Greece: European elites declare war on SYRIZA government; Thousands rally in Athens

Thousands of protesters gathered in front of the parliament building in Athens on February 5, to show support for the new SYRIZA-led government after the European Central Bank announced its decision to reject Greek bonds as loan collateral from February 11.

For more discussion and analysis of SYRIZA's victory, click HERE.

By Dick Nichols

February 8, 2015 – Links International Journal of Socialist Renewal – If anyone was still wondering whether European politics and a Europe-wide class struggle actually exist, reactions from all political quarters to the first two weeks of Greece’s new SYRIZA-led government would have cleared up any lingering doubts.

The conflict between Europe’s ruling elites and the new anti-austerity administration—which has already raised the minimum wage, reconnected electricity to 300,000 poor households cut off for non-payment of bills, re-employed sacked public servants and stopped impending privatisations—reached a high point on February 4-5.

On February 5, a headlong media conference clash took place between Germany’s finance minister Wolfgang Schäuble and Yanis Varoufakis, his Greek counterpart, after Schäuble rejected any suggestion of restructuring Greece’s debt. The German government remains anchored in its “debts must be paid” position.

The night before, the European Central Bank (ECB) announced that it would not be accepting Greek government debt as collateral for loans to the bankrupt Greek private banking system beyond February 11, 2015. This turned the screws on the SYRIZA government to abandon its commitments, which are largely dependent on its winning a program of debt alleviation.

As an exception to its statutes and with the aim of stabilising the shaky European financial system, the ECB has been accepting less than “A grade” government debt as collateral for credit to private banks for five years. Now it is suddenly questioning the worth of bonds that it was happy to accept before SYRIZA won government.

The measure—according to some observers, the work of Bundesbank pressure—comes as rumours of capital flight from Greece amounting to €100 billion circulate in financial circles. According to Bloomberg, €14 billion was withdrawn from bank accounts in January alone.

With the Greek government owing €20 billion in loan repayments in 2015, its back has been put against the wall by a financial coup d’etat and its request for six weeks’ leave to develop a new repayment proposal snubbed. The pressure from Brussels is for Prime Minister Alexis Tsipras to make clear his government’s intentions at the February 11 European leaders’ summit.

This move against SYRIZA has a similar function to the 2010 European Union (EU) prohibition of former prime minister Georg Papndreou’s ill-fated plan for a referendum on the first “rescue package” from the Troika (EU, ECB and International Monetary Fund). Varoufakis himself predicted such a move in a Greek TV debate two years ago.

Reuters reported last week that it has had access to a German government document that amounts to a surrender demand on the new Greek government: the maintenance of the Troika (with whom Varoufakis will not negotiate), the continuation of payments to the ECB and IMF, primary (before interest repayment) targets of 3% of GDP in 2015 and 4.5% in 2016 (as against the 1% proposed by Varoufakis), the sacking of 150,000 public employees, the reversal of the increase in the minimum wage and the continuation of privatisations.

Those responses came as prime minister Alexis Tsipras and Varoufakis were conducting a tour of key European capitals in order to win support for SYRIZA’s debt restructuring proposal, which would make the debt repayment schedule subject to the Greek economy meeting growth targets.

At the February 5 opening session of the new parliament, Tsipras was defiant: “Greece won’t take orders any more. Greece is no longer the miserable partner who listens to lectures to do its homework. It cannot be blackmailed. Greece has its own voice.”

Outside the parliament, the first demonstration in decades in support of a Greek government was roaring its rejection of European Commission, ECB and German government blackmail. It was the Greek people’s answer to the February 1 comment of European Commission president Jean-Paul Juncker that “there can be no democratic decisions against European treaties”.

Moreover, all their crude blackmail could blow up in the EU leaders’ collective face. European Parliament speaker and German Social Democrat Martin Schulz told Varoufakis that “if Greece unilaterally modifies its undertakings, others are not obliged to accept. Greece risks bankruptcy”. The Greek finance minister replied: “We’re already bankrupt.”

An anonymous Greek government official, quoted in the February 8 Le Monde, said. “They are putting the knife to our throat but we cannot give in and accept the continuation of the [memorandum] plan. Otherwise we lose all legitimacy in Greece and the government will fall immediately. We have received a clear mandate to end austerity.”

On February 6, economy minister Georges Stathakis told the Wall Street Journal that “Greece needs €4-€5 billion up until June, the time needed to renegotiate a new agreement with its creditors. If this doesn´t happen it will be the first ever country to go broke for the lack of €5 billion”, seeming to indicate that the government was prepared to go to the extreme of letting that happen rather than succumb to blackmail.

Not Greece?

The new SYRIZA-led government is having an enormous impact on European politics. This is most shown not so much by the surge of support from ordinary people across southern Europe and Ireland (real and expressed in demonstrations of solidarity), but by the political body language of the rulers.

All progressive parties—left, Green and left-nationalist—welcomed the radical coalition’s win. However, for the governing parties in the other countries hit by the “rescue packages” of the Troika, it’s a nightmarish thought that SYRIZA’s strategy—of debt restructuring combined with increased wages, welfare benefits and public investment—might prevail against “Brussels” and “Berlin”.

After January 25, government spokespersons in Spain, Ireland and Portugal seemed to decide simultaneously that their populations had suffered a fit of geographical confusion, requiring immediate correction.

“Spain is not Greece,” intoned Antonio López-Istúriz, general secretary of the European People’s Party, on January 26. “Portugal is not Greece”, stated Portugal’s Prime minister Pedro Passos Coelho to journalists at the Catholic University of Portugal several days later. “Ireland is not Greece”, said Irish finance minister Michael Noonan in Luxemburg on February 4.

In Greece itself, the first opinion polls after January 25, done by Metron Analysis and Public Issue, seemed to indicate that, for a majority, even Greece might not be Greece (or the Greece they knew).

By contrast with a survey of world opinion polls by the French-Greek affairs site okeanews.fr—which revealed that the outgoing New Democracy-PASOK government had been the third-most hated in world—the new polls showed 56%-60% pleased with the election result, 70% believing Tsipras would make a good prime minister and 52%-56% supportive of the government alliance between SYRIZA and the right-nationalist Independent Greeks (ANEL).

That result would only have been reinforced by the news on February 3: the government would be selling its luxury car fleet (including the €750,000 BMW soft top with satellite communication ordered by the former Papandreou cabinet) and requiring its ministers to travel economy class or use their own cars.

On January 28, Fintan O’Toole, former literary editor of the Irish Times, explained the angst of Ireland’s ruling Fine Gail-Labour Party coalition. “The Irish political elite is deeply invested in an essentially religious narrative: Ireland sinned, Ireland confessed, Ireland did penance, Ireland has been forgiven, Ireland will be rewarded.“If SYRIZA's strategy in Greece succeeds, this will be exposed as a folly.”

Portugual’s PM Passos Coelho said that it was “a child’s fairy-tale” to maintain the idea “that a country might, for example, not accept its international commitments, not pay its debts, want to raise salaries, lower taxes and still expect partners to have the obligation to guarantee its financing.”

Snakes tied up in knots …

As for Europe’s social-democratic parties, they have been torn between the “imperatives of government” and the sympathetic reaction of their traditional voters to SYRIZA’s moves in government.

The Portuguese Socialist Party (PS), which called in the Troika in 2011 but is not in government and as yet faces no serious challenge to its left, waxed lyrical. In the words of PS general secretary Antonio Costa the SYRIZA win was “a sign of hope” indicating “the exhaustion of the politics of austerity”.

In Spain, where the Spanish Socialist Workers Party (PSOE) has fallen to third place in opinion polls behind radical newcomer Podemos and the ruling People’s Party (PP), Iratxe Garcia, leader of the party’s group in the European Parliament, expanded the general “Spain is not Greece” tweet to read: “Spain is not Greece, PASOK is not PSOE, SYRIZA is not Podemos.”

Inviting SYRIZA to “ally itself with all progressive and social-democratic forces”, Garcia said that PASOK had been a “victim of its strategy of sustaining the governability of Greece by supporting a right-wing government”. She added: “That pact with the right isn’t going to take place in this country, therefore parallelisms with the situation of the PSOE are out of place.”

But deeds speak louder than words. Ten days later PSOE general secretary Pedro Sánchez signed an “anti-terrorist pact” with the PP’s Prime Minister Mariano Rajoy. And on the day after SYRIZA won in Greece, Susana Díaz, president of the government of Andalusia, announced early regional elections in an attempt to take advantage of Podemos’s incomplete state of regional organisation.

As for social-democratic leaders in government—such as German Martin Schulz and Matteo Renzi, the Italian prime minister—the photo-op smiles with Alexis Tsipras and the pleasant platitudes quickly gave way to knives in SYRIZA’s back.

Schulz, who was the first European politician to meet with the incoming SYRIZA-led government, told the German news weekly Der Spiegel on January 31, “Tsipras promised the Greeks he would improve the situation in which they find themselves by negotiating changes with the European Union. He would be well advised to tell the Greeks: ‘I can try, but I can't guarantee you anything.’ That would be the truth.”

When Tsipras went to Rome, there was a chummy exchange of gifts to camera between the two 40-year-old leaders. Renzi said that “from Greece arrives a message of hope that comes from an entire generation of people who are asking for more attention, more concern and more interest towards those who are experiencing the crisis. The success of Tsipras at the elections is based on hope and not only on fear.”

Later in the week Italy’s prime minister made a point of openly backing ECB president Mario Draghi’s decision to start turning off credit to the gasping Greek economy.

The French government of François Hollande also initially seemed to be prepared to act as intermediary beween Germany and Greece, but soon showed its real hand by calling for Greece to abide by all undertakings made to date.

According to Reuters, an adviser charged with helping preparing the February 11 summit of European leaders said: “It’s Greece versus the rest, 18 against one.”

SYRIZA strategy

The SYRIZA-led government’s strategy is Europe-wide: to try to isolate the core base of austerity in Europe, the German government and the Bundesbank, by making the convincing case for debt relief and growth to as broad an audience as possible. This started well before the January election, with an open letter from Tsipras to readers of the German financial daily Handelsblatt.

What the last week of its efforts along this line seem to have revealed, however, is that it will take a whole lot more political pressure on the social democracy in government—organised solidarity and mobilisation by friends of Greece everywhere—to force it out of the austerity camp.

No-one has expressed the stakes more clearly than newly elected SYRIZA deputy, economist Costas Lapavitsas. Writing in the February 2 Guardian [before the ECB acted] he said:

The domestic program of SYRIZA, moreover, remains insecurely funded, even if the government aims simply to achieve a balanced budget. Income tax has been falling, partly because of the extraordinary tax pressure imposed by the troika, and partly because of the disruption of the election. It will take a major and rapid re-organisation of tax collection to secure funding for the planned measures to relieve those worst hit by the crisis. And the banks continue to be absolutely dependent on liquidity provided by the ECB and are susceptible to deposit flight.
The harsh reality is that the EU has substantial leverage over Greece. The country has major debt repayments in the coming period, the largest due in early summer, which will be impossible to meet without fresh funding.

The pressure on SYRIZA to water down its demands and comply with the core requirements of the bailout program is likely to be ferocious. If the SYRIZA leadership is not to buckle under the strain it is vital that it should receive strong international support, including good, practical proposals on how to deal with the massive difficulties ahead. Further discussion is needed, for instance, on whether Greece should repay in full the part of its debt that is owed to the ECB and the IMF (roughly €70bn out of a total of €320bn). The legal and moral basis of that debt is well and truly open to dispute.

[T]wo things are of paramount importance: first, the forces of austerity currently strangling Europe should not be allowed to crush the SYRIZA experiment, or turn it into a moth-eaten compromise; second, SYRIZA should make solid and meticulous preparations for all eventualities, a point that is well understood by many within it.

Conclusion

The Greek people have been the victims of the monstrous austerity policies imposed by the Troika in order to rescue the French and German banks, whose losses were shifted onto the backs of the taxpayers of the “periphery” once the 2008 financial and economic crisis hit.

In a January 26 letter to the Financial Times, Reza Moghadam, the IMF’s European Department Director until 2014 and supervisor of the 2010 and 2012 “memoranda” called for a write-off of 50% of Greek debt, admitting that both “rescue packages” were based on overly optimistic assumptions on growth, inflation, fiscal efforts and “social cohesion”. He also assumed his share of responsibility, as he was involved in the Troika talks between 2010 and 2014.

But Moghadam’s change of heart will not affect the German government and the Bundesbank—the fight in Europe is not about policy, but interests. Now that SYRIZA has said “no more” and the critical clashes are approaching, the European elites will not budge from austerity unless the political cost of their “debts must be paid” mantra is made as intolerably high as possible.

Nonetheless, that may not turn out to be quite as immense a task as it might sound. Since January 25 Greece itself has been experiencing a surge of hope and pride, with a growing wave of solidarity beginning in the other countries of the European “periphery”.

In Germany too, voices in support of SYRIZA are emerging in the strangest places. Of course, it is not surprising that a number of German trade unions, led by the powerful IG Metall, came out on February 2 with a communique called “Greece after the election, not a danger but an opportunity for Europe”, in which austerity applied to Greece is called “a policy of destruction, not construction” and a Europe-wide policy of public investment proposed.

More surprising was a January 24 interview by Würzburg university economics professor Peter Bofinger, a member of the Merkel government’s economic advisory “Council of the Wise”, in the Frankfurter Rundschau. No left winger, Bofinger said:

Greece needs a complete review of the reform policies and budget cuts of the last few years, a review which should be conducted not by the Troika but by independent economists…What has been a success, what key reforms remain to be done, what sacrifices can realistically demanded of the population? I think SYRIZA is going to breathe fresh air on all that.

Such statements are, of course, aimed at showing SYRIZA that it has “reasonable” interlocutors in Germany, if only it acts “reasonably”. But it is also a reminder that the Greek people’s years of struggle and SYRIZA’s January 25 victory are beginning to turn the tide in Europe. But that will not be finalised with the present balance of forces: definitive victory against neoliberal austerity can only start to emerge when the tens of thousands of Greeks who came out in support of the SYRIZA-led government on February 5 are joined by hundreds of thousands more in the rest of Europe.

The call by the Party of the European Left to make February 11-17 a week of solidarity with the Greek people is a good first step along the road to building the pan-European movement essential for a victory for the Greek people—and the tens of millions of other victims of neoliberal capitalist brutality.

[Dick Nichols is Links International Journal of Socialist Renewal’s and Green Left Weekly’s European correspondent, based in Barcelona. He was part of the paper’s reporting team in Athens for the January 25, 2015, Greek election. A shorter version of this article appeared in Green Left Weekly.]

Greeks rally to support SYRIZA government, oppose bankers' blackmail

February 7, 2015 – Green Left Weekly – "When was the last time you saw Greeks protesting in support of the government?", Keep Talking Greece asked on February 5. "Exactly this is happening right now outside the Parliament with crowds of people flocking to Syntagma Square and raise their voice against the decision of the European Central Bank, to stop accepting Greek bonds as collateral for granting liquidity.

"After years of iron barricades around the Parliament, the stunned protesters keep a distance to the area in front of the Parliament. Barriers were removed on January 28, 2015, by order of new alternate Minister of Public Order Yiannis Panousis."

Pappaspost.com said the next day: "The response [to the ECB's decision] was quick as calls to assemble in Syntagma Square went viral throughout Greece. Similar protests were held in Thessaloniki and other Greek cities.

"Protests in Greece usually make front page news — even abroad. Fiery molotov and buildings in flames have often appeared on front pages of major American newspapers with violent images showing clashes between demonstrators and riot police.

"Last night there were no police. There were no 'MAT' as the heavily suited riot police are called in Greece. There were no molotov cocktails.

"There were only chants against Germany and other European leaders’ 'blackmail' against the Greek nation and calls for unity amongst all Greeks to support their government as it pressed for a solution to the country’s debt crisis.

"Police and media estimate over 10,000 people in attendance at the rally."