WeeklyWorker

09.07.2015
Austerity has not been defeated

Austerity in a modified form

We need to distance ourselves from the Syriza/Anel coalition government, argues Eddie Ford - not heap praise on it

As all Weekly Worker readers will know, Greece’s July 5 referendum saw the ‘no’ vote win by a commanding 61.3% to 38.7% on a 62.5% turnout. Spoilt votes amounted to 5.8% - perhaps partly attributable to the boycott campaign conducted by the ‘official’ Communist Party of Greece (KKE), which urged its supporters to reject both the Syriza/Anel coalition government and the ‘institutions’ of the European Commission-International Monetary Fund-European Central Bank (troika).\1 Another thing to mention is that the referendum saw some 108,371 Greeks who had recently turned 18 voting for the first time, of which at least 80% voted ‘no’ - hardly surprising, as youth unemployment currently stands at a staggering 55.5%.

True to form, tailing spontaneity as always, the left has overwhelmingly welcomed the ‘no’ result. However, we should seriously question whether the ‘no’ victory for the government is unambiguously positive; after all what comes next? True, voting ‘no’ in Greece under the present appalling circumstances was perfectly understandable - just as voting ‘yes’ in the Scottish referendum was a deflected protest against the Tory-led government in Westminster, the ‘red Tories’ of the Labour Party and the wretched Better Together campaign. Voting for the status quo was an unacceptable option. But was it the correct tactic in Greece to vote ‘no’ - the best way to advance working class interests? That is the fundamental question. An automatic corollary of this approach is that politics must be analysed in the concrete.

Needless to say then, any Marxist worthy of the name begins not with the question on the ballot paper, but the background, record and political purpose of any referendum - the balance of class forces behind the vote. Looked at it in this way, the ‘no’ vote on July 5 was not a blow against austerity - except in the heads of the 3,558,450 who voted that way on the day, just as a large proportion of those who voted ‘yes’ in the Scottish referendum thought they were voting against austerity economics. No doubt some will growl about aloofness - but we are surely obliged to tell the truth as we see it.

After all, why did Alexis Tsipras call this referendum? It was obviously not done with a view to abandoning austerity (except in the realm of rhetoric). Rather, quite clearly, it is being used to strengthen the hand of the Syriza-Anel government when it comes to the ongoing negotiations with the country’s creditors - principally the institutions. Tsipras has hardly kept this a secret. In a televised address straight after the referendum, he insisted that the referendum vote was not a mandate for “rupture” with Europe, or Grexit, but instead a vote that “bolsters our negotiating strength” to achieve a “viable deal”.

What is this “viable deal”? We get a clue from the Financial Times.According to the paper, in the talks before the referendum, the difference between the proposals put forward by the institutions and Syriza was a mere €400 million - next to nothing in the context of Greece’s €323 billion debt. Hence on June 30, the day Athens defaulted on an IMF payment and the official bailout programme expired, Tsipras actually wrote to the institutions accepting nearly all of the creditors’ conditions - except for a handful of essentially cosmetic changes, such as maintaining a VAT discount for Greek islands and delaying the raising of the retirement age until October 2015. In other words, austerity by any other name. Meaning that during the referendum campaign Tsipras was dishonestly calling upon the Greek people to reject the very deal that he had nearly agreed in private. The man is facing both ways.

In reality, the ‘no’ vote was not a victory for the working class - rather, it was a victory for left populism. But the referendum has only deepened the crisis. Both ‘yes’ and ‘no’ equalled an attack on the working class. Either way, it is austerity. Indeed, on July 5 the people were not even asked about austerity per se - they were asked about what had been on the table after months of tortuous negotiations. That made the referendum a trap or political con trick, not the height of democracy. The ‘no’ vote was in practice a vote of confidence in the Greek government: to believe anything else is to retreat into fantasy.

We in the CPGB did not advocate voting for ‘slightly less austerity’ in the person of Ed Miliband, so why would we do so when it comes to Alexis Tsipras - just because people have illusions in him? We are fighters for consistent democracy and working class independence, not haggling with EU and IMF bureaucrats.

Haircut

Only the wilfully blind could fail to have noticed that Tsipras has no plan B, as was demonstrably shown at the July 7 meeting of finance ministers - ahead of a supposedly make-or-break emergency summit of euro zone leaders in Brussels later on the same day. This marked the first official appearance of the new finance minister, Euclid Tsakalotos, who had replaced Yanis Varoufakis. The latter had resigned to ‘help the negotiating process’ and now wears “the creditors’ loathing with pride”. Yet all Tsakalotos did was reiterate the same plan Athens had submitted to its creditors on June 30 - which is now off the table, Angela Merkel saying there was “still no basis” for talks on a new bailout. Wolfgang Schäuble, Germany’s finance minister, was equally blunt: “We don’t have a financing programme for Greece any more”.

European leaders then gave Athens an ultimatum; it had until July 9 to present “concrete” and “convincing” new proposals to its creditors as the basis for its third bailout in five years. These measures, it goes without saying, will have to involve the continuation of austerity, not ending it. Not mincing his words, Donald Tusk, president of the European Council, said this was now the “most critical moment” in the history of the euro zone - the “final deadline” ends this week, he emphasised. If the Syriza/Anel government does not produce any proposals deemed satisfactory, then all 28 national EU leaders - not just those of the euro zone - are due to gather again in Brussels on July 12 for yet another emergency session to discuss how to contain the fallout from Greece’s imminent financial collapse. “We have a Grexit scenario prepared in detail,” bluntly stated Jean-Claude Juncker, president of the European Commission - who had dismissed the July 5 referendum as an “irrelevant circus”.

At the time of writing, the Greek government has submitted a formal application for a new rescue package from the European Stability Mechanism (ESM), the euro zone’s permanent bailout fund - the exact details still being unclear. Athens is expected to ask for a new bailout programme worth up to €60 billion over two-four years, it being reported that Tsipras wants Greece’s enormous debt to be cut by up to 30% with a 20-year ‘grace period’ However, it seems unlikely that Germany would accept such a proposal - having persistently warned against any unconditional writing-off of Greece’s debt.

Meanwhile, the banks remain closed, and will probably stay that way until at least the end of the week - the bank holiday having been extended again to Friday July 10. Showing the desperate nature of the situation, the deputy minister of interior and administrative reform, GiorgosKatrougalos, tweeted that it is “technically impossible” for the banks to open this week.

Capitals controls are still in place, preventing withdrawals of more than €60 a day from cash machines. The banks are teetering, maybe only days away from crashing. Greece’s entire banking system was delivered a body blow on July 6 when the ECB not only refused to increase emergency lending, but actually ordered them to provide more security for existing emergency loans. That is, the ECB is treating Greek government bonds as riskier, and valuing them as such when it calculates how much cash it can provide. The upshot being that some banks may find it even tougher to qualify for emergency liquidity assistance (ELA).

Making matters worse, in two weeks time a €3.5 billion repayment to the ECB is due - there seems no way, as things stand now, that Athens will be able to avoid another non-payment.

11th hour

The IMF’s managing director, Christine Lagarde, said last Wednesday that Greece’s debt needed restructuring. This was greeted as a welcome sign in Athens. Needless to say, there have been no moves to write-off the €22.5 billion owed to that particular institution. Nevertheless, the IMF’s change of tone was clearly inspired by US worries about Greece crashing out of the euro zone and perhaps triggering another global downturn. We await to see, however, whether or not this produces a change of heart in the EU and ECB. But if it does it would represent a major shift in global strategy. Meantime Germany doggedly insists on maintaining its hardline approach. That will only change if the US is prepared to exert real pressure on Berlin ... and so far that is something Obama has chosen not to do.

That leaves Syriza with an awful dilemma. Greece will not be bailed out by Moscow - the very idea is absurd. Look at tiny Cyprus, which in July 2011 suffered a devastating explosion that destroyed a good chunk of the island and knocked out over half of the island’s electricity supply, making it one of the worst peacetime military accidents ever recorded.\2 The Kremlin provided a quick injection of €2.5 billion to stem immediate collapse, then promptly turned off the tap - Cyprus was left to its own devices. While Vladimir Putin will want to make mischief with a Nato country, there is no way that Russia can substitute in terms of funds, trade, etc for the EU. The whole of the Greek economy is orientated to its rich north, not its much poorer east.

True, the KKE does have a plan B - as does Syriza’s Left Platform, which constitutes about 30%-40% of the party’s membership. The plan is relatively simple: get out of the euro and the EU. Go it alone. National autarky. Permanently maintain capital controls, nationalise everything you can see and hope for the best. A vision of grim, barrack-room socialism - but at least it is an option (not something you can say about the Syriza majority - if Berlin refuses to cave in).

And apart from stringing out the negotiations with the institutions, what has the Tsipras government actually done over the last six months? OK, he may not wear a tie, but has he initiated steps to abolish the standing army and the old state bureaucracy? Expropriated the big capitalists or the landed estates of the orthodox church? Overseen a massive wave of trade unionisation and workers’ control over production? There has been no radical extension of democracy. Sure, the children of migrants born in Greece now have citizenship rights, but everyone should have that right anyway after six months residency - as it says in our CPGB Draft programme, for example.

Yes, OK, on July 5 the majority of the Greek people rallied behind Syriza, but Syriza’s entire strategy is premised on its negotiations that will almost certainly result in the continuation of austerity, albeit in a modified form. Hence our tactics should be designed to exposeSyriza, not support it.

eddie.ford@weeklyworker.co.uk

Notes

1. https://21centurymanifesto.wordpress.com/2015/07/06/kke-statement-on-the-referendum-result.

2. https://en.wikipedia.org/wiki/Evangelos_Florakis_Naval_Base_explosion.