The deal imposed on Greece in the early hours of July 13 after an all-night Euro summit can only be described as a humiliating capitulation. Greece has basically given up sovereignty to the Troika. This deal will not work, but will create further political and economic instability, whilst exposing deep rifts within the European Union.
The deal imposed on Greece in the early hours of July 13 after an all-night Euro summit can only be described as a humiliating capitulation. Greece has basically given up sovereignty to the Troika in exchange for a new strings-attached bailout and some vague promises that debt restructuring (but not debt forgiveness) will be studied, at a later date, perhaps. This deal will not work. It will politically destroy Tsipras and Syriza and economically will plunge Greece even further into recession. It has also exposed deep rifts within the European Union.
Six months ago, the Greek people voted against austerity with the election of a Syriza government on January 25. A week ago they again decisively rejected austerity with a 61.3% OXI (NO) vote in the referendum called by Prime Minister Tsipras on July 5. Now the Troika has imposed a deal which is much worse than that which was put to the vote at the referendum and that Tsipras has agreed to it. If there is one conclusion that should be clear to everyone from this experience, it is that it is not possible to break free from austerity within the straightjacket of a crisis ridden capitalist Europe.
The details of the deal signed are hair raising. They are much worse than what the Greek government proposed last Thursday, July 9, which was already a humiliating climbdown. That document had been worked out jointly with French officials and was a reflection of the enormous pressure in some quarters to guarantee a deal which would prevent the expulsion of Greece from the eurozone.
In this, France was acting as the agent of the interests of the United States and the IMF, but also as a way of countering the weight of powerful German capital within the EU. The last few days have exposed the real nature of the EU as never before. Rather than a “project” for building a strong united Europe, we have seen squabbling between the member states, with the national interests of each member state coming to the fore.
We also saw the mask of “reasonable and civilized” capitalists falling, revealing the real monster that has for long attempted to hide behind it. This was particularly obvious in the case of Wolfgang Schäuble, the German Finance Minister, who has shown a determination to squeeze the Greek people and a disdain towards any of his allies who attempted to reach some kind of compromise to avoid Greece being expelled from the euro. It is an indication of what is to come in the future in terms of tensions between the more powerful EU member states and does not bode well for the future of the EU as a whole, both in terms of its diminishing role globally and in terms of its internal cohesion.
The Americans in particular were terrified of the potential impact of a disorderly default in Greece on the already very fragile world economy. While the world’s attention was centred on the crisis in Europe, the Chinese stock exchange bubble started to burst. The situation of the world economy is so precarious that any shock can tip it over the edge into a new recession. For this reason, the US exerted enormous pressure for a deal to be reached. Such a deal would have to include substantial debt relief. In any case, as the IMF admitted in an official report, the Greek debt is unmanageable and will never be repaid in full. A haircut is needed.
Of course, what the US were demanding was for German capital to bear the burden of such debt reduction, since Germany is the country more heavily exposed to Greek debt. It is easy to be wise with someone else’s money. This was the real meaning behind the French proposal which the Greek government put to the Eurogroup of Finance Ministers.
That proposal in itself already led to the Greek government losing its majority in Parliament, with 17 Syriza MPs in one way or another refusing to vote for it, and another 15 voting in favour under protest. The government has a majority of 162 MPs (149 Syriza and 13 ANEL). Two members of Syriza openly voted against, another 8 abstaining (including Energy Minister and leader of the party’s Left Platform Panagiotis Lafazanis and Deputy Minister of Social Security Stratoulis), another 7 were not present (amongst those two expressed their support for the proposals) and 15 members of the Left Platform voted in favour but issued a separate statement expressing their opposition to the measures. The government had to rely on the votes of opposition parties (PASOK, ND, To Potami) in order to get the vote passed in the early hours of Saturday July 11. This is a de facto “national unity” coalition in the making!
The vote was presented not as a vote on the proposals themselves but rather as one giving the government authority to negotiate with Europe on the basis of those proposals. This was a way of exerting pressure on critical Left Platform MPs under the argument that this was a vote of confidence in Tsipras. In reality the Left Platform should have been much firmer, voted against en bloc and called for a mobilisation against these latest proposals which were in direct violation of the mandate of the referendum.
When the latest Greek (French) proposals reached Brussels they were met with a stern rebuttal on the part of Germany. Schäuble issued a written assessment which was a demand for unilateral surrender. He demanded more cuts and counter-reforms to be implemented immediately, put the blame for a possible breakdown of the talks on Greece, demanded that 50bn euro worth of state assets be put under the control of a Luxembourg based fund to be privatised and, finally, raised the idea that Greece should be given a 5-year time out period from the eurozone (read “should be expelled”).
The position of German capital was based on their appraisal that overall Grexit would be less costly (politically and economically) than a new bailout. The economic reasons are clear, rather than throwing more money into a bottomless pit from which very little will be recovered, it is better to cut their losses and run, perhaps throwing a little bit of money to Greece in the form of humanitarian aid.
The political reasons for this we have also explained before: Greece could not be allowed to deviate from austerity lest other countries followed suit. If Syriza had been allowed to move away from cuts and austerity, that would have encouraged Podemos in Spain and severely weakened governments in Spain, Portugal, Greece, France, Ireland and elsewhere following precisely those policies. On top of this, with a Euro-sceptic party growing to its right, Merkel could not afford to be seen as being soft on Greece.
To this we have to add the intense anger which French interference provoked in Germany. How dare Hollande help the Greeks out of the stranglehold of Germany! German capitalism is the most powerful in the EU and therefore it rules.
The German demands, expressed in Schäuble’s document, were so scandalous and arrogant that they seemed designed specifically to provoke the Greeks into walking out. They were helped by the Finns, whose government is the hostage of extreme right-wing eurosceptics.
Contents of the capitulation “agreement”
Finally, to the surprise of many, an agreement was reached which basically included all of Germany’s demands.
The document, which Tsipras signed, is scandalous, tearing up any pretence of respecting national sovereignty and basically transforming Greece into a protectorate of the Troika.
Greece is instructed to pass into law four measures, including the increase in VAT, further cuts in the pensions system and “quasi automatic spending cuts in case of deviations from ambitious primary surplus targets”. All of this must be legislated within 72 hours, by July 15. Then two other measures must be implemented by July 22.
Only after these measures have been implemented and “verified by the Institutions and the Eurogroup”, then a decision to start negotiating a Memorandum of Understanding (MoU) “may be taken” (note the conditional tense).
Not only this, but in order to conclude a new MoU, Greece must implement more and deeper cuts “to take into account the strongly deteriorated economic and fiscal position of the country”. These are: further cuts in pensions, “more ambitious product market reforms”, the privatisation of the electricity grid company (ADMIE). On top of this the Greek government, in reviewing collective bargaining and collective dismissals cannot “return to past policy settings which are not compatible with the goals of promoting… growth”. This means that the government must scrap its promise to reintroduce collective bargaining agreements which were scrapped by the previous Memoranda.
As if this were not already a sufficiently insulting level of micro-managing economic policy, there is more. The document also accepts Schäuble’s plan for a 50bn euro privatisation fund. The slight “concession” is that this fund will not be based in Luxembourg but Athens. However, this makes no substantial difference as it will be “under the supervision of the relevant European Institutions”. This is madness, even from a capitalist point of view. If we add the proceeds of all privatisation deals so far to those which are currently being undertaken, we only get a total sum of about 7bn euro, and this already includes the more valuable assets. It is physically impossible to raise 7 times that amount in the next three years.
And on top of all this, the Troika (for that is what it is, as the document instructs Greece to “request continued IMF support”), which will be back “on the ground in Athens”, demands the right of veto on all future and past legislation in Greece! The exact wording is worth reproducing: “The government needs to consult and agree with the Institutions on all draft legislation in relevant areas… before submitting it for public consultation or to Parliament”.
As well as abrogating itself control over future legislation, the Troika gives itself the right to change legislation already passed: “With the exception of the humanitarian crisis bill, the Greek government will re-examine with a view to amending legislations that were introduced counter to the February 20 agreement by backtracking on previous programme commitments”. This ties the current Greek government, elected on a platform against previous Memoranda, to abide by them and change any laws which it has implemented against that principle. This would apply for instance to the highly symbolic decision to reinstate the MInistry of Finance cleaners.
Implementation of these dictats does not even guarantee a new bailout, as the document spells out: “the above listed commitments are minimum requirements to start the negotiations… however… the start of negotiations does not preclude any final possible agreement”.
The amount of a new ESM bailout is calculated at 82 to 86 bn euro, including up to 25 bn euro for bank recapitalisation.
What is it that Greece is offered in exchange for this full capitulation and handing over the family silver and control over its finances? In relation to the crucial question which the Greek government had always stressed, debt relief, the document is extremely vague. “The Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods)” on Greece’s debt.
This extremely vague commitment is then heavily qualified: “these measures will be conditional upon full implementation of the measures agreed in a possible new programme and will be considered after the first positive completion of a review”.
The vagueness of this commitment contrasts starkly with the bluntness of the refusal in the next line: “The Euro Summit stresses that nominal haircuts on the debt cannot be undertaken”, while the “Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and in a timely manner”.
The document ends throwing a very non-committal carrot to Greece, by saying that the Commission “will work… to mobilise up to EUR 35bn… to fund investment and economic activity”.
Clearly, Germany has not made any concessions. Tsipras has been made to sign up to everything he had previously denounced. Many have asked, how is this possible? How could Tsipras sign such a bad deal, particularly after having called and won the referendum? It is impossible to know what goes on inside Tsipras’ head. One thing is clear, however. The whole basis of the political strategy of Tsipras and the leading group in Syriza has been proven to be completely bankrupt in practice. Their strategy was based on the idea that it was possible to convince the Troika to reach a deal which would allow Syriza to pursue a non-austerity policy, which in turn would lead eventually to economic growth and then would allow debt repayment. Nothing of the sort has happened.
When he called the referendum, Tsipras insisted that a NO vote would give him a stronger negotiating hand and allow for a better deal to be arrived at. The opposite has been the case.
Furthermore, his insistence that remaining within the eurozone was the only possible option disarmed him in the negotiations, forcing him to make ever greater concessions, leading finally to this humiliating capitulation. He seems to have learnt nothing from it and has become a willing signatory to his own execution order.
The worst part of this capitulation is that it will not work. The impact it will have on the Greek economy will be disastrous. The uncertainty of the negotiations and ultimatums from the Troika have already cancelled a very sluggish recovery sending the country into recession, again. Now the two weeks of bank closures and capital controls (the latter forecast to last for months), have sent it tailspinning into a deep depression, with most economic activity grinding to a halt.
Add to this another package of cuts and austerity Memorandum, and the result is easy to foresee. These policies have already been implemented in Greece for the last five years and they have failed miserably. They have failed even in its stated aim of reducing the debt to GDP ratio. It now stands at over 170%. With these new measures it will immediately jump to over 200% making it even less sustainable.
The most likely scenario is that this latest “deal” (or rather, imposition) will only be a stopgap on the road towards a new crisis which will eventually lead to a default and Grexit.
From a political point of view, the deal means the political suicide of the current government and Syriza itself. Already leading figures in Tsipras’ group are demanding the heads of the ministers and MPs who oppose this capitulation. The current government cannot last as it will certainly lose its majority over the next 48 hours. Different options are being discussed, including a temporary technocratic government headed by an “independent” (possibly the governor of the Bank of Greece), a coalition government with To Potami, etc.
Whatever the specific form it may take, what we are talking about, in effect, is a government of national unity to carry out brutal austerity. This would close the circle, with the party which was propelled by the masses to power in order to end austerity, ending up allying with the parties which were defeated, in order to carry out the program of the vanquished.
The pressure within Syriza is such, that it is unlikely that Tsipras will call a meeting of the Central Committee as he is not sure he would be able to hold the line. First of all he needs to pass these measures in Parliament and for that he needs a de facto alliance with the bourgeois parties.
Was there an alternative?
Yes, but, what was the alternative? In its criticism of the government proposals last week, Syriza’s Left Platform outlined its views. They argue for a return to the national currency, but remaining within the EU (“an option which is already well advanced in countries such as Sweden and Denmark”) in order to implement a program which can only be described as national capitalism. This would be based on exports, national production, state investment in the economy and “a new and productive relationship between the public and private sectors to enter a path to sustainable development”.
In reality, such a plan is as utopian as Tsipras’s. While there can be no alternative to austerity within the EU, it is foolish to think that an independent crisis-ridden capitalist Greece can compete its way out of the crisis, faced with much more powerful capitalist nations. It would seem that the comrades subscribe to the idea that austerity is somehow “ideological”, i.e. the choice of nasty German bankers and capitalists, rather than an inevitable consequence of the crisis of the system. Austerity is an attempt to make workers pay the price for the crisis of capitalism. That will remain the case inside or outside of the euro.
This mistaken political approach is one of the main weaknesses of the Left Platform. Working people in Greece are rightly fearful of the catastrophic economic consequences of Grexit. Their justified fears cannot be countered with the false argument that “things would be bad for a while, but then we can devalue our way out and build a strong national capitalism”. It doesn’t solve the problem of a weak, less productive industrial apparatus, incapable of competing with the advanced, highly productive industry of countries like Germany. In or out of the EU or the euro this problem remains. And the idea of exporting their way out of the crisis is utterly utopian, considering the wider worldwide crisis, in which the weaker economies will be the first to fall.
The only alternative is “socialist rupture”. That is, to repudiate the debt (which an official parliamentary inquiry has already found “illegitimate, illegal and odious”), nationalise the banks and seize the assets of Greek capitalists. At no other time has the “realism” of the reformist leaders of Syriza been more exposed as completely Utopian. At no other time has the case for socialism been easier to explain, as it coincides with the practical experience of hundreds of thousands, millions of Greek working people over the last five years.
Only the radical reorganisation of society on the basis of the common ownership of the means of production could offer a way forward. Even that would not be possible within the limits of Greece, a small peripheral economy in Europe. But it would send out a powerful message to working people across Europe, starting in Spain, Portugal and Ireland.
If the Left Platform leaders were to adopt a genuine socialist program and offer a clear opposition to the Memorandum, not just in words and statement, but in actions, they would be able to rally the growing opposition.
The humiliating capitulation of the government that the masses trusted to put an end to austerity will have a profound effect. On Friday, the latest government proposals were met with disbelief. That is quickly turning into rage and anger.
A general strike has already been called for Wednesday, July 15, by the public sector workers’ federation ADEDY. Significantly, Syriza-aligned trade unionists, alongside others, played a key role in the vote at the union’s executive. Demonstrations have been called on the same day to oppose the new Memorandum.
It is one thing to approve the measures in Parliament, but it will be difficult to actually get them implemented. The workers at the electricity company, at the port of Piraeus, the pensioners, the youth who voted OXI massively – these people are not going to accept these new measures with their arms folded. The scene is set for major class battles. The European ruling class and its Greek counterparts may be counting on a huge majority in parliament, but the balance of forces in society is massively tilted against them. This will not be resolved through parliamentary procedure, but with struggle.
Finally, it is important to stress that the Greek crisis contains precious lessons for all those parties and movements in other countries who may have the illusion that it is possible to oppose austerity and reach a deal with European capital at the same time. It is possible to fight austerity, but the only effective way of doing it is to break with capitalism.
Greece: The new agreement – sellout and punishment for the people’s ‘NO’ vote
Organise mass resistance against the the junta – consisting of the Troika, the oligarchy and the capitulating government – to stop the passing the agreement by parliament!
What should the members of SYRIZA and the Left Platform do?
The memorandum agreement, which was signed this by the prime minister at the EU Summit this morning – and which includes massive austerity, new levels of over-taxation of the people, sweeping privatisations and cuts in wages and pensions – is nothing but a sellout and a submission to the demands of the Troika. It is also a punishment of the people for their courageous, class-based ‘NO’ vote [in the referendum last Sunday].
The government and the leading group in SYRIZA capitulated. The working people and youth are not going to do the same. The most crucial issue at the moment is to build a mass revolutionary working class “NO” movement, in order to stop the adoption of the new memorandum by parliament and to overthrow the parliamentary junta of “national unity”.
What is to be done now:
- An indefinite general strike as well as daily mass rallies and demonstrations demanding the rejection of the agreement.
- Organise meetings to elect committees of struggle in every workplace and in every neighbourhood.
The Communist Tendency calls on all members of SYRIZA to react decisively in the coming hours. The anger of the left rank and file must be transformed into political action and not be left to dissipate and end with people leaving the movement with “bowed heads”. We must not make it easier for the leading clique of liars to complete their betrayal. They have not only violated, but destroyed, all ideological, political, programmatic and founding principles of the party. All the shame of the betrayal is theirs. To wage a final battle against the liars who lead the party, is an issue of political honor, but above all a means of rescuing the best left activists.
The Communist Tendency calls on all members of SYRIZA to demand emergency meetings of their local branches to adopt the following resolution:
“The Meromandum Agreement and the draft laws that accompany them must be voted down by all of the SYRIZA members of parliament.
“Those SYRIZA MPs who vote in favor of the agreement and the government officials who accept to carry them out, will automatically have put themselves outside of the party. They can no longer be welcome in any of the bodies of the party and would not have the standing of party members.
“An emergency congress of SYRIZA is needed, that will politically denounce the government and will adopt a new program, a new policy and elect a new leadership.”
We demand the immediate convening of the Central Committee to discuss and adopt the above resolution. We urge the Left Platform to support us and to demand of its members to vote against the agreement and of its ministers to resign from the memorandum-government of “national unity”.
If this necessary final battle against the lying leaders as explained above is lost, then the left wing of SYRIZA should proceed to the establishment of a new party based on the political and programmatic principles of genuine scientific socialism and a firm political denouncement of reformism and social democracy, which has once again proven to be responsible for large losses and betrayals.
The conduct and success of this final battle depends entirely on the attitude and choices of the largest tendency of the Left of the party, the Left Platform. If the Left Platform does not directly adopt the essential steps mentioned above, then thousands of demoralized fighters will leave the party and it will render the staying of the leftists and communists inside SYRIZA meaningless.
The Communist Tendency, although it is a new tendency with small forces, is and has always been, the only consistent opposition to the leadership within the party. It was the only Tendency to support an alternative political program during the founding congress and in all the other party bodies and to oppose the social democratic views of the leadership.
It was the only Tendency in the Central Committee of the party which, through its representatives, voted against all the political suggestions of the leadership. This was not due to any “ideological fetish”, but because within these suggestions the seed of a future betrayal was hidden. This is the reason why, it was the only Tendency that was deprived of the right to be part of the voting ballots and to be represented within the party MPs. This consistent political stance of the Communist Tendency, as opposed to the dominating current of the applauders, apologists and the gutless “opposition” of “abstainers” and “amenders”, allows us to make an appeal for rallying and organising the best militants of the party today.
Comrades, members, supporters and voters of SYRIZA that we have fought with, shoulder to shoulder, during the strikes and demonstrations, in the neighborhoods, in the workplaces and Universities, against the Memoranda, defending the rights of the working class and the poor people – stay away from the poison of disappointment and cynicism!
Indeed the SYRIZA of the leadership team, the SYRIZA of social democracy and careerism is over. Our SYRIZA though, the SYRIZA of of the left rank and file and the class struggle is alive. We call upon you today to strengthen this Tendency. Organise with the Communist Tendency, fight for the only real political solution which favors working people, for the anticapitalist, socialist rupture! This is the best answer to the lying reformist leaders, this is the only way to turn this valuable lesson of reformist betrayals into a decision to act, that will prepare the victorious revenge of genuine socialism.