The Syriza-led government has been blamed for much of the current impasse between Greece and its creditors. It may not be responsible for the dire economic state of the country, commentators note, but it has done everything to make that situation worse. Accused of bringing Greece and possibly even the Eurozone to its knees all in the name of its radical Marxist doctrines, the problem of Syriza is in fact the opposite. Syriza has not been radical enough.
The dirty secret of the Greek crisis
A confusing aspect of the Greek crisis has been the extent of disagreement between Greece and its creditors. Commentators have regularly presented the Syriza-led government as a group of dangerous mavericks, led by a student radical and a celebrity academic-blogger. Impatience with what were considered unacceptable demands from the Greek negotiating team spilled out in recent weeks with Christine Lagarde in particular saying that Tsipras and his colleagues needed to ‘grow-up’ and act like adults rather than like truculent children.
This vision of an unbridgeable gulf between the radical demands of Syriza and the German-led austerian orthodoxy masks what is perhaps the dirty secret of the whole Greek crisis: the sheer moderation of the Greek government’s demands. Faced with such economic and social turmoil, the Greek response has been remarkably mild. The Greek demands include some consideration of debt relief, more flexibility on the implementation of structural reform programmes, a slight reorientation of budget cuts so as to hit less the poor and a bit more the well-off, and all this couched within a firm and heartfelt commitment to remain in the Eurozone. There is nothing radical here and as the recent report from the IMF suggests, it is almost conventional wisdom that some amount of debt relief will have to come at some point. We are thus faced with a complete breakdown in negotiations at a time when the actual gap between creditors and debtor is remarkably small. Syriza has been vilified for its extremism but the truth is that its position has not been nearly as radical as it should be.
Syriza’s utopian strategy
From the outset and including last Sunday’s referendum, the Syriza strategy has been based on a completely utopian premise: that the prime minister and finance minister can convert the rest of the Eurozone to a post-austerity economic programme where losses are written off and more breathing room is given to crisis-hit countries. This has been the Syriza wager: that it alone can convince the rest of the Eurozone to change course.
The difficulty is that on this point Syriza has missed the historical boat. Ever since the Maastricht Treaty, European integration has entered into a ‘new intergovernmental’ phase. Member states have moved forward with integration but have kept themselves at the heart of the process. Real and lasting delegations of power to supranational institutions has been kept to a minimum, with national governments preferring to beef up bodies such as the Eurogroup and the European Council. New agencies have been created instead of giving more powers to the European Commission. Even the current vice-President of the European Commission Frans Timmermans declared recently that “ever closer union” was dead. Syriza’s vision of debt mutualisation and hope for an ever closer and more politically integrated Eurozone has fallen on deaf ears. The future is lies in incremental change overseen by national governments.
The only real negotiating power Syriza has stems from the fact that whilst Eurozone membership has long had an existential quality for Greek citizens and the Greek political class, this is also true of other member states. They are also committed to keeping the Eurozone together as it appears to them as a condition of their own statehood. This is why the creditors keep coming back to the negotiating table even when they said they have had enough. There is real no alternative to the Euro for both Greece and the other members of the Eurozone.
Why is structural reform so difficult?
Part of the difficulty faced by the Greek government in its negotiations is that the implementation of structural reform amounts to a profound transformation of the Greek state. It is not laziness or hypocrisy that makes structural reform difficult in Greece.
The post-authoritarian Greek state was rebuilt along two lines. One involved a commitment to EC membership, with the EC serving as a guarantor of the modernity and economic development. Democratization in Greece was made conditional upon integration into EC institutions, as was the case in Spain and Portugal. The other was the ‘Pasokisation’ of the Greek political economy, where state-society ties passed through the dominant role of the Pasok party in redistributing public wealth.
This sort of clientelism survives today in the form of the government’s financial commitments to its public sector employees and pensioners. Reform of these sectors, as demanded by the Troika, amount to a profound restructuring of the social basis of the post-dictatorship Greek state. Hardly an easy task nor one that can be achieved through external monitoring by EU technocrats. The difficulty for Greece today is that the European dimension of its statehood no longer matches its domestic political economy. One of the two has to give.
The Left and self-determination
Syriza’s position has not been radical enough. It has tried to balance a commitment to Eurozone membership with an anti-austerity message. Far from being a strategic or even a tactical choice, this reflects a deep-seated ambivalence that takes us to a basic problem facing the European Left today: its position on national self-determination.
Over the last few decades, European social democracy has abandoned national sovereignty, preferring to throw its lot in with the European Union. This is what gave the recent referendum in Greece its terrible pathos. On the one hand, the ‘No’ was a powerful affirmation of a Greek desire to reject the terms of the agreement with its creditors. On the other, the ‘No’ lacked any real content as no-one was willing to contemplate exit from the Eurozone. The Greeks are left to celebrate their ‘No’ whilst their future remains out of their hands.
To seek ‘ever closer political union’, as thinkers like Jurgen Habermas do, is to pursue a dream that is even less likely to be realized today than ever before. It was often said that those who believe in national democracy are the fantasists and dreamers, the “small state nostalgists” as Habermas calls them. In fact, the real fantasists are those who think that a democratically organized supranational Europe can emerge out of an institution like the Eurogroup or the European Parliament. Compared to that fantasy, exit from the Eurozone appears a much more tangible option that Syriza should embrace instead of shy away from. They talk the talk of national sovereignty but do not follow it through.
Dismantle the Eurozone
The right response to the current crisis is to dismantle the Eurozone. As it stands, there is no way of reconciling national democracy with a continued commitment to Eurozone membership.
Ever since it was created, the common currency has served to sharpen the differences between national economies in Europe. Diverging rates of competitiveness were masked by easy access to credit, something which ended in 2009. We are left with a situation where national populations are expected to bear the full brunt of adjustment whilst governments have no freedom of manoeuvre in either monetary or fiscal policy.
These sorts of expectations about internal adjustment to wages and prices are what brought the Gold Standard to an end, precisely because it became incompatible with national democracy. Only the involution of national democracy and the abandonment by the Left of its belief in national self-determination has allowed the Eurozone to survive thus far. It should be dismantled in order that national populations across Europe have a greater control over their fate.