Tsipras: the reverse shock doctrine

Newly appointed Greek Finance Minister Varoufakis attends a hand over ceremony in Athens

Now the euphoria in Greece has subsided, it is being matched by astonishment in Berlin and the European Union institutions. On its first day in government yesterday, Syriza cancelled a privatisation progamme of the ports and energy sector, pledged to re-employ around 15,000 workers, and announced minimum wage and pension rises costing around 12bn euros.

Palul Mason reports the astonishment in Europe cannot be expained by lack of foreknowledge.

see full article here with excerpts below

Numerous journalists who cover Greece, including me, reported in detail what Syriza planned to do: cancel the austerty and privatisations, run a balanced budget and massively hike the tax take from the so-called oligarchs and the black economy.

The astonishment comes because all the political centre’s contingency plans come apart. The centre-right did not win, the centre-left parties formed to create a moderation mechanism on Syriza in coalition did not get asked into the government (and in the case of Papandreou’s party, To Kinima, failed to get into parliament).

By tying up an immediate coalition with a far-right nationalist party, Tsipras was able to seize the apparatus of the Greek executive faster than anybody expected. That is what drove yesterday’s collapse of Greek bank shares, and the fall on the stock exchange.

Most market analysts thought before the election that Syriza would be forced into a U-turn. As someone who has grilled all of its economics team on camera, and Mr Tsipras himself, I can report they have no intention of backing down.

But their strategy is not confrontation over debt. It is confrontation over the institutional form of debt resolution. They will deal with the “troika”, as Yanis Varoufakis (pictured below) put it to me last week, “as a sovereign government” – i.e. separately. They will no longer recognise the troika, and will challenge its legality.

Fiscal union
Syriza’s international strategy remains, economically, to insert themselves into the wider debate over austerity and monetary policy in Europe. Bank of England Governor Mark Carney became the latest European policymaker to slam Germany’s begger-thy-neighbour polcies and refusal to share risk. He said:

“Cross-border risk sharing through the financial system has slid backwards. Europe’s leaders do not currently foresee fiscal union as part of monetary union. Such timidity has costs.”

Syriza, and its ally Podemos in Spain, which also has a chance to gain power this year, want Europe to be a full fiscal union. Yanis Varoufakis, the Syriza finance minister, has proposed for example that the Greek banks be “Europeanised” – with banks in Cyprus, Greece and Spain handed over to the ECB to recapitalise direct.

So long term, Syriza’s leaders know the fate of their government lies not just in debt renegotiation, but in the ability to make QE apply to Greece, to grab a part of any infrastructure money that comes out of the commission, and in forcing a strategic policy change in Germany which leads to a banking and fiscal risk-recycling union.

Extreme-right links

I want to explain here the parliamentary arithmetic. There’s been strong criticism and distaste among the European left and centre of Syriza’s coalition with the Independent Greeks (ANEL), an ultra-conservative right-wing party whose leader accused Greek Jews of not paying their taxes in December, and who are alleged to have links with the Russian extreme right.

The outcome is to create a stable government for Syriza. The Independent Greeks – who will run defence, and have ministers in tourism, the cabinet office and Macedonian regional affairs – will have little or no influence on economic policy. Even if their parliamentary group fragments, Syriza only needs two of their MPs in any confidence vote.

People looking for political synergies between Syriza and ANEL will find them in just one area: geopolitical stance towards Russia. And this is deeply rooted. Tsipras’s party emerged out of a split with pro-Moscow communism – but the Greek people have both religious affinities with Russia (orthodox Christianity) and historic sympathy (via the Communist-led resistance movement during the war). Meanwhile the Russian sanctions on EU agricultural exports have hit Greece hard.

Economically, meanwhile, Syriza can rely on the support or abstention of 15 communist MPs, who have refused to join a coalition, in any economic measures against austerity. Even if the communist KKE refuses to back nationalisations, wage rises and welfare increases on principle, just by abstaining it gives Syriza – voting alone – a majority on any measures.

Tsipras’s original position was that he would call a referendum if the ECB tried to force Greece out of the eurozone, or tried to veto anti-austerity measures. Given his unexpectedly high 36 per cent vote, the wipeout of the Democratic Left (which refused to join Syriza), and the surge of positivity that’s happened in the political centre since he won, my guess, after speaking to party activists, is that now he would do something different.

If he can enfranchise 200,000 18-year-olds the government refused to put on the register, and change the law to allow a further 200,000 Greek recent emigres to vote at embassies abroad, Syriza could probably win a snap second election.

That’s what some on the left of Syriza, queasy at the coalition with ANEL, actually want.

One thought on “Tsipras: the reverse shock doctrine

  1. Reblogged this on Don Sutherland's Blog and commented:
    I think this helps to understand what SYRIZA is trying to do. It must continue to build its base in Greece and extend that beyond to other countries in a similar situation: suffering from the diktat of the Troika imposed neoliberal destruction of communities and societies. Their strategy appears to include NOT doing what the real enemy in the institutions of neoliberal capitalism either expect or want.

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