Knife at its throat, Greece yields to Troika brutality

By Dick Nichols, Barcelona

July 22, 2015 – Links International Journal of Socialist Renewal -- In a summing-up speech to the Greek parliament in the earlier hours of July 16, Prime Minister Alexis Tsipras said of the punitive July 12 funding deal accepted by Greece after negotiations with Eurozone leaders:

I would like to put this question very honestly to each and every one of you who is going to vote today: "The blackmail [of the Eurozone institutions] that you mentioned—was it real or fictional?"

If you think it was fictional, then I am open to hearing different alternatives, and together we can work on them.

If you think that it was real, however, then there is no other choice but for everyone to bear the burden of the responsibility [and vote to accept the deal].[i]

Tsipras was asking the MPs, especially the 30-plus dissenters within his governing SYRIZA coalition, what alternative to signing on they could propose. Notwithstanding his appeal, 32 of SYRIZA’s 149 MPs, including all members of its Left Platform, opposed the legislative package implementing the austerity proposals, while six abstained.

Among the SYRIZA MPs opposing the bill were parliamentary president [speake] Zoe Constantopoulou, former finance minister Yanis Varoufakis, energy minister and Left Platform spokesperson Panagiotis Lafazanis and deputy labour minister Dimitris Stratoulis.

Deputy finance minister Nadia Valavani, who stepped down on June 15, also opposed the bill.

Tsipras’s ERT interview

The day before Tsipras had been interviewed by the newly re-established public broadcaster Greek Radio-Television (ERT). He argued that the deal for proceeding to a third bailout memorandum, finalised at the Eurosummit of Eurozone prime ministers, was “a harsh and bad agreement, but giving some hope of escaping from the crisis”.

Tsipras contrasted the accord with the June 5 “take-it-or-leave-it” offer made to Greece by the “Troika” institutions, the European Central Bank, European Commission and International Monetary Fund.

On June 5, I had in my hands harsh reforms and nine months of life—€18 billion and then new discussions about a further memorandum. Now I have harsh reforms and let’s enumerate the positive points: €82 billion so we cover the mid-term loan requirements for our country, and we have a clear commitment that there will be a readjustment for the debt from 2022 onwards… At the same time there will be €34-€35 billion of investment.

Tsipras argued that these gains opened the way to an escape from Grexit and formed a potential “counterbalance to the recessionary impact of the ‘reforms’”. He contrasted the depth of the “adjustment” to the public sector deficit carried out under the first two Troika memoranda (“over the past four years an adjustment of four per cent per year”) to the one per cent adjustment that would be required under the new arrangement.

In addition, while the Greek prime minister deplored the enforced increase in sales tax, he claimed there would be no cuts in wages and pensions. Moreover, if and when the budget started to show a surplus “we shall distribute the surplus to the people who are in need”.

Tsipras said that the agreement provided “space for policies of redistribution, of fighting against tax evasion and corruption”. “Ten days ago we had a complete dead end; today we have a difficult agreement, but let us not underestimate that we have covered our needs for three years.”

Tsipras explained his government’s about-face after the July 5 referendum’s 61.4% rejection of the June 25 “final offer” of the Eurogroup (of Eurozone finance ministers) as the result of the extremely unfavourable balance of forces in Europe. The SYRIZA-led government had struggled to change this: “I fought to create progressive alliances, I fought for people to mobilise in support, I wanted Europe to change.”

However, he said as a self-criticism: “I overestimated the power of the right of one people to prevail against the might of the European establishment.”

Given the present balance of forces, signing up to the Eurosummit agreement was the lesser evil: “I shall try to implement our plan within a certain framework, because a certain Europe cannot change.”

He said no viable alternative policy was available:

Within this harsh framework we did our best, whatever we could. Let people, from the left or the right tell me what was a more left choice. [Exit from the euro] would be a disaster. This is the black reality. We don’t have any reserves to support a change of currency. I visited Russia, China, the US. Nobody told me to follow that course…we have no reserves to support a national currency.

We would have a currency that would be devalued dramatically owing to the lack of our reserves. Those who have sent €250 billion abroad would be able to buy up our country, because the rich people would have a better future in a Greece having the drachma as a currency.

As for the proposal of German finance minister and Grexit supporter Wolfgang Schaüble—that Greece leave the Eurozone temporarily—Tsipras said: “You would have a memorandum plus a national currency [and] this memorandum would not be easier than the one we have right now.”

Schaüble’s other pet proposal—that the fund to execute the privatisation of €50 billion in Greek public assets be based in Luxemburg and not to be controlled by Greek authorities—had also been defeated (by Tsipras’s threatening to leave the negotiations).

Tsipras’s judgement was that “what happened is a defeat for Europe” and that “the message is that there is no meaning in elections. This is a harsh message for Europe”.

At the same time, “Europe is not the same after these five months [of SYRIZA-led government] and the minor victory imposed on this small country. And this vision of a different kind of Europe will come to fruition despite the fact that yesterday this vision was defeated.”

He added: “I was in the European parliament [on July 8], and there I understood the very deep rupture there was within Europe—not between Europe and Greece.”[ii]

Asked whether he agreed with the viral social media message #ThisIsACoup Tsipras pointed out that there are many conservative forces in Europe and Greece were aiming to exploit the crisis to get rid of the SYRIZA-led government or expand it into a government of national unity. “We shall not satisfy those who want to put an end to our government… we shall not form alliances to the right.”

Was the July 5 referendum then in retrospect a mistake? Tsipras defended the Greek people’s massive rejection of the June 25 Troika offer by stating that it demonstrated for all the world to see what the plans of the ruling financial establishment and its institutions was inimical to democracy. Against this background he did not believe that the Eurosummit agreement was “a final victory for the conservative forces”.

The Greek prime minister concluded: “It is my responsibility that I signed a text I did not believe in, but I am obliged to implement this text. I shall not escape from my duties.”

The parliamentary debate

The immediate threat confronting the Greek parliament on July 15-16 was that if it voted down the July 12 agreement—which requires a raft of austerity measures to be adopted before discussion can even begin on a third €85 billion bailout for Greece—the government would not be able to meet looming debt repayments to the ECB and IMF.

The ECB, which has been deliberately restricting the flow of cash to the near-insolvent Greek banks, would then have a pretext to cut off all funding, bankrupting the already bleeding financial system and forcing the country out of the Eurozone.

George Katrougalos, minister of administrative reorganisation until becoming minister for employment after the July 17 cabinet reshuffle, told the BBC: “Clearly, the Europe of austerity won. We either accept these draconian measures or face the sudden death of our economy. The banks are closed—about to collapse—and with the prospect of having to print a parallel currency, and then exit the Euro monetary union.”

The SYRIZA dissenters believed the agreement was so bad that Greece’s creditors had to be dared to do their worse, a position expressed with force by Zoe Constantopoulou. Having stepped from the speakership in order to put this case, she stressed that “we do not have the right to turn the NO of the people into a YES with our vote”. She argued:

I believe that the prime minister has done everything he possibly could to oppose this blackmail. Nobody can deny that. And nobody can belittle the share of courage, disinterestedness and moral grandeur in his intention—today—to proceed to his own political self-destruction, considering that in this way he will serve society and the people. I believe that the parliament and the SYRIZA parliamentary group should not allow such a thing to happen.

I believe that the parliament must block the plan for an end to “the left parenthesis”, which has been set in motion by wicked forces who want to turn the left government into producer and director of the memorandum. Those who want to force us, one at a time, to do and say the opposite of everything we have fought for, who want to humiliate us to the point that we can no longer recognise ourselves and that society, our natural ally, can no longer recognise us as part of the people, as flesh of its flesh.

Constantopoulou concluded:

If the Parliament does not resist today’s blackmail, it will give in again. If it legislates to accept ultimatums, others will be forced upon it, and it will be compelled to accept them in the very near future.

In a July 20 article entitled “Why I Voted No” Yanis Varoufakis explained that he had agreed to become Alexis Tsipras’s finance minister on the basis of a rejection of the doctrine of former PASOK treasurer Giorgos Papaconstantinou, namely that, given the choice between disorderly bankruptcy and taking on “toxic loans”, the latter was always preferable. For Varoufakis, the Papaconstantinou doctrine guarantees permanent debt slavery. However, with the signing of the Eurosummit deal, the SYRIZA-led government had effectively adopted it.

Varoufakis wrote:

The Prime Minister asked on Wednesday “Is there an alternative?” I estimate that, yes, there was. But I shall not dwell on that now. It is not the appropriate time. What is important is that on the night of the referendum the Prime Minister was determined that there was no alternative course of action.

The Prime Minister, on Wednesday’s parliamentary meeting asked us to decide together, to share the responsibility. Fair enough. But how? One way would be to act, all together, as we had said time and again we would in case of defeat. We would declare we had been compromised, announce that in our hands we held a deal we considered non-viable and ask all those politicians that judged the agreement to be even potentially viable, regardless of their parties, to form a government and enforce the measures.

And that is why I resigned, so that I would facilitate his going to Brussels and coming back with the best terms he could possibly deliver. But that does not mean that we should be automatically committed to enforcing those measures no matter what they were!

The other way would be to do as the Prime Minister suggested: protect the first left government, be it by enforcing an agreement – the product of blackmail – that the Prime Minister himself considers impossible.

Varoufakis rejected the argument, put to him by supporters of voting for the agreement, that it was better to have SYRIZA holding the reins of government in Greece under a new memorandum:

... the reason why I voted “NO” last Wednesday is simple: we should have handed back the keys to the ministries, as we had said we would, to those who can look people in the eye and say what we cannot: “The deal is tough but it can be enforced in such a way that will leave room for hope that we might recover and reverse the humanitarian catastrophe”.

The left government cannot promise Europe what it knows it cannot deliver. The ultimate asset that the government of SYRIZA needs to protect is the promise we would repeatedly give throughout our visits to the European capitals: In contrast to the others, we shall not promise anything (e.g. a certain primary surplus) that cannot be accomplished. On the other hand, the left government has no right to pillage any longer the victims of a five year long crisis without, at the very least, being able to answer in the affirmative the question: “Have you at least compensated for the recessionary measures?”

Many of my colleagues ask: “Is it not better for us to be in charge? We that care for the people and have good intentions targeting corruption and oligarchy?”

Yes, it is better. But what tools have we left to work with? The decision of the Euro Summit establishes and furthers the complete lack of social control over the banks while society will be burdened with a further €10-25 billion of debt to support them…

Varoufakis ended by stressing the enormous cost to SYRIZA’s political prestige:

And when the harsh reality of the results of this newly found austerity dawns upon society, when young and old alike either take to the streets or stay at home and rot in despair in the face of such measures, those people – the people we have been speaking for all along – who in the political scene is going to represent them then? Can it be that same party that brought these very measures before the Parliament? Measures which the well-meaning ministers are forced to defend to the parliament and media while being ridiculed by the anti-memorandum opposition?

Arguments in favour of signing the Eurosummit deal was put by education minister Aristides Baltas in this July 19 interview with the Real News network.

[Tsipras] had a very difficult decision. Because if he signed the agreement this would be against all of what we have been saying during these years regarding the impossibility of having a program like this in Greece. For many reasons, the most technical one being it does not work on financial grounds.

On the other hand, if he said no, given the kind of blackmail Greece found itself in during the would be total catastrophe. The next day nothing would work here, the banks would be closed for [all], totally. And the humanitarian crisis of enormous proportions would start [just on Monday]. So he had to sign the agreement.

Baltas said that the burden on the economy was less than for the two previous memoranda:

What the economy has to produce over costs in order to adjust to the financial demands of Greece and Europe is much better than the one had been used to in the two previous years. Because in the two previous years the demand for such a surplus was much bigger. And so in order to get this much bigger surplus you could drain the resources from pensions, salaries, and things like that. The kind of adjustment they're asking for for this program is less.

So from this, let's say, strictly economic point of view, this program is a little better than the previous ones. But the main thing we gained through the 17-hour negotiation was a kind of realisation and acceptance that the debt in itself is not sustainable.

Baltas also pointed to the space for continuing the war against corruption:

This government is going to implement new bills with no, let's say, financial cost regarding aspects to Greek society which have to be transformed and reformed in many kinds of ways, starting from the state itself, which have no cost. And which on the other hand it can, let's say, stop spending without measure or corruption without measure, which we encounter every day in all ministries, including this one.

So if they just allow us, whoever they might be, to continue with this kind of program we will be surprised how much money we can save without cost to anybody, but to the profit of everybody … I can give you examples, how much money has been spent in the sense of corruption. How much money has been spent in the sense of just throwing [it] away with no effect. And how much money can be saved if we do the right kind of forms independently of our debtors.

But they don't allow us this, even for political reasons. Because behind the strategy I think is a political aim [of removing the SYRIZA government].

In that context Baltas pointed out, the fact that more and more people now understand the viciousness of the deal imposed on Greece is itself becoming a political factor in the struggle against it:

From a purely economic level it's not sustainable, all of these economists are absolutely right. But there are two factors. One, social in the sense I was trying to describe [of social solidarity campaigns within Greece continuing to fight the humanitarian emergency].

And the other is political in a more general sense. What I understand, in all corners of the world right now, in [parliaments] with most European countries, the question has been opened. Europe in general is not the same as it was before the agreement. Everybody understands the kind of strategy Germany is forewarning within Europe. Very many voices have been raised against it, and not just intellectuals or famous economists, but parties, factions of parties, oppositions, things like that.

And this gives the idea that to the effect that the program has proven not sustainable even the next few months, some measures can be taken at the political level. That's why at this level it's important that this government stays in place, because it can renegotiate based on what's happening in Europe and the kind of support it gets politically from parties and governments which understand that this situation is absolutely terrible.

After over five hours debate, the package was approved with 229 MPs in the 300-seat chamber in favour, less than the 251 who had supported the original Greek negotiating proposal that had gone to the July 12 Eurogroup meeting.

One hundred and ten of those supporting the bill were from SYRIZA, 13 from the nationalist Independent Greeks (its partner in government), 76 from the conservative main opposition New Democracy, 17 from the “hipster” party The River and 13 from the social democratic Panhellenic Socialist Movement (PASOK).

Sixty four MPs voted against the package—32 from SYRIZA, 17 from the neo-Nazi Golden Dawn, and 15 from the Greek Communist Party (KKE). Six SYRIZA MPs abstained.

The Eurosummit document

Just how bad is the document that Tsipras and finance minister Euclid Tsakalotos felt they had no choice but to accept?

It not only forces the SYRIZA-led government to swallow measures that violate its long-held “red lines” (on sales tax, pensions, privatisations and labour market “reform”): it also takes cold revenge on SYRIZA for daring to call the July 5 referendum on the June 25 “final offer” of the Eurogroup.

That inspiring exercise in democracy was regarded by the European establishment as an unspeakable “betrayal of trust”. The opening paragraph of the document states: “The Euro Summit stresses the crucial need to rebuild trust with the Greek authorities as a pre-requisite for a possible future agreement on a new European Stability Mechanism program.”

In a July 16 comment on the Eurosummit agreement Yanis Varoufakis stated that it requires the SYRIZA-led government to prove its bona fides with the Troika by enforcing the very austerity it was elected to oppose and by endorsing the Troika’s own world-view and version of events.

Varoufakis’s comments cover the following key issues:

On “streamlining” Value Added Tax(VAT): ”[This makes it] more regressive, through rate rises that encourage more VAT evasion, [also] dealing a major blow at the only Greek growth industry—tourism.”

On worker and union rights: “Make sure that no collective bargaining is allowed, [collective dismissals] “should be allowed at the employers’ whim [and] there should be no mechanisms that waged labour can use to extract better conditions from employers.”

On the privatisation fund: “An East German-like Treuhand is envisaged to sell off all public property but without the equivalent large investments that West Germany put into East Germany in compensation for the Treuhand disaster ... Public property will be sold off and the pitiful sums will go toward servicing an un-serviceable debt – with precisely nothing left over for public or private investments.”

On control of the financial system: ”The Troika closed Greece’s banks to force the Syriza government to capitulate and now cries out for their re-opening...[There will be] a tsunami of foreclosures [and] the Greek people who maintain the Hellenic Financial Stability Fund (HSFS) and the banks will have precisely zero control over the HFSF and the banks.

On austerity: “The Greek government must introduce new stringent austerity directed at the weakest Greeks that have already suffered grossly … Greece must subject itself to fiscal waterboarding, even before any financing is offered.”

On Troika strategy: The SYRIZA government must sign a declaration of having defected to the Troika’s ‘logic’ [and] the Greek government, which knows that the imposed fiscal targets will never be achieved under the imposed austerity, must commit to further, automated austerity as a result of the Troika’s newest failures.”

On bailout conditions: “The SYRIZA government must be humiliated to the extent that it is asked to impose harsh austerity upon itself as a first step towards requesting another toxic bailout loan, of the sort that SYRIZA became internationally famous for opposing.”

On blame: “The SYRIZA government must accept the lie that it, and not the asphyxiation tactics of the creditors, caused the sharp economic deterioration of the past six months – the victim is being asked to take the blame by and on behalf of the villain.”

On the oversight role of the Troika: “The Greek parliament must, again, after five months of short-lived independence, become an appendage of the Troika—passing translated legislation mechanistically” and “in addition to promising that it will no longer legislative autonomously, the Greek government will retrospectively annul all bills it passed over the past five months.”

It is on the aspects of the agreement emphasised by Tsipras as positive—the access to €80-plus billion of new loan funds that Varoufakis is most critical. “The Eurogroup conjured up a huge number, well above what is necessary, in order to signal the debt restructuring is out and that debt bondage ad infinitum is the name of the game.”

The deal loads up Greece with yet more debt, taking it to as much as 200% of gross domestic product (presently an asphixiating 177% ). And this when even the IMF, in its latest report on Greek public debt sustainability, states that it must be restructured if the country is ever to have some chance of regaining growth.

Of the €35 billion to be made available under the “Juncker investment plan”, Varoufakis says: “Of the headline €35 billion, consider €1 billion as real money [under a] “plan that most Eurozone ministers of finance refer to as a phantom program”.


Will this third memorandum even allow the Greek economy to grow? The bet here is that agreement itself, when combined with the reopening of the banks and the political enchainment of SYRIZA to the Troika chariot, will set off a spurt in business confidence and a subsequent lift in private investment and consumption.

Holger Smeiding, chief economist at Berenberg Bank was quoted in the July 14 Financial Times as saying that “capital could start to flow back cautiously after a while [and] the positive confidence effect … could enable the Greek economy to return to growth by later 2015.”

By contrast, Christian Odendahl, chief economist at the Centre for European Reform, believes that the Greek economy will be 4.2% smaller by 2018 because “Greece’s third bailout is bound to fail for the same reasons that the two last programs did. A government who … claimed to be ending austerity will now be forced to do the opposite.”

The majority of economists consulted by European financial media incline towards this position, the consequences of which are described by Marco Valli, Unicredit’s chief economist for Europe, said in the Financial Times: “Even if the Athens government applies a program in which it has said it doesn’t believe, growth prospects are uncertain, and if the economy doesn’t respond it will be impossible for Greece to remain in the euro.”

The prospects are very sombre. With the Greek government now committed to running a primary surplus—the government budget balance before interest payments—of 1% this year, leading to 3.5% by 2018, seriously increased domestic public investment is ruled out, leaving nearly everything dependent on the “animal spirits” (Keynes) of the investing class.

At the same time, the near-bankrupt private banking system will have to be recapitalised, income from privatisations come in somewhere near target (unprecedented in Greece), and the revolt of the victims of the memorandum contained.

If the Spanish “recovery” is anything to go by, in the best of imaginable growth scenarios one thing will be certain: the benefits will go overwhelmingly to the rich and super-rich. This includes the tax evaders who got their money out of the country early, the mafias, Greek and foreign, who are presently snapping up Mediterranean assets at fire sale prices, and the hedge funds on the prowl for alternatives to very low yielding government debt.

A harbinger of the kind of “recovery” Greece can expect will come soon when the bond traders who snapped up Greek public debt when its price slumped during the moments of greatest political tension will make a killing as demand for the asset returns.

Path to humiliation

In his July 15 intervention to the Greek parliament Varoufakis compared the Eurosummit agreement to the 1919 Treaty of Versailles, vindictive towards Germany and underlying cause of Hitler’s rise to power. So how did the SYRIZA-led government arrive in this dreadful situation only 10 days after the triumph of the June 5 referendum—a volte face that confused and even traumatised SYRIZA sympathisers around the world?

The point of the referendum was to demonstrate the strength of popular Greek rejection of austerity, and to force concessions from Greece’s “partners” in the continuing negotiations.

(Left aside here is the theory that the SYRIZA leadership actually wanted to lose the referendum and then hand the whole mess to others, reported on July 7 as fact and without sources by the Daily Telegraph’s international business editor Ambrose Evans-Pritchard.)

However, the actual impact of the Greek people’s staunch July 5 rejection of austerity was to harden the position of those, led by German finance minister Wolfgang Schaüble, who wanted Greece out of the Eurozone. They took the referendum result as a declaration of war.

Within the Christian Democratic Union (CDU), party of German chancellor Angela Merkel, and its Bavarian ally the Christian Social Union (CSU), the result was interpreted as a rejection of euro membership. CDU and CSU politicians filled the German social media with abusive messages to the effect that there was now nothing to be gained from further negotiations with these ungrateful spongers on the German taxpayer (whose euro membership was a “cancerous growth on the EU” according to one).

At the same time French president François Hollande, committed to keeping Greece in the Eurozone and anxious to demonstrate an independent French role in solving Europe’s crises, offered to help the troubled Greek negotiating team draft a new proposal.

Hollande’s position received support from the German Social Democratic Party (SPD), partners in the Merkel government, but after the Greek referendum anxious to appear more sympathetic to Greece and also aware of the possibility of exploiting the tensions between Merkel—still inclined to keeping Greece in the Eurozone—and Schaüble.

This document that emerged from the collaboration between the French and the Greek negotiating team put forward positions that were worse than those that had just been rejected by the referendum. It was also backed by New Democracy, The River and PASOK.

However, the new test was judged to be unavoidable because only in this way was there some chance of forcing Schaüble and the other supporters of Grexit to reconsider their position. The new Greek negotiating position won 251 votes out of 299 when submitted to the Greek parliament on July 10 (17 SYRIZA members voted against, abstained or absented themselves from the parliament).

When the position was submitted to the July 12 Eurogroup meeting, Schaüble, backed by Eurogroup president and Dutch finance minister Jeroen Djisselbloem, seized the opportunity to make the final text as draconian and vindictive as possible. If Greece was to stay in the euro, it would have to become a direct protectorate of the European institutions, with the IMF brought in to guarantee “rigour” in the application of “reforms”. Tsipras fought tooth-and-nail with Merkel over this point, but was told that without the IMF in, Germany would not be signing. The hated Troika was back.

Also, only in this way would it be possible to convince the parliaments of northern Europe—whose electorates have been force-fed a diet of distortions about Greece for six years—to vote for a third bailout. Maintaining the Goebbelsian Big Lie that the two previous memoranda had been about helping lazy and corrupt Greeks—and not “about protecting German banks, but especially the French banks, from debt write-offs”, as conceded by former Bundesbank head Karl-Otto Pöhl—meant that the dose of sadism in the third memorandum had to be even higher than in its predecessors.

Having built up this Big Lie over six years the Merkel government and its closest allies have also become its partial victim—they have created a Northern European constituency of Greece-haters which would limit their own ability to carry out a more rational economic policy towards Greece, even if they wanted to.

This grisly political imperative was much more powerful than all the evidence in the world showing that austerity was preventing Greece from recovering economically—a reality Varoufakis was to experience first-hand in the meetings of the Eurogroup.

At the same time, given the SYRIZA-led government had decided that it could risk neither Grexit nor defaulting on the debt and trying somehow to stay in the Eurozone[iii], it had no choice but to accept the final deal in all its humiliating detail. Economic reason and the democratic will of the Greek people were powerless to save it

The dynamic driving its retreat is well portrayed in a July 14 Huffington Post article by Daniel Marans, entitled How Germany beat Greece in Liar’s Poker”.

The consequences of Syriza’s lack of preparation for a Grexit are now there for all to see. Even if Germany was bluffing, its claims that it would force a Grexit had more credibility at the negotiating table. Germany appeared willing to walk away from negotiations and let the Greek banks collapse, and Greece clearly was not. Once again, in the final negotiations, through hawkish finance minister Wolfgang Schaüble, Germany wielded the threat of a Grexit to force Greece to surrender virtually unconditionally.

The final negotiations revealed that French president François Hollande, who along with Merkel had brought the Greeks and Schaüble back together at the table, was powerless to prevent Tsipras from being “crucified” (term of a senior EU official), by the Schaüblerites.

The ridiculous Hollande then returned to Paris to bask in the rare praise of the French media for having saved Greece from Grexit. His final contribution to the slaughter was to describe the Eurosummit meeting as having produced “neither winners nor losers”.

Alternatives (then)?

How was the German government and its Eurosummit allies able to get away with this brutally imperial operation?

On July 20, Nobel Prize-winning economist and fierce Troika opponent Paul Krugman speculated that the final result must have been due to incompetence on the part of the SYRIZA-led government:

It didn’t even occur to me that they would be prepared to make a stand without having done any contingency planning … amazingly – they thought they could simply demand better terms without having any backup plan. So certainly this is a shock... The new terms are even worse, but the terms they were being offered before were still not going to work. So I, you know, I may have overestimated the competence of the Greek government.

For the left currents within SYRIZA[iv], much of their criticism of the SYRIZA-led government’s strategy has ascribed the defeat to the party majority’s commitment to the euro and/or to the ideology of “left-Europeanism”—as if correct ideological and analytical positions would somehow have saved the government from the Troika.

These analyses each in their own way dodge or downplay two fundamental facts about the battleground on which SYRIZA has been fighting:

1. To date a clear majority of Greeks, around 70%-80%, have said that they want the country to remain in the euro;

2. SYRIZA was elected on a pledge to simultaneously keep Greece in the Eurozone and fight the austerity. It has no mandate to organise a Grexit.

This state of affairs is not going to be changed easily, because it reflects potentially differing interests within the SYRIZA support base. There are the most marginalised and poverty-stricken, for whom it makes no difference at all whether their penury is denominated in euros or new drachmas. Then there are those whose small amount of savings would devalue between 40% and 70% (according to different studies) in the event of a Grexit.

Still strong, too, despite the exhibition of German government brutality in the latest deal, is the attachment to Europe, or to the vision of a different Europe based on solidarity and social justice. In his Real News interview education minister Aristides Baltas summarised his sense of present Greek attitudes:

The polls which say that Greece should remain within the Eurozone in Europe are mostly correct in the sense that what you hear about, people don't want to get out of Europe. Not for financial reasons, but geopolitical reasons. Greece in a very, let's say, unstable part of the world. It's a kind of limit between Europe and Asia. Asia Minor, all these countries, a very different situation. Turkey. Balkans.

So Europe and the Eurozone gives us a kind of security sense. So it's not a question of money. It's a question of more, let's say, elementary kind of reactions. On the other hand there are people who think that getting out of the Eurozone will help Greece. This is, this has been, debated over the years here within SYRIZA. And with all the analysis, et cetera, we had and we've been discussing, it's not at all sure that this [exchange] will get better, to put it as mildly as I can.

On the other hand, being within the euro gives us a kind of political leverage which would be impossible outside the euro. For example if Puerto Rico fails, who knows it, who cares about it [in other words]. But if Greece fails within Europe, then it's a big world problem. So being within the Eurozone is also a kind of political necessity, as it were.

From this point of view I think that the Greek people understand these issues. So when they say good on Tsipras, and the exact mandate we're giving him is that, most believe it.

Given these realities, it is hard to disagree with this assessment of Leo Panitch and Sam Gindin:

SYRIZA would never have been elected on the basis of a call for leaving the Eurozone, nor would it have won the recent referendum. Those in and out of the party who have always called for an immediate Grexit never were persuasive on the necessary political conditions for this.

Given the limits imposed by the unfavourable international balance of forces, those of us who argued that the room for manoeuvre inside the EU was a lot narrower than the SYRIZA leadership hoped, and therefore favoured connecting a socialist strategy to Grexit – and always made this view clear to our SYRIZA comrades – could not, however, help but be sympathetic to the dilemmas they faced. Not to have been would have been churlish beyond measure, especially given the socialist left's own political weakness in our own countries.[v]

In this real context, the hand of the Eurogroup would only have been stayed if its members had felt that they were about to pay a much higher political price for their thuggery against Greece. The immediate reason for this shortfall of political pressure was the still inadequate level of mobilisation in solidarity with the SYRIZA-led government. While it is true that 200,000 have been out in the streets of Europe over the past month or so, the broad sympathy with Greece that it reflects has not yet been organised enough to make those mugging the country suffer politically for their crimes.

The fundamental reason for the defeat is that the SYRIZA-led government remains isolated and that, while support in many European countries is growing out in “civil society” as well as in some institutions (European parliament, newly elected progressive councils in the Spanish state), matters can’t change decisively until more national governments are won by the left and this new balance starts to get reflected in Europe’s institutions.

After the June 5 referendum result, just three of the Eurozone’s 19 member states were disposed to renew negotiations with Greece. They were France, Italy and Malta, ruled by social democratic parties more vulnerable to popular sympathy with Greece, but also unwilling to confront the hegemonic conservative majority in the rest of Europe.

Given this balance and the lack of an agreed Plan B, Alexis Tsipras clearly felt on July 12 that Greece had no choice but to cop the Eurosummit’s brutal conditions as the lesser of two evils. Certainly those who opposed acceptance had no agreed immediately practicable alternative to propose. Options floated ranged from handing the keys of government to other parties supporting the Eurosummit agreement (Varoufakis), to defaulting on the debt but fighting to stay in the euro (Constantopoulou and her adviser, Eric Toussaint of the Committee for the Abolition of Third World Debt), to Grexit (Lafazanis).

Alternatives (now)?

The signing of the Eurosummit deal opens a new phase in the struggle against austerity in Greece, with a future full of unknowns. At this early stage, relief at the end of the bank crisis still exceeds fear of the coming blows of further austerity.

At the time of writing, turmoil is increasing within SYRIZA, continuing the momentum begun by the majority vote of the SYRIZA central committee against the Eurosummit deal. All the left ministers who voted against that deal have been replaced.

Calls for a special congress of the radical coalition are also growing, with a good probability that such a call will be carried by the central committee.

At the same time, the Tsipras government has, if anything, increased its lead in the polls, with Tsipras’s own popularity also increasing on the back of rising appreciation of his courage and tenacity in the face of Troika and German government bullying.

The phase of inevitably intense discussion about what room to manoeuvre the Eurosummit deal allows the SYRIZA-led government will now be tested in the struggles of resistance that are already starting (with protests against the extension of shop trading hours).

The draconian July 12 agreement is already leading long-standing supporters of “staying in the Eurozone and fighting”—including Varoufakis—to wonder whether the price of membership of a club designed to boost the profitability of German big capital just isn’t too high. The arguments for and against Grexit, and the conditions under which it might be best managed can only continue.

In this situation it is important to keep present that the basic reason for the signing of the Eurosummit deal was the SYRIZA-led government’s isolation. The energies of the left outside Greece are therefore best devoted to doing everything we can to strengthen understanding of Greece’s predicament and solidarity with its struggles, and to exposing the complicity of conservative and social-democratic governments in the European establishment’s ongoing war on the Greek threat to “There Is No Alternative”.

Greece has lost a battle—most probably unavoidably—but its courageous struggle against capitalist austerity continues. It must not be left to fight alone.

[Dick Nichols is Green Left Weekly’s and Links International Journal of Socialist Renewal’s European correspondent, based in Barcelona. An earlier version of this article appeared in Green Left Weekly.] 


[i]This English version comes from Greek web site The Press Project, which broadcast the parliamentary session live with simultaneous translation from the Greek.

[ii] The reference is to the July 8 European Parliament’s debate on Greece after the referendum, available here: