Greece: The moment of decision

“You must either conquer and rule or serve and lose, suffer or triumph, be the anvil or the hammer” (Goethe)

Echoes of Versailles

I recently read the Memoirs of John Maynard Keynes, the celebrated English economist who participated in the negotiations at Versailles that followed the defeat of Germany in the First World War. The parallels with the present negotiations of the Greek debt crisis are very striking. The only difference is that then Germany was the victim and now it is the oppressor.

In 1919 Germany was ruined. Her industries were paralysed and her trade strangled by the embargo imposed by the victors. German women and children were starving. Yet the Allies, in particular France, insisted on inflicting further pain on a desperate country, squeezing it mercilessly in order to obtain reparations for the damage inflicted during the War.

Keynes, who was more far-sighted than most members of his class, protested against this madness. He pointed out what was obvious, namely that it was impossible for Germany to pay its debts, and that by pushing it against the wall, the victors were driving it in the direction of Bolshevism. He warned that unless the burden on Germany was lifted “the industrial future of Europe is black and the prospects of revolution very good.”

All this was later shown to be true, but at the time, nobody paid much attention to these warnings. In the end negotiations between France, Germany, and Britain broke down, Germany’s mountain of debt continued to increase and reparations ceased altogether, leading to the French occupation of the Ruhr and a revolutionary situation in Germany in 1923.

Now history repeats itself. After six years of austerity inflicted by the Eurozone under the control of Germany, the Greek economy has been devastated as much as if it had suffered a catastrophic defeat in war. Greece has been pushed into a deep slump, losing at least of 25% of its GDP with mass unemployment and terrible impoverishment and suffering not seen since the Second World War.

Talk of the beginning of a recovery is a very bad joke. The latest figures show that tax returns have declined, while Greece’s debts have increased to an unsustainable level. The accumulated debt, which six years ago, before the application of austerity, was 125% of GDP, now stands at 175%. It is clear even to a blind person that this can never be paid. Yet Berlin and Brussels are pressing for even deeper cuts. The policy of austerity is pushing Greece to the very brink of an abyss.

The new Greek Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis flew to Paris, London, Brussels, Berlin and Rome seeking a compromise agreement. But no compromise was available. German Finance Minister Wolfgang Schäuble, the most implacable opponent of a renegotiation of Greece’s bailout terms, commented with characteristic acidity: “Being in government is a date with reality, and reality is often not as nice as a dream.” If the leaders of Syriza were dreaming, they got a very rude awakening. They were told in no uncertain terms: Pay your debts! Pay them in full and pay them on time!

Just like the French ruling class in 1919, the German bourgeois are behaving like greedy and insatiable usurers, determined to squeeze the last drop of blood from their victims. They use a combination of threats and the offer of so-called bail-outs, the price of which is vicious austerity. This is the equivalent of the brutal reparations that were imposed on Germany herself by the Allies after World War One. In 1919 Keynes said that the philosophy of Clemenceau (“dry in soul and empty of hope”) “had no place for ‘sentimentality’…” These words apply equally well to the flint-faced Wolfgang Schäuble.

The trashing of Greek democracy

When bourgeois commentators complain that democracy is threatened in Greece, what they mean is that bourgeois democracy is threatened, that the capitalist system is threatened. And that is perfectly true. The real threat to democracy, however, comes from the bankers and capitalists both inside its frontiers and outside.

The EU imposes its policies on countries with no regard for the wishes of their electorates. It favours only those governments that are prepared to do as they are told, to plunder the people in order to pay the bankers. But when, as in Greece, a government is elected that says “No”, they are prepared to use the most blatant blackmail to force them to bend the knee.

In 1919 the Germans complained: “German democracy is now annihilated… by the very people who throughout the war never tired of maintaining that they sought to bring democracy to us… Germany is no longer a people and a state, but has become a mere trade concern placed by its creditors in the hands of a receiver.” What was true of Germany then is just as true of Greece now.

The Troika treated Greece like a vassal state. That has not changed. The only difference is that Berlin and Brussels have kindly allowed the Athens government to draw up a list of proposals, instead of directly dictating them. But since the EU will decide which proposals are acceptable, the difference is merely a fig-leaf to conceal the crude reality of domination.

Christine Lagarde, the head of the IMF, explained that the IMF was unlikely to distribute its 3.6bn euros portion of the 7.2bn euros aid package unless Athens adopted reforms that went further than the “policy perimeters outlined in the government’s list”. Mario Draghi, the ECB president expressed similar sentiments. They are demanding further deep cuts in order to reduce Greek debts to 110% of GDP by 2020.

Channel Four’s correspondent Paul Mason asked Jeroen Dijsselbloem, the Dutch finance minister and head of the Eurogroup, whether Europe had not “trashed” Greece’s democratic will. The latter answered that voters in one country cannot tell voters elsewhere how to spend their money. What Mr. Dijsselbloem really means to say is: What are the lives, jobs or opinions of eleven million Greeks when weighed against the balance sheets of our banks?

Syriza’s illusions shattered

The leaders of Syriza seem to think that it is possible to avoid a clash by manoeuvring and clever tactics. The German negotiators thought the same in 1919. Manoeuvres are indeed an important part of warfare and diplomacy, but it is important to realise the limits of any manoeuvre. Varoufakis discovered fairly quickly that his own manoeuvres were very limited indeed. The Germans soon let him know that they were in no mood to play games or prevaricate.

The Greek representatives went to Brussels with high hopes of reaching a deal. They imagined that if they spelled out the dire situation of the economy and the people of Greece, even the most hard-hearted politicians in Berlin would begin to melt. They were prepared to be reasonable, to make concessions, in the belief that the other side would also give a little ground. Varoufakis was trying to frighten the people in Brussels with the danger of the breakup of the EU. He must have made a certain impression on some of them. At first it even seemed that a deal would be struck with Brussels. But then the Germans said: “Nein”.

During the negotiations at Brest-Litovsk, when Trotsky was attempting to spin out the talks, at one point the German general Hoffmann placed his boots on the table. Trotsky noted that everybody present understood that this action expressed the real situation. The German rejection of the compromise package painfully worked out between the Greeks and Brussels was the equivalent of Hoffmann’s jackboots. The purpose was twofold: to show everybody who is boss and to humiliate Syriza.

It is true that Germany is playing a dangerous game. The exit of Greece from the Euro could spell disaster for the Eurozone as a whole. It could even bring about the collapse of the EU itself, sending a shock wave through international financial markets that could bring about a new and even deeper slump in the world economy. This explains the split between Berlin and Brussels in their dealings with the Greeks.

It appears that a section of the ruling class in Germany and its northern European satellites, Finland and the Netherlands, is in favour of Greece leaving the Euro. A recent editorial in the Financial Times pointed out:

“The strain of thought in some northern European countries that the eurozone would be better off without Greece will only have been strengthened by the prospect that such a move could be managed without disastrous wider consequences.” (FT, 23/2/15)

In reality, a Greek default would have the most serious effects. A collapse of the banks in Greece would affect banks throughout Europe and beyond, since all banks have some links, directly or indirectly with the Greek banks. This would force governments to spend huge amounts to prop up their own banks. 

A Greek default would mean a repudiation of all its debts and be like the collapse of the German economy in 1923 and the massive inflation that accompanied it. A return to the Drachma would mean a massive devaluation and a flood of capital out of the country. The write-off would send shockwaves throughout Europe and the rest of the world, already mired in slowdown and crisis.

The Financial Times of 9 February predicted that “the domino effect will first and foremost affect Southern Europe and spread to the ‘dominant regions’ in the North and then across to England and North America.” That is why Obama has expressed such a keen interest in arriving at a deal with Greece.

 “Make Germany pay” was a popular cry on the streets of Paris at the time of the Versailles negotiations. This overlooked the trifling detail that, with its economy in ruins, Germany could not pay. And nor can Greece today. But that did not mean that either the rulers of France in 1919 or in Berlin today would be any more inclined to compromise. The ladies and gentlemen in Berlin must know that demands that they are making on Greece cannot be met. From that point of view their conduct seems illogical. But politics and economics are not necessarily ruled by logic. Here greed and fear play a far greater role than Aristotle’s Syllogism.

Frau Merkel is thinking of a cause far closer to her heart than logic, humanitarianism, democracy in Greece or the preservation of the European Union. She is thinking of the next election in Germany. The German press has organised a noisy campaign of vilification of “lazy Greeks”. The mood has hardened against any compromise, just as it did in France in 1919. The anti-Euro Alternative für Deutschland (AfD) is growing. And many in Merkel’s own party are implacably opposed to any further bailouts.

Nothing has been solved

Last December when I was in Athens I was interviewed by the official Syriza newspaper Avgi. The journalist asked me what I thought about the European anti-austerity bloc. I said: “What bloc are you referring to? No such bloc exists.” My comments (which were not published) were soon shown to be true.

Soon after being elected, Tsipras and Varoufakis went on a tour of European capitals, hoping to create an impression of youthful change, particularly their lack of ties. But their belief that Spain, Portugal and Italy would rally to support their anti-austerity stance was sadly mistaken.

“I think it is almost a total capitulation,” said Raoul Ruparel, the head of economic research at Open Europe, a research group in London. “Tsipras gambled on austerity fatigue in Europe and thought that by flying the flag for change lots of other countries would follow his lead. None did.”

Even as they argued their case in European capitals, Merkel and Schäuble were inviting European leaders to Berlin to insist once more on the need for financial discipline and pro-business “reform”. In between trips to Brussels for emergency finance ministers’ meetings, Schäuble attended a presentation given in Berlin by the finance minister of Portugal, one of the southern European nations Greece viewed as natural allies. Like Greece, Portugal endured years of austerity after appealing for a financial lifeline.

The Portuguese minister of finance, Maria Luís Albuquerque, spoke proudly in Berlin of how Portugal had endured all the painful impositions of a bailout in order to “regain credibility”. Naturally, she herself had not endured much pain, which was a privilege reserved for the Portuguese working class, the unemployed and the ruined small businesspeople. Despite this slight omission, her grovelling speech was music to the ears of her German masters.

The masses are willing to fight

Greece’s debts amount to around 315 billion Euros. Somebody calculated recently that this is equivalent to 30,000 Euros for every Greek man, woman and child. It also means it has to pay 25 billion euro every year in interest alone. It is patently obvious that this can never be paid. Not only Greece, but Italy, Portugal and Spain are being slowly crushed under the burden of mass unemployment and debt. There is no way out on a capitalist basis, unless it means decades of austerity and drastic cuts in living standards, which people can no longer tolerate.

The deal reached with the EU has solved nothing. It did not mark the end of a five-year Greek drama, but only the beginning of a new and even more convulsive stage. The coming months will be months of crisis with endless tense negotiations. The extended bailout is said to be worth 240 billion euros. But it expires in June, by which time (or even before) Greece will need a further infusion of cash to stave off default. The bottom line is that Greece cannot pay.

In Greece the old parties and leaders are discredited, hated even. All hopes were placed on Syriza, which won the election on 25 January. But hope was tinged with a degree of scepticism: will Syriza really do what they say? Or will they do the same as Pasok and others have done before? Therefore, when, after the election, the government stood for rejection of the Memorandum, the Troika and austerity, it received the enthusiastic support of the overwhelming majority of people in Greece.

For the first time in many years thousands came onto the streets to support the government. Support for Syriza in the polls jumped from the 36% it won in the election to 45%, while New Democracy slumped from 27% to 18%. A huge 83% had a favourable impression of the government and 80% supported the government’s policy statement. Over 75% supported the government’s stance in the negotiations. Obviously the highest rates of approval were amongst voters of Syriza and ANEL, over 90%, but this was also the case with voters of Golden Dawn. Amongst KKE voters 73% were in favour, and 69% of voters of PASOK. Even 41% of the voters of the conservative ND agreed.

Since then, however, there has been a certain cooling off. The concessions made to Greece’s creditors and the EU is giving rise to the suspicion that nothing has changed. Even so, support for the government remains high. In the latest poll 68% say they are satisfied, while 23% are dissatisfied.

This is a decrease from polls two weeks ago which showed support for the government policy statement at between 80 and 90%, and support for government stance in negotiations at 72 to 75%.  The masses wanted the government to stand firm. But when it became clear that Varoufakis was making more and more concessions, the mood started to become more critical. It is a warning to Syriza.

Victory or defeat?

Tsipras claimed that the government had succeeded in separating the loan agreement from the Memorandum and successfully challenged the dogma of austerity while securing the stability of the financial system. But it is clear to all that the concessions made by Varoufakis represent a major retreat from key aspects of Syriza’s Thessaloniki programme.

No doubt he thought that his concession would be reciprocated by the EU. If so, that was a serious miscalculation. Weakness invites aggression. For every step back taken by the Greek government Merkel and Schäuble will demand ten more.

The worst mistake is to present a defeat as a victory (“a battle which has been won”). It is necessary to tell the truth to the people of Greece, even if that truth is unpalatable. And the truth is that it is not possible to carry out policies in the interests of the Greek people while at the same time agreeing to respect the interests of Capital and the “European partners” (in reality, the European bankers).

The programme on which Syriza won the election included the reversal of the austerity policies pursued by the previous Pasok and ND governments, the restoration of the level of the minimum wage, increasing pensions, health, education and unemployment spending. Now all this has been vetoed by the EU. The agreement to extend the bailout for four months while imposing harsh conditions, merely delays the inevitable clash between Greece and Brussels-Berlin. The formal abandonment of the supervising role of the Troika is an empty gesture, since “the institutions” will continue to exercise control, which is more or less the same thing.

The deal has provoked a storm of opposition inside the party, even at the leading level. Varoufakis was accused by some MPs of attempting to whitewash the fact that Greece had effectively signed on to a new memorandum. Among those afraid that the government had gone too far in making concessions to its lenders were several high ranking officials including Zoe Konstantopoulou, the newly elected Parliamentary Speaker. She reportedly failed to support the deal by voting “present” at the meeting of Syriza’s parliamentary group. Panagiotis Lafazanis, the Minister for Productive Reconstruction of Greece’s economy also voted present as did all of the MPs from the ‘Left Platform’ which includes several deputy ministers.

The existence of serious disagreements over the deal was made clear by the publication of an extensive criticism of the agreement by Yiannis Milios, a leading member of Syriza and architect of the party’s economic policies. In a long essay analysing the agreement co-written with other Syriza advisers, Milios called the agreement “the first step on slippery ground”. The essay was critical of the lack of clear numbers and targets, noting that the government had made significant climb-downs while the vague language of the agreement placed the government on shaky ground.

“The fact that the government chooses to present the obvious retreat and the forced changes to its program as a ‘victory’ is a bad sign for the future, as it shows that it is more concerned with appearances as opposed to substance,” the authors write.

“The economic landscape the government is relying on for the negotiation and the review of the final agreement is slippery.”

To repair the damage, Milios and his co-authors recommend a new offensive and in particular a ‘memorandum for wealth’ which would see aggressive crackdowns on high income tax evasion, the black market for fuel and tobacco etc. in order to “build new ground for alliances with the working classes.”

“The goal for ‘the oligarchy to pay’ has never been more pressing,” the authors write. That it is necessary to attack the rich in order to defend the interests of the working class is self-evident. But it is not enough to try to raise more money by measures against tax evasion. Wealthy Greeks have developed this into a fine art and have a thousand ways of cheating the taxman. Meanwhile the flow of money out of Greece continues. If this haemorrhage is not stopped, Greece will be facing bankruptcy even before the end of June.

At the Central Committee of Syriza the Left Platform submitted an amendment rejecting the Eurogroup agreement and the "list of reforms" submitted by the government. It got 41% of the vote, with 55% against and 4% abstaining or voting blank (the votes were: 68 in favour, 92 against, 6 abstentions/blank votes).

A debate about the future strategy is now taking place in the party and the Left is in a very strong position to put forward its strategy in favour of an alternative approach. But what should this alternative be?

What is to be done?

The EU bosses have an economic agenda but they also have a political agenda. Under cover of a so-called bailout they continue to plunder Greece, siphoning off huge amounts of money through privatization and debt repayment to German and French banks, while imposing on the Greek working class and middle class further savage cuts in living standards and ever growing debt.  Their political agenda is to humiliate Syriza and destroy its credibility as a harsh lesson to all other anti-austerity movements in Spain, Italy, Portugal and Ireland.

Their motto is “rule or ruin”. A whole people are being sacrificed on the altar of Profit. Greece has been told in very clear language that it will not get the money that it needs to survive unless all its political parties sign what amounts to a complete surrender. If Syriza capitulates to the demands of the EU bankers, it will be compelled to continue the austerity programmes, which will bring about the total ruin of Greece.

The European bankers and capitalists are strangulating the new government, utilising the crudest methods of blackmail to humiliate it. These are the actions of a bandit who holds a pistol to a man’s head and then presents him with the “choice” of committing suicide. If Syriza accepts this blackmail, it will see its electoral support melt away. Hope will turn to despair. People will say: this is just the same as with Pasok. Instead of mass demonstrations supporting the government, there will be angry mass demonstrations against it.

But this is not the only perspective. By rejecting Brussels’ dictates and proceeding to mobilize its mass base, Syriza could establish a firm base of support for carrying out radical socialist policies. Instead of accepting the dictates of Merkel and Schäuble, the leaders of Syriza should have gone to the people and asked them to decide in a referendum. Mass meetings should have been held all over Greece, in every town, factory, island and village to debate the question. There is no doubt that the result would have been a massive No, which would have provided the government with a strong mandate to confront its enemies.

In its amendment rejecting the agreement in the Central Committee the Left Platform says:

“In the immediate future, Syriza, despite the agreements of the Eurogroup, should take the initiative of implementing steadily and as a matter of priority its commitments and the content of its programmatic governmental statement. To go down that road, we have to rely on workers' and popular struggles, to contribute to their revitalization and to the continuous expansion of popular support in order to resist to any form of blackmail and promote the perspective of an alternative plan promoting the full realisation of our radical objectives.”

This is good as far as it goes. But it does not go far enough. It is necessary to speak clearly and tell the world that this monstrous debt is not a debt of the Greek people.  During the boom years the bankers in France and Germany lent money to crooked politicians, shipping magnates and bankers in Athens who stole vast quantities of Euros that are now resting comfortably in bank accounts in Switzerland, London and Paris. Huge fortunes were made in this way, which never benefitted Greece in any way. But as soon as the crisis struck, the whole burden of this debt was placed on the shoulders of the Greek people. The government must not accept any responsibility for this debt and should not pay it. Syriza has received a democratic mandate and must carry it out.

Syriza must carry out its programme, not just increasing the minimum wage and reinstating all those who have lost their jobs in the public sector, but increasing wages and pensions, reinstating collective bargaining, halting all privatizations and drawing up a list of firms to be renationalised.

“But that would mean an immediate confrontation with the EU”, some will say. Yes, that is true. But a confrontation is inevitable sooner than later. It cannot be avoided, and if a battle cannot be avoided, it is better that it should take place under more favourable conditions than to retreat, lose ground and demoralise one’s own forces so that the battle will be lost before the first shot is fired.

The Thessaloniki Programme calls for a National Reconstruction Plan to “reverse the social and economic disintegration, reconstruct the economy, and exit from the crisis.” But the programme says very little about how this reconstruction is to be achieved. It is impossible to plan the economy as long as the main levers of economic life remain in the hands of the Greek bankers and shipping magnates. You cannot plan what you do not control and you cannot control what you do not own.

The Spanish Socialist Largo Caballero once said: you cannot cure cancer with an aspirin. Dramatic situations demand dramatic measures. The leaders of Syriza say they intend to raise billions by taking action against those who commit fraud and evade taxes. But which bankers and capitalists are not guilty of these things? The most urgent task is to stop the Greek bankers and capitalists from sending their money out of the country. The only way to halt the outflow of capital is by nationalising the banks and introducing strict controls on the movement of capital and a state monopoly of foreign trade.

In a word, the only alternative consists of a radical break with capitalism and the gangsters who rule the EU, appealing to the workers of Greece and the rest of Europe to mobilise to change society. The Communist Tendency of Syriza has consistently defended this idea. But at this stage we are still a small minority. Our voice cannot be heard by the masses, the mood of which is contradictory.

We should not forget that big hopes were aroused by the victory of Syriza. There is disappointment and apprehension about what has happened, but the hope has not yet disappeared. While a section of the most advanced workers are very critical of the government, many others will say: “It is still too early to judge Tsipras. He has a very difficult task because of the mess created by previous governments. We must give him some time and see what happens.”

We must be careful not to move too far ahead of the masses who only learn slowly on the basis of experience. While fighting resolutely against capitulation, we must also avoid any hint of ultra-left impatience that will alienate many honest supporters of Syriza. The task of the Greek Marxists is, in the words of Lenin, to patiently explain that this is the only solution. At every stage we must proceed shoulder to shoulder with the masses, advancing timely slogans and proposals. On the basis of experience, the workers will come to see that we are right.

Will Greece be isolated?

Cowards and sceptics who disguise themselves as “realists” will argue that what we propose is not possible. But experience has already shown that it is absolutely possible.  The firm stand against the Troika was met with tremendous enthusiasm. In early February as much as 80% of the people said they backed the government. That showed that the masses were prepared to stand by the government and fight. What is needed now is a bold leadership.

“But Greece cannot stand alone against Europe,” others will argue. That is also true. But Greece would not be alone if its government was seen to stand against the bankers and capitalists. The mistake was to think that other governments would stand with Greece in her hour of need. The existing governments of Europe are all the faithful servants of the banks and big monopolies. They will slavishly follow the lead of the most powerful capitalist nation, Germany. No trust whatsoever can be placed in them.

Even though Portugal and Spain have suffered policies of grinding austerity dictated by Brussels, the right-wing governments of those countries shouted louder than anyone else in support of the hardliners, Germany, Finland and other northern European countries. These governments, which have slashed living standards to pay the banks are deeply unpopular and are terrified that making any concessions to Syriza would only encourage similar insurgent political groups in their own countries like Podemos.

The rapid rise of Podemos in Spain is proof that the same rebellious mood of indignation that manifested itself in the election of Syriza in Greece is developing in the rest of Europe. Precisely for that reason Rajoy has formed a bloc with Merkel to throttle Syriza before it has a chance to show in practice what a real anti-austerity programme looks like. A genuinely socialist foreign policy must base itself on the opposition movement that is developing in many European countries and that is looking to Greece for a courageous lead.

If such a lead is given it would have a tremendous effect all over Europe and beyond. But capitulation would weaken that movement and strengthen the right wing everywhere. They would say: “You see! Syriza promised a lot but then behaved just like all the others. And Podemos will be just the same!”

The Greek crisis exposes the fraudulent nature of the European Union, which, let us remember, was supposed to be based on the principles of solidarity and a commitment to an “ever closer union.” Now all these fine words have dissolved like soap bubbles in the air. Behind the high-sounding ideals of European Unity the ugly reality stands exposed: not a Europe of the Peoples, but a Europe that is completely dominated by the bankers and capitalists, overseen by German imperialism, which has achieved through its economic might what Hitler failed to bring about with tanks, guns and planes.

What is necessary is to fight to overthrow the dictatorship of Capital and to replace the Europe of the bankers and capitalists by a Europe of the Peoples, a Europe based upon true solidarity, equality, harmony and democracy, which pools its gigantic resources in a common plan of production under the democratic management and control of the workers themselves: the Socialist United States of Europe.

London, 5 March 2015