Greece: Syriza government capitulates to austerity

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On Thursday 16 July, Greece’s Syriza government capitulated to the austerity demands of German-led European imperialism. In a referendum held 11 days earlier on 5 July, 61% of the Greek electorate had signalled their complete opposition to further concessions to their European creditors. However, democracy counts for nothing as far as imperialism is concerned, and the referendum result merely hardened the position of the European Central Bank (ECB) and the European Union (EU). They were determined to punish the Greek people for their audacity in defying the imperialists’ edicts. Now Greece is tied into a third bailout agreement whose terms even the IMF thinks are impossible to meet.

Syriza had won the election in January 2015 on a platform of opposing the Troika’s (ECB, EU and IMF) austerity memoranda and in particular its demands to slash pensions further, privatise key state assets and scrap existing labour laws. Syriza also campaigned for a substantial debt write-down on the grounds that the repayments schedule for the Troika’s €240bn bailout loan had destroyed the Greek economy, making the working class poor, hungry, ill and desperate. Unemployment stood at 28% and 60-90% amongst the youth. Living standards had fallen by 25-40% with 45% of pensioners forced to exist below the poverty line of €655 per month as pensions were cut by 27% between 2011 and 2014. Three generations of a family might now have to depend on a single pension. In 2014, child poverty reached 40.5%, up from 23% in 2008. 50.4% of Greeks were undernourished, 300,000 out of a population of 11 million were without electricity and having to apply for emergency humanitarian aid. Development has been set back for decades.

Syriza’s electoral victory opened up real possibilities for the mass of the Greek people and especially the working class. No socialist could stand aside from the development: the key was whether or not the working class could be mobilised on the streets in opposition to the demands of the European imperialists and to ensure that the government did not back down under the pressure it was sure to face. In this context, the refusal of the Greek Communist Party (KKE) to offer electoral support to Syriza or to join the government was an act of gross and self-defeating sectarianism: it was tantamount to saying that Syriza and the Troika were equal enemies of the working class.

‘Within one day and with one law’, Syriza declared, it would put an end to austerity. It was not to be. Syriza went into negotiations with the Troika with a commitment to remaining within the eurozone. It therefore always had one hand tied behind its back as it sought a solution to austerity within a framework determined by imperialism. This gave the Troika the whip hand, and it exploited this to the full. Within days of Syriza taking office, the Troika was already demanding its pound of flesh. On 22 February it extended the bailout agreement until the end of June but required the Greek government to:

• honour existing privatisations and those already out to tender, and review privatisations not yet launched;

• organise a spending review of every ministry;

• control health expenditure while granting universal access;

• link improvements in the minimum wage in a manner that safeguards competitiveness and employment prospects;

• address needs arising from the recent rise in absolute poverty through the use of non-fiscal measures like food stamps.

The Troika also maintained its insistence that Syriza honour all commitments made by previous Greek governments, in particular to cut pensions further and increase VAT. Until that time it would not release the final tranche of bailout money of €7.2bn. This should have been the signal to Syriza that the Troika had no interest in serious negotiations and that the only way forward would be through mobilising the Greek working class to totally oppose austerity. This possibility was never considered. Instead, the government continued in round after round of pointless discussions with its creditors while making a point of maintaining a ruinous repayment schedule: interest payments amounting to €2bn in February, €1.6bn to the IMF in March and a further €458m in April and €200m to the ECB in May. When on 19 March the government passed a bill making food stamps and free electricity available to the poorest people, assistance worth a mere €200m, the European Commission warned it not to proceed unilaterally in the absence of a broader agreement.

In April, Syriza had to make further concessions, extending deregulation of small business such as bakeries, petrol stations and pharmacies, authorising the sale of more government property to raise €500m and placing a further 4,000 government workers on ‘mobility schemes’, facing the sack if no other public sector jobs could be found. Now Syriza leaders were fair game, routinely described by European politicians and bureaucrats as unreliable, dishonest and liars. The British press joined in: The Guardian described Greek Prime Minister Alexis Tsipras as ‘abrasive’ and Athens as ‘belligerent’, the Financial Times editorialised Tsipras as ‘dishonourable’. Syriza was mocked as ‘a mix of delusional fanaticism…a coalition of radicals, Maoists, former Stalinists and populists…more at home with their comrades in Caracas than in Brussels’.

Throughout June deadlines for reaching agreement were set and then broken as Syriza tried to find a way out of the crisis without breaking from the eurozone. The Troika, led by Germany, remained implacable, reasoning that Syriza would blink first and that as a consequence the risk of a Greek exit was both small and its impact anyway limited, given that the Greek economy was only 2% of the eurozone’s. On 26 June, it seemed that the Greek government was prepared to abandon further negotiations when it walked out of talks in Brussels and announced that it would hold a referendum on 5 July to either accept or reject the Troika demands. At midnight, Yanis Varoufakis, Greek finance minister, unsuccessfully sought a week’s extension on the period of an IMF loan repayment of €1.6bn due on 30 June. Greece’s subsequent default was the first ever by an advanced capitalist country. Yet in a volte-face on 1 July, Tsipras stated that he was willing to concede to the bulk of the outstanding demands from the Troika on pension cuts and VAT increases if spread over a two-year period, only to be contemptuously dismissed by German Chancellor Merkel who said there could be no further discussions until after the referendum. He had sold the pass: from that point on the Troika knew that whatever the outcome of the referendum, Tsipras was theirs.

For a brief moment on 5 July the Greek working class was centre stage. For the first time since the January general election it had been called on to pronounce its judgment on austerity and its resounding rejection of any further concessions was as much a slap in the face of Tsipras as it was an insubordinate two fingers up to the rich and powerful. The result came despite every intimidation: EC President Jean-Claude Juncker spelled it out: ‘It’s the moment of truth … the euro versus the drachma. This is the choice’. Germany, France, Italy and Britain united in defining it as a referendum on euro membership. Sigmar Gabriel, German Vice-Chancellor and president of the Social Democratic Party stated that if the Greeks voted ‘No’ they were voting ‘against remaining in the euro’. Not that Tsipras was now prepared to heed the outcome: in a telling move the next day, he forced the resignation of Varoufakis whose negotiating style had got up the noses of eurozone finance ministers during the preceding months.

When Tsipras returned to the negotiating table on the day after the referendum he held no cards, and the imperialists knew that they could tighten the screws. Over the next few days they constructed a new agreement with the promise of a further loan worth €86bn, and this time insisted that no money would be released until the Greek parliament had passed the terms of the deal into law. On 12 July, Tsipras was forced to accept it. The terms were brutal – much worse than those on offer in January:

• all laws passed by Syriza since its election in January to be annulled;

• all re-hirings that had been carried out, such as those of the hundreds of women cleaners at the Finance Ministry, to be reversed;

• early retirement arrangements to be ended and the retirement age to be raised to 67;

• a uniform VAT rate of 23% to be introduced with no exemptions for island communities where tourist income is a lifeline, and no exemption on food. Food prices are expected to rise by 20% as a consequence, and there will be increased public transport costs;

• the government to achieve a primary budget surplus of 1% of GDP in 2015/16, rising to 3.5% in 2018/19. This will maintain the deep depression of the Greek economy;

• court action in relation to evictions, bankruptcies and debt to be streamlined.

There was no mention of debt relief, even though the IMF had already conceded on 2 July that large-scale debt relief would be necessary to create ‘a breathing space’ and stabilise the economy. For the IMF to appear as a dove demonstrates the ruthlessness of the other two Troika partners. On 16 July the Greek parliament approved the deal by 229 votes to 64 with six abstentions. 32 out of 149 Syriza MPs voted against, and six abstained. All 15 KKE MPs voted against, as did the 17 fascist Golden Dawn MPs. A week later the parliament by a similar margin cleared the route to negotiating the release of the third bailout since 2010. For the moment, the imperialists have won.

What are the lessons?

The ruthlessness of the Troika was an object lesson in class war. It was evident that they knew their opponent, and that Syriza’s commitment to a capitalist solution within the eurozone would be its Achilles heel. The only possible countervailing pressure would have come from the constant and militant mobilisation of the working class on the streets, in demonstrations and occupations. This did not happen except on a few occasions, for instance, on 5 July in celebration of the ‘No’ vote in the referendum, and outside parliament when it voted on 16 July.

In part this is down to the sectarianism of the KKE which failed to offer a viable alternative to the working class and in the end could not influence events. What was needed was for a communist organisation to constantly engage with Syriza’s working class support and argue that there was no solution to austerity for the working class within a capitalist context. The Greek people had never been beneficiaries of the 2010 or 2012 bailouts: all the money had gone to the Greek banks or European creditors. A call to nationalise the parasitic banks and financial institutions and introduce capital controls would have been a first step in controlling the country’s finances – but it would also pose the question of eurozone membership in a concrete way. It would have put the working class on the offensive instead of being left as more or less passive bystanders, and start to pose the question of an alternative form of society – socialism.

Although there were times when the left within Syriza expressed opposition to the course the government was taking – 109 out of 201 members of its central committee rejected the deal – they were not in a position to mobilise support for their position and prevent a capitulation. The struggle is not over: indeed, the Greek ruling class and its imperialist allies will be intensifying their offensive against the working class to ensure that the terms of the new bailout are strictly observed. The working class will have no option but to resist, and out of this struggle it will need to create a new party which can organise and represent its independent interests and link the defeat of austerity with the defeat of capitalism.

Robert Clough and Michael MacGregor

FRFI 246 August/September 2015