The EU has enforced a humiliating surrender on Greece. The Syriza government that was elected to end austerity has been forced to implement it. The meaning of Wolfgang Schauble, the German Finance Minister’s infamous phrase ‘we can’t possibly allow an election to change anything’ is now clear.
The scale of the brutality is astounding. To take just one example: there will be a ‘significantly scaled up privatisation programme’ to generate a fund of €50 billion. This fund will then be effectively controlled by the EU to ensure that bank debt and bondholders are paid off. Up to now €7 billion worth of privatisation has been pushed through by other governments in Greece.
The Irish government helped humiliate the Greeks. The former Greek Finance Minister, Yanis Varoufakis, has stated that Ireland – along with Spain and Portugal – were among his ‘energetic enemies’. He explained why,
the “greatest nightmare” of those with large debts – the governments of countries like Portugal, Spain, Italy and Ireland – “was our success”. Were we to succeed in negotiating a better deal, that would obliterate them politically: they would have to answer to their own people why they didn’t negotiate like we were doing.
This attitude became public when the Labour Minister, Alex White, welcomed the ‘fair’ deal. The Taoiseach, Enda Kenny, went further and claimed that, under the deal Greece, would ‘thrive and prosper’
The Irish government tried to invoke an undertone of nationalist rhetoric to bolster its position. ‘The Greeks are looking for more money from us – they should take their medicine like we did’ was the message. But the issue cannot be framed in such terms because the original €7.5 billion that the Greek government requested as a loan was never going to be used to fund public services. It was earmarked to repay previous loans because Greece had been put on a treadmill of austerity from which it could not escape.
In 2012 the Troika intervened in Greece to safeguard wealthy private creditors. In return for a haircut on their loans, these investors got EU institutions and the IMF to fund a Greek loan that guaranteed them re-payments. These ‘loans’ triggered further austerity and created the latest crisis.
So the issue was never about Greek people begging from others in Europe. It was about a devious mechanism to make the Greek people pay for debts to wealthy bondholders. Which is precisely what happened the people of Ireland.
The Irish government’s strategy of using ‘quiet diplomacy’ to get the Irish debt reduced has proved an abject failure. But by backing Germany’s brutal approach, it has copper-fastened debt re-payment from Ireland until 2053.
WHY DID THE EU TORTURE GREECE?
Stathis Kouvalakis, a member of Syriza, has described the outcome as ‘the most resounding defeat of any left-wing government in Europe after the war’. It certainly represents a turning point in left-wing politics.
Ever since the crash of 2008, there has been an increasing call among activists to forget ‘old’ debates about reform or revolution. Yet the betrayal of Syriza re-opens this very question. To understand the implications for future socialist strategy, it is necessary to analyse the motivations of both the EU elite and the political strategy of Syriza.
For Paul Krugman, the actions of the EU in humiliating Greece are an act of ‘madness’. The assumption that the EU acted irrationally also finds an echo in Varoufakis’ efforts ‘to save capitalism from itself’. He had aimed to put ‘forward an analysis of the current state of play that non-Marxist, well meaning Europeans who have been lured by the sirens of neoliberalism, find insightful’. In other words, to present a rational case for why austerity policies would harm capitalism. More generally, Syriza’s strategy was premised on the fact that it could persuade its European ‘partners’ to move away austerity.
Once they came into government, Syriza found that their words literally fell on deaf ears. Here is Varoufakis’s description of what occurred when he spoke to eurozone finance ministers
there was point blank refusal to engage in economic arguments. Point blank. You put forward an argument that you’ve really worked on, to make sure it’s logically coherent, and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply.
There were a number of reasons why it was not possible to even get them to listen.
First, Germany has become the effective leader of a dysfunctional, imperial project known as the EU. It is determined to impose its model of export-led growth and wage suppression on the rest of Europe. Its strategy known as ‘ordoliberalism’ is neoliberalism encompassed in tight bureaucratic control. Rule-bound mechanisms are set up to automatically shut off increases in social spending and create self-regulating systems of austerity that have the appearance of voluntary compliance. The new EU ‘six pack’ regulations; the fantasies about calculating ‘medium term objectives’ and ‘structural deficits’; and fines that arise out of the ‘excessive deficit procedure’ all arise from this ordoliberalism philosophy. The aim of the strategy is, in the words of Hayek, to ‘seal off’ decision makers from democratic pressures. The German’s elite imposes this model on the rest of the EU as both a tangible sign of its own domination and because it ensures that no demands can be made on the German treasury.
Second, EU capitalism is facing a problem restoring its levels of profitability. Stagnation has persisted for much longer than expected and there is a heightened competition between the US and China. The primary mechanism for restoring profitability is cutting real wages, intensifying work-effort, and reducing the social wage. These pressures to increase the level of exploitation and cut back on social spending explain why a virulent form of neoliberalisms persist- even after Keynesian mechanisms are adopted though quantitative easing.
Third, the leaders of EU capitalism face serious challenges. The rise of Syriza, the growth of Podemos in Spain and the changing nature of Irish politics show that austerity is leading to a political backlash in the peripheral countries. By humiliating Greece, the EU leaders are sending out a message of fear and fatalism. The scale of the humiliation is designed to drill into people’s heads. ‘there is no alternative’.
All of these factors explain why it was never possible to rationally persuade the EU leaders of an non-austerity strategy. Even if Syriza had gained a few other allies – such as Podemos in Spain – the whole structure of the EU and the needs of European capitalism meant that there was no space for rational persuasion. The talk of a European solidarity and appeals to the moral values of ‘our partners’ was, therefore, a fantasy.
Syriza was held up as a model for the left in many countries but, unfortunately, this was often accompanied by an uncritical outlook.
Syriza is the first radical left party to come to power by an election in Europe since the Popular Front government in France and Spain in the 1936. It represents a break from the social liberalism of the mainstream social democratic parties and does not belong to the club of established political parties.
However, despite opposing neoliberalism, Syriza embraced a reformist strategy. The term ‘reformism’ is not meant as one of abuse but it describes a strategy of using the mechanisms of the state to effect substantial changes on behalf of working people. It operates within the framework of capitalism and uses Keynesian economics to increase demand – rather than proposing the outright expropriation of capital.
Some object to describing Syriza as a reformist because a) it leaders used a rhetoric about moving beyond capitalism and b) because there were avowed anti-capitalists elements within its coalition. However, this objection is somewhat facile as it was only in Bad Gotesberg programme in 1959 that the German SDP dropped their formal adherence to Marxism. In the early twentieth century many reformist parties combined a rhetoric about moving beyond capitalism as their maximum programme with a practice of seeking social reforms as their minimum programme. Syriza was certainly distinctive in growing out of social movements in the 21st century and in rising so rapidly in public support. But at the core of its strategy was a belief that the machinery of the state could be used to ameliorate the lives of workers.
The main component within it, Synaspismos, was a euro-communist formation. In the early seventies, it broke its allegiance to Moscow and instead sought to bring about change through wining elections. One of the early theorists of Eurocommunism, Santigao Carillo, summed up the new approach by claiming it held out the ‘possibility of democratising the apparatus of the capitalist state, transforming it into a valid tool for constructing a socialist society, without needing to destroy it radically by force’.
Most modern European states are embedded in a network of EU institutions and so a strategy of working through the state also means working within those institutions. Syriza leaders correctly assumed that in an era of globalisation, there could be no purely national solutions to the crisis within capitalism. But they deduced from this, that a ‘rupture’ was no longer possible and that the EU provided the framework for generating an alternative to austerity. This is why they repeatedly called for a European Debt Conference but offered no Plan B if the EU leaders refused to call one. They stressed the role of international solidarity and looked to Podemos in Spain and Sinn Fein in Ireland to help them bring about change within the EU. But they placed little emphasis on the role of Greek workers themselves taking action to break from capitalist control.
The weakness of this strategy soon became apparent. Soon after the Syriza government was elected, the EU changed the rules for calculating the reserves of Greek banks. This seemingly technical change was designed for two purposes. The, first, was to increase nervousness among the Greek rich and to encourage a flight of capital. The, second, was to make the Greek banks dependent on EU emergency liquidity funding and, therefore, more subject to blackmail. Yet Syriza watched passively while this was underway. It did not move to nationalise the banks or encourage bank workers to open the accounts of the rich to prevent them sabotaging the economy.
The referendum showed how the militancy of Greek workers could pull whole swathes of the wider society behind them in giving a decisive NO to EU blackmail. But Syriza’s strategy of working exclusively through the state and through negotiations with the EU could not match the courage of the Greek electorate.
Varoufakis has given lie to the argument that the Greek government had no choice. He proposed that in response to EU blackmail, the government should
issue euro-denominated IOUs; apply a “haircut” to the bonds Greek issued to the ECB in 2012, reducing Greece’s debt; and seize control of the Bank of Greece from the ECB’.
This would, no doubt, have set off a chain of events which would have upped the stakes. The EU would have tried to further de-stabilise the country and its allies among the Greek rich would have stepped up their sabotage and flight of capital. So even this mild strategy of Varoufakis would have required a degree of popular mobilisation and workers action to carry it though.
It was precisely this option which the Syriza leadership rejected, bringing into sharp relief the difference between its past left rhetoric and present passivity. Varoufakis describes what happened on the night that the huge victory in the referendum became known.
That very night the government decided that the will of the people, this resounding ‘No’, should not be what energised the energetic approach [his plan]. Instead it should lead to major concessions to the other side: the meeting of the council of political leaders, with our Prime Minister accepting the premise that whatever happens, whatever the other side does, we will never respond in any way that challenges them. And essentially that means folding. … You cease to negotiate.
In other words, Tsipras and the Syriza leadership saw the referendum result as simply a moral cry for solidarity from the other EU leaders. It never entered their heads to think about how the NO vote could be mobilised within Greece to physically face down EU efforts at blackmail. The sole agency was the Greek cabinet and its ability to negotiate with the EU bullies.
This historic defeat, therefore, arose from a belief that control of the Greek state apparatus and appeals to EU solidarity was the method for bringing change.
IMPLICATIONS FOR THE IRISH LEFT
In recent months there have been discussions about the need for a ‘progressive government’ in Ireland and interesting debates have occurred about policies. But there has been little talk about the methods by which such aspirations might be achieved. The Greek crisis indicates that these issues can no longer be avoided.
Let’s us take just one example: Interest payments on Ireland’s national debt amount to approximately €8 billion a year – and they are set to continue long into the future. As long as that burden persists it will be difficult for any left government to effect many substantial reforms. In the light of the Greek experience, one therefore has to ask: will a left government seek to write down that debt by unilateral action or will it simply comply with the new EU regime and commit to paying it off? If it chooses the latter course, it shall be pulled back into the neoliberal consensus. If it chooses the former, it will need a strategy to deal with EU economic terrorism.
The initial elements of that strategy can be developed by looking at the Greek experience.
After the Greek crisis, the Irish left needs to drop any idea about the progressive nature of a social EU. It should note that Syriza was wrong to believe that it could combine an anti-austerity programme with support for the EU. The reality is that the EU combines a soft rhetoric about ‘inclusion’, ‘solidarity’ and ‘respect for human right’ with a hard core neoliberalism that is embedded into its institutions.
The Irish left should, therefore, fully break with a ‘ we will stick to the EU at any cost’ mentality because it was precisely this approach that gave the EU leaders a stick to beat Tsipras. Instead the left should advance its demands for a write down of debt, for nationalisation of natural resources, and a reversal of privatisation regardless of whether or not this is acceptable to the EU. It should indicate that it will not be bound by the rules of the Fiscal compact and that electoral support for the left means a mandate to defy such rules. It should make it clear that it favours the break-up of the EU in its current form and will seek its replacement by a federation of peoples based on democracy and control of capital.
Of crucial importance here is its attitude to the Euro. The left should indicate that its policies will be pursued regardless what piece of paper functions as a currency. As a first step it should take control of the central bank out of the hands of the so-called ‘independent’ ECB. If implementation of its policies means being forced out of the euro, it should be ready to use an alternative currency. But neither it should pretend that a different currency –such as the punt- can in itself solve problems. Thus who currently advocate a return to the punt often do so from within a capitalist framework, suggesting that a devaluation would make Irish exports more competitive. However, the key issue is not the currency but control of the economy. A break from the euro would have to be accompanied by a major programme to re-distribute wealth so that the costs of the change fall on those who can most afford it.
One of the key lessons from Greece is the role that credit and the cutting off of credit played in blackmailing a government. The Syriza’s government’s first mistake was accepting ‘emergency liquidity assistance’ from the EU because this gave its tormentors control over its life saving machine. One of the assumptions behind the fatalistic assumption that we cannot ‘burn bondholders’, is that a country will always need a substantial amount of credit to run any economy. Given this assumption, it is argued that any move against bondholders would cut off the ‘life blood’ for an economy.
But it is possible to organise an advanced economy without a permanent need for substantial credit transfers. Ireland already has a high level of wealth but, unfortunately, its control lies in a few hands. Re-distribution of that wealth provides an alternative avenue to seeking ‘support’ from foreign creditors. Such a strategy does not preclude individual arrangements to access credit . Rather it suggests that a transitional economy that goes beyond capitalism would have to overwhelmingly rely on its own resources – rather than the type of EU ‘support’ that hung Greece.
However, none of this is remotely possible with a strategy of simply taking control of the state apparatus and driving through changes from above. Greece shows that any left government that moves beyond the confines of social democracy will be faced with economic terrorism and sabotage. A state machine which has been constructed to defend privilege and which relies on secretive networks with the economic elite could never act as the principle mechanism of defence. Only the active mobilisation of its own working class supporters offers the best defence.
One of the great gaps in conventional economic thinking is to see workers simply as ‘factors’ in the cost of production or services. The economists forget that behind the mysterious power of ‘market forces’ lie human beings who have thoughts, feelings and political consciousness. Every time the wealthy need to move their money abroad, they rely on computer workers, bank officials, administrators to carry out their work. When they try to run down production to teach people a lesson in obedience, they face a workforce who is more than capable of organising production without the ‘help’ of investors. When they claim a status of tax fugitives, they forget that when they fly abroad, their tangible assets remain at home. The mobilisation of workers in every area of society can stop the power of money and market forces.
Against the economic terrorism of the EU, people power and workers action is the only way to achieve change.
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