The OXI Revolt of 2015

oxiThe OXI revolt that burst out of Athens on July 5th sent a political tremor around the world. But very soon the defeat of the Greek government in its July negotiations with the lenders dealt a massive blow to SYRIZA and the government as a whole. In turn it has deflated many people across the world.  SYRIZA has a long history of managing internal conflicts and serious tensions as it has grown from a coalition of parties and social movements. It will neeed to use all that experience if it is to learn and move on from its mistakes and disagreements.

Now is the time to quickly comprehend the significance of what happened and emerging options to regain political initiative. The observations and comments are based on my time in Greece during these past few dramatic weeks. They draw on conversations with activists, SYRIZA party members and general discussions with people on the street.

What happened is relatively straight forward. The SYRIZA led government was elected on a platform to end austerity and negotiate a write-down of the Greek national debt. Immediately upon being elected the Greek government prosecuted this case with alacrity and conviction. Indeed many people within Europe and across the world were convinced for the first time of the Greek cause and the unjust terms imposed on the Greek people. The lenders too could no longer pretend they did not know or were told different things by their Greek counterparts –they were told in detail the damage done and the inevitable further damage that would arise from austerity and a failure to write-down the debt. To help them along there were even very creative solutions offered that could help them manage the domestic political constraints they would have to negotiate.

The initial political response to this from the European lenders and the IMF was unadorned belligerence. They ended 5 months later with a nasty vindictiveness and a final humiliating deal that does not have a hope of being fully implemented, and in even its partial implementation will do a great deal of harm. A deal that shocked even hardened insiders like former IMF boss Strauss-Kahn. The hard line position of the German led negotiators shatters any pretence of an honourable and humane Euro consciousness upon which the Euro project was founded and exposes a restless German dominance. It can be described as a neo Euro-imperialism.

Most likely within a couple of years of Memorandum 3 being signed, Greece will find itself again depressed economically and with little further assets to sell. At that point, most probably a partial debt write-down will be agreed, but given the absurd cruelty of the current lender mind-set, even this cannot be assumed.

In moving forward, the initial political question is – why did the Greek government fail to move these lenders to a more favourable position? The short answer is that it did not appear to have a plan that could give them more leverage than relaying a simple truth – that the people of Greece and Europe would be better off if a fairer deal was struck. Of course, the Greek government did explore options for seeking external support from countries such as Russia, China, Latin American countries and even the USA. It is true that it received support and help in various ways from all of these. In the end, however, the lenders were supremely confident that Greece was still left in a position that it had to accept any deal offered by its existing lenders.

By the close of negotiations the lenders were coalescing around two positions. One position was to offer Greece a third bailout with conditions that ranged from tough to humiliating. The other was to force Greece into an exit from the Euro-currency (and possibly even the European Union). The so-called Grexit would not have been undertaken under terms that would have been favourable towards Greece. Indeed, we now know that a detailed plan was developed over a one month period within the European Commission to deal with a Grexit. That plan reportedly is still under lock and key within the EC. The Kathimerini newspaper has reported that one staffer involved in its preparation considered the Grexit scenario so volatile it would have led to tanks being deployed in the streets of Athens.

Two weeks before the final agreement, Alexis Tsipras played his final card. He called a referendum on whether Greece should accept the harsh terms of an agreement proposed by lenders. The resounding OXI of the Greek people gave Tsipras a gasp of breath and a fresh mandate to negotiate against the harsh conditions.

The response of the lenders was worse than neutral. Outraged that a government should refer to its people before making a critical decision, the lenders responded with vindictiveness by toughening their conditions and humiliating the Greek Prime Minister. The humiliation was precisely in the fact that they “forced” him to sign an agreement (which he has declared he does not believe in) to prolong a strategy that had already proven a grotesque failure and which was deemed by the IMF analyst’s themselves (one day after agreement) to be unviable. The IMF analysts have confirmed what many other economists around the world have joined together to declare – the current debt load is unsustainable and any further debt is plainly irresponsible.

For many people the burning question is – why did Tsipras agree to further harsh austerity?  The answer is because he saw no other alternative other than an exit from the euro. An exit for which his government was thoroughly unprepared to manage. This would mean the country would have been at the mercy of the lenders. Given the savagery of their negotiating stance, he could only realistically expect the worst.

In the wash-up discussion of what happened, he will be criticised by some as selling out and betraying the cause. I believe that when it came to that final week, Tsipras had no option but to sign. The critical errors had already been made – it would have made no sense to turn those critical errors into a fatal error. If Tsipras had walked away it is more than likely Greece would have descended into chaos as the banking system dissolved, trade and business froze and resentment grew on the street. It would have been the easiest thing for hostile forces to sow discontent and move the country towards the precipice.  More than likely, the government would have fallen and the Left would have been saddled with the charge of bringing the country an economic and political disaster.

But if Tsipras was right in swallowing all pride to agree to horrible terms for the country, he was dead wrong in not insisting beforehand on the preparation of an exit plan from the Euro. The badge he proudly displayed (I do not have a Plan B) was a mark of weakness fully exploited by the lenders.

Tsipras was proven correct in plotting a winning electoral strategy that promised to stay within the Euro and yet overturn austerity and reduce national debt. He had a right to preserve his compact with the Greek people until he had a mandate to do otherwise. But this strategy also locked him into an untenable bargaining position with lenders.

The Left Platform now appears correct in arguing (from before SYRIZA assumed government) that an acceptable agreement with lenders most probably could not be found within the Euro-currency.

SYRIZA should make the most of the fact that under Tsipras it did everything feasible to get a better deal for Greece within the Euro. SYRIZA took the Greek people down a path of sincere negotiations armed only with the truth and a claim for justice. It has won many friends to the cause across the world and has even produced a split within lenders on the critical issue of the write-down of debt. This accomplishment has not produced tangible results, yet augurs well for future concessions on debt.

But on austerity, it went mostly backwards.  It should accept (apart from some concessions) it has extracted a draconian austerity package for the country. It is significant that people (even those set against him) acknowledge that he and his negotiating team argued as hard as humanely possible. There is an emerging consensus that it’s not possible to extract a more favourable deal from within the Eurocurrency arrangements. This is a significant development.

Unless SYRIZA now accepts that hyper-austerity is tolerable, it should recognise that it (and any other responsible Greek government) must have a viable and advanced strategy for exiting the Euro currency. It would be entirely irresponsible (when the lenders are developing such strategies behind closed doors) for Greece to be idly whistling in the wind.

In other words, the agreement Tsipras was forced to sign, is also an instrument to buy time. One track will be locked in an absurdist farce set around negotiations for a third memorandum of horrors. The other track should be laying the groundwork to plan and prepare people for an exit from the Euro. There is nothing schizophrenic or irrational about this – its called having live and competing options and it is exactly what the German-led lenders did to Greece in the first round of negotiations that ended in July.

Critical in all this will be keeping alive the message (in Greece and abroad) that austerity is a program imposed upon Greece by lenders. We should always remember that this SYRIZA government has fought hard against austerity.. A detailed alternative plan and hard work from below is now needed. This can allow it to negotiate with confidence by knowing it has somewhere to go if the lenders again bare their teeth.

The German newspaper Die Welt reported in July 2015 there is already a growing belief across Europe and the rest of the world of a German government tendency for domination. All efforts should be made to ensure that German government and business understand the growing resistance towards their foreign and economic policy in Europe.

For its part, the Australia-Greece Solidarity Campaign remains committed to working with all those in Greece who are resisting the politics of austerity and seek an end to the tyranny of an unsustainable debt.

On July 5th, the Greek people showed courage and defiance. They will be greatly helped in the next round if the OXI revolt gets global support.

Adam Rorris

National coordinator, Australia-Greece Solidarity Campaign

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