Making Sense of a Crisis – Greece and Europe in 2015

Euro grafitti artConfusion, a memorandum for renewed austerity, elections and the split of SYRIZA as the grand political coalition of the left forces. All in the space of one brief, mad, volcanic summer. The Greek political crisis has entered its next phase. After a gruelling 6 months of negotiations with an intransigent set of partners, it all came to an inglorious stop. What followed is the rapid fire of political aftershocks.

It is important to begin to understand the predicament the Greek people. Within the soft and hard walls of the advanced capitalism zone, the Greek government attempted to disrupt the established order of Europe. The implications of that attempt and its defeat in battle are worth pondering. Of course this is a ‘live-event’ – it is history in free flow and the war still rages but on a different terrain. Who knows what the situation will be by the time you are reading this. What is very clear is that the “battle for Greece” will have far reaching effects across Europe and probably further afield. But in order to better understand what is yet to come, we can begin with some perspectives on what has been.

The Terms of Defeat

The SYRIZA led government (that was elected on a platform of ending the politics of austerity) has had to concede under humiliating circumstances to the conservative political forces within Europe. The imposition of another Memorandum (MoU) on the Greek government by the lenders will extend the neoliberal politics of austerity on a country that is already decimated by its encounter with this aggressive neoliberalism. The former Finance Minister within the SYRIZA government, Yannis Varoufakis, has provided a useful annotated copy of the latest MoU commenting on its horrible consequences for the economy and the Greek people. Some of the imposed lowlights include:

  • Cuts to the poorest pensions – including the disabled
  • Establishment of a privatisation fund – supposed to be capitalised at 50 bill euro. That is designed and intended to sell off Greek public assets. An advance action demanded and already delivered this past week by the government was the sell-off of 14 regional airports to a German corporation.
  • The Government commits to consult and agree with the European Commission, the European Central Bank and the International Monetary Fund on all actions relevant for the achievement of the objectives of the Memorandum of Understanding before these are finalized and legally adopted. In other words, parliament is rubber stamping exercise and national sovereignty may as well be housed with Elgins Marbles in London or Berlin.
  • Greece will have a target medium-term primary surplus of 3.5% of GDP – this is just impossible to deliver and expect the economy to get out of its vicious cycle
  • A recapitalisation process of banks should be completed before the end of 2015 – However, Banks were already recapitalised in 2013 but failed to provide credit because no bad bank was instituted to manage the huge volume of Non-Performing Loans (NPLs).
  • Continuation with a property tax that does not take account peoples income or capacity to pay – it will continue to fail and be resisted because of gross unfairness
  • Increasing taxes on farmers (most are very small) that will attack and damage one area of the economy that has prospects for growth
  • Move towards greater flexibility in the labour market – in an economy where workers regularly get underpaid or have to wait months to receive payment – more flexibility is not really the burning issue.

It is true that there were some very soft (and possibly even illusory) gains from the agreement. There is begrudging acknowledgment from the lenders that they will consider the issue of debt sustainability. This may or may not translate to some form of debt easing. The three year term of the agreement captured by the MoU does give the government some room to implement its other reforms (if it can manage to ride out the crisis associated with implementing the cuts imposed as part of austerity).

However, one does not even need a radical standpoint to understand the inherent brutality and illogicality (from the point of view of economic development) of what is demanded by the European elites. Joseph Stiglitz as a mainstream economist, who spent a working life within the World Bank and similar bedrock institutions, has commented:

I believe strongly that the policies being imposed will not work, that they will result in depression without end, unacceptable levels of unemployment and ever growing inequality. But I also believe strongly in democratic processes — that the way to achieve whatever framework one thinks is good for the economy is through persuasion, not compulsion. The force of ideas is so much against what is being inflicted on and demanded of Greece. Austerity is contractionary; inclusive capitalism — the antithesis of what the troika is creating — is the only way to create shared and sustainable prosperity.

For now, the Greek government has capitulated. Perhaps, as the lost half decade becomes the lost decade, as the politics get uglier, as the evidence mounts that these policies have failed, the troika will come to its senses. Greece needs debt restructuring, better structural reforms and more reasonable primary budget surplus targets. More likely than not, though, the troika will do what it has done for the last five years: Blame the victim.

 

The Split of SYRIZA and Fresh Elections

The defeat of the Greek government in its negotiations has produced dire political effects. The SYRIZA party has now split with a left grouping establishing a movement called Popular Unity (the same name as the united political front that formed the Allende government in Chile). This Popular Unity is now the third largest political force in the Greek parliament (in terms of number of MPs, after SYRIZA and the conservative New Democracy).

The SYRIZA government has called for national elections in September in a bid to regain control of parliament and government. SYRIZA is expected to be the largest party and to be able to form government. However, the political situation remains very fluid and victory is not at all considered to be safe. The Popular Unity party will not garner the same votes, with recent polls showing it attracting around 8% of the votes (SYRIZA polling somewhere between 28%-40%).

Aside from the electoral ramifications, the split represents an important divergence in political strategy between the two camps. Those remaining within SYRIZA are coalescing around the idea that the constellation of neoliberalist forces is too strong in Europe and this precludes any strategy that takes Greece out of the Eurozone. This case is presented by Alexis Tsipras (the president of SYRIZA and Greek Prime Minister).They favour a long game of winning over people across Europe to resist neoliberalist policies and defeat the politics of austerity:

We have to be objective in our conclusions. These have been six months of great tensions and emotions, and self-flagellation helps no one. Feelings of joy, pride, dynamism, determination, and sadness have surfaced. But I think that at the end of the day, if we try to look at this process objectively, we can only be proud to have led this fight. Under adverse conditions and with a difficult balance of forces within Europe and the world, we tried to assert the point of view of a people and the possibility of an alternative path. Ultimately, even if the powerful were able to impose their will, what remains is the absolute confirmation on the international level that austerity is a dead end. This process has established a completely new landscape in Europe.

Leo Panitch argues that:

The charges of betrayal being levied against the SYRIZA leadership today are based on its signing off on the latest very harsh memorandum. But insofar as this memorandum was imposed on the basis of the threat of expelling Greece from the Eurozone and leaving its banking system without support, the claim that Greek Prime Minister Alexis Tsipras “capitulated” implies that there was a viable alternative centred on an immediate Eurozone exit (“Grexit”) that the government could have undertaken.

The political conditions that would make an immediate Grexit viable are not present today. Those who insist that these political conditions were established by the outcome of the referendum are being disingenuous.

The other side (now represented openly by Popular Unity but still with many supporters within SYRIZA) argue that the last 6 months were an attempt to prosecute this “strategy from within” and the results are none too edifying. Stathis Kouvelakis who is an important strategic thinker within Popular Unity argues that the Left needs to absorb the full significance of the crushing defeat it has endured:

What has been crushingly defeated was a political strategy, the strategy that the majority in SYRIZA, and therefore SYRIZA as such, has espoused for the last five years, and which could be called “left-Europeanism.”

It was the conception that the memoranda and austerity could be overturned within the specific framework of the Eurozone, and, more broadly, of the European Union (EU). That we have no need of an alternative plan because in the final analysis a positive solution will be found within the euro and that displaying credentials as “good European citizens” and professions of faith in the euro could be used as bargaining chips…

Alexis Tsipras, the Greek prime minister, did not carry out a secret plan “to sell out.” He found himself confronted by the total bankruptcy of a specific strategy, and when a political strategy fails this means that there remains only the choice between bad and worse options. Or rather, there remains only the worst option — and that is exactly what happened in this case.

The case against remaining inside the euro (if the political objective is to defeat neoliberalism, or even to getter better terms) is also reinforced by the arguments of economists far removed from the ‘left political scene’. Anne Petifor has concluded that:

The plain truth is that the euro is a product of utopian neoliberal economists and their ambitions for a monetary system governed only by market forces, beyond the reach of any European state. It is this utopian vision and its embodiment in ‘rules’ that is the cause of economic failure, divergence, social and political instability across member states.

That utopianism is why, like the gold standard, the euro is doomed to failure.

A key argument in favour of breaking with the Eurozone is the viciousness with which it imposed a continued austerity program this time around. Why on earth would the euro-elites go softer next time, when they got away with it in 2015, with barely a boo heard across Europe?  Ellen Brown provides a succinct account of the financial and economic instruments of coercion that were available to the lenders courtesy of the Eurozone. In the end she concludes:

When Prime Minister Tsipras called a public referendum in July at which the voters rejected the brutal austerity being imposed on them, the ECB shuttered the banks.

The Greek government was thus broken Mafia-style at the knees, until it was forced to abandon its national sovereignty and watch its public treasures sold off piece by piece. Suspicious minds might infer that this was a calculated plot designed from the beginning to throw Greece’s prized assets onto the auction block, a hostile takeover and asset stripping for the benefit of those well-heeled entities in a position to purchase them, including the very banks, hedge funds and speculators instrumental in driving up Greek debt and destroying the economy.

There is also scope for a potential realignment of the forces of SYRIZA and Popular Unity further down the track. Certainly not all that remain within SYRIZA agree that Greece will in fact be able to manage from within the strictures of the Eurozone.  A so-called Group of 53 represents within the leadership grouping of SYRIZA recognises the failure of current strategy and advocates moving towards a political exit from the stranglehold of the Eurozone. But it also argues that this will take some time and needs to undertaken with caution and with mobilization of communities. Andreas Karitzis for example:

Is there any room for manoeuvre? Yes, if we are determined and systematic enough to work under the radars of the neoliberal configuration, inventive enough to formally coincide with it while at the same time we empower people against it and decisive enough not to give in to threats and blackmail.

In order to respond adequately in these suffocating conditions, new organizational standards and methods are needed for the engagement of thousands of people in this day-to-day and multi-level fight. Negatively put, without the people with the knowledge needed, aligned into groups of collaboration and embedded in a vast network of democratic decision-making that produces policies of our own logic no government will be in a position to wage this battle.

Nasos Iliopoulos also recognises the dead end the current strategy has produced and calls for another way out that avoids the usual traps:

In order to extricate ourselves from the position that we are in we need to preserve our collectiveness and to start re-planning in a most democratic manner. Surely there is not much time left. But it is equally true that we cannot create a plan for our own extrication just a few days after our greatest defeat. Of course, one condition remains. That is to acknowledge the current state of the country as a dead end that we must escape and not as a state of stabilization of the Greek economy or as an expectation for investments and growth.

We need to plot another strategy as soon as possible. From now on we have to only deal with tough questions.
How can we extricate ourselves? How can we escape from the blackmail?

What is our answer to the imposed suppression of democracy?

Which is the way to the organization of social resistance and to reactivation of people’s participation and action as our main weapons of defense against the unorthodox economic war that we are facing?
In this course, the only burden that we need to leave behind us is the “ease” with which we have learned to go about things.

Beyond the elections

The only thing that is near certain is that the elections will mean the election of a government that will apply the terms of the memorandum agreed to by the SYRIZA government. Whether it be SYRIZA or a conservative coalition, the dead end path of austerity seems unavoidable. Even for the neutral economists such as Joseph Stiglitz, the implications mean its not at all over with a scrappy deal in July and some hot August nights in a humiliated Greek parliament. The eminent logic of a rupture with the strictures of the Eurozone remains ever present:

As awful as the prospect of leaving the Eurozone may be for Greece, staying in given the current terms only means a longer and deeper depression. The best way forward might be moving toward a two-currency situation, using both the euro and a “Greek euro” — a currency that would be tradable within the country’s own banking system. At least then Greece would be better able to set its course for the future. A tiny spark of hope is better than no hope at all. 

The challenges that lie ahead for the Greek Left are immense. But the Left stand as the one great hope of the Greek people to out manoeuvre the grotesque chaos that has become their lives. A chaos that unfolds daily and seemingly has no end. In government and in opposition (and in both at the same time) the Left will have to find again the strategy and tactics that are up to meeting the demands of the situation.

Adam Rorris

August, 2015

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