Eyewitness Greece: SYRIZA announces dramatic changes, prepares for debt battle with EU

By Dick Nichols, Athens

January 30, 2015 – Links International Journal of Socialist Renewal – It was the French Catholic daily La Croix that last week best described the size of the challenges facing Greece’s incoming SYRIZA government—they are “labours of Hercules”, a reference to the mythical Greek hero whose 12 feats against impossible odds made him immortal in the ancient world.

The most crucial of SYRIZA’s “Herculean labours” is the renegotiation of Greece’s unpayable and economically suffocating public debt, now at 175% of the country’s gross domestic product. Success or failure here will largely determine whether its other labours—the commitments to Greek voters on which it was elected—can be fulfilled.

Every action of the new government in its first week was, regardless of its own merit, also aimed at strengthening its hand for this vital struggle. And to date those actions have been nothing if not dramatic.

Coalition with ANEL

On January 26, the day after SYRIZA’s historic win left it two seats short of an absolute majority of 151 seats in Greece’s parliament, the party made an alliance for government with the right-wing nationalist Independent Greeks (ANEL), a split from the former ruling New Democracy (ND) of ousted prime minister Antoni Samaras.

This was a choice that SYRIZA had keenly wanted to avoid—indeed, the last week of its election campaign was a non-stop plea to voters to give it an absolute majority. As the counting progressed on election night, the growing probability that it would fall short brought an undertone of concern into the celebrations in the party's headquarters.

“Now for the difficult decisions”, a SYRIZA full-timer muttered to me. He was referring to the coalition’s view as to which party might be its least intolerable partner in government. Given the centrality of the debt negotiations with the European Union and SYRIZA’s rejection of the memoranda with the Troika (EU, European Central Bank and International Monetary Fund), the attitudes of potential partners to these critical concerns would count for most with the SYRIZA leadership.

That immediately eliminated as a possibility PASOK (the once social-democratic Panhellenic Socialist Movement), junior partner to ND in applying the Troika’s austerity packages from 2012.

It also knocked out The River (Potami), an eclectic party funded by the Bobolas family, owners of Ellaktor, the largest public works company in Greece, and of a variety of mainstream media, including a majority share in the notoriously pro-austerity TV station, Mega Channel.

(The River’s trendy décor masks a core commitment to neoliberalism, strengthened by its fusion with the free-market, small-government outfit Drasi. During the election campaign its leader, TV personality Stavros Theodorakis, said that he was prepared to govern with either ND or SYRIZA.)

The Greek Communist Party (KKE) was always out of contention, with its line that SYRIZA is “part of the system”. Its post-election assessment stated that “the new SYRIZA government does not constitute a political change in favour of the people”.

That left ANEL, which lost support at the election (down from 20 seats to 13), but which has been staunch in opposing the Troika memoranda from a right-nationalist, Greek-patriotic stance. Its politics also features virulent anti-Turkish and anti-German rants, as well as positions completely at odds with SYRIZA’s on social issues, such as migration, rights for refugees and LGBTI rights.

In announcing the agreement with SYRIZA leader Alexis Tsipras, ANEL leader Panos Kamenos declared that “the time has come to rebuild what was destroyed by the memoranda and to free Greece from the chains of subjugation”.

According to the Spanish daily El País, the main condition for ANEL participation was that SYRIZA not pursue any permanent settlement of outstanding disputes with Turkey. The appointment of Kamenos as the new defence minister will also put SYRIZA’s anti-NATO commitment on the backburner for the time being.

The challenge—creating real majorities

For the SYRIZA leadership the priority was to become a government and act fast on its undertakings to the Greek people. Despite the concern and confusion that the alliance with ANEL has caused within some SYRIZA ranks and supporters (and in some sections of the European and world left), the move was taken to allow the coalition to immediately settle the question of government in the face of the looming debt negotiations with the European institutions.

All other options were judged to be greater evils. Take new elections: there was no guarantee that SYRIZA would do better, especially when it won on January 25 with the votes of many who were giving the party a go “just this once” and when participation at this most important Greek election in decades was only 63.9% (incidentally, voting in Greece is “compulsory”).

Forming a minority government, the only other alternative and one proposed by some in the party’s Left Platform minority, would have made exposed SYRIZA to issue-by-issue negotiation at a time when it judged it critical to act quickly and dramatise with deeds that “this time the government really is different”.

Moreover, the more the Tsipras government could act freely on the issues that are of greatest concern to its support base, the greater would be its freedom to tackle other commitments when the time was right. By the same token, the greater would be the pressure on ANEL not to break the coalition when SYRIZA enacted progressive social policy.

Such a scenario would also increase the pressure on PASOK, the KKE and The River to not oppose progressive SYRIZA legislation.

A difficult reality underlay the decision to ally with ANEL, despite some risk of disorienting SYRIZA’s own members and supporters. SYRIZA has won an election with 36.3% of the vote in a poll with 36.1% abstention—out of 9.911 million registered voters, only 2.246 million voted for the radical coalition. Moreover, a lot of its support is recent, gained since the May and June 2012 national elections, and while sympathetic, is also provisional and dependent on reasonably quick advances.

The “Herculean labour” for the SYRIZA government is therefore to turn that minority support into a social majority backing for its program—issue by issue.

Such was the context in which the difficult decision to make an alliance with ANEL was taken. Immediately afterwards, however, Tsipras began showing that this government would be different from its predecessors. After breaking with the tradition of being sworn in by a Greek Orthodox priest by taking the oath before the Greek president, the new prime minister laid flowers on an Athens monument to 200 communist resistance fighters killed during the German World War II occupation. Those actions set the bars, streets and public transport of Athens abuzz.

At the same time defeated prime minister Antoni Samaras revealed that he felt he wasn’t dealing with a normal governmental handover by not even turning up for Tsipras’ swearing-in. Samaras also stripped the prime ministerial offices clean and forgot to pass on its computer passwords.

The street buzz just kept growing. One story doing the rounds was that the vengeful Samaras had even had all soap and toilet paper removed from the prime ministerial suite.

The 40-person cabinet named the following day confirmed that SYRIZA was equipping itself for radical changes in policy. Besides Tsipras and his deputy prime minister, founding SYRIZA member and economist Giannis Dragasakis, the cabinet contains:

The cabinet is composed of 35 members, alongside six deputy ministers. Including the deputy ministers the cabinet comprises six women and 35 men.

January 28: ‘Government of national salvation’

Just two days after forming government and before cabinet had met, Tsipras announced his government’s first measures. He introduced them with: “A new era has begun, a government of national salvation has arrived. We will continue with our plan. We don’t have the right to disappoint our voters.”

The most important measure was the announcement of the restoration of the €751-a-month minimum wage. At present, after the Troika memoranda, it is €586.06 and €510.95 for people under the age of 25. Then came the decision to restore electricity to the 300,000 households who had been cut off for non-payment.

Schemes to privatise the ports of Piraeus and Thessaloniki would be halted and pensions reinstated. Then, after cabinet had met, energy minister Lafazanis announced that plans to sell the public power corporation would be suspended, while other ministers announced the end of fees for prescriptions and hospital visits, the rehiring of some public sector workers and the restoration of the right of workers and unions to negotiate collective agreements.

Three measures stood out in this day of attacks on neoliberalism’s “There-Is-No-Alternative” principle. First, the cleaning women at the finance ministry, in struggle against Troika cutbacks for over two years, were rehired. Finance minister Varoufakis commented: “One of our first moves will be the immediate cutting of costs at the ministry — for example, the number of advisers—and this spending cut will fund the rehiring of the cleaning ladies at the ministry. It will be a symbolic first move.”

Next, migrant children born and raised in Greece will have Greek nationality.

And lastly, as a symbol of the overall aspiration of the government, the fences that have for the last six years protected the parliament from popular protest were removed.

The reaction: blackmail

All that good news was too much for the vested financial and economic interests to bear. On hearing that privatisations had been frozen, some Greek bank stocks lost more than a third of their value, while yields on Greek bonds rose and the Athens stock market lost more than 9% on the day.

Next came the inevitable concern from Standard & Poor’s ratings agency, as it revised its Greek sovereign rating outlook, prelude to a formal downgrade. The agency that had certified US bank toxic “assets” as AAA warned that a Greek bank run might eventuate, noting that accelerated deposit withdrawals from banks had created “a credit concern”.

On the same day, the Wall Street Journal reported that Greek shipowners, responsible for 15% of global tonnage and fearful of being asked to pay some tax, were developing a Plan B to shift their operations to London, Monaco, Singapore or Dubai.

Behind these threats lay the biggest menace of all: that if no agreement is reached with the EU on debt restructuring an isolated Greek economy might soon be faced with a liquidity crisis due to ECB credit strangulation, causing a crisis similar to the 2012-2013 crisis in Cyprus. This was “solved” when, despite rejection by the Cyrus parliament, the EU forced bank depositors to take a “haircut”. Economist Richard D. Wolff described the Cypus “solution” like this:

So tense was the mood created by these reactions and the Athens financial rumour mill that by January 28 evening vice-president Dragasakis announced that the government would not carry out unilateral actions or any changes in the banks without first consulting their private shareholders.

As a result, the frightened markets recovered somewhat on the following day (January 29). On that day Tsipras also met with the president of European Parliament, German social-democrat Martin Schulz, while Dutch social-democrat Jeroen Dijsselbloem, the Eurozone financial czar, came to Athens on January 30 to meet finance minister Varoufakis.

Tensions immediately climbed after this meeting when Varoufakis announced that the Greek government would no longer deal with the Troika, but directly with the individual European states that are the majority holders of Greek government debt.

Dijsselbloem said that Greece could not take unilateral action, a position immediately backed up by a German government statement.

Varoufakis has also announced that he will travel to European capitals to talk to his counterpart ministers about Greek proposals, while Dragasakis has stated that he has had reassurances from ECB chief Mario Draghi that Greece will not be the subject of a liquidity squeeze.

At the same time, bank of England governor Mark Carney, without mentioning Greece by name, came out on January 29 with a strong attack on austerity in the Eurozone, saying it could cost the continent another lost decade.

Conclusion

In short, all sides are jockeying for position before the serious negotiations begin. It would be wrong to underestimate the power of the blackmail of the financial and economic interests besieging the Greek government, but it would also be a great mistake to underestimate the strength of the “collective Hercules” that is the SYRIZA government and its growing support in Greece—and across southern Europe.

SYRIZA’s victory is already deepening tactical divisions within the European powers-that-be, as tensions between its hard cops (led by the German and Finnish governments and the Bundesbank) and some of its softer cops (mainly social democracy) increase. The hard cops’ line (“debts must be paid”) is losing support, while the soft cops’ acceptance of some sort of debt restructuring makes discussible the halving in the €321 billion Greek public debt burden that SYRIZA proposes.

In the January 30 Le Monde, former Belgian social-democratic prime minister Elio di Rupo wrote:

George Katrougalos, the new Greek deputy minister for administrative reform, told the January 30 edition of L’Humanité, published by the French Communist Party, that SYRIZA’s victory had already had repercussions across the continent, putting pressure on social democracy to choose between pro- and anti-austerity camps.

And that’s after just five days of SYRIZA government. Its struggle, which demands the solidarity of all progressive people, continues.

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