Greece: Bankruptcy imminent

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Greece is teetering on the edge of bankruptcy. A repayment to the IMF of €305m is due on Friday 5 June. US Treasury spokesperson Jack Lew phoned Greek Prime Minister Alexis Tsipras on 27 May to tell him that: ‘Greece is going to have to do some very tough things’. The possibility of Greece’s exit from the eurozone looms closer. Those sections of the European imperialists who regard this as an acceptable outcome of the long drawn-out negotiations between the Greek government and the Troika – the International Monetary Fund (IMF), European Commission (EC) and the European Central Bank (ECB) – seem to be in the ascendancy. They are nervous that concessions to Syriza may fuel demands for similar treatment by the other PIGS governments – Portugal, Italy and Spain. They are less bothered about the risks of a ‘Grexit’ since Greece represents just 2% of the eurozone economy. MICHAEL MACGREGOR reports.

Syriza has attempted to balance its commitments to pay wages and pensions, repay loans to its creditors and be seen to comply with the demands on economic reform. Tassos Koronakis, Secretary of the Central Committee of Syriza, stated on 18 May that Greece had achieved a primary budget surplus of €2.16bn between January and April. He pointed out that Greece had met all debt repayments during its negotiations with the Troika. After paying back €450m to the IMF in April, Greece made two more repayments of €200m and €750m in May before warning that it had only two weeks’ cash left.

The crunch will be in June when Greece must make four repayments to the IMF totalling €1.6bn. It must pay a further €458m in July and repay the ECB a total of €6.7bn in July and August. This is impossible. Greek interior minister Nikos Voutsis confirmed this on 24 May, saying of the June IMF instalments: ‘this money will not be given and is not there to be given.’

Prime Minister Tsipras immediately repudiated this; nevertheless, the Greek economy and the Syriza government are under intense pressure. It has had to scrabble around for cash to pay salaries and pensions each month since its election, sequestering pension fund emergency reserves, and accounts of regional and municipal authorities, health boards and academic institutions. Fears of private depositors that they will be subject to similar measures have led to capital flight: €800m left the country in 48 hours at the end of May. This further undermines the liquidity of Greek banks and exacerbates the crisis.

Greece – five years after the bailout

For European imperialism the crisis is to be solved by Syriza accepting the terms of the bailout agreement committing Greece to strict reform and repayment. Since 2010 the Troika has organised the bailout of the Greek economy with loan agreements worth €240bn. Troika terms were: the reduction of the minimum wage and pensions, swingeing cuts in welfare and health, the privatisation of Greek national assets and the sacking of thousands of state employees. New labour regulations limiting the ability of unions to challenge austerity were also part of the deal.

Five years later, the crisis is even worse. Unemployment of 25% has driven down real wages leading to an average fall in the standard of living of 40%. Greece’s indebtedness has increased while cuts to health, welfare and education budgets have brought hunger, disease and insecurity to millions. The banks do not care. The final tranche of €7.2bn from the loan agreements has been withheld until the directives of the Troika are met, with a deadline of the end of June.

The divisions within the European ruling class over the crisis have been expressed in the Financial Times. European editor Tony Barber wants total Greek submission: ‘It boils down to the happy thought that, with Greece running out of cash to pay salaries and pensions, he [Tsipras] should bow to realities and govern as a right winger or, at least, as much less of a leftist.’ Martin Wolf, its chief economics editor, is more worried about the possible impact of a Greek exit from the eurozone. ‘Forgiveness is inevitable’, he says, through a write-down of Greece’s massive debt. He is concerned that the shaky edifice of European capitalism is heading for an even worse disaster.

The road out of austerity: mobilise the people

‘We have to be faithful to the will of the people and our proclamations without taking a step back.’ (Manolis Glezos, legendary Greek resistance fighter, urging repudiation of the debt)

Syriza’s election in January represented a popular determination to challenge the Troika’s austerity. In government, Syriza has attempted to resist: it has so far refused to cut pensions and wages. It has rehired thousands of state workers and re-opened the state TV station closed by the previous government. Greek Finance Minister Yanis Varoufakis has said that ‘If we face a dilemma over paying one of the lenders or wages and pensions, then we will opt to pay wages and pensions.’ On 20 May health workers across Greece struck for 24 hours. Olga Siantou of the health workers union pointed the way forward: ‘The solution is to organise and struggle! The solution is to be found in the joint struggles of the health workers, workers of other sectors, pensioners, unemployed, self-employed.’

If there are splits within European imperialism, there are also divisions emerging within Syriza. At a meeting of the Central Committee of Syriza on 23 May, almost half the delegates supported a Left Platform resolution calling on the Syriza government to abandon its current negotiating approach and return to its electoral commitments to repudiate the Troika’s debt memoranda and refuse to make further repayments. There is massive popular opposition to any concession over pension cuts and mass redundancies, red lines which the government says it will not cross. On 18 May, the Left Platform declared that:

‘Our only choice is a rupture with the creditors – suspending loan repayments, imposing measures to restrict free movement of capital, putting banks under state control, taxing capital and the wealthy to finance measures to support ordinary people… and even a break with the euro.’

To pursue this line will require the greatest effort and energy in mobilising the Greek working class to challenge the austerity agenda. It is the only way forward.

Fight Racism! Fight Imperialism! 245 June/July 2015