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
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
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
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.
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.
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
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
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
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
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.
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
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.”
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.
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.
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.