Greek crisis reveals ‘progressive’ Europe’s reactionary stew

By Paul Kellogg

May 3, 2010 -- The bailout of the debt-ridden Greek government seems finally to be complete. The European Union (EU) – most centrally the French and German treasuries – along with the International Monetary Fund (IMF) will provide €110 billion ($150 billion) in emergency loans. The price for these loans will be high. Along with steep tax increases and cuts in spending, the loans are conditional on a public sector wage freeze being extended through to 2014.[1] This is in reality a wage cut, as there will be drastic changes to the so-called “bonuses” – holiday pay that has become an essential part of the income package of low-paid public sector workers.

The anger at these cuts is everywhere in Greek society. Giorgos Papadapoulos is a 28-year-old policeman who normally confronts demonstrators. But in March he put aside his riot shield and joined the mass protests which have become a regular part of life in Greece. “It’s a different feeling for me”, he told journalists while he was on the demonstration. “But this is important. It hurts me and my family.”[2] However, the crisis in Greece has revealed not just a shift to the left in Europe. It has also brought to the surface a seamy reactionary underside to politics in the EU portion of the Eurasian landmass.

The April 29, 2010, front page of the mass circulation German daily Bild screamed out: “The Greeks want even more billions from us!”[3] The echoes of a half-forgotten German nationalism gave shivers to those with an historic memory. One who has such a memory – Greece’s deputy prime minister Theodoros Pangalos – reminded Greek voters of the horrors of World War II. “They [the Germans] took away the gold that was in the Bank of Greece”, he said. “They took away Greek money, and they never gave it back.”[4] It was a thinly disguised attempt to divert attention from a crisis over which his party (the Panhellenic Socialist Movement or PASOK) has helped create. These kinds of reactionary nationalisms were supposed to have been superseded by the progressive cosmopolitanism of the EU.

`Nicer' capitalism?

That many have clung to a hope that the EU contains within it the seeds of a progressive capitalism is not in itself news. Antonio Negri, co-author of Empire, supported a call for a “yes” vote on the European constitution in 2004-2005. His rationale was explained very well by Salvatore Cannavò, then deputy editor of Liberazione, the daily paper of Italy’s Rifondazionie Comunista.

Empire, for Negri, is the new globalized, capitalistic society. He thinks of Europe as being a “brake on the ideology of economic unilateralism which is capitalist, conservative and reactionary. So Europe can become a counterweight against US unilateralism.”[5]

Another with faith in the EU was Christopher Hitchens, who describes himself as “one of the few on the Left to advocate enlargement of the European Union and to identify it with the progressive element in politics”.[6] But really, Hitchens needn’t describe himself as being so alone. In their hope that the EU represents a “nicer” capitalism than that in the United States, the very radical Negri and the ex-left gadfly Hitchens are actually trailing behind the very mainstream “social liberal” politics of very traditional European social democratic parties, still by far the principal force in the workers’ movement and the left in Europe. Hitchens’ and Negri’s pro-EU stances place them within the hegemonic project of European capitalism, mediated – as is so often the case – by European social democracy.

This hope for a progressive EU has been sorely tested by the most recent slump in the capitalist economy – the so-called “Great Recession” of 2008-09 – the trigger for the debt problems in Greece and elsewhere. November 2009, 57 per cent of the 53 per cent who participated in a referendum in Switzerland voted to ban the building of mosque minarets in that country. This reactionary trend is not restricted to Switzerland. In April we learned that the home affairs committee of the federal parliament in Belgium voted unanimously to ban Muslim women from veiling their faces in public. “Support for the ban ... transcended party lines, ranging from the Greens to the far right.” Similar restrictions are being contemplated elsewhere in Europe, including in France and the Netherlands. That this reflected a rise in Islamophobia and anti-Arab racism is revealed by the fact that “only four modest sized or small minarets exist in Switzerland”,[7] and that in Belgium “very few women wear the full veil, and there has been little public debate about the need to ban it”.[8]


It needs little analysis to see what is at work here. The deep crisis of 2008 and 2009 triggered huge government-spending programs across the continent. That spending worked to stem the crisis, but left governments saddled with unsustainable debts. Every government is now preparing to address this debt crisis by slashing government spending. The anti-Arab racism is a deeply reactionary, very old-fashioned and very predictable way for ruling elites to try and “change the channel” and make working people and the poor look at scapegoats, rather than at the deep attacks on social services and public sector workers that are around the corner throughout the continent. The anti-Greek nationalism in Germany – which threatens to derail a bailout sorely needed by German as well as Greek capital – reflects this politics of scapegoating getting out of the hands of German capital, and opening the door to populist far-right forces, an increasingly sombre menace on the fringes of the European political landscape.

This shift right is not a big step for politics in the EU. The EU could present itself as a force for progress, given the barbaric history of European civilisation. A collection of nations – whose continent had, in a century and a half, witnessed the bloodiest wars ever seen in human history – had found a way to unite and partially reduce their divisions. Holders of an EU passport could travel easily from one country to the next – and more importantly work in any country of the EU. The emergence of a common currency for some of the EU states seemed to indicate an even greater reduction in tensions in a continent comprised of historic rivals.

But this progressive surface appearance masked another aspect of the barbarism that has been European civilisation. Its roots are not just in the 150 years of intra-European rivalry which resulted in the Napoleonic Wars, World Wars I and II. Those roots are even more in the 500 years of colonial conquest of the global South, which resulted in the depopulation of whole sections of Latin America and the Caribbean, the horrors of the Atlantic Slave Trade, and the long humiliation and plunder of three of the four most populated regions in the world – China, the Indian sub-continent and the Indonesian archipelago. If the creation of the EU muted intra-European rivalries, it did not lessen European pressure on the global South. If anything, it led to an intensification of European imperialism abroad.

European imperialism

European corporations, from Latin America to Africa to Asia, have been as much a part of the story of imperialism in the late 20th and early 21st century as has been the much more recognisable hand of the United States. In fact, an argument could be made that the very reluctant decision to embark on the process of European integration was spurred not so much by a desire to create a progressive Europe, but rather by the recognition that another round of wars between the European states would make all of Europe incapable of participating with the United States in the ongoing plunder of the great riches in the global South. It was either all in or not at all – and the EU was the result.

In other words, there has always been a reactionary side to the EU project. Internal migration for holders of EU passports was wonderful for the workers of Europe. But for those outside the EU, what it meant was “Fortress Europe” – a wall of anti-immigrant rules and regulations from Italy to Spain to Germany. And while it was one thing to push forward with a unity project so long as each country in the project was in its majority white and Christian – when the project faced up to its next task, expanding to include the largely Islamic country of Turkey – a sudden reluctance showed its hand, a reluctance which could only with difficulty conceal its xenophobia and racism.

There is another aspect to the imperialist roots of the project of European Union – the unequal relations between states inside the EU. Doug Saunders, writing in the Globe and Mail, is going too far when he calls Greece, Portugal and Spain “economic colonies” of Germany. But he is highlighting something important about the unequal structure which is the EU. There is an inner core of dominant countries – on the continent, Germany and France in particular – and an outer layer of countries which has a very unequal relationship with that core.

Germany is the world’s second-largest exporter, ahead of the United States and exceeded only by China, and its largest markets are its European neighbours. These countries are net importers ... These importing countries have more money flowing out of their borders than they have coming in – for Greece, an amount equivalent to a tenth of the entire economy – and Germany has a surplus, with piles of it stacking up. Money cannot sit still, and nature abhors a vacuum, so German banks disposed of those heaps of surplus export-payment cash by lending it to companies, especially property developers, in those same countries at low interest rates. And they lent it to their governments, too, to fill their need for missing cash, which would in turn be spent on more German goods and services.[9]

This is the toxic brew which is now bubbling over as the EU finalises details on its bailout of the debt in Greece. The fact, outlined by Saunders above, that much of this debt is held by German banks, means that there is every reason for German capitalism to support such a bailout – but the terms that are being demanded are very severe, and it is Greek workers who are being asked to pay the price.

These conditions also run counter to the lessons learned so painfully in 2007 and 2008. The biggest lesson of the Great Recession was that it is neoliberal folly to cut government spending when economies are shrinking. Such cuts make economic decline even worse. In fact what is needed is an increase in government spending, so that government demand can compensate for declining private sector demand.

Greek crisis

But if Germany has returned to economic growth and can now contemplate cuts to government spending, Greece has not. It is estimated that the Greek economy – after contracting through all of 2009 – will shrink by a further 4% in 2010 and another 2% in 2011.[10] The cuts being demanded by the EU and the IMF will make a bad situation worse in the coming weeks and months.

There is hope in the situation – the evolving resistance emerging in Greece. One poll indicated that “more than half of Greeks say they will take to the streets if the government agrees to new austerity measures”.[11] The growing mass movement and opening to the left underway in Greece is extremely encouraging. It is with that movement that hopes ultimately lie for the emergence of a really progressive Europe.

But we should temper these hopes with a sober assessment of the reality of the situation. Social democracy – and the union bureaucracies on which it stands – is deeply implicated in the construction of the structures which are today being used to orchestrate an attack, across the continent, on social services and the working class. Social democracy remains the leading force in the workers’ movement, and we can have no illusions in its capacity to lead a serious fightback.

In Greece the movement has necessarily broken in part with PASOK, as it is a PASOK-led government which is implementing the attacks. But in Greece, as throughout Europe, social democracy is only a reflection of the problem. The material foundation of social democracy is comprised of the union bureaucracies entrenched in the workers’ movements in Europe and throughout the global North. Ultimately the task facing the workers’ movement and the left is not just a political break from social democracy, but organisational independence from these union bureaucracies.

Winning that independence will be bound up with creating a counter-hegemonic project whose horizons are not just the internal politics of Europe, but the fact of Europe’s implication in the imperialism which oppresses the majority of the world’s population. Our counter-hegemonic project, in other words, cannot simply focus on economic issues. A counter-hegemonic project in Europe – as in North America – has to simultaneously involve a break from chauvinism and racism.

Such a recognition has practical implications. Greece’s small role in Europe’s noxious imperialism has been a series of chauvinistic rows over Macedonia and Cyprus, and its irresponsible and long-running feud with neighbouring Turkey. This has translated into an inflated military budget, keeping “Greek military spending well above that of other EU members, reaching €14-billion, or 6 percent of GDP, in 2007 and 2009”.[12] In other words, fully half of the deficit problem – which stands at between 13 and 14 per cent of GDP – is caused by inflated spending on war preparation. Breaking from chauvinism and militarism opens the door to a simple demand which can be a modest, but necessary part of the counter-hegemonic project – cut spending on war, not spending on welfare.

[Paul Kellogg, based in Canada, is an assistant professor in the Department of International Development Studies at Trent University. He is also affiliated with the Centres for Global and Social Analysis and State and Legal Studies at Athabasca University. He has published articles in several journals, including Canadian Journal of Political Science, New Political Science, Labour/Le Travail, International Socialism, Praxis (Brazil), Science & Society, Studies in Political Economy, Canadian Dimension and Contemporary Politics (UK). He is a founding member of Coalition Venezuela We Are With You/Coalición Venezuela Estamos Contigo and Toronto Bolivia Solidarity. He maintains an occasional blog at, where this article first appeared. It has been posted at Links International Journal of Socialist Renewal with permission.]


[1] Eric Reguly (Rome), “Greece swallows tough medicine in bailout”, Globe and Mail, May 3, 2010, p. B1. Accessed May 3, 2010.

[2] Nicole Itano (Athens), “Why the Greeks are protesting”, March 11, 2010. Accessed May 3, 2010.

[3] Tony Paterson (Berlin), “As size of Greek bailout soars, supply of German sympathy runs short”, Independent – London. April 30, 2010, p. 16. eLibrary. Accessed May 2, 2010.

[4] Cited in Timothy Garton Ash, “The agonies of the eurozone reflect a far more significant hidden deficit”, The Guardian. Feb. 25, 2010, p. 31. Accessed May 2, 1020.

[5] Salvatore Cannavò, “Toni Negri in favour of free-market constitution”, International Viewpoint 377, April 2006. Accessed May 2, 2010.

[6] Christopher Hitchens, “What now for the European Dream?”, Australian, April 28, 2010, p. 8. eLibrary. Accessed May 2, 2010.

[7] Charles Bremner, “Swiss back right-wing minaret ban [Eire Region]”, Times of London. November 30, 2009, p. 3. elibrary. Accessed May 2, 2010.

[8] Ian Traynor, “Belgium to introduce first European ban on burqa and niqab”, The Guardian, April 1, 2010, p. 21. eLibrary. Accessed May 2, 2010.

[9] Doug Saunders (London), “Life in the German empire”, Globe and Mail, May 1, 2010, p. A23. Accessed May 2, 2010.

[10] Global Economics Research, “Greece GDP Growth Rate”, TradingEconomics. Accessed May 3, 2010. “Greek Stocks Decline Amid Recession Concerns”,, May 3, 2010.

[11] Jason Subler, “Greek austerity measures will work: deputy PM”, Reuters, May 1, 2010. Accessed May 3, 2010.

[12] Eric Reguly and Brian Milner, “The bigger fear behind Greece: contagion”, Globe and Mail, May 1, 2010, p. B7. Accessed May 2, 2010.

Submitted by Terry Townsend on Sun, 05/09/2010 - 13:12


By Tony Paterson in Berlin

Saturday, 8 May 2010

Chancellor Angela Merkel won approval for Germany's controversial €22.4bn (£19.3bn) bailout for Greece yesterday despite huge public opposition to the rescue and a savaging by her political opponents in a furious parliamentary debate.

The bailout, dubbed the "fattest cheque in history" by the German press, was passed by 390 votes to 72 but only after 139 abstentions from opposition Social Democrat MPs who insisted that taxpayers were contributing too much to the package. However, an embattled Ms Merkel defended the rescue, saying that the credibility and future of both the European Union and the euro depended on it. "If we don't work together in such times of crisis, the markets will think we are unable to act," the Chancellor insisted.

Public opposition to the bailout could undermine the chances of Ms Merkel's conservatives winning a key regional election in the state of North Rhine-Westphalia tomorrow. Defeat for her party in what is Germany's most populous state would deprive her coalition of its majority in the country's upper house and could force an early general election.

Opinion polls have suggested that up to 80 per cent of Germans are opposed to the Greek bailout. Since the crisis began, Greece has been widely depicted in the German media as a corrupt nation which cheated its way into the euro zone.

Sigmar Gabriel, the Social Democrat leader, accused Ms Merkel of having "managed the crisis miserably". Other members of his party claimed that because of her delay in offering immediate financial support to Greece, she had ignited a financial "bush fire" that had spread across Europe.

The Social Democrats abstained from the voting after Ms Merkel's coalition of conservatives and liberals rejected demands for greater controls on the markets. The deputy leader of Germany's Left Party described market speculators as "Taliban in pinstriped suits" during yesterday's debate.

Yesterday Franz Jaeger, a leading Swiss economist, argued in the conservative Frankfurter Allgemeine newspaper that Greece had to be ejected from the euro zone in order to save the currency's future.

The paper noted that only weeks ago Ms Merkel had argued in similar vein. "There is nothing of the Iron Lady left now," it remarked.

Five German Eurosceptics, including renowned economist Joachim Starbatty, said they were taking the government to the constitutional court over the package, claiming that it was in breach of EU and German laws."