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Greece wins breathing space, but made to pay high cost; SYRIZA's support grows

Germany's finance minister Wolfgang Schäuble looks on as Greece's finance minister Yanis Varoufakis speaks.

For more discussion on SYRIZA's struggle against austerity, click HERE

By Duroyan Fertl

February 28, 2015 -- Green Left Weekly, posted at Links International Journal of Socialist Renewal -- Greece’s new SYRIZA government submitted its list of proposed economic reforms to the Eurogroup (the finance ministers of eurozone nations) on February 23 as a precondition for its international creditors to approve a four-month loan extension. The deal was signed on February 20.

With Greece’s existing loan arrangement expiring on February 28 and bankruptcy looming, a last-minute deal was finally agreed after three weeks of intense negotiations. The talks had been characterised by daily — sometimes hourly — twists and turns, claims and counterclaims, leaks and threats.

SYRIZA was elected on January 25 on a wave of hope and rejection of the crippling austerity measures imposed on Greece in return for economic “bail-out” programs by the “Troika” — the European Central Bank (ECB), the International Monetary Fund (IMF) and the European Union (EU). The deal represents a significant compromise on its election platform.

Any discussion of debt write-offs, “hair-cuts” or renegotiation has been postponed until the next round of negotiations. Funds earmarked for bank recapitalisation will have to be used for that purpose, rather than redirected towards meeting Greece’s desperate social needs.

Greece no longer has to accept the unilateral diktats of the Troika and is able to negotiate with each body separately. But the new funding still comes with conditions. These include oversight by those same bodies, now referred to as “the institutions”, and restrictions on how the money can be used.

The SYRIZA government is required to refrain from any “rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions”.

Although less than specific, this restriction includes any privatisations already completed, as well as those now underway. Depending on interpretation, this may also impact on measures promised by SYRIZA to improve social welfare, such as raising the minimum wage and restoring collective bargaining rights.

Qualified success

On the other hand, the agreement also includes measures that will improve SYRIZA’s ability to fund solutions to the unfolding humanitarian crisis in Greece.

To gather funds, the government is able to crack down on corruption, tax avoidance, tax immunity (Greece’s powerful shipping owners, for instance, currently pay no tax) and smuggling.

Such measures target the vested interests of Greece’s powerful oligarchy — something previous governments deliberately avoided — and strengthen the revenue-raising capacity of the Greek state.

This approach has already achieved success, with a reported €500 million already raised. It still remains to be seen if enough revenue can be raised to address social needs while repaying Greece’s short-term debts — several billion euros are due for payment in the coming months.

The SYRIZA government has described the agreement as a qualified success. Greek Finance Minister Yanis Varoufakis described it as “a small step in the right direction”.

Varoufakis said that Greece is now the “co-author” of its own fate, no longer the victim of “autopilot austerity” where it meekly takes economic and policy directives from its creditors.

In a marathon 10-hour session on February 25, Greek Prime Minister Alexis Tsipras advocated the deal to his fellow SYRIZA MPs as a small but tangible win.

Acknowledging the restrictive conditions in the interim agreement, Tsipras said that while it is an extension of pre-existing loan arrangements, it is not a continuation of the Memorandum of Understanding that accompanied the previous tranche of loans.

Tsipras said the new deal frees up the government from unrealistic primary surplus targets and “asphyxiating” policies of austerity. While “things remain difficult”, the prime minister said the conditions replace the previous government’s measures with targets based on SYRIZA’s “Thessaloniki program”, which it took into January’s election.

Criticism

SYRIZA’s leaders have faced severe internal criticism over the deal, however. It has mostly come from members of the party’s Left Platform, who consider the deal a near-capitulation to Greece’s creditors on the questions of debt and austerity. About 30 of SYRIZA’s 149 MPs, and four government ministers, belong to the Left Platform.

On February 22, Greek wartime resistance hero and SYRIZA MEP Manolis Glezos also condemned the deal for failing to implement SYRIZA’s platform, and accused Tsipras of “renaming meat as fish” for defending it. He also declared “I apologise to the Greek people for having assisted this illusion.”

A Left Platform leader and member of SYRIZA’s central committee, Stathis Kouvelakis, said SYRIZA had carried out a major retreat caused by a “mistaken strategy”. He said the deal showed it was impossible to break with austerity and Greece’s debt burden “within the existing European framework”.

On February 25, Greek energy minister and Left Platform supporter Panagiotis Lafazanis said the privatisation of Greece’s main energy company and energy grid operator would not go ahead, a statement that appears at odds with the deal’s conditions.

The SYRIZA government has emphasised that its promised social measures will go ahead. In a CNN interview on February 23, Varoufakis insisted “there will be no pension cuts, there will be no increases to Value-Added Tax, there will be a series of poverty-alleviation moves.

“Every single election campaign pledge that we’ve made will be incorporated in a way that is consistent with this new fresh dialogue.”

Varoufakis denied that Greece had capitulated, saying: “We could have ended the stalemate between us and our partners simply by signing on the dotted lines of documents that were presented to me and getting the next dose. We didn’t do it.”

Varoufakis conceded that Greece was forced into significant compromises, admitting on February 20 that he was asking Europe to meet Greece “not half-way, but one-fifth of the way”.

In the event, that was a lot more than powerful forces in Europe wanted to give them.

SYRIZA was elected with a mandate to end austerity, resolve the country’s social crisis and rebuild the Greek economy. The humanitarian crisis caused by austerity has led to a widespread drop in living standards, with about one in four people unemployed (60% of youth) and an average 20% cut in wages for those in work.

Contempt for democracy

The negotiation process, therefore, exposed the open contempt for democracy that lies at the heart of the European Union and the financial interests that it represents.

Even before negotiations began, European Commission president Jean-Claude Juncker made it clear that the wishes of the Greek people were irrelevant to the powers-that-be, saying: “There can be no democratic choice against the European treaties.”

German finance minister Wolfgang Schäuble echoed the sentiment, declaring: “Elections change nothing. There are rules.”

Schäuble took this uncompromising stance into negotiations, using Germany's dominance within the Eurogroup to demand Greece’s total and unconditional capitulation.

Gabi Zimmer, president of the United European Left/Nordic Green Left (GUE/NGL) — the European Parliament grouping for left-wing MEPs that includes SYRIZA — said: “The Eurogroup’s intransigent attitude towards Greece is not only unreasonable, it is not suited to the current situation in the country.”

If Greece was hoping for support from other countries suffering from austerity, however, it was disappointed. Spain, Ireland, Portugal and Finland — all facing rising political challenges to their pro-austerity governments — sided firmly with Germany, as did France and Italy, leaving Greece isolated.

Meanwhile, Greece was faced with possible bankruptcy. A run on the banks led to an estimated €3 billion withdrawn in the week before February 20, on top of a further €12 billion withdrawn in January.

In the final days before the agreement, the ECB was preparing for a possible “Grexit” — a Greek exit from the eurozone, and therefore the EU.

Varoufakis had already ruled out a voluntary Grexit on the basis of the economic damage it would cause and the boost it would give to the neo-Nazi party Golden Dawn, already the third largest party in the Greek parliament.

A series of compromise drafts were rejected by Schäuble, who accused the Greeks of trying to present a “Trojan horse”. The claim was echoed in an increasingly nationalistic German media, which blames “lazy Greeks”, rather than a predatory and poorly regulated banking system, for the crisis.

However, SYRIZA won exactly what Schäuble insisted so strenuously it would not get — a short-term loan extension, with a degree of control over spending to alleviate the worst elements of austerity.

Ongoing struggle

Differences about the exact nature of the agreement appear to be emerging already.

On the one hand, the Greek government has presented the interim arrangement as a break from the Memorandum and its austerity policies.

On the other hand, the Eurogroup seems to view the agreement as a continuation of the Memorandum — and its conditions. According to Schäuble, “only when we see they have fulfilled this will any money be paid. Not a single euro will be paid out before that.”

After the deal was struck, Schäuble exulted that “the Greeks certainly will have a difficult time explaining the deal to their voters”.

For its part, the IMF is concerned about the lack of “clear assurances that the [Greek] Government intends to undertake the reforms envisaged in the Memorandum on Economic and Financial Policies”.

Even if the list of reforms is accepted by the Eurozone parliaments, the institutions have until the end of April to “refine” it. Key elements may yet be rejected.

This would be highly problematic for Greece. After submitting the list of reforms, Varoufakis pointed out that there was no alternative: “If they reject them, we’re finished.”

 

SYRIZA's support grows, laws targetting social crisis drafted

An anti-austerity protest in Athens. A poll found 68% of people approve of how the SYRIZA government negotiated with its creditors.
By Stuart Munckton

March 1, 2015 -- Green Left Weekly, posted at Links International Journal of Socialist Renewal -- Support for the Greek government headed by radical left party SYRIZA is growing, new polls show. The polls also found high support for SYRIZA's negotiations with its creditors, which secured a deal to extend its loans package by four months.

The deal came with significant concessions [see article above] to the institutions that have imposed austerity on Greece, which led to strong criticisms from SYRIZA's Left Platform.

However, Prime Minister Alexis Tsipras has said it will allow Greece to begin rolling back the austerity measures that have caused a social crisis in the southern European nation.

Marcopolis.gr polls published on February 28 showed a 76% approval rating for the government, with 68% satisfied with how it negotiated with Greece's creditors.

It also found SYRIZA was polling 42.1%, up from the 36.5% it won in the January 25 elections. A Metron poll put SYRIZA's support as high as 47.6%.

Members of SYRIZA's Left Platform have criticised the government for refusing to consider a "grexit" -- leaving the euro and returning to the drachma -- but the February 28 poll found 81% of people support staying in the euro.

In a televised address to his cabinet on February 27, Tsipras outlined the content of the first four draft laws his government would take to parliament in coming days, Macropolis.gr said the next day.

Macropolis.gr said the laws would grant 300,000 households living in poverty to receive free electricity and meal tickets, and subsidised accommodation for up to 30,000 people.

The laws include debt relief for the 3.7 million people and small- or medium-sized enterprises that owe up the state up to 5000 euros, but are unable to pay, allowing them to pay gradually in up to 100 instalments. At the same time, the government plans to crack down on tax evasion by the wealthy.

Another draft law seeks to protect houses worth up to 300,000 euros from foreclosure.

One particular significant law seeks to re-open state broadcaster ERT, closed by the previous government, causing hundreds of job losses. The move sparked widespread outrage and ERT workers occupied their workplace in protest.

Tsipras also said his government would seek a new bailout, but would keep pushing for debt relief.

[Green Left's European correspondent Dick Nichols, who was in Ahtens for SYRIZA's election, is in the middle of a "Greece eyewitness" speaking tour across the country. Over the next few weeks, he will speak in Hobart, Sydney, Newcastle, Armidale, Brisbane, Cairns and Perth. See details here.]

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Poll surge for Alexis Tsipras’ Syriza

Sunday 1 March 2015
 
http://www.theguardian.com/world/2015/feb/28/greece-poll-surge-syriza-alexis-tspiras

Alexis Tsipras’ left-led government may be the bane of Europe’s political establishment, but in Greece support is soaring as Athens’ new political class negotiates the country’s economic plight.

One month and three days after the tough-talking firebrand assumed power, Greeks of all political persuasions appear to like what they see. A Metron Analysis poll published on Saturday showed popularity ratings for the prime minister’s radical left Syriza party at an all-time high: from the almost 36% it won in snap polls on 25 January, support for Syriza has jumped to 47.6%, a record for a movement that only three years ago was on margins of Greek politics.

In a triumphant address Tsipras attributed the surge to restored pride after five rollercoaster years of being humbled and humiliated by the debt-stricken nation’s worst economic crisis in modern times.

“The Greek people feels it is regaining the dignity that it has been doubted and denied,” the leader told Syriza’s central committee at the weekend. “From the very first day of the new [coalition] government, Greece stopped being a pariah, executing orders and enforcing memorandums,” he said, referring to the EU- and IMF-sponsored bailout accords Athens signed to keep afloat.

On the street, optimism has returned. People worn down by gruelling austerity, on the back of unprecedented recession, are smiling. Government officials have taken to walking through central Athens, instead of ducking into chauffeur-driven cars to avoid protesters. Last week, finance minister Yanis Varoufakis – a maverick to many of his counterparts – was mobbed by appreciative voters as he ambled across Syntagma square.

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“They’ve given us our voice back,” said Dimitris Stathokostopoulos, a prominent entrepreneur. “For the first time there’s a feeling that we have a government that is defending our interests. Germany needs to calm down. Austerity hasn’t worked. Wherever it has been applied it has spawned poverty, unemployment, absolute catastrophe.”

The approval is all the more extraordinary, given the policy U-turns the anti-austerity government has been forced to make – concessions that have sparked fierce opposition within the ranks of Syriza. Faced with the reality of governing, Tsipras has dropped demands for a reduction of the country’s monumental debt; agreed to continued supervision by auditors at the EU, European Central Bank and International Monetary Fund (now named “the institutions” rather than the maligned “troika”); and abandoned pre-election pledges by promising not to take “unilateral” steps that might throw the budget off-balance.

The climbdown triggered criticism by leading Syriza members, including the second world war resistance hero Manolis Glezos who apologised for participating in a government that had given the “illusion” of offering an alternative way out. Leading members of the small, rightwing Independent Greeks party, in coalition after Syriza narrowly failed to win an absolute majority, express similar reservations in private.

But analysts said disdain for a political establishment blamed for bringing Greece to the brink of ruin and plain exhaustion were also working in Tsipras’ favour.

“Politically this is now the strongest government in over a decade,” political commentator Pavlos Tsimas said. “To a great degree it reflects how fed up people are, but also how much they despise the political system

Yet the government is walking a fine line and its popularity could as easily evaporate if it is perceived not to deliver. Accusations of political incompetence, narcissism and moral high-handedness are already rife.

On Friday, Varoufakis triggered uproar by declaring that the government was proud of the “degree of creative ambiguity” used in drafting reforms set as the condition of prolonging the country’s bailout program – initially due to expire yesterday – until June.

The extension was grudgingly agreed, despite the concerns of the ECB and IMF that the figures Athens offered were overly abstruse. As the German Bundestag prepared to vote through the extension, Varoufakis told a local television channel: “They asked for it. They said, ‘for us to pass it in our parliaments, our institutions, it’s better to leave it vague’.”

The government’s first challenge comes this week when it tries to plug a fiscal black hole exacerbated by the collapse of tax collection. Tax revenues have fallen by 22.5% – much more than anticipated – as Greeks, put off by political uncertainty, have stopped paying. Locked out of markets, the country must repay €21.8bn (£15.8bn) in maturing debt this year, starting with a €1.6bn loan to the IMF in the coming days.

With further rescue funds not on offer until Athens satisfies creditors with reforms, the government is likely to run out of cash – and funding options – by mid-March. Salvation, say economists, will only come if the ECB allows it to issue short-term debt through Treasury bills.

“They have a real problem on their hands,” said Tsimas. “A looming credit crunch that is far worse than anyone ever thought because of the drop in revenues.”

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