Some thoughts on current developments in Greece. While events are still moving and uncertain at the moment the along awaited third memorandum between the Greek state and the Troika seems to be on its way. For all the hopes and promises of Syriza, austerity remains.
The rather tumultuous negotiations between the Greek state and the Troika and the events of the last weeks can be said to be a tale of two Sundays. Sunday 5th July saw thousands celebrate as a large number of people voted to reject the austerity demanded by the Troika as a condition of remaining in the Eurozone. One week later, Sunday 12th, and that position was reversed as PM Tsipras agreed to a set of demands even worse than those rejected in the referendum.
We should of course be careful not to read too much into the referendum result. It was primarily a negotiation tactic, a misguided one at that, from a government attempting to make an austerity deal. The fact that around 1 in 3 people abstained from a supposedly critical vote shows that many understood this. Syriza believed calling a referendum would strengthen its hand and perhaps scare the Troika into easing its demands. In the end the Troika first sensed an opportunity to force the Greek government out, when that failed they simply realised that the referendum vote meant nothing to them after all.
This should not detract though from the potential significance of the No vote. The referendum on whether to accept the latest Troika demands was held against a background of capital controls and closed banks. The mainstream media stepped up its campaign of fear to tell people that rejecting Troika demands would lead directly to catastrophe. This was backed up by the majority of politicians, with a number of past leaders and 'elder statesmen' crawling out of the woodwork to campaign for Yes. One of the useful aspects of the brief referendum campaign was the moment of clarity it offered. The whole of the Greek political and economic establishment of the old regime which has ruled the country since 1974 was behind the Yes campaign. So too was the hierarchy of the EU and the markets. When the Yes campaign held public protests it was clear to see it was largely backed by a wealthier demographic with several business leaders even joining in. This was further shown by the referendum results. For example in Athens, the only districts to vote Yes were the wealthy northern and southern suburbs while in some poorer areas the No vote reached 70%. After the referendum the dividing lines seem a little clearer.
We can say that had a similar vote been held on previous austerity memorandums the results would likely have been different. Over time more and more people, many with less and less to lose, are shifting against accepting such measures. The positive we can take from the referendum result is that a large number of people were not scared by the media and even before it is enacted it is clear the next memorandum lacks any legitimacy. We will have to wait and see whether this can be used as part of the campaign against the third memorandum.
However, it is also necessary to note one significant danger the July 5th referendum presented. No doubt for many who voted No it was a case of standing up for national pride rather than rejecting neo-liberal policies. The number of Greek flags seen at the victory celebrations point to this and it should be remembered that aside from Syriza the only parties to approve the referendum were the right-wing Independent Greeks and fascist Golden Dawn. The latter will certainly be happy to see national pride inflated and then wounded, even if by a left government.
A week on from the referendum and it is clear to all that the Troika simply doesn't care about the opinions of people living in Greece. It's not that they ignored the result, instead they reacted by complaining of a lack of trust and countering this by demanding more control and inflicting harsher measures than those rejected. For its part Syriza, having played by the diplomatic and political rules throughout the last months, had nowhere to go. They had not prepared an alternative plan and, determined to stay in the Eurozone, simply submitted.
And so despite a somewhat more dramatic road then many expected, we are at the point many people have predicted. Syriza is about to bring the long awaited third memorandum. With the first and second bailouts dating from 2010 and 2012 having failed and led to an economic depression, a third bailout has been seen as inevitable for sometime. The measures included, which must be rushed through in the next days, will only add more suffering to an already battered populace. Some of the key measures are:
- €50bn privatisation fund to be overseen by Troika officials. This represents a huge increase in privatisations from the previous memorandums and it is unclear yet what will be up for sell.
- Tax increases. VAT is to be raised on a number of products.
- Pension cuts. Retirement age is likely to rise and pensions which have already been cut may suffer further loses. It must be noted that due to huge levels of youth unemployment, pensions are frequently the only income from many families.
- Labour market reforms such as changes to collective bargaining.
- 'Ambitious' primary surplus targets must be met and tied to automatic budget cuts.
Previous measures taken by Syriza, perhaps including the rehiring of fired workers, must be reversed.
Added to the harsh measures was a large dose of blame, threats and humiliation. The Greek state must show an 'unequivocal commitment to honour their financial obligations to all their creditors fully and in a timely manner'. The statement stresses that 'the risks of not concluding swiftly the negotiations remain fully with Greece' and claims that the unsustainability of the Greek state's debts is 'due to the easing of policies during the last twelve months'. Commentators aren't wrong in pointing out the similarities between this loan request and punitive treaties imposed after wars.
In return the only concessions Tsipras can point to are a reference to start a discussion about Greek debt in the future, though an actual write off is strictly prohibited. The other 'win' is that the privatisation fund will be based in Greece(though overseen by the Troika) rather than being transferred to Luxembourg. The terms of the third memorandum represent a major defeat for the Greek state but this is not what should concern us here.
It is still possible that the deal could collapse, at the least it is likely there will be some changes in the government of Greece soon. Whichever way things go hardship for an already suffering population looks likely to increase. Now more than ever we can see that no one in the Greek parliament offers people a real way forward. Syriza swept to power on a wave of hope from a tired population. In the end they proved to be the 'foolishly misguided idealists' they were predicted to be. One lesson from this hardly needs stating. A social democratic left wing party believed that by persuasion and reason they could mitigate the effects of capitalism. They have been proven wrong and another political project has failed. Now more than ever real hope for people has to be built from below.