Greece and the latest phase of the EU crisis

Alexis Tsipras and the Syriza leadership have pushed through parliament the third bailout – and further deep cuts – although only with the help of right-wing parties. However, the crises in Greece, the eurozone and wider EU are far from over…

alexis-tsipras-angela-merkelAlexis Tsipras and the Syriza leadership have pushed through parliament the third bailout – and further deep cuts – although only with the help of right-wing parties. However, the crises in Greece, the eurozone and wider EU are far from over…

Tony Saunois, CWI, from September 2015 issue of Socialism Today, magazine of the Socialist Party (CWI in England & Wales)


Alexis Tsipras and the Syriza leadership have pushed through parliament the third bailout – and further deep cuts – although only with the help of right-wing parties. However, the crises in Greece, the eurozone and wider EU are far from over. These unfolding developments are of immense importance to socialists internationally.

The Greek tragedy that has shaken the EU to its foundations throughout 2015 with ineffable consequences for the working class and capitalism is far from over. At the time of writing some capitalist commentators argue that agreement has been reached and the end game is being played out. That is until the next infelicitous deficit or repayment crisis erupts.

Syriza’s election triumph in January 2015 raised the hopes of workers, young people and all those opposed to austerity throughout the EU and beyond. The massive ‘No’ vote of 61.3% in the referendum on 5 July – all the more remarkable as it followed a brutal shock-and-awe campaign of intimidation and scaremongering in the media – aroused high expectations internationally. This victory appeared to break the logjam and raised the prospect that a mass struggle for an alternative to austerity and neo-liberal capitalism was possible.

Unfortunately, these hopes were dashed by the capitulation by prime minister Alexis Tsipras in July to the terms of the bailout imposed by the troika of the European Commission, European Central Bank and International Monetary Fund. This betrayed the hopes and aspirations of the Greek people and those of the whole of Europe. Activists are now faced with the question: was such a capitulation inevitable given the balance of forces of ‘tiny Greece’ pitted against the Goliath of the troika and EU alliance of capitalist powers?

It demonstrates, above all, the crucial necessity of a decisive programme to break with the EU and the capitalist system. Without such a socialist programme and the mobilisation of the working class of Greece and across Europe it is impossible to defeat the demands of the troika. Tsipras and the other leaders of Syriza thought it would be sufficient to enter negotiations with German chancellor, Angela Merkel, and the other leaders of European capitalism and convince them of the errors of their ways. Yet they hit a brick wall within hours of the start of the talks. EU leaders were not prepared to accept any compromise. Everything (and more) initially rejected by Tsipras and the Syriza leadership was eventually accepted to secure a third bailout.

The crisis also opened up significant splits among the ruling classes in the EU. The French and Spanish governments feared pushing too hard against Greece and forcing it out of the eurozone, thus deepening the EU-wide crisis. Splits to the right opened up within the German ruling class and Merkel’s governing Christian Democratic coalition, with 60 MPs voting against the deal. The neo-liberal thug, Wolfgang Schäuble, German finance minister, was at the forefront of demanding that more and more be imposed on the Greek masses with the aim of driving Greece out of the euro.

Imposing savage austerity

The third bailout and austerity package will mean another catastrophe for the Greek people and a further brutal assault on living standards. Insanity is sometimes measured by the repetition of the same action but on each occasion expecting a different result. The preceding two bailouts have resulted in an economic and social disaster in Greece. Since the crisis began in 2008, over 10,000 suicides have taken place. GDP has shrunk by over 25%, worse than any economic depression since the crash in 1929. Far from resolving the debt crisis, the debt-to-GDP ratio has grown with each successive bailout – from 120% to an estimated 185%. According to the IMF, the consequences of this third bailout will be an increase in the debt to at least 200%.

The effects of a further round of austerity will be even more devastating. The National Institute of Economic and Social Research estimates that by next year the economy will have shrunk by 30% since 2010! It warns of a permanent recession, concluding that a debt write-off of at least 55% is necessary to avert such a disaster. Even the IMF accepts that a write-off is needed and that the current debt will never be repaid. The EU estimates that the Greek economy will contract by a further 2.3% in 2015 and another 1.3% in 2016.

Tsipras has now accepted a brutal austerity package to repay a debt that will never be repaid – and it is also doubtful that the terms of the bailout will be realised. The EU has demanded that £50 billion be raised from privatisation. Yet, against the backdrop of a stock market crash of 40% over the last five years, only £3 billion has been raised from the privatisations in the preceding two bailouts!

As the deposed finance minister Yanis Varoufakis commented, the agreement is a modern day Treaty of Versailles (1919). It has been imposed as in a colonial occupation – if not by tanks, then by banks. As Thomas Jefferson is reputed to have commented in the 19th century: “The banking establishment is a greater threat to our liberties than standing armies”. EU officials (‘monitors’) will be appointed to every government department to oversee the terms of the agreement. Even the bills to enact the deal in parliament were drafted in Brussels and not by the Greek government! The Greek government is giving up control over everything from budget planning, drug pricing, tourist rentals, right down to details of personal bankruptcy.

Prior to the agreement being reached it was clear that the EU’s objective was regime change, or at least partial regime change. Its representatives effectively refused to negotiate with Varoufakis and he was dismissed. It was like employers determining which trade union leaders they negotiate with during an industrial dispute. Since the agreement, ten ministers have resigned from the government because they opposed the deal.

The imposition of this plan has resulted in a strong ‘anti-German’ sentiment developing in some countries, but it is important to stress that it was not only German capitalism that demanded a hard-line. The governments and capitalist class of the Netherlands, Finland and others were just as ruthless in their demands for savage austerity. Socialists stand for a united struggle with the German, Dutch, Finnish and all workers of the EU, and the majority could be won to a campaign in support of the Greek working class and against austerity.

EU intransigence

Tsipras and other Syriza leaders deluded themselves that they could simply appeal to the capitalist leaders to change policy and they would agree, if a powerful enough case was put. When the Tsipras leadership faced the iron fist of the troika, however, it became clear it had no alternative in place to withstand the intransigence of the ruling class. This is a crucial lesson for the international working class. The representatives of capitalism and imperialism cannot be reasoned with if they perceive their interests are threatened.

In this case, what they feared was not only making concessions to Greece. This they could have lived with. Their fear was the effect that would have in the rest of the EU – especially Spain, Portugal, Italy and Ireland. Concessions to Greece would have resulted in a clamour in these countries for a change in policy. It would have further exposed the governments and political establishments of these countries, which have rolled over and accepted austerity package after austerity package being thrust on the people.

It was for this reason that Irish Taoiseach Enda Kenny and Labour leader Joan Burton were among the most vitriolic in denouncing the ‘irresponsibility’ of Syriza and the Greek people for saying a massive Oxi (No) to austerity. They were only surpassed, perhaps, in the attitude adopted by Sigmar Gabriel, leader of the German pro-capitalist (formerly social-democratic) SPD, who ranted against the Greek referendum, accusing Tsipras of having “pulled down the last bridges over which Europe and Greece could have moved to a compromise”.

The EU was not prepared to countenance even a mild proposal from Tsipras to increase the level of tax on the richest in Greek society for fear of the example this would set throughout the EU. Throughout the crisis of June and July the EU demonstrated an almost breath-taking arrogance in its dealings with Syriza, and tried to humiliate Tsipras and co, especially following the calling of the referendum and the massive No vote. The EU was determined to punish the people of Greece for their temerity in saying no to the troika.

Tsipras was summoned to Brussels during the negotiations and was subjected to what commentators have dubbed a ‘political water-boarding’. Prisoners held in Guantánamo Bay or other torture centres have no choice but to accept their fate. They cannot escape the barbaric treatment of their captors. However, Tsipras did have a choice. He could have walked away, rejected the diktat of the troika and EU capitalism, gone back to the Greek people and offered them an alternative plan to additional human misery. Yet this path was closed to him because he imprisoned himself by insisting that Greece remain within the euro, which is incompatible with ending the austerity measures demanded by the eurozone.

An alternative plan

The shock-and-awe campaign unleashed by the right-wing in the run-up to the referendum tried to terrify the Greek people with the consequences of being expelled from the eurozone. Yet still they voted No. Had Tsipras been prepared to reject the deal, say no to austerity and explain that Greece was being expelled from the euro because of this, while offering a bold revolutionary socialist alternative, he would have rallied the support of millions. Had he put himself at the head of a determined campaign on that basis, the mass of the Greek working class, the youth, big layers of the middle class and small farmers would have responded enthusiastically.

Moreover, an appeal for solidarity to the working class and youth of Spain, Portugal, Italy, Ireland and the rest of the EU would have brought millions onto the streets demanding an end to austerity. The surge in support for Jeremy Corbyn in the Labour Party leadership contest in Britain indicates the potential backing Tsipras could have won internationally. Even in Germany, Die Linke (The Left) was compelled to vote against the latest deal, unlike previously. Two-hundred-and-fifty demonstrations in support of Greece took place throughout the EU at the time of the referendum, a small glimpse of the support that could have been rallied. Equally, socialists are opposed to the workers of Germany, Finland or anywhere else paying for this crisis – as right-wing politicians in these countries try to claim would be the result of concessions to Greece. An appeal by Tsipras to the workers in these countries would also have received a warm response.

In countries such as Greece, Spain and Ireland, the EU and the euro are associated in the minds of many with ‘modernity’ and development. This idea was fostered during the years of economic growth of the 1990s and early part of the 21st century. Among the older generation it was the contrast to the conditions which existed in the 1930s and following the end of the war in 1945. Among the younger generation it was also associated with social development and freedom to travel, etc.

The profound crisis in the eurozone and vicious austerity demanded to maintain the euro raises the opportunity to expose the brutal capitalist nature of the EU. However, it also demands a socialist alternative. Varoufakis, as has been recently revealed, had a plan for a transitional arrangement and the reintroduction of the drachma in the event of Greece being ejected from the euro. The vitriolic character of the Greek ruling class was revealed by demands that Varoufakis be tried for treason simply for having a plan B. Others in Syriza, like the Left Platform member, Panagiotis Lafazanis, have argued correctly that it is better to be out of the euro than remain in its straitjacket.

However, a plan for leaving the euro and introducing a new drachma, even with the nationalisation of the banks, is not enough. On a capitalist basis, this would not allay the fears of sections of the Greek people – especially the middle class – fearing isolation and an even worse situation outside the eurozone. A clear programme to explain what would be done in the event of being expelled from the euro, or breaking from it, and how a new economy could be rebuilt is also needed.

As Xekinima (CWI in Greece) has argued, an emergency plan should have been prepared. The immediate introduction of capital and trade controls, together with the nationalisation of the banks and other measures, were needed. The capital controls introduced by Tsipras were too little, too late. They should have been introduced in January following Syriza’s election victory and the banks nationalised immediately. These measures should have been linked to a refusal to pay the unpayable debt.

All major companies and any which are laying off workers and not paying salaries should also be taken into public ownership, with the occupation of the factories and workplaces and the building of neighbourhood committees. This would allow a democratic plan to be drawn up, with workers’ control and management of the economy. An emergency plan of public works to rebuild the infrastructure of transport, hospitals and housing, among others, is needed to redevelop the devastated economy.

These measures would not resolve all of the problems immediately. A government taking such measures would come under ferocious attack from capitalism internationally. However, emergency steps could be taken to mitigate the worst effects of the crisis especially for the most downtrodden and vulnerable. These steps could be linked with a powerful appeal to the working class of the EU for solidarity. Alongside a plan to build a new democratic federation of socialist European states and for them to take similar steps, this would have won a massive echo – especially, initially, in southern Europe. The upcoming elections in Spain, Portugal and Ireland would offer the prospect of building something new. Any anti-austerity, socialist governments in these countries would offer the perspective of coming together to establish an alternative to the capitalist EU.

Following Pasok’s path

Unfortunately, Tsipras chose to take the other path: capitulation and betrayal in order to remain in the euro. The price for this will be paid by the mass of the population. At the same time, it will not resolve the underlying crisis which can re-erupt at any moment. In the process, Tsipras has risked the future of Syriza itself. Opposition to the deal was agreed at most branches and regions of Syriza. In parliament, 43 Syriza MPs refused to vote for the deal (32 voted against, 11 abstained). It was only passed due to the support of the pro-capitalist, pro-austerity New Democracy, Pasok, and ‘the River’ parties. The decision of the majority of Syriza MPs to vote for this deal has been compared to the great betrayal on 4 August 1914 when the German SPD voted for war credits to its own imperialist government.

Syriza has capitulated to the EU just as Pasok, the former mass party of Greek workers, did. Pasok was reduced to ashes as a result. From the ashes of Pasok, Syriza emerged, promising an alternative to austerity. Now Tsipras has agreed a worse austerity package than Pasok implemented, and has imposed it on Syriza. No Central Committee of Syriza was called to discuss the deal, even though a majority of the CC opposed it. Their views were simply ignored. The farce of an ‘emergency congress’ to discuss the deal has been called in September – after it has been introduced! Syriza’s majority leadership has metamorphosed into Pasok II.

Tsipras originally came from a Euro-communist background. He has tried to justify his capitulation, or ‘compromise’ as he calls it, as an “element of political reality and an element of revolutionary tactics”. (L’Humanité, 31 July) In this interview he even invoked Lenin’s book, Left-Wing Communism: An Infantile Disorder, to try and justify what he has done. “Lenin is the first to speak of compromise… he devotes several pages to explaining that compromise is part of revolutionary tactics. In one passage, he gives the example of a bandit pointing a pistol at you and saying ‘your money or your life’. What is a revolutionary supposed to do? Give his life? No, he has to give the money in order to claim his right to live and continue to struggle”.

Yet Lenin, in the same chapter, also makes a clear distinction between “a compromise enforced by objective conditions… a compromise which in no way diminishes the revolutionary devotion and readiness for further struggle on the part of workers who have agreed such a compromise, and a compromise by traitors who try to ascribe to outside causes their own selfishness, cowardice, desire to toady to the capitalists”. In accepting the bailout, Tsipras has handed the pistol to the capitalists and allowed them to shoot the Greek masses!

Nevertheless, despite bitter opposition from politically active and aware workers, and disgust at this capitulation, at this stage the mass of Syriza voters have been prepared to give Tsipras the benefit of the doubt. The EU and troika are being blamed rather than him. A perception that ‘at least he tried’ has predominated. However, this can change rapidly as the consequences of the bailout become clear and are felt in the autumn. The mood of tolerance of the Syriza government can give way to a bitter sense of anger and betrayal. Where this anger is channelled will depend on the ability of the left forces in Greece to build a new front of the revolutionary left, which Xekinima is fighting to establish.

Ongoing eurozone crisis

The Syriza government has announced a deal which will release an £86 billion bailout over three years. The price will be further brutal austerity measures. The pension age will be increased to 67 and the labour laws will be changed to further attack workers’ rights. The privatisation giveaway is to be among the first bills to be enacted – and overseen by the EU monitors. Yet the 24 hours of ‘negotiation’ in the Athens Hilton hotel resolved none of the underlying problems in Greece or the eurozone. As the British daily, The Guardian, concluded: “This week’s ‘deal’ may allow the German and Greek leaders to duck a few local political bullets, but the bombs that threaten the euro more widely have still not been defused”.

At the same time, the debt crisis facing other eurozone countries is huge. Italy’s debt-to-GDP ratio stands at 132%, with Portugal at 130%. Youth unemployment in Italy is officially 42.6%. Fifty percent of Italy’s debt, (US$2 trillion) matures in the next two years. If the crisis in Greece has provoked a major EU crisis, then one erupting in Italy, the EU’s third-largest economy, would be catastrophic. The crisis in the eurozone is set to erupt again, the only question is where. In reality, the disintegration of the euro has merely been delayed by keeping Greece in the single currency for the moment.

The capitulation of Tsipras has also complicated developments in other countries. It has exposed, for example, the political weakness of the leadership of Podemos in Spain. The response of Pablo Iglesias and the Podemos leadership to the Greek crisis has revealed their lack of an alternative in the face of the troika and its demands for austerity. “It is sad but it was the only thing they could do”, responded Iglesias. “This difficult agreement, as Tsipras recognises, is the only agreement possible when faced with the intransigence of Europe’s leaders”.

This is an anticipation of the response Iglesias would make if he and Podemos were elected into government, a prospect which seems less likely at the time of writing. Podemos was born out of the indignados movement. It exploded in support. However, the failure to offer a clear alternative and its acceptance of Tsipras’s capitulation has re-enforced the idea that ‘there is no alternative’ to the austerity demanded by the EU rulers and capitalism. Support for Podemos has fallen back to 11% as a consequence.

This will not impede the Spanish working class and youth moving back into struggle as the crisis continues. The underlying issues of mass youth unemployment, attacks on workers’ conditions and housing remain unresolved, notwithstanding the extremely fragile economic recovery claimed by the government. Despite a ‘growth’ of 1% in the last quarter, unemployment remains at over five million, 22.4% of the workforce.

Breaking with capitalism

These developments are of crucial importance for workers and socialists throughout the EU. They demonstrate the need for any movement to challenge the austerity straitjacket of the eurozone, to have a clear programme to break with capitalism, and to begin to build an alternative to the EU on a democratic socialist basis. In another historical period, left governments, such as under François Mitterrand in France and Salvador Allende in Chile, at least spoke of socialism, challenged capitalist interests, and introduced a far more radical programme than Tsipras and Syriza have defended. However, even this was not enough to defeat the ruling class. A decisive break with capitalism was needed. Without such a programme, future capitulations will be repeated and will lead to further defeats for the working class.

Workers and socialists need to draw the conclusions from these historic events. In Greece, a complicated situation exists as the opportunity to break from the shackles of austerity has been squandered temporarily. From this defeat, Xekinima and others are attempting to draw together the most politically conscious forces, to build a new, united, revolutionary left front, grouped together in the ‘July 17th Movement’. Hopefully, forces from the left of Syriza and others will join it. Reactionary forces like the fascistic Golden Dawn are poised to try and capitalise on this crisis. Thus far, they have been partially checked by the working class and the hopes that existed in Syriza offering an alternative, but the urgency to strengthen the revolutionary left is clear.

The threat of Golden Dawn, or of the ruling class resorting to authoritarian methods of rule and even the military in the event of social collapse and upheaval, cannot be discounted. Although not an immediate prospect, such a threat can emerge if a powerful alternative is not built. The right-wing populist Independent Greek party occupies the ministry of defence in the coalition with Syriza. Greek military forces are soon to begin training in Israel. Greece has now signed a ‘status of forces’ accord with the Israeli state, offering legal defence to both militaries while training in each other’s country. Greece is the only country apart from the USA to have signed such an agreement with Israel.

The challenge facing the working class and socialists is to ensure that a party is built with a programme that can break with capitalism. The explosion in support for Jeremy Corbyn in Britain, and further movements poised to erupt in other countries, illustrate the possibilities that are emerging to allow the working class to find a road to such an alternative. The intervention of revolutionary socialists in these struggles will be crucial to assist in this task.

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