea.)

The key NAFTA provision is Chapter 11, which codifies “equal treatment” in accordance with international law and enables corporations to sue over any regulation or other government act that violates “investor rights,” which means any regulation or act that might prevent the corporation from earning the maximum possible profit. Thus we have had the spectacle of a corporate parcel-delivery service suing Canada in attempt to have the Canadian postal system dismantled and chemical companies suing because a chemical they produce has been banned because it is poisoning water supplies.

The idea that safe drinking water is considered a trifle next to the maximization of profits, sadly, is not a mordant joke. Any company that has its shares traded on stock exchanges is legally required to maximize its profits for shareholders, to the exclusion of all else — under capitalism, safe drinking water is unimportant. (Except, of course, for the bottled-water companies that drain aquifers to supply their products.)

Although Canada, which has the most stringent regulations of the three NAFTA countries, has won five decisions before the arbitration boards, three of them were on technicalities in which the merits of the cases were not ruled upon. Only twice has the Canadian government won a clean victory in the dozens of cases brought against it. Just this week, The Globe and Mail newspaper of Toronto reported that Exxon Mobil Corp. won a Chapter 11 arbitration case against the province of Newfoundland and Labrador because Exxon and a partner company were required to conduct research before commencing projects.

A U.S. watchdog group, Public Citizen, summed up the rules of NAFTA and other trade treaties in this succinct fashion:

“This ‘investor-state’ enforcement mechanism elevates private firms and investors to the same status as sovereign governments, effectively privatizing the right to enforce public treaties’ expansive new investor rights. There is no such private enforcement for labor rights or environmental standards. … The [free-trade] pacts provide firms a way to attack other countries’ domestic public interest laws and skirt their court systems.”

If readers in Canada, the United States or Mexico have no recollection of voting on any of this, there is good reason.

Similarly, the financiers who dominate European Union policy are not subject to any democratic accounting, either. And under the rubric of not allowing a perfectly good crisis to go to waste, the ongoing eurozone crisis is being used as leverage to install an ever harsher régime. Doing so is completely logical within the imperial construct of the European Union, which is a supra-national institution to impose corporate domination on a reluctant population. National governments are not insulated from popular opinion, but a supra-national structure can impose dictates on those governments, which can then tell citizens that is has “no choice” but to adhere to them so that the country can remain “part of Europe.”

Concomitantly, European capitalists desire the ability to challenge the United States for economic supremacy, but cannot do so without the combined clout of a united continent. This wish underlies the anti-democratic push to steadily tighten the E.U., including mandatory national budget benchmarks that require cutting social safety nets and policies that are designed to break down solidarity among wage earners across borders by imposing harsher competition through imposed austerity.

The E.U., in its current capitalist form, is a logical step for business leaders who desire greater commercial power on a global basis: It creates a “free trade” zone complete with suppression of social accountability while giving muscle to a currency that has the potential of challenging the U.S. dollar as the world’s pre-eminent currency.

A difficulty for E.U. business elites is that nationalism tends to act as a disorganizing force within the E.U., whereas nationalism is a potent unifying force in China and the United States. But nationalism, as always, has its uses: Instead of uniting on their common interests across borders, all too many Europeans are attacking one another on a national basis. Nationalism, ordinarily an easily manipulated ethos used to provide a unifying glue within countries that are otherwise consciously atomized by capitalist pressures and individualist propaganda, becomes a divide-and-conquer tool par excellence in a supra-national context. And so we have the dispiriting spectacle of venomous attacks on “lazy Greeks,” “arrogant Germans” and the rest of the assortment of tired clichés.

Nationalism is fine for working people, but an impediment for business elites who are increasingly bold in calling for economic policy to be directed by Brussels. In the past week, an assortment of E.U. officials, joined by national leaders elected and unelected, said the E.U. must be bound together more tightly. Arrogant and hypocritical as they may be, these officials are simply enunciating the logic of E.U. capitalism. The most prominent tangible form of these calls are for the issuance of “euro bonds” — government bonds to finance debt issued by the European Central Bank in place of bonds issued by individual national governments.

The new French government has endorsed the issuance of “euro bonds,” adding to the momentum. The proximate cause of pleas for the creating of “euro bonds” is that too many eurozone governments can’t afford to borrow at the high interests rates demanded by financiers and the rich who buy bonds (in lieu of paying taxes, which would end the need for selling bonds in such large amounts). The price of pooling together the risk of all E.U. governments by issuing such bonds is much closer economic integration. And what that means is financiers controlling policy to an even greater degree than they already do.

Financiers, that is, as an international interest group; not German bankers or Germany as a country. The corporate news media continues to cover the ongoing crisis and its slow-motion developments as a contest of wills between Germans (or Chancellor Angela Merkel) and the Southern rim of the E.U. with France as a buffer in between. But, as I have previously written, it is German industrialists, not German working people, who are the beneficiaries of German government policy.

Germany has become reliant on exports as German workers have absorbed a decade of wage cuts, leaving domestic demand inadequate to soak up German production or to pick up the slack when export markets soften. German exports have become more competitive on the backs of German employees, making it more difficult for other eurozone countries to remain competitive because, by not having their own currency that they can devalue, they can’t use that route to give their exports a boost. Thus, German industrialists have prospered through the widespread adoption of the euro, which has “locked in” their competitive advantages.

German, French and other bankers earned fat bonuses because the euro also made it easier for them to make loans to the Southern rim, which also enabled those countries to buy more German products. In turn, deficits mount and production is shuttered in countries such as Greece (where the shipping industry, the rich and even many private-sector middle class people don’t pay taxes), and the price for more loans is more harsh austerity.

But the money doesn’t go to the Greek budget, it goes right back to the banks. The 130 billion euro bailout of Greece is used almost exclusively to service the interest on Greece’s debt — not even to pay down the principal! The so-called “troika” — the European Central Bank, the International Monetary Fund and the European Commission — wire Greece the money, which is almost immediately sent right back. Most of the small amount that is retained by the Greek government is used to bail out Greek banks. The price for this? An unemployment rate of 22 percent and rising, pay cuts of 40 percent for those still employed and large numbers of small businesses closing.

The troika went so far as to demand that the Greek government change its constitution to ensure that banks are paid back before there is any spending on social programs. That is a taste of what will be experienced across Europe if more power is concentrated in the hands of unelected and unaccountable officials at the European level. A de facto financier dictatorship, although one to benefit big industrialists as well as financiers, because financiers are dependent on big industrialists to generate the profits that are poured into speculation (nor is there a neat separation between the two). For working people across Europe, the program can be summed up in two words: permanent austerity.

And not even German workers, who have acquiesced to their unions agreeing to a decade of wage cuts in exchange for job security, will be immune. German workers’ living standards are slowly eroding, and when German exports slow or decline because buyers in other advanced capitalist countries buy fewer of their their products because of austerity and buyers in developing countries like China buy less because they can no longer sustain the pace of investment in infrastructure and industrial capacity, austerity will hit Germans. The route to German industrialists maintaining their profits under these future conditions will be either deeper cuts to wages, an end to job security, export of production to places with much lower wages or a combination of these.

The alternative to harmonizing economy policy among the eurozone countries (harmonizing with the tightest policy among them) is for the eurozone to break up, and countries to resume using their own currencies and setting their own policies, which would at least be subject to elections, and provide space for policies other than neoliberal austerity.

It is no surprise, then, that centralizing economic policy is the preferred route for European business elites. The arguments among them are over details — Chancellor Merkel is not a stubborn holdout nor obsessed with Weimar-era inflation; she is simply reminding other national political leaders that the harmonization will conform to the tightest policy among them and Germany so happens to have that tightest policy. None of the eurozone’s national leaders are in any sense reducible to “puppets,” but their perceived national interests are distorted by whatever consensus their capitalists arrive at, which in turn are determined by larger market forces. Big industrialists and financiers dominate their societies through control of the mass media and a range of other institutions to the point that their preferred policies become, through repetition, the dominant ideas across society and the ideas adopted by the political leaders who become dependent on them.

Similarly, “markets” seek regulatory harmonization within NAFTA countries at the level of the weakest regulations. Governments must respond because capitalists can move production at will, leaving everyone else at their mercy.

Such is the logic of “markets,” which are not the disembodied forces of nature so often portrayed but are simply the interests of the most powerful capitalist elites. It is futile to expect anything different from their system.