Greece needs our solidarity, in or out of the euro

Soup kitchen, Athens.

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

By Dick Nichols, Barcelona

July 10, 2015 -- Green Left Weekly, posted at Links International Journal of Socialist Renewal -- Regardless of the result of the latest round of negotiations between the SYRIZA-led government of Greece and the heads of the 28 members of the European Union, one thing is certain: in coming years, the Greek people are going to need all possible solidarity because their struggles and sufferings are bound to continue.

The best imaginable deal with the EU will mean six years of Troika-imposed austerity grinding along to one degree or another. Forced Greek exit from the eurozone will drive the country deeper into recession, further contracting an economy that has shrunk by 25% since 2008.

This awful choice will hang over Greece so long as the country has a government committed to ending the austerity that has created a humanitarian crisis.

Which of these two paths to misery appears least evil will be for Greece to decide. At the time of writing – July 9 – a forced Greek exit from the euro remains possible.

Europe's stance

This is despite a last-minute scramble by French economic officials to help the Greek negotiation team craft a proposal that would have some chance of winning EU support. The proposal, which was agreed by the Greek government on July 9 and was to be submitted to the SYRIZA parliamentary caucus on July 10, involves a “reform-for-debt relief” swap.

The SYRIZA-led government will apparently offer budget cuts and tax increases of €13 billion over two years — more, ironically, than the €9 billion rejected by the July 5 referendum on the June 25 ultimatum of Greece’s creditors.

In exchange, however, Greece would win a new “bailout” package worth at least €50 billion -- and maybe up to €60 billion if International Monetary Fund recommendations are followed.

According to the British Guardian’s running coverage of the Greek crisis “international observers have been telling us that the package is likely to be so punitive that humanitarian aid cannot be ruled out. EU president Jean Claude Juncker had mentioned humanitarian aid as part of the ‘detailed Grexit scenario’ plans creditors had drawn up.

“EU diplomats based in Athens said some form of assistance is likely to be given even if an agreement between Greece and its creditors is reached.”

The new negotiation is being overseen by Donald Tusk, president of the European Council made up of EU prime ministers. This marks a new axis between Greece and its creditors, partially displacing the intransigent Eurogroup made up of 18 Eurozone finance ministers.

The Eurogroup strategy was aimed at taming or destroying the SYRIZA-led government. As former finance minister Yanis Varoufakis told the July 4 Spanish daily El Mundo: “During my first week as minister I met with Eurogroup chairman, [Dutch finance minister] Jeroen Dijsselbloem, and he already made it very clear then that we only had two options: we either signed the agreement that the previous Greek government had accepted or they would end the aid program.

“I asked him if he was threatening me with ‘Grexit’ at our very first meeting, and he replied by saying that if we didn’t sign he would end the aid program. But we all know that ending the aid program means forcing us to close the banks …

“They had all this prepared from the beginning: a plan to get rid of a government that would not let itself be blackmailed by the European establishment already existed five months ago.”

By contrast, Tusk’s approach expresses the position of the French and Italian governments, the IMF and the United States. They are fearful of the impact of a forced Greek exit on the stability of the euro and world economy, as well as on the NATO-Russia power balance in south-eastern Europe.

This conflicts with the approach of the “hawks”, led by German finance minister Wolfgang Schäuble. They think Greece can be “let go”, because they feel the economic impact on the eurozone is now controllable.

They fear the longer the delay in dropping Greece, the greater the chance of other “SYRIZAs” -- starting with Podemos in Spain and Sinn Fein in Ireland -- coming to power and ending SYRIZA’s isolation.

That position is shared by the German Social Democratic Party (SPD), governing in tandem with chancellor Angela Merkel’s Christian Democratic Union (CDU). After the Greek July 5 referendum, SPD leader and government minister Sigmar Gabriel said: “If you reject the rules of the Eurozone, it’s pretty inconceivable to be negotiating a program of several billion euros.”

July 5 referendum

The stunning referendum result on July 5, with 61.4% rejecting the terms of the creditor powers’ offer despite its backing by the EU power-that-be as well as Greek commercial media, deepened the differences between the European establishment’s hard and soft cops.

For those wanting to drop Greece as soon as possible, SYRIZA daring to ask the Greek people’s opinion was a betrayal of trust.

Former Belgian prime minister and leader of the Alliance of Liberals and Democrats for Europe in the European parliament, Guy Verhofstadt, said: “Tsipras pulled off the referendum at home, but he has lost credibility with the rest of Europe.”

Manfred Weber, head of the conservative European People’s Party parliamentary fraction, said: ”Tsipras has to a large degree broken the links of mutual confidence that connected him to his European partners.”

By contrast, the social-democratic governments in France and Italy felt pressured to show sympathy towards a Greek government that enjoys broad sympathy with their own voters.

For example, on the evening of the referendum result, chairperson of the social-democratic caucus in the European Parliament Gianni Pittella said: “From tomorrow, let’s reopen the negotiations on the basis of a new attitude, of solidarity and cooperation, taking into account the difficult social dimension that exists in Greece … It will be the opportunity for certain members states and ministers to put an end to unacceptable rigidity, national egoism and national political game-playing.”

To pressure the Schäuble-Eurogroup position, Tusk said on July 9: “If Greece provides a realistic proposal, it will need to be matched by an equally realistic proposal on debt sustainability by the creditors.

“Only then will we have a win-win situation. Otherwise we will continue the lethargic dance that we have been dancing for the last five months.”

The ECB's role

Whichever side of the appalling choice SYRIZA’s parliamentarians come down on — or even divide over — it is vital to remember how their eventual decision was forced on them. In this drama of many villains, the villain-in-chief has been the European Central Bank.

The day after the victory of the “No” case, the ECB board decided that it would tighten conditions for supplying liquidity to the Greek private banks. This brought even closer the risk of collapse of a banking system already restricted to providing withdrawals of no more than €60 a day.

The screws were further tightened by discounting the value of Greek government debt being offered as loan collateral by the banks. This cut the available liquidity under the ECB’s Emergency Liquidity Assistance program.

This happened as euro notes of various denominations are disappearing from circulation in Greece and the Bulgarian lev is appearing as a substitute currency.

The ECB justified its financial sadism with a note on its website reading: “The functioning of the Eurosystem can be disturbed by Emergency Liquidity Assistance granted under overgenerous conditions, which could in turn increase moral hazard on the part of financial institutions or responsible authorities.”

New Greek finance minister Euclid Tsakalatos commented: “If they do that the situation will become really serious. It looks like an attempt at overthrowing the government.”

Greek economist Dimitris Athanasopoulos said: “Our economy is dying, it is in intensive care. Everything, everywhere, is coming to a halt.”

In tightening its strangulation of Greece, the “independent” ECB is violating its own statutes, which require it to safeguard the stability of the banking system.

In the words of Belgian economist Paul de Grauwe: “When a banking system of a Eurozone country undergoes a meltdown, it is its responsibility to provide liquidity. Which the ECB refuses to do.

“So we are dealing with political goals — in any case that’s my interpretation.”

Obstacles to a deal

At the time of writing it is impossible to guess what the outcome of the latest Greek proposal will be. The economic pressures on the SYRIZA-led government are brutal and growing -- apparently leading it to accept measures on pensions and sales tax that are close to those rejected on July 5.

This poses questions that will be answered in coming days:

* Will SYRIZA’s Left Platform accept the new proposal? This seems unlikely, given the opposition of energy minister and Left Platform leader Panagiotis Lafazanis. He has already expressed opposition to the proposed plan because he believes it fails to give any hope of a breakthrough to the ongoing Greek economic crisis.

* How many of the millions of Greeks who voted “No” will be prepared to accept the government’s new proposal, even if backed by Tsipras, who won enormous political authority by calling and winning that referendum?

* Even if Tsipras wins majority support for the “reforms-for-debt-relief” swap, will the hawks in the EU accept it as sufficient, or will they insist on their line of “offers” that they know SYRIZA must refuse?

On June 9, Schäuble said in response to the Tusk initiative that the IMF was correct in Greece needing a “haircut” to make its debt sustainable; but “alas this isn’t possible under European rules. A monetary union constructed like ours is nothing but an invitation for somebody that doesn’t stick to the rules.”

* If negotiations fail, will the SYRIZA leadership dust off the plan it has already rejected — of producing a parallel currency while refusing to leave the Eurozone and taking the ECB to court? Or will it accept the judgement of economist Paul de Grauwe? He called the plan “science fiction. When Greece leaves the Eurozone, it will be a definitive departure … the process of pushing Greece out of the Eurozone in very violent fashion is under way.”

Whatever the answers to these vital questions, the need for solidarity with the Greek people will only grow.

[Dick Nichols is Green Left Weekly’s European correspondent, based in Barcelona.]

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Submitted by Bob Lyons (not verified) on Sat, 07/11/2015 - 04:40


Two brief points.

1 . Solidarity is needed with the Greek working class and popular sectors, not with the Greek bourgeoisie. The struggle in Greece is a class war. Our internationalism in no way implies an ounce of support to the pro- Euro leadership group surrounding Tsipras and his Eurocommunist faction in SYRIZA.

2? The essence of political leadership is the ability to seize upon those opportunities which provide a decisive shifting of the relationship of political forces in one's favor, to heighten the chance of victory. The majestic NO of the Greek people was just such a moment, it showed the working class was ready to fight. The Tsipras group, expecting a victory for the YES, are now trying to jump from the tiger's back, and will be devoured.

To present the alternative, as if there were only two, as Nichols does, is an attempt to hide a political which has from the first shown unconditional support to the Eurocommunist faction in SYRIZA. There is the alternative of the rupture, an alternative based on the concrete dynamic of the class struggle and a materialist analysis which understands that the EU and its institutions are nothing more than a political form of the executive committee of the European bourgeoisie as a whole. This analysis, which nobody who claims to be a Marxist would refute, has as its political logic a strategic vision of rupture.

The destruction of the EU project, and of its creations like the Eurozone and the ECB, and their replacement with a strategic understanding of the need to build pan-European structures of working class solidarity, of a United Socialist States of Europe, is the line of March of revolutionaries within and without SYRIZA. It is to them that the international revolutionary left needs direct their solidarity above all else. Acting as cheerleaders for reformism is not solidarity, but a show of political incoherence.

Submitted by Terry Townsend on Sat, 07/11/2015 - 17:53


It is not a case of "total capitulation" by SYRIZA, but having come up against enormous odds leaving it with few choices. Those who focus on and on about any deal SYRIZA may be forced to make are misidentifying the enemy. It's very easy to demand from a continent or ocean away that SYRIZA do what we will not be asked to do -- do the best with the hand we're dealt with little or no back up -- but the last thing we should do is simply walk away from the struggle at this point.

Our struggle is not helping to split and divide SYRIZA as so many "far-left" commentatots believe. SYRIZA needs solidarity more than ever. SYRIZA simply surviving in the face of everything the combined ruling classes have attempted in order to defeat it is a gain. If we offer solidarity, resist the attacks of the elites in our own countries around the world, and make it easier for SYRIZA in the future to resume the fight -- and hopefully with Podemos, Sinn Fein and other radical governments in Europe, as well as the "Pink Tide" governments in Latin America, led by Venezuela, Ecuador and Bolivia -- then that's important.

Syriza is caught between a rock and a hard place and there is no easy way out.

Previous generations of revolutionaries have come up against this. Lenin was the clearest in talking about the realities and his words carry weight today: "Their knees are on our chest, and our position is hopeless. This peace must be accepted as a respite enabling us to prepare a decisive resistance to the bourgeoisie and imperialists."

syriza are clearly trying to hang on until the Spanish and Irish elections, when we can expect radical governments to come to their political defence. However, Spain and Ireland are not the major powers in Europe. Currently the front running party in the polls for the next presidential elections in France is the National Front.


Lenin's Address Urging Acceptance of the Brest-Litovsk Peace Treaty, 23 February 1918

The German reply offers peace terms still more severe than those of Brest-Litovsk. Nevertheless, I am absolutely convinced that to refuse to sign these terms is only possible to those who are intoxicated by revolutionary phrases.

Up till now I have tried to impress on the members of the party the necessity of clearing their minds of revolutionary cant. Now I must do this openly, for unfortunately my worst forebodings have been justified.

Party workers in January declared war on revolutionary phrases, and said that a policy of refusal to sign a peace would perhaps satisfy the craving for effectiveness - and brilliance - but would leave out of account the objective correlation of class forces and material factors in the present initial moment of the Socialist revolution.

They further said that if we refused to sign the peace then proposed more crushing defeats would compel Russia to conclude a still more disadvantageous separate peace.

The event proved even worse than I anticipated, for our retreating army seems demoralized and absolutely refuses to fight. Only unrestrained phrasemaking can impel Russia at this moment and in these conditions to continue the war, and I personally would not remain a minute longer either in the Government or in the Central Committee of our party if the policy of phrasemaking were to prevail.

This new bitter truth has revealed itself with such terrible distinctness that it is impossible not to see it. All the bourgeoisie in Russia is jubilant at the approach of the Germans.

Only a blind man or men infatuated by phrases can fail to see that the policy of a revolutionary war without an army is water in the bourgeois mill. In the bourgeois papers there is already exaltation in view of the impending overthrow of the Soviet Government by the Germans.

We are compelled to submit to a distressing peace. It will not stop revolution in Germany and Europe. We shall now begin to prepare a revolutionary army, not by phrases and exclamations, as did those who after January 10th did nothing even to attempt to stop our fleeing troops, but by organized work, by the creation of a serious national, mighty army.

Their knees are on our chest, and our position is hopeless. This peace must be accepted as a respite enabling us to prepare a decisive resistance to the bourgeoisie and imperialists.

The proletariat of the whole world will come to our aid. Then we shall renew the fight.

To try in the slightest to compare the retreat to save the revolution at Brest-Litovsk, with the craven capitulation of the reformist Tsipras group stretches your credibility beyond any words I could hope to conjure up.

How in the world do you think you could possibly try to make an analogy as stupid as this, and have anyone believe it? How could you possibly think the events of the Russian revolution could equate with the election of a left reformist or centrist party in Greece, one without any coherent strategic perspective except slavish idolatry of the Euro and the Eurozone-EU? This brushing off old quotes from Lenin, and out of context in the extreme would be laughable except for its attempt to hide behind the "left" version of TINA (Margaret Thatcher's "There Is No Alternative").

Socialist Alliance is unable to defend its cheer leading of the Eurocommunist Tsipras faction, against the Greek revolutionary left by an analysis of the relationship of forces and the real alternatives represented by the working classes rejection of austerity. This is absolutely clear to everybody and anybody watching this debate.

So while SA waves its pompoms for the Tsipras faction from the luxury of its Australian vantage point, those who are involved in the forefront of organizing the Greek workers and popular sectors to fight the new Memorandum will be leading direct clashes with the Tsipras government. The use of the riot police to stop the march of the revolutionary left grouped in ANTARSYA on 10 July is just a tiny premonition of the clashes between the social movement and the reformists to come. It will be very interesting to see how Socialist Alliance will react to these real questions.

Will you side with Tsipras' use of riot police, against the comrades of ANTARSYA? Will you side with the dockworkers of Piraeus as they chase the Chinese managers of COSCO out of the docks, only to have Tsipras callin the army to protect his Memorandum of privatizations? Will you side with the pensioners or with the cuts to their pensions? And on and on and on it will go. Since you have your fingers in the wringer by supporting the reformist faction of SYRIZA, your hands and arms are surely to follow.

Do you support the comrades of the DEA who voted NO to the Tsipras leadership, or do you support those who voted YES? These are the real questions, that a million quotes from Lenin can't keep you from answering. The trutch is always, always and always concrete.

Better re-examine your unconditional support to the reformists, comrades. Word to the wise.

The Brest Litovsk Treaty was signed by a revolutionary government, which excercised state power through the Soviets of workplace deputies and the Red Army.

Syriza holds office within a capitalist state as part of a coalition with the nationalist party ANEL.
The Greek army remains part of NATO and it’s doubtful whether its officer class would support the government in the event of a national state of emergency.
They are more likely to follow the orders of the President, who is a member of New Democracy, sworn to defend the Greek Constitution “in the name of the Holy, Consubstantial and Indivisible Trinity”

Furthermore, Syriza is negotiating with the EU as part of a popular front, which includes every party in the Greek Parliament except, ironically, the KKE.

Even if Tsipras was engaging in some convoluted cunning plan to expose Germany and get French support when called his referendum, then caved-in to the EU’s demands, it’s SYRIZA which seems to be splitting.

The concessions he has made have simply encouraged Germany’s negotiators in Brussels to move in for the kill.
Germany’s big industrialists and bankers, are engineering a soft-coup in Greece, designed to neutralize Syriza , force it from power, then seize a big a slice of the Greek economy as collateral for the debt.
France is doing much the same, while posing as Syriza’s social democratic ally.

Whether the country is forced out of the Eurozone, or kept in as a basket case the result will be much the same- the immiseration of the working class and an economy run according to EU-IMF diktats.

This is an inevitable consequence of Syriza’s failure to form a “ Left government” (let alone a Workers government) after it was elected.
The KKE bears heavy responsibility for this, through its failure to apply the united front strategy towards Syriza right up to the Referendum.

If Syriza splits, so be it.
The only option now left to the Greek working class is to use its control of the factories, ports and airports to prevent the economy being looted by the Troika’s bailiffs.
The unions, the left-wing of Syriza, Antarsya and the KKE need to organise the resistance and call for the formation of a workers government, with an emergency programme to run the economy under workers control.

My thanks to Colleen Bolger for drawing my attention via Facebook to the very mature speech by Costas Lapavitsas to a Democracy Rising conference:….

She emphasised his reference to Brest-Litovsk:
“This is not Brest-Litovsk. Those of you who think that this is Brest-Litovsk are making a mistake. This is not gaining time to establish Bolshevik power in Moscow and Leningrad. This is not--this is not gaining time. There is no time to be gained. Time works in favor of the enemy in this context, and this is not a tactical maneuver. This is putting the country down a path which has only one exit. And that exit is not in the interest of people's rights.”

Lapavitsas’ statement is insufficient on the dissimilarities between the Greek situation and the early Soviet government. For example, Syriza holds governmental office; it doesn’t hold state power, as the Bolsheviks did. The Russian Army was deserting the front in droves, the Greek army today stays in its barracks, but tomorrow will do what? The Soviet government had Red Guards patrolling the streets whereas in Greece police known to 50% support Golden Dawn hold the streets.

What is similar between the Greek predicament today and that of the young Soviet government is that they are caught between the hammer and the anvil, as Trotsky described the Brest-Litovsk choice.

The scale of that hammer is shown in this March 2 Bloomberg report:
“Greek banks' reliance on euro system liquidity is now close to 100 billion euros, compared with about 45 billion euros at the end of November.”

That is, in just three months Greek banks’ debts to the ECB trebled. Lapavitsas is a good enough economist to know what that means.

If Syriza could have won time before the hammer met the anvil that would have been a victory.

The bailout plan just signed will not clear the debt. Austerity will haunt the Greek people down to the seventh generation, like an Old Testament curse. Lapavitsas is not the only person saying that. I’m sure that Alexis Tsipras would concur with every word.

What of Lapavitsas’ alternative, to leave the Euro?

Syriza was gained office with a minority of Greeks supporting it. The referendum demonstrated that 61% oppose what the Euro Barons want to impose. However, what does that social majority want to do next?

Sixty-one percent protested against the 25% slashing of GDP that the Euro Barons have already imposed. Lapavisas assumes a great deal about what that referendum majority will tolerate. He promises to take that GDP cut to 50% via a Grexit.

Lapavitsas says the referendum exposed that the Euro is a class issue and that the Greek youth “have spoken”. That’s good (and rather rhetorical) as far as it goes. What is salient about the referendum was that it was a clear vote against austerity without being a clear vote for an alternative.

Lapavitsas says that reintroducing the Drachma will be easy. Yanis Varoufakis has said that it would take about 18 months. As soon as the Grexit announcement is made the bourgeoisie will strip Greece of all assets.

Lapavitsas’ solution to that is to nationalise the banks and it is “very easy” to pass the laws needed to do that. You would have to be very confident of implementing that quickly. I hope that he is right.

My estimation, for what is worth, is that a Grexit would impoverish the Greek people on a scale that is unimaginable to those of us who did not live through the Great Depression.

Lapavitsas enumerates the failings of Tsipras’ agreement:
1) It is recessionary
2) It creates social inequality
3) It will not restructure the debt
4) It does nothing for development.

A default and a Grexit promises to eliminate the debt, number three on that list. A default and a Grexit promises to massively increase numbers 1, 2 and 4.

Lapavitsas says that “I expect bad things to happen if we go down the path of the bailout, and if we don't better things will happen.” Lapavitsas could be correct: inviting the Greek people to be “partners” in their own impoverishment, rather than victims of the Troika might be the way forward.

I think that he has underestimated the social and economic costs of his proposal. However, it remains a legitimate choice in the circumstances, between the hammer and anvil.

When forced to choose one or other evils Tsipras has chosen one and Lapvitsas urges another. Another speaker on the same panel said of Lapvitsas’ proposal: “It could be, it could be perhaps, I would say, the longest suicide note in the history of the left.”

Right at the very end of the Q&A session Lapvitsas’ says: “I don't know better than others.” It is noticeable that he isn’t pointing the finger at anyone and denouncing them, he is not sloganeering in the manner that Lenin spoke of.

It seems like the further from Greece leftists are the more they indulge in that sort of thing, based on wildly inaccurate historical understandings. For example, it is claimed above that the Soviet government signed the Brest-Litovsk settlement while defending the state with the Red Army. Brest-Litovsk was signed in March, 1918; the decree establishing the Red Army was issued the following month.

Incidentally, on the day after that Bloomberg report I quoted earlier there was another:
“Draghi's Rescue Plan Has Created a $103 Billion Problem
Mario Draghi's European Central Bank's 1.1 trillion euro ($1.2 trillion) bond-buying plan might have already blown a 92 billion-euro hole in defined-benefit pension plans by depressing bond yields, Standard & Poor's said Feb. 26. And if the actual start of QE pushes yields further, for longer, companies may have to take drastic measures to make ends meet, and could face a hit to their credit ratings.”

Lapavitsas, Tsipras, the leaked IMF memo and everybody else knows the truth of the matter: this bailout solves nothing, if anything it simply broadens the problem. Let us compose ourselves for the struggle.

Submitted by Terry Townsend on Sat, 07/11/2015 - 22:00


By Paul Mason

July 10, 2015 -- The new Greek government proposals, published late last night are clearly based on those submitted by Jean Claude Juncker last Thursday, before the referendum.

It’s left many Greeks frustrated,  asking: what was the point of the referendum? It’s left many foreign observers saying the same.

Here are the most obvious answers:

First, the Greek government’s hope that a referendum mandate would allow swift negotiations with their creditors, and relaxation of terms, did not materialise. Instead a renewed ultimatum materialised. If they can’t meet it, the ECB and EU will collapse the Greek banking system and throw them out of the Eurozone. Indeed, one of the main “achievements” of the referendum was to flush out that clear threat, from politicians who had never admitted it before.

The Greek government has no mandate to leave the Euro, as the 61% vote No last Sunday was clearly won as a “stay in and fight” mandate.

Secondly, the deal makes no economic sense without debt relief. The referendum, combined with US pressure, seems to have prompted key European voices, including Angela Merkel and Donald Tusk, accede in principle to the need for debt reprofiling – which is a sneaky way of writing off debts.


Thirdly, it is still redistributive on balance. Syriza can still sell this as a very different programme from those previously designed by the conservative led coalition. 29% corporation tax is one example. However it does make concessions on pensions and on VAT on the islands, which currently enjoy a discount.

Fourth, it is the work of Euclid Tsakalatos. Tsakalatos, as I’ve been explaining since mid-January, is existentially committed to two things: Euro membership and the use of government to foster widespread modernisation and social change. He wants to stay in power – not lose it to a government of “technocrats”.

Fifth, the deal comes with a request for a loan to make Greece’s debt repayments over the next three years. If someone else pays your debts for three years, that is a very fiscally beneficial thing, and leaves Greece with money to spend it did not have. 

Most importantly, this is not a done deal. If it gets through the Greek parliament and is then thrown back into the Greeks’ faces it will solidify and prepare Greek society for Grexit.

It will most likely prompt a few resignations from Syriza, but I am told the Left Platform in Syriza will mainly accept it. But getting it through parliament is not the problem. Getting it through the EU is the problem – and it’s left many Greeks still predicting this is the last gamble before Grexit.

Submitted by Terry Townsend on Sun, 07/12/2015 - 14:33


Yanis Varoufakis, former Greek finance minister originally published at The Guardian
Friday 10 July 2015

Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.

Official Europe chose the second option, putting the bailing out of French and German banks exposed to Greek public debt above Greece’s socioeconomic viability. A debt restructure would have implied losses for the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers would have to pay again for the banks by means of unsustainable new loans, EU officials presented the Greek state’s insolvency as a problem of illiquidity, and justified the “bailout” as a case of “solidarity” with the Greeks.

To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers as an exercise in “tough love”, record austerity was imposed on Greece, whose national income, in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It takes the mathematical expertise of a smart eight-year-old to know that this process could not end well.

Once the sordid operation was complete, Europe had automatically acquired another reason for refusing to discuss debt restructuring: it would now hit the pockets of European citizens! And so increasing doses of austerity were administered while the debt grew larger, forcing creditors to extend more loans in exchange for even more austerity.

Our government was elected on a mandate to end this doom loop; to demand debt restructuring and an end to crippling austerity. Negotiations have reached their much publicised impasse for a simple reason: our creditors continue to rule out any tangible debt restructuring while insisting that our unpayable debt be repaid “parametrically” by the weakest of Greeks, their children and their grandchildren.

In my first week as minister for finance I was visited by Jeroen Dijsselbloem, president of the Eurogroup (the eurozone finance ministers), who put a stark choice to me: accept the bailout’s “logic” and drop any demands for debt restructuring or your loan agreement will “crash” – the unsaid repercussion being that Greece’s banks would be boarded up.

Five months of negotiations ensued under conditions of monetary asphyxiation and an induced bank-run supervised and administered by the European Central Bank. The writing was on the wall: unless we capitulated, we would soon be facing capital controls, quasi-functioning cash machines, a prolonged bank holiday and, ultimately, Grexit.

The threat of Grexit has had a brief rollercoaster of a history. In 2010 it put the fear of God in financiers’ hearts and minds as their banks were replete with Greek debt. Even in 2012, when Germany’s finance minister, Wolfgang Schäuble, decided that Grexit’s costs were a worthwhile “investment” as a way of disciplining France et al, the prospect continued to scare the living daylights out of almost everyone else.

Syriza supporters in front of the Greek parliament Facebook Twitter Pinterest
‘By the time Syriza won power last January, a majority within the Eurogroup had adopted Grexit either as their preferred outcome or weapon of choice against our government’.
By the time Syriza won power last January, and as if to confirm our claim that the “bailouts” had nothing to do with rescuing Greece (and everything to do with ringfencing northern Europe), a large majority within the Eurogroup – under the tutelage of Schäuble – had adopted Grexit either as their preferred outcome or weapon of choice against our government.

Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.

With Grexit reinforcing the ECB-induced bank run, our attempts to put debt restructuring back on the negotiating table fell on deaf ears. Time and again we were told that this was a matter for an unspecified future that would follow the “programme’s successful completion” – a stupendous Catch-22 since the “programme” could never succeed without a debt restructure.

This weekend brings the climax of the talks as Euclid Tsakalotos, my successor, strives, again, to put the horse before the cart – to convince a hostile Eurogroup that debt restructuring is a prerequisite of success for reforming Greece, not an ex-post reward for it. Why is this so hard to get across? I see three reasons.

Europe did not know how to respond to the financial crisis. Should it prepare for an expulsion (Grexit) or a federation?
One is that institutional inertia is hard to beat. A second, that unsustainable debt gives creditors immense power over debtors – and power, as we know, corrupts even the finest. But it is the third which seems to me more pertinent and, indeed, more interesting.

The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM, or the 1930s gold standard, and a state currency. The former relies on the fear of expulsion to hold together, while state money involves mechanisms for recycling surpluses between member states (for instance, a federal budget, common bonds). The eurozone falls between these stools – it is more than an exchange-rate regime and less than a state.

And there’s the rub. After the crisis of 2008/9, Europe didn’t know how to respond. Should it prepare the ground for at least one expulsion (that is, Grexit) to strengthen discipline? Or move to a federation? So far it has done neither, its existentialist angst forever rising. Schäuble is convinced that as things stand, he needs a Grexit to clear the air, one way or another. Suddenly, a permanently unsustainable Greek public debt, without which the risk of Grexit would fade, has acquired a new usefulness for Schauble.

What do I mean by that? Based on months of negotiation, my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone.

... when he wrote: "... my conviction is that the German finance minister wants Greece to be pushed out of the single currency to put the fear of God into the French and have them accept his model of a disciplinarian eurozone".

Just after the humiliating vote of Friday, imposed by Germany, that threatens with the breakup of Syriza and with the trust of the Greek People in their government. Just after accepting that draft agreement... Germany is now asking for more conditions, such as transference of Greek state property to the institutions as "guarantee" and proposing a "temporary suspension" of Greece membership in the Eurozone.

Meanwhile we see a growing degeneration of the situation across Europe. In Finland the Fascists have become part of the new coalition government, in other Central-East European states, from Sweden to Hungary, reactionary governments thrive, in Britain the tories won elections again, in France the return of Sarkozy is likely and in Spain the debacle of the conservative government is producing a minefield of extremely repressive laws that remind of the Franco dictatorship.

And let's not forget Ukraine, a case very similar to Greece in the general outline, where a totalitarian regime was imposed, not just to challenge Russia but also to make sure they kept paying a huge debt, with their gold reserves, with the blood of their people or whatever the banksters can plunder.

I'm really beginning to feel Europe (not just the EU but all the subcontinent) crumbling around myself. And feels truly scary.

However these crisis are also pregnant with opportunities, revolutionary opportunities even. I try to keep the hope alive.

Submitted by Chris Slee (not verified) on Mon, 07/13/2015 - 14:58


I think the Syriza leadership had good intentions, but underestimated the ruthlessness of the European ruling class. They had no answer to the European Central Bank's tactic of shutting down the Greek banking system and refusing to reopen it until their demands are met.

It is easy to be wise after the event. But I tend to think that after the referendum, instead of sitting in meetings with Eurozone leaders, Tsipras should have been addressing rallies in Germany and other European countries demanding the end of the banking blockade, in the hope of building a mass movement that could put pressure on the capitalist governments to back off.

Protests against the banking blockade should still occur, but now that Syriza seems to have capitulated they are unlikely to be big enough to have much impact.

Future left governments will face similar problems, so left parties will need to think about how they would respond.

Argentina was able to survive a similar situation in 2001. One factor in its favour was that it had its own currency.

Perhaps Syriza should have moved earlier to establish a new Greek currency. Or perhaps they should have used the threat of switching to another currency (perhaps the Chinese renminbi) as a bargaining tactic.…

Greek bailout deal 'a new Versailles Treaty', says Yanis Varoufakis in first post-resignation interview
Monday 13 July 2015 10:39PMExclusive—Alex McClintock

In his first interview since resigning as Greek finance minister, Yanis Varoufakis took aim at Greece’s creditors, revealed the extent of the country’s preparations to leave the euro and warned of the rise of the far right. Late Night Live reports.

In his first interview since resigning earlier this month, former Greek finance minister Yanis Varoufakis has described the 86 billion euro bailout deal agreed to by prime minister Alexis Tsipras as ‘a new Versailles Treaty’.

In the coup d’état the choice of weapon used in order to bring down democracy then was the tanks. Well, this time it was the banks.
‘This is the politics of humiliation,’ he told Late Night Live. ‘The troika have made sure that they will make him eat every single word that he uttered in criticism of the troika over the last five years. Not just these six months we’ve been in government, but in the years prior to that.

‘This has nothing to do with economics. It has nothing to do with putting Greece on the way to recovery. This is a new Versailles Treaty that is haunting Europe again, and the prime minister knows it. He knows that he’s damned if he does and he’s damned if he doesn’t.’

The deal, agreed to on Monday after 17 hours of talks with eurozone leaders, contains tough conditions including pension cuts, tax increases and the movement of public assets into a trust fund to pay for the recapitalisation of Greek banks.

Mr Varoufakis rejected the deal in the strongest possible terms, comparing it to the 1967 coup d’état that installed a military dictatorship in the Mediterranean nation.

‘In the coup d’état the choice of weapon used in order to bring down democracy then was the tanks. Well, this time it was the banks. The banks were used by foreign powers to take over the government. The difference is that this time they’re taking over all public property.’

Mr Varoufakis suggested that Mr Tsipras may call a snap election rather than bring the deal before the Greek parliament, saying he would be ‘very surprised’ if Mr Tsipras wanted to stay on as prime minister.

He insisted, however, that he and Mr Tsipras remain on good terms, and that he has kept a low profile over the last week in order to support Mr Tsipras and his successor in the finance ministry, Euclid Tsakolotos.

‘I jumped more than I was pushed,’ said Mr Varoufakis, describing his resignation in the immediate aftermath of the ‘no’ vote in the July 6 referendum on bailout terms similar to those accepted on Monday.

‘I entered the prime minister’s office elated. I was travelling on a beautiful cloud pushed by beautiful winds of the public’s enthusiasm for the victory of Greek democracy in the referendum. The moment I entered the prime ministerial office, I sensed immediately a certain sense of resignation—a negatively charged atmosphere. I was confronted with an air of defeat, which was completely at odds with what was happening outside.

‘At that point I had to put it to the prime minister: “If you want to use the buzz of democracy outside the gates of this building, you can count on me. But if on the other hand you feel like you cannot manage this majestic ‘no’ to an irrational proposition from our European partners, I am going to simply steal into the night.”’

Read more: Yanis Varoufakis on austerity and Australia

The former finance minister also described the Greek government’s secret preparations to print drachmas in the event of the country being forced to leave the euro.

‘As a responsible government, knowing full well that there was a very significant alliance within the eurogroup whose purpose was to throw us out of the euro, we had to make contingencies,’ he said. ‘We had to have a small team of people in secret who would create the plan in case we were forced to exit the monetary union known as the eurozone.’

‘Of course, there is a conundrum here. Once this plan begins to be implemented, once you go from five people working on it to 500—which is the minimum you need to implement it—it becomes public knowledge. The moment it becomes public knowledge, the power of prophecy creates a dynamic of its own ... We never made that transition from five to 500. We never felt we had a mandate to do it. We never planned to do it. We had the design on paper but it was never activated.’

Mr Varoufakis said that he will remain as a backbencher in the Greek parliament, where he has ‘a lot more room to manoeuvre and speak the truth’. He warned however, that austerity will further embolden the country’s far right.

‘In parliament I have to sit looking at the right hand side of the auditorium, where 10 Nazis sit, representing Golden Dawn. If our party, Syriza, that has cultivated so much hope in Greece ... if we betray this hope and bow our heads to this new form of postmodern occupation, then I cannot see any other possible outcome than the further strengthening of Golden Dawn. They will inherit the mantle of the anti-austerity drive, tragically.

‘The project of a European democracy, of a united European democratic union, has just suffered a major catastrophe.’

Submitted by prianikoff (not verified) on Tue, 07/14/2015 - 13:45


The Greek Public Sector Union ADEDY are calling on unions to hold General Assemblies, occupations and workplace meetings on Tuesday, July 14, 2015.

They’ve called for a 24 hour general strike on Wednesday, when the Greek Parliament meets to debate the agreement.

The executive A.D.E.D.Y. will decide in the next few days, whether to escalate their industrial action.

The Executive Secretariat of PAME (the “All Workers Militant Front”, led by the KKE) has issued a statement denouncing “the anti workers Agreement, the 3rd Memorandum which was decided at the Euro Summit.”

They are organising PAME rallies on Wednesday July 15th, under the slogan “All in the Streets –Fight Now!”, but they haven’t issued a call for a General Strike, or to any united front of the left.