Tag Archives: greece

Look not to the peripheries

5 Aug

In recent weeks, Yannis Varoufakis, former Greek Finance Minister, has been under fire because of a secret group he ran, from February to June, whose purpose was to plan for a possible Grexit. Some have charged him with treason – primarily because his group hacked into the Greek Finance Ministry to acquire information they needed for the planning. Others defended him.

Whatever the stakes of this minor power struggle, it is a sideshow. In fact, Greece itself is not even the story. In this post-agreement moment, as the Tsipras government capitulates to the Eurogroup’s diktats, we need to grasp the dramatic failure of Syriza’s strategy in its proper context: the wider exhaustion of Left politics. The primary lesson is not (only) that Syriza failed but that the Left, across Europe, is politically exhausted. It is important to identify this weakness not only to acknowledge the limits of what Syriza could ever have done, but also to counter the emergent left-populist view that this is all about Germany.

To be sure, Tsipras deserves some blame. If the only planning for Grexit was happening in secret, on condition it never be made public and therefore never part of the bargaining strategy, then it was not just a pointless activity but a sign of Tsipras’ opportunistic willingness to use the Greeks as a stage army. They were there to vote, but never to have a real option granted. After all, for an exit to be a democratic act aimed at something like self-determination outside the Eurozone, it could not be a mere technocratic process of figuring out how to print and distribute notes, denominate payments, and sort out IOUs. It might have required seizing banks to prevent capital flight, nationalizing industries to prevent them being bought up by oligarchs who were hoarding euros outside Greece, rationing of certain basic supplies, even subsistence level economic production for a time. That is something the Greeks would have had to have been prepared for, something asked of them, and something which would have needed explicit popular backing. Tsipras made no effort in this direction and one has to think that he did not ultimately believe in his own people enough even to put the question to them.

Nevertheless, we should not lose sight of the extraordinary constraints that Tsipras and the Syriza government generally were under. They took power after Greece had already been through multiple rounds of austerity and seen roughly a quarter of its GDP evaporate. The financial thuggery by the European Central Bank, which engineered a quasi-bank failure in the last days of the negotiations by drastically reducing emergency funding, was illegal and extremely coercive. President of the Eurogroup, Jeroen Djisselbloem, doubled down on the threat, saying “we are going to collapse your banks.” It was clear that Schäuble wanted to turn Greece into something like debtor’s colony and was willing to take only that or let Greece go altogether. Even if Tsipras had, from the very beginning, made more effort to plan for the exit, looked for alternate sources of financing, pre-emptively printed drachmas, readied to seize the banks, moved to nationalize key assets, prepared capital controls, and taken the 50 other steps necessary to minimize the costs of exit, the democratic act would not have been a revolutionary step into a heroic, post-austerian future. It would have been a necessary, high-cost, step away from the clutches of the Eurozone.

The reason Greece was so limited in options is that Syriza had no meaningful support from the rest of the European Left. It had no support because the mainstream left parties, from the German SPD to the French Socialists, on through other Western European parties, have so fully committed themselves to the Eurozone and to some version of austerity that they were in no position to open the space within which a proper resistance to the Eurogroup’s divide-and-conquer sadomonetarism could be challenged. Syriza ran up against some world-historic limits that allowed someone other than the Left to dictate not just the basic terms but also the governing ideas of public discourse.

The best way to appreciate this is to note what could have been said but wasn’t. For one, it is striking how quickly the sovereign debt crisis of 2010 became pitched in nationalist terms, as a competition between creditor and debtor nations. In fact, the sovereign debt crisis had its origins in reckless lending by major French and German banks, which mirrored some of the profligacy and corruption of the Mediterranean spenders, and the majority of the money of the early bailouts was channeled into making those banks whole. This was true across the board but especially true in Greece. As Mark Blyth notes:

Greece was thus a mere conduit for a bailout. It was not a recipient in any significant way, despite what is constantly repeated in the media. Of the roughly 230 billion euro disbursed to Greece, it is estimated that only 27 billion went toward keeping the Greek state running. Indeed, by 2013 Greece was running a surplus and did not need such financing. Accordingly, 65 percent of the loans to Greece went straight through Greece to core banks for interest payments, maturing debt, and for domestic bank recapitalization demanded by the lenders. By another accounting, 90 percent of the “loans to Greece” bypassed Greece entirely.

The European people funded the bank bailouts, preserving their irrational financial system, and effectively nationalizing the debt through the Troika institutions. This could have been the start of more democratic control over the economy. Instead, the price of the bailouts was austerity for the southern countries, even less democracy (remember two elected governments, in Italy and Greece, were replaced by unelected technocrats), and worst of all the transformation of a conflict between the people and their economic system into a conflict between creditor and debtor nations. After all, once the majority of the debt was nationalized through the bailouts, the French, Dutch, other Northern Europeans, but above all the Germans, became creditors for the Italians, Spaniards, Portuguese and Greeks. The parties of the Left in these Northern countries could have tried to resist the nationalist impulse that coursed through the financial circuits of the European Financial Stability Facility/European Stability Mechanism, Emergency Liquidity Assistance, and other conduits of the bailout programs. They were, however, so thoroughly compromised by their commitment to the EU and the euro, not to mention their cooperation with what we now know as austerity, that there was no way out.

Consider the Germans. Any left-wing politician worth his salt could have pointed out that the way Schäuble talked about Greeks in public was likely how he talks about German workers in private. And, further, that Schäuble represented the interests of a fraction of German capital, not the German people as whole. Indeed, a German politician could have further pointed out that keeping Greece in but forcing it into deeper internal devaluation – namely, benefits reduction and wage repression – simply threatens to lower the wage floor for all of Europe, especially since the latest agreement also involved a direct assault on labor rights. However, the German SDP has been imposing wage stagnation on its own working class for the last two decades, most notably with the Hartz reforms of the early 2000s, imposed more or less in tandem with the rise of the euro. These reforms, pushed through when the SPD’s Gerhard Schröder was Chancellor, reduced benefits and contributed to wage stagnation. Even when the SDP lost to Merkel’s Christian Democrats, they agreed to be the junior partner in a governing coalition, in exchange for a few concessions, some lousy portfolios, and fealty to Merkel’s vision of Germany in Europe.

This has left the only significant party with any capacity for opposition utterly compromised. How do you tell workers whom you have been telling to accept wage stagnation and benefits reductions that they should now turn around and spend more money bailing out Greeks? Why save Greek benefits when your own are being chipped away? The SPD has no answers, no capacity even to generate answers, and even if it had generated answers, it could have never presented itself as a credible opposition, able to support the Greeks. That is why the whole affair looked like a unified, German hegemonic operation. Not because Germany really does have a national interest in dominating Europe – no working class has a stake in intensified nationalistic conflict – but because the expression of class divisions has been suppressed by the mainstream Left party itself.

A similar story could be told about the French Socialist Party. As already argued on The Current Moment, the French Parti Socialiste (PS) is not a working class party. Indeed, the abandonment of the working class by the French Left goes some way to explaining the popularity of the Front National amongst the young working class French. They rightly judge that the PS no longer represents them. Hollande’s tepid support for Tsipras soon after the latter’s election quickly turned into hostility. Hollande’s intervention at the last minute to stop Schäuble’s push for Grexit was a matter of French national interests, not of ideological or class solidarity. Hollande calculated that a German-provoked Grexit would make life in the Eurozone quite a bit more difficult, with rules ever more rigid. A similar calculation was made by Italy’s Matteo Renzi.

The PS’s commitment to European integration and monetary union stems from Mitterrand’s u-turn on membership of the European Monetary System (and the Exchange Rate Mechanism within it) in 1984. Whilst Mitterrand justified his decision to remain in the EMS in the language of Europe and peace, it fitted with his wider goals. He had become convinced of the need to reform the French economy through domestic adaptation rather than to use devaluations of the French franc as a basis for economic competiveness. The EMS was a rules-based framework that would help Mitterrand to pursue this strategy. De Gaulle’s attempt at internal reform failed with the general strike of 1968 and a devaluation in 1969. The Barre Plan of 1976 had also failed, which was why Mitterrand’s alternative of ‘Keynesianism in one country’ had been so popular in 1981. When he abandoned it a few years later, he brought the PS in line with the now established view about the need for an external monetary anchor to encourage reform internally. Mitterrand’s conversion to the power of external rules has become a core belief within the PS and there was no chance that Hollande, Valls, Fabius or Macron would challenge this by supporting Syriza. For them, as for the rest of the European Left, there is no alternative to this way of conducting economic policy.

The failure we see is, therefore, not just one of parties taking the wrong stance, or being compromised by their past commitments. It is also the dearth of alternative, left-wing ideas. Being anti-austerity is no longer enough, and it hasn’t been for a long time. It is one thing to say that turning Greece into a debtor’s colony, or undermining the European welfare state, is immoral. It is another to have some conception of and belief in the alternative. No doubt one reason that Tsipras and Syriza were afraid of what Grexit would take is because few found it credible even to consider nationalizing the banks. They only got as far as capital controls, very likely an example of how halfway can be worse than none or all. But the point is that, beyond outrage, there isn’t much in the way of a credible Left alternative to what gets shoved down the people’s throats each time the dollars or Euros run out. In such a political and ideological climate, there is little the Greeks could have done.

In fact, the degree of hope invested in Syriza by the wider European Left, especially around the time of the referendum, was the product of political displacement – not so dissimilar from left-wing support for the ‘Yes’ vote in the Scottish referendum last year. Unable to lead directly, the Left will project its needs and desires onto anything that looks vaguely oppositional, and Syriza had the added advantage of having some actual left-wing elements in it. If Syriza failed to lead, their failure only reflected the wider Left’s failure to imagine itself leading a popular movement that is willing to take responsibility for running society out of the hands of a bankrupt elite.

This is a failure not only of Syriza, but of the only other significant movements that have emerged out of the European status quo. Consider Pablo Iglesias, leader of Spain’s Podemos Party. In July Iglesias took pains to distance himself from Greece and to commit himself, if elected, to staying in the euro. He then openly professed that there is nothing he can do to resist the anti-democratic character of the EU – despite claiming the right to lead 45 million people. What better sign that it is not only the technocrats of Europe that are queasy about democracy. The peripheries and the core are constrained by the weakness of the Left everywhere.

Alex Gourevitch

Why Syriza Failed

31 Jul

Recent events in Greece have baffled many observers. Prime Minister Alexis Tsipras walked out of talks with Greece’s creditors, calling a snap referendum on their proposals. It appeared to be crunch time. Tspiras denounced the EU’s ‘blackmail-ultimatum’, urging ‘the Hellenic people’ to defend their ‘sovereignty’ and ‘democracy’, while EU figures warned a ‘no’ vote would mean Greece leaving the Euro. Yet, even during the referendum campaign, while ostensibly pushing for a ‘no’ vote, Tsipras offered to accept the EU’s terms with but a few minor tweaks. And no sooner had the Greek people apparently rejected EU-enforced austerity than their government swiftly agreed to pursue harsher austerity measures than they had just rejected, merely in exchange for more negotiations on debt relief. This bizarre sequence of events can only be understood as a colossal political failure by Syriza. Elected in January to end austerity, they will now preside over more privatisation, welfare cuts and tax hikes.

How can we explain this failure? I argue three factors were key. First, the terrible ‘good Euro’ strategy pursued by Syriza, the weakness of which should have been apparent from the outset. The second factor, which shaped the first, is the overwhelmingly pro-EU sentiment among Greek citizens and elites, which created a strong barrier to ‘Grexit’ in the absence of political leadership towards independence. Third, the failure of the pro-Grexit left, including within Syriza, to win Syriza and the public over to a pro-Grexit position.

The ‘good Euro’ fantasy

The strategy pursued by Tspiras and his former finance minister, Yanis Varoufakis, has been dubbed the ‘good Euro’ approach. Essentially, they argued that a resolution to Greece’s economic depression could be found within the confines of the single European currency. The failure of previous governments to do this was simplistically assigned to the fact that they ‘never negotiated’ with the Troika but merely implemented its demands. Instead, Syriza would make common cause with other anti-austerity groups and sympathetic governments across Europe, pushing for more favourable bailout terms. This involved an attempt to ‘delegitimise’ the creditors by appealing – as Tsipras did even when denouncing the creditors – to the ‘founding principles and values of Europe’, supposedly norms of social justice like ‘rights to work, equality and… dignity’. From this perspective, the referendum was never intended to be a decisive moment for the restoration of Greek democracy and autonomy. It was merely called to strengthen the Greek government’s position when bargaining with the creditors, which is why Tsipras never stopped seeking another ‘bailout’ even as campaigning was underway.

But to any clear-eyed observer, this strategy was disastrous from the outset, because it rested on two flawed premises.

The first was that the allies Syriza sought were either too weak, or simply did not exist. Perhaps the most remarkable thing about the European response to the global financial crisis has been the near-total absence of any effective resistance to the conversion of a banking crisis into a fiscal crisis of the state and from there to the imposition of austerity. With the exception of Greece and Spain, elections across Europe have tended to shift goverments to the right, even – as in Britain – after five years of cuts to state spending. The lack of effective anti-austerity resistance itself reflects the wider collapse of left-wing political forces from the 1980s. The disarray of the rump parties of social democracy, clearly unable to offer any alternative to austerity, is merely the prolonged death rattle of this epochal defeat. This was never promising terrain for a ‘good Euro’ strategy.

One hope of Syriza was the rise of Podemos in Spain – like Syriza, a loose alliance emerging from street-level, anti-austerity protests. But, as Varoufakis rapidly realised, ‘there was nothing they could do – their voice could never penetrate the Eurogroup’. Similarly, while Syriza notionally classified EU governments as pro-austerity, anti-austerity and neutral, with pro-austerity governments ostensibly in the minority, it was unable to leverage any international support. The French – perhaps the main hope – promised support in private, but criticised Greece in public. Nor were the governments of other countries suffering from EU-imposed austerity sympathetic. In fact, Varoufakis recalls, ‘from the very beginning… [they] made it abundantly clear that they were the most energetic enemies of our government… their greatest nightmare was our success: were we to succeed in negotiating a better deal for Greece, that would of course obliterate them politically, they would have to answer to their own people why they didn’t negotiate like we were doing.’ It should therefore have been immediately clear to Syriza that the building materials for the progressive bloc it hoped to construct simply did not exist.

The second flawed premise was ‘leftist Europeanism’, the idea that the European Union is primarily about values of ‘social justice’, such that appeals to these values could overcome demands for austerity. Again, this notion was ludicrous from the outset. By the time Syriza was elected, the EU had already subjected the Greek people to grotesque abuses. These include: 25 percent unemployment (57 percent among youths) by 2012; the mass collapse of small businesses; a 25 percent rise in homelessness from 2009-11; a 75 percent rise in suicides from 2009-11; mass emigration; and a massive health crisis, with spikes in epidemic diseases and a drop in life expectancy of three years (a phenomenon generally only seen in war-torn countries), nonetheless followed by a further 94% cut in health funding from 2014-15. Even pro-EU liberals outside Greece are now reconsidering their naïve faith in ‘social Europe’ after what has happened there. To any Greek, the real values being pursued through the EU ought to have been crystal clear. As one Varoufakis advisor notes, ‘the only weapons… [Syriza brought] to the negotiating table were reason, logic and European solidarity. But apparently we live in a Europe where none of those things mean anything.’

Eurobarom 1

 

Eurobarometer: percentage of EU citizens expressing trust in EU institutions. Source.

 Eurobarom 2

Eurobarometer: what does the EU mean to you personally? Source.

As Varoufakis and Tspiras discovered almost immediately, EU institutions have little to do with democracy, either. The informal Eurogroup of Finance Ministers, Varoufakis notes, makes ‘decisions of almost life and death, and no member has to answer to anybody’. ‘From the very beginning’ (i.e. from their first meeting in February), Varoufakis encountered a ‘complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy’. Germany’s finance minister told him: ‘Elections cannot change anything’. Some ministers agreed with Syriza’s critique of austerity, but essentially said, ‘we’re going to crunch you anyway.’ What further demonstration did Syriza need that EU leaders are not interested in social justice, only containing the Euro-crisis – and thereby protecting their own shoddy financial institutions from debt default and contagion – by making Greece the whipping boy of Europe?

The Greek fetish of European membership

Unsurprisingly, critics had declared the ‘good Euro’ strategy a failure as early as February, while Varoufakis’s post-resignation interviews reveal that its chief executors also swiftly recognised its flaws. So why did it ever appear a good idea in the first place? Ultimately, Syriza was elected on a platform both of ending austerity and remaining in the Euro – the latter position being shared by all of its main political rivals and by 80 percent of the public. This contradictory position reflects the attachment of Greek citizens and elites to ‘Europe’ as a refuge from their domestic political difficulties, and thus a reluctance to confront and resolve these difficulties alone.

As The Current Moment’s co-editor, Chris Bickerton, has shown, this is part of a general trend across the EU. From the 1970s, faced with crises of rising expectations and increasing social unrest, European elites have – through varying national trajectories – tried to create a new social, political and economic settlement by entrenching themselves within international elite networks. The EU’s structures are generally not supranational authorities but rather elite solidarity clubs, where ministers pursuing unpopular ‘reform’ agendas can draw upon each other’s support against their respective populations, thereby basing the content and legitimacy of their actions not on democratic mandates but on the legalistic European processes of policy coordination and harmonisation. By linking virtually every state apparatus across European borders, elites have thereby transformed once-sovereign nation-states into EU ‘member-states’, heavily constrained, with popular sovereignty deliberately negated. European elites can no longer imagine life outside of these structures, because it would represent a vast step-change: a need to re-engage with their own populations as the sole source of their authority, and the need to articulate clear political visions for their nations instead of relying on the latest EU action plan to guide their polities.

Each member-state has followed its own particular trajectory into this dismal arrangement. In Portugal, Spain and Greece, the process was strongly marked by their 1970s transition from authoritarian rule. In much the same way as the recent Scottish referendum proposed to make Scotland independent of the United Kingdom but immediately constrain its autonomy by retaining EU membership, these southern European nations emerged from authoritarian rule only to constrain democratic choice by swiftly joining the then European Economic Community. For the Greeks, joining ‘Europe’ was apparently a way to help draw a line under the past. It signalled their rejection of military rule, their ‘identity’ ‘as Europeans’, their distinction from authoritarian neighbours like Albania and Turkey. And it precluded the return of authoritarianism by locking Greece into various intergovernmental agreements and processes that entrenched liberal rights. The same motive and process had guided the formation of the European Convention on Human Rights in the early post-war years, and the later flight of Eastern European states from ‘Brezhnev to Brussels’, as Bickerton puts it.

Thus, for wide swathes of the Greek public, and especially the liberal and left elite, membership of the EU is valued precisely for its constraints. The fear, as Varoufakis himself clearly articulated, is that the beneficiaries of Grexit would not be the ‘progressive left, that will rise Phoenix-like from the ashes of Europe’s public institutions’, but rather ‘the Golden Dawn Nazis, the assorted neofascists, the xenophobes and the spivs’. His successor, Euclid Tsakalotos, issued similar warnings from the foreign ministry. Their fear was essentially of what the Greek people would do, left to their own devices.

This concern is hardly unique to Syriza. Across Europe, the dominant – perhaps only – elite justification for European integration is that its only alternative is a return to nationalism (or worse) and war. The Greek version of this politics of fear is simply mediated through the recent historical experience of military rule. Syriza’s embrace of this pessimistic narrative clearly signified a profound lack of faith in its own capacity to lead Greeks towards a more progressive future as an independent nation.

This quite widespread ideological attachment to Europe was undoubtedly reinforced by the apparent economic benefits of EU membership before the Euro crisis. In 1974, when the Colonels’ regime fell, Greek GDP per capita was just $2,839. When Greece joined the EEC in 1981, it was $5,400. By 2001, when Greece joined the Euro, per capita income had more than doubled to $12,418. Under the Euro, average incomes then nearly tripled to $31,701 by 2008. Greece literally appeared to go from third world to first in the space of two generations. In real terms, of course, the increase was always smaller – from $12,829 to $24,148 from 1974-2008 – but this was still a significant ‘catching up’ with other European states. As is now widely recognised, much of the post-2001 boom was fuelled by reckless borrowing and its benefits were always maldistributed, with a narrow oligarchy dominating a state-led patronage system. This is undoubtedly why the Greek oligarchy, while evading the consequences of austerity itself, has waged a strong pro-EU campaign, including through the media organisations it dominates, and is implacably opposed to Syriza, which had pledged to ‘destroy’ the ‘oligarchy system’. However, economic benefits also flowed to a wider coalition, with handouts like early pensions for professional groups and public sector unions supportive of the status quo.

graphic 3

Greek GDP Per Capita, current US$. Source.

 

graphic 4

 

Greek GDP Per Capita (Purchasing Power Parity) 1990=100. Source.

Combined, these factors seem to have made many Greeks leery of Grexit, even as the economy shrivelled. For some, when the crisis struck, there was apparently a guilty sense of the chickens coming home to roost – that ‘the party was over’ – with two-thirds of Greeks actually supporting austerity in 2010. Although this support collapsed over the next four years, fuelling the rise of Syriza, fear of the unknown remained very strong. Even in the most favourable scenarios, restoring the drachma would be hugely destabilising in the short to medium term and risk undoing the residual benefits of Euro membership. This motivation seems particularly strong among those with most to lose.

All of this helps explain the structural constraints facing Syriza leaders upon their election. The Greeks were both tired of austerity and yet fearful of exiting the Euro. Consequently, they demanded an end to austerity within the Euro. Squaring this circle was an impossible task.

But this should not let Syriza off the hook. Insofar as Syriza leaders understood that these popular demands were incompatible, they ought to have exercised political leadership by trying to lead the Greek citizenry towards a more rational position. The most crucial step was to outline a compelling vision for a Greek economy independent of the Euro, where life might be tough for a few years (but probably no tougher than under perpetual EU-imposed austerity), and recovery was eventually possible via the currency devaluation that every sane economist argues is both essential for Greece’s recovery and impossible within the Euro. This Syriza comprehensively failed to do.

Despite their leftist élan, its leaders seem just as incapable as their European counterparts of imagining a future for themselves and their country outside the strictures of European integration. Syriza’s failure remains one of leadership and strategy, irreducible simply to popular attitudes. The Syriza leadership has now embraced a deal that it openly admits is rotten, claiming ‘there is no alternative’. This merely signals a refusal to accept political responsibility for articulating an alternative. Ultimately, they – like the leaders of Europe’s other ‘member-states’ – are too afraid of the consequences of genuinely restoring autonomous, democratic decision-making to their nation. As Stathis Kouvelakis comments, this reflects their ‘entrapment in the ideology of left-Europeanism’. When Greek officials denounce the ‘almost neo-fascist euro dictatorship’, they are heaping the blame entirely on German sadomonetarism while evading their own failure to rebel against it, however difficult that rebellion would undoubtedly be.

As a consequence of this hesitancy, Syriza leaders spurned the growing social basis for a pro-Grexit line, which emerged despite, not because of, them. While in January 2015, 80 percent of Greeks favoured remaining in the Euro, by the time of the referendum this figure had fallen to 45 percent, with 42 percent favouring the serious consideration of Grexit.

The left’s failure to produce Grexit

This leaves one remaining question: why were those on the left, able to see all of the foregoing problems, unable to change Syriza’s course? After all, much of the above criticism of the ‘good Euro’ strategy was initially articulated by figures within Syriza, most notably Costas Lapavitsas, Stathis Kouvelakis and others members of its ‘Left Platform’. The Greek far left has also long demanded Grexit. Left Platform figures had adopted a position of ‘no more sacrifices for the Euro’ in 2012/13 and have long argued for default and Grexit, with apparently growing support. 44 percent of Syriza’s Central Committee backed the Left Platform’s call to break from negotiations and pursue a radical ‘plan B’ in late May. Tsipras was reportedly being constrained by their resistance in parliament in June. After the referendum, the Left apparently won over a (bare) majority of Syriza’s Central Committee to oppose capitulation, backed by many grassroots activists. Yet, only 38 Syriza legislators (out of 149) rebelled against the government (six of whom merely abstained). Although this left

Tsipras dependent on opposition legislators to survive, in subsequent votes that number has shrunk to 36 (with Varoufakis among the defectors), while Left Platform ministers have been sacked or resigned. Amazingly, the ‘good Euro’ strategy persists.

Part of the explanation for this is the nature of Syriza itself as a loose coalition rather than a traditional leftist party. Initially merely an electoral coalition, formed to contest the 2004 elections, Syriza became a party only in 2012, merging 13 political groups ranging from social democrats to hard-line Marxists. Syriza’s dominant parliamentary faction has always been Synaspismós, itself a democratic socialist coalition, led by Tsipras. Syriza’s ‘Left Platform’ – comprising the ‘Left Current’ and ‘Red Network’ – are relative newcomers and, even when joined by the Communist Organisation of Greece (KOE), also a Syriza member – simply lack the numbers required to impose their preferences.

Moreover, despite the 2012 merger, Syriza did not develop party structures capable of discussing, determining and imposing a collective ‘party line’. This looseness permitted a high degree of open internal dissent and had a ‘horizontalist’ flavour much celebrated by contemporary critics of traditional leftist parties. But the downside is that this organisational form effectively permitted the central leadership to determine policy, while more critical elements simply became a sort of internal ‘loyal opposition’.

Syriza’s leftist elements were not unaware of this, but were compelled to join the party having failed in their initial quest to form a broad, anti-EU alliance with the anti-capitalist left. As Kouvelathis describes it, the Left Platform crowd joined Syriza in 2012 only after these proposals left were rejected by the main component of Antarsya (Anticapitalist Left Cooperation for the Overthrow), a far-left coalition formed in 2009. The KKE, the Communist Party of Greece, also remained aloof. The sticking point was apparently the ultra-leftists’ insistence on a programme of immediate rupture from the Eurozone as the bulwark of ‘neoliberalism’. However, as noted earlier, in 2011/12 this position had virtually no popular support. Nor, reflecting the long-standing decline of Greece’s far left, did these far-left parties have any electoral standing.

Essentially, while Syriza had the wrong line but at least the capacity to get elected, the radical left arguably had the correct political line but lacked any capacity to translate it into policy. Following a crisis common to all European states in the 1980s, the Greek far-left has been extremely fragmented, remaining, despite the formation of horizontalist alliances, unable ‘to actually articulate an alternative project’, and producing ‘catastrophic electoral results’, according to Antarsya’s Panagiotis Sotiris. This strategic ineptitude led them, unlike Syriza, to fail to translate their mobilisation of Greeks in the 2011 ‘movement of the squares’ into party organisation and electoral success. This was arguably a serious failure of the horizontalist model with its renunciation of forming parties capable of seizing the state. As Sotiris laments: ‘we never realized that the question was about power… reclaiming governmental power. At that point, we did not have this position, but Syriza had it’.

Unsurprisingly, then, the Left Platform group threw in its lot with Syriza. But in so doing, it inevitably became somewhat marginalised and constrained: outnumbered within Syriza by centre-leftists and balanced within government by Syriza’s coalition partners, the right-wing Independent Greeks (ANEL). Through this Caesarist balancing act, as Kouvelakis recounts, ‘the government, the leadership, became totally autonomous of the party’. The lack of democratic structures within the loosely constituted party has permitted Tsipras to dominate: the Central Committee has not convened for months. But nor, it seems, has the Left Platform been willing to precipitate a full-on confrontation. Even when voting against the post-referendum ‘bailout’, it carefully manipulated its vote to try to avoid removing Tsipras’s majority support from within his party, the loss of which has traditionally triggered elections in Greece. (Ultimately, so many non-Left Platform Syriza MPs rebelled that this majority was lost anyway, although no election has been called.)

But these questionable tactics, an inevitable part of the difficulties of party politics, are probably secondary to the larger strategic failure, which was to neglect to present the citizenry with an alternative plan for Greece’s future outside the Euro until early July. Kouvelakis now admits this was a serious mistake.

It is not that the plan took forever to draft: it was already in hand long ago, but there was ‘internal hesitation about the appropriate moment to release it.’ This apparently stemmed partly from fears that Greece was ‘ready’ for Grexit. Lapavitsas has long argued for a managed and ‘orderly’ Grexit, but as late as 10 July he openly doubted whether any preparations had been made. Varoufakis’s subsequent revelation that only five officials had been tasked with this suggests that he was correct (as well as signifying his utter disinterest in alternatives to striking deals with the creditors). Essentially, reflecting its marginal position in the ruling coalition, the Left Platform was dependent on the governing part of Syriza to lay the technical ground for their Grexit strategy, which they clearly had no interest in doing. Its members had also become swept up in day-to-day events, Kouvelakis recalls, being ‘neutralized and overtaken by the endless sequence of negotiations and dramatic moments and so on… it was only when it was already too late… that [our] proposal was finally made public… This is clearly something we should have done before.’ The Left Platform thus failed to provide the leadership that their Syriza colleagues refused to provide and that their compatriots so badly needed.

Conclusion

What lessons can we draw from this sorry tale?

The main one is that the European left must shed its illusions about European solidarity. First, the EU is not, and has never been, a font of democracy and social justice. The left, broadly defeated at home through the 1980s, has increasingly put its faith in supranational institutions to protect human rights and social protections, including the EU’s ‘social chapter’. That this only ever expressed the left’s domestic weakness was starkly revealed when European elites combined after 2008 to inflict austerity on their own peoples, and domestic resistance was utterly ineffective. Appealing to EU leaders to uphold norms of democracy and social justice, as Syriza did, is clearly futile. Syriza should be credited with one achievement. It has finally pulled away the veil, forcing everyone to recognise the EU’s true character.

But, secondly, it is equally illusory to put one’s faith in European parties, peoples and social movements, in the hope of a transnational alliance capable of generating more progressive outcomes. This hope for a ‘counter-hegemonic bloc’, long expressed by Gramscian scholars of the EU, has been peddled for 20 years without success, expressed in forms like the European Social Forum, which ultimately go nowhere. Sadly, Syriza found little to no effective support beyond their own borders. Again, this reflects the collapse of progressive political organisations capable of turning humanitarian sympathy into meaningful political action.

This experience strongly suggests that the prevailing European order cannot be effectively contested by progressive forces at the European level. They are simply too weak and isolated. After all, part of the elites’ purpose in rescaling governance to the European level is precisely to outmanoeuvre opposition, which is rightly assumed to be less able to organise regionally than nationally. This suggests that progressive forces must operate primarily on the more hospitable terrain of the nation-state. They need to lead a movement among their own people, even if it means arguing with them, rather than relying on those abroad who already agree with them. This implies a need to recover space for this activism by reasserting the autonomy of domestic politics from European regulation – i.e., by reclaiming popular sovereignty.

Despite growing left-wing Euroscepticism, this step seems to remain anathema to most. Syriza’s leadership were openly leery of popular sovereignty, warning of a fascist revival. This fear is widespread among European elites, suggesting a strong suspicion of the masses, perhaps especially among supposed progressives. But even Syriza’s Left Platform seemed wary of articulating the necessary steps for the restoration of Greek autonomy, despite their clear premonitions of disaster. This is a sign of how deeply the ‘member-state’ mode of politics has been entrenched over several decades. It will be a hard habit to kick.

Another lesson concerns the organisational form and content of anti-EU resistance. Broad coalitions, rooted in societal mobilisations, are crucial, but insufficient without strong party organisation. Syriza’s formation as a party helped create the structures and programme necessary to help turn popular mobilisation into political power. It thereby achieved what every fashionable, ‘rhizomatic, horizontalist network’ – from Occupy to the Greek far left – has failed to: to exert some grip over state power and thus potentially leverage over social change. Yet, its absence of strong internal democracy also allowed its leaders to pursue an unworkable strategy and even betray the expressed wishes of the electorate. Against the Eurocrats for whom ‘elections cannot change anything’, the task is to rebuild truly democratic parties capable of articulating an alternative and attractive vision for the future of European societies.

Lee Jones

 

 

Why Torture a Victim Whose Will Is Already Broken?

14 Jul

The draft of the agreement between the Greeks and the Eurogroup is out and, as everyone has noticed, it is not just an act of revenge, it is a piece of legislative torture. It contains old demands, like pension reductions and higher taxes to fund primary surpluses, as well as new demands, like reduction in the power of unions and a massive privatization of state assets using a separate fund controlled by Greece but monitored by the EU’s institutions. In fact the document asks for a massive legislative program touching on every aspect of Greek economic life – tax policy, product regulation, labor markets, state-owned assets, financial sector, shipping, budget surpluses, pensions, and so on. This legislation is demanded within the next few weeks. Such a package is the kind of thing one sees during or just after wartime, not as the product of democratically negotiated decisions. Let’s remember that the programme on which Tsipras and the Eurogroup agreed is something asked of a country that has already experienced a very severe depression, already implemented a number of constraints requested by creditors, has 25% unemployment and a banking crisis. What is the point of torturing a victim whose will is already broken? To destroy all opposition.

I think this should not be read as a proposal for restoring growth to Greece or even as the reflection of an economic blindness in Europe but as the reflux of the EU political project, of which the euro is the purest expression: the preference for technocratic domination over popular sovereignty. This program describes an architecture of rule, one that expresses utter indifference to the attempt by peoples to manage their affairs democratically, and one that demands enormous reserves of discretionary power for the Eurogroup. Note not just the scope of the Eurogroup’s demands but the molecular level of detail with which they lay out demands. For instance, as part of their package of “ambitious product market reforms,” they insist on changes in “Sunday trade, sales periods, pharmacy ownership, milk and bakeries, except over-the-counter pharmaceutical products, which will be implemented in a next step, as well as for the opening of macro-critical closed professions (e.g. ferry transportation).” Then there are the new demands, like “rigorous reviews and modernization of collective bargaining [and] industrial action,” which is Eurospeak for rubbing out labor rights. Other demands make it clear that these decisions are not only extensive and fine-grained, but designed as much as possible to remove responsibility and control from the Greek people and their government. The “scaled up privatisation programme” is to “be established in Greece and be managed by the Greek authorities under the supervision of the relevant European Institutions.” And the “quasi-automatic spending cuts in case of deviations from ambitious primary surplus targets” are “subject to prior approval of the [European] Institutions.”

Most telling of all, “The government needs to consult and agree with the Institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to Parliament.” That is to say, on every above named area of reform – from tax policy to labor markets – the government must consult first with its European managers. The piece-de-resistance, however, is that the Greeks are maximally accountable to the Eurogroup while the Eurogroup is minimally accountable and maximally arbitrary. Having listed its demands the document then says, “The above-listed commitments are minimum requirements to start the negotiations with the Greek authorities.” Later, the document says that an ESM programme is possible “Provided that all the necessary conditions contained in this document are fulfilled.” There is no guarantee the money is forthcoming. In other words, the Eurogroup retains maximum discretion to decide that Greece has failed to meet any of the impossible demands made upon it, while the Greeks possess no similar ability to hold the Europeans to account for their failures. Recall, for instance, that the agreement requires Greece to run budget surpluses that the Germans and French have never managed to achieve and that the ECB recently refused to extend sufficient emergency financing to the Greek banks, essentially engineering a near bank-failure in direct violation of its mandate to provide emergency liquidity to illiquid banks.

There are those who think that you can be pro-Euro and anti-austerity. As this round of negotiations show, the economics and politics of the euro are not separated like that. The Euro is a political project. It is unification without sovereignty. It is the delegation of national sovereignty to groups of finance ministers and supranational bodies whose main task is to suppress the re-appearance of the very source of their power. The political institutions and practices that have grown up around the euro and the EU are based on the belief that exercises of sovereignty are dangerous, irresponsible, and unaccountable. Although these institutions are in one sense nothing more than the product of agreements between nations, their raison d’etre is to prevent any further, outright expression of that sovereign power. That is why they insist on total subjection to their decisions, and why Greece became about more than Greece. The Greeks dared to assert popular sovereignty at the only level it is currently possible to do so. The bitter irony being that the discretion demanded by these post-sovereign entities is less accountable than when exercised as the outright power of a democratically elected government. And no less vindictive.

Alex Gourevitch

 

The Grand Old Duke of Athens

11 Jul

Alex Tsipras has caved in to the demands of Eurozone creditors. He rightly claims that he has no mandate to leave the Eurozone. However he also has no mandate to accept the creditors’ demands. In the referendum that he called, Tsipras convinced the Greek people to vote decisively against accepting an austerity package very similar to the one he is now recommending. The Greek parliament’s approval of the package last night is an empty formality that does nothing to conceal the final surrender of Greece’s sovereignty and with it any remaining pretence of self-government. The parliamentary majority that Tsispras commanded was made up of the utterly compromised Syriza and the opposition parties whose arguments the Greek people decisively rejected in the referendum campaign less than a week before.

The contradiction in Syriza’s strategy and its mandate has been fully exposed. From its election as a government to the referendum, Syriza convinced the Greek people to vote for something that was not possible: staying in the Euro without the austerity that was the condition of staying in the Euro. This strategy has now come unstuck, as it was bound to. Faced with a stark choice of leading their country out of the Eurozone or giving it up to the control of Eurozone leaders, Syriza has opted for the latter. At the time of writing, it is still possible that the Eurozone will decide to kick Greece out, notwithstanding Syriza’s capitulation. But whatever the outcome, democrats need urgently to assimilate the lesson of this political debacle.

Tsipras and Varoufakis claimed that they could use the Greek people’s support in elections and the referendum to increase their bargaining power in an intergovernmental forum. They discovered that there was no truth in this claim. They fatally misunderstood the nature of the Eurozone and the EU. These are not institutions in which different sovereign nations reach a compromise on their interests, as they erroneously believed going into the negotiations. They are institutions in which national governments agree to subordinate their national will and interest to a set of technical rules dictated by market imperatives. As Syriza discovered, this institutionalized self-limitation of national sovereignty by European governmental elites is implacably hostile to the idea that policy should be accountable to electoral majorities. The essence of the Eurozone and the EU is anti-democratic.

Instead of being straight about this with his supporters, Tsipras, like the Duke of York in the English nursery rhyme, marched the Greek people up to the top of the hill only to march them back down again. This futile manoeuvre failed to cover up his retreat, and it is likely to have a profoundly subversive effect on democratic politics in Greece and beyond. After months of populism Syriza have flipped and now do the work of the technocrats. Voters have been forcefully reminded that neither their votes nor their views count for much in contemporary Europe. Many will react to Syriza’s capitulation with resigned acquiescence, while others will simply turn away from representative politics in disgust. The worst of it is that many people, and not only in Greece, will take away the lesson that democratic political action is impotent in the face of market power.

To have any chance of reversing the effects of this disaster, democrats need to be realistic about the anti-democratic nature of European integration and recapture the idea of popular sovereignty from the populist right.

Peter Ramsay

The real sins of Varoufakis

9 Jul

Why have negotiations between Greece and creditors collapsed, to a point of virtual no return, when both sides have repeatedly said they want the same thing: for Greece to stay in the euro?

The conventional wisdom is that the policy gap between the two sides was simply too great. Elected in January, the Syriza-led government sought to reverse years of austerity under the slogan of no more bailouts. Its flamboyant finance minister, Yannis Varoufakis (who has since stood down), spoke of an economic transformation in Greece, taking on the long-standing power of the country’s oligarchs. His renegotiation with the Troika was part of this broader agenda.

Facing Greece was a German-led bloc committed to more austerity and structural reforms. Within this bloc were countries – Ireland, Portugal – that had turned to the EU for their own bailouts and had undertaken the cuts and reforms asked of them. They were implacable in their belief that Greece should do the same.

But this view cannot explain why both sides came as close as they did. The often-forgotten truth of the last few weeks is that Greece and the Troika very nearly secured a deal. From the outset, the policy differences between them have been minor, largely because of Syriza’s moderate demands.

In early 2015, there was a lot of sympathy – including from the IMF – for Greek debt relief. When Varoufakis argued that a crisis of insolvency should not be confused with a liquidity crisis, he was listened to. Even in the very final stages of the negotiations, the remaining differences were small in what was multi-billion euro loan agreement. In the recent referendum, heavyweight economic commentators like Joseph Stiglitz and Paul Krugman argued for a ‘no’, saying the intellectual case for a revised bailout agreement and debt relief was solid.

The negotiations didn’t break down because of an unbridgeable gap between the North and South; creditors and debtors; the German ‘Ordoliberalism’ of Schäuble and Djisselbloem and Greek-style Marxism of Varoufakis and Tsipras. This gap has never existed. They broke down because Varoufakis repeatedly breached the Eurogroup’s etiquette. In doing so, he challenged the very foundations of the eurozone’s mode of governance.

The Eurogroup is not a democratic institution. Though it is made up of finance ministers from democratically elected governments, these ministers meet as individuals who are there on the assumption that they will build consensus, make compromises, and reach agreements amongst themselves.

The etiquette of the Eurogroup is that one leaves one’s national interests at the door. Relations are more personal than political. Ideologies and grand statements of political doctrine have no place in the body’s deliberations. If a minister is constrained because of a difficult situation at home, this is treated as an understandable – if unfortunate – problem thatneeds to be solved. Ministers find in the Eurogroup a source of energy and support for taking on their own domestic populations. It is also a private club of sorts, where what goes on inside remains secret. Ministers attending the Eurogroup are transformed from politicians representing interests into experts seeking solutions to common problems.

The hostility towards Varoufakis stems from his breaking of all of these rules. He refused to play the Eurogroup game. It’s not really about riding a motorbike, wearing combat trousers and being a celebrity academic-blogger – though his charisma and popularity probably created jealousies amongst the other (colourless and tie-wearing) politicians.

At the heart of the matter is how Varoufakis presented his demands. Thinking of himself as a representative of the Greek people, he made his wishes public, and when in the Eurogroup, he maintained the same stance – changes in views could not be informally agreed around a table but had to be taken back to Athens and argued for, in cabinet and with the Syriza party.

It was this breach of etiquette that made agreement impossible. Creative solutions can usually be found in the EU. It is, after all, a machine built on compromise. But when someone violates the very rules of the game, nothing can be done. Varoufakis exposed the Eurogroup as a private club where relations between individuals matter more than relations between the populations that are formerly being represented around the table. For that, he – and Greece – must now be punished.

Christopher Bickerton

Originally published on Le Monde Diplomatique

The end of insolvency

10 Jan

An arresting fact published yesterday in the Financial Times: the lowest rates of insolvency in Europe in 2011 were in Greece, Spain and Italy, the countries that faced the brunt of the Eurozone economic crisis. The newspaper continues: fewer than 30 in every 10,000 companies fail in these three countries, at the same time as nearly one in three companies is loss-making. There couldn’t be a clearler proof of the fact that Schumpeterian creative destruction has taken leave of Europe.

There are various explanations for this. For instance, the low level of corporate insolvencies is partly a reflection of government action: companies that might otherwise have gone bust have been able to borrow from their governments at very low rates, making refinancing of existing loans possible. Fearful of the political fall-out from lots of businesses going bust, governments have kept them alive. The broader climate of cheap borrowing, made possible by central bank action, has also played its part.

According to the FT, however, action by public authorities is only partly to blame. The real culprit appears to be the banks. Faced with so much pressure on their balance sheets, and saddled with bad loans, banks have been very reluctant to force businesses into insolvency or restructuring procedures. Rather than take the hit, they have preferred to hang on, letting the bad loans sit on their balance sheets. This has been the case particularly in Spain, but also elsewhere across the continent. Here we obviously see the underlying causes of the crisis working their way back into its resolution. Central to the debt-financing that occurred prior to the crisis, it is the same debt that prevents a more decisive resolution of this crisis.

We should, of course, be wary of bullish talk about the constructive effects of insolvency. The FT quotes one company chairman who laments the fact that all the company’s revenues are being taken up by pension payments to retired employees. “We are unable to invest in new growth areas”, he complains, because of these pension obligations. One wonders what his solution would be: renegue on the payments and ask the pensioners to find alternative sources of income?

Clearly, the idea of creative destruction works less well in an age when corporations have welfare obligations. But is also rests upon an expectation that public authorities command enough authority to be able to weather restructuring storms. Evidently in Europe this is not the case. Alongside a fear of social unrest is also a fear and hostility towards change. In countries like Greece, Italy and Spain, and certainly in France, governments talk about supply side reform and a fundamental transformation of their economies but there is little idea of where they would like to go or of what they would like to do. This political impasse is matched at the corporate level. Creative destruction after all rests upon an optimistic attitude towards the future: something new can be built, new energies can be released if the old is torn down. Restructuring is often driven by hedge funds looking to buy up assets cheaply and sell them on for a profit. But in Europe’s current predicament, we also see hostility towards change present across the political and corporate elite. And the banks, supposedly the most gung-ho and reckless of the lot, are the most cautious of them all.

Aglietta on the crisis

26 Sep

In a comment last week on George Soros’ well-publicized essay on the Eurozone crisis, we noted his fixation with the European roots of the present crisis. In his view, the combination of the Eurozone’s curious institutional design (a common currency without a fully empowered central bank) and the overly cautious approach of European policymakers together explain the European sovereign debt crisis. Whilst there is a specific European dimension to the crisis, we argued that it is also a crisis of capitalism, not just of the Euro.

In a piece published in the New Left Review in May 2012, the French economist Michel Aglietta gives his account of the European crisis. His account is more general and wide-ranging that Soros’. His explanation of the debt build up in Western economies is tied to the emergence of a new “accumulation regime”: one that demands a maximisation of returns for shareholders and downward pressure on labour costs. The gap between stagnating wages and the demand needed to maintain growth levels is provided through credit. The availability of credit in Western economies was made possible by various factors, including financial innovations and the recycling of large dollar surpluses built up by East Asian economies. These surpluses were an outcome of the East Asian crash of the late 1990s: a traumatic event that pushed governments in the region to insulate themselves from further instability by focusing on export-led growth.

Whilst generating a great deal of liquidity within the global financial system, these developments in East Asia also help explain why European economies failed to capitalize on the boom years of the 2000s when borrowing rates across the continent fell steeply on the introduction of the Euro. Aglietta notes that the intention in the early 2000s was that the mobility of capital within Europe would lead to a convergence of national economies. Productive investments would be sought out and the differences between national economies would slowly disappear. Capital certainly flooded to those countries that had the highest interest rates prior to 1999 – Greece, Spain etc – but there was no evening out of competitiveness across the region. In fact, as Aglietta notes, divergences grew. This was because at the same time as capital was moving into Europe’s periphery, so were East Asian economies beginning a concerted export drive as a response to their 1997-1998 crisis. Unable to compete with these imports, industrial activity in Spain, Portugal and elsewhere shrunk. Capital was channelled into a property and services boom, with growth becoming dependent upon rising house prices. In a better starting position and not faced with the temptations of sudden influxes of capital, countries like Germany and the Netherlands faced up to East Asian competition and were able to generate their own export surpluses. Aglietta also notices that given the poor performance of the German economy in the first half of the 2000s, the country was not sucked into the property boom that affected countries like Ireland and Spain. Divergences within Europe are thus not only an internal European story but have a global dimension as well.

Aglietta makes a number of other important points. His discussion of the options open to Greece and to Europe makes for interesting reading. He notes that Europe cannot really afford a Japanese-style era of deflation and high public debts. A reason for this is that Japan has a large industrial sector and is in a very dynamic part of the world. Aglietta also observes that Japanese debt is financed by Japanese savers, meaning that the risk of spiralling debt refinancing costs is kept low. In Europe the situation is different on all counts, making it difficult to replicate the Japanese model. On Greece, Aglietta gives a detailed breakdown of how “Grexit” would work, arguing that the long-term benefits outpace the short-term costs. Argentina, he argues, did the right thing but it did it badly. Greece could learn lessons from it and exit the Euro in a more orderly manner.

For all the elegance in his exposition, Aglietta’s solution to the crisis is surprisingly apolitical. He argues that “the euro must be constituted as a full currency, which means it must be undergirded by a sovereign power” (p36). This means transferring competences to the European level, fiscal union, and a long-term development strategy based on the idea of permanent transfers from one part of Europe to another. Aglietta’s recommendations are obvious but the problem today is that public opinion across Europe is moving in the opposite direction, against the idea of further transfers of power to European institutions. In practice, pursuing Aglietta’s recommendations means deepening the gap between national politics and European-level policymaking, thus compromising democracy in the name of economic emergency. Whilst that may provide some palliative to the economic crisis, it will only make the political crisis even greater.

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