Changing of the Guards

by cominsitu

The recent anarchist riots in Greece have cost the country billions of dollars in damage. Rioters destroyed shops and luxury cars, sparing homes.  They attacked Citibank and other buildings which represented the system.  They were not interested in looting.  For example, they broke open an ATM machine and burned all the cash.

The recent anarchist riots in Greece have cost the country billions of dollars in damage. Rioters destroyed shops and luxury cars, sparing homes. They attacked Citibank and other buildings which represented the system. They were not interested in looting. For example, they broke open an ATM machine and burned all the cash.

by Cognord, Brooklyn Rail, July 2015

It appeared that the endless saga of the negotiations between the Syriza government and the European lenders had come to an end. After five months of ferocious zigzags, suspense, and fear, a certain deal had been reached. A sense of relief was radiating from the world press, the technocrats, and government bureaucrats. Whether the deal would be a success or not, however, seemed to depend on whom you ask. For those who wanted to ensure that austerity would continue, the deal was certainly to their liking. Curiously, for those who claimed to be on a mission to end austerity, the deal was also favorable. For those who will be immediately affected by the proposed measures, it seemed that not much had changed. The devil is in the details, some say, and many would have preferred those details to get lost amidst the obscure technicalities. Unfortunately for them, however, even Lorca knew that “ […] under the multiplications, the divisions, and the additions […] there is a river of blood.” The relief and satisfaction that the deal brought about could only have been short-lived. In fact, it could only have provided some gratification to the extent that it remained on paper. For as soon as its measures would have been implemented, the party would have been over.

Gentlemen, we don’t
need your organization

In the February 2015 issue of the Brooklyn Rail, I described Syriza’s infamous Thessaloniki Program(its veritable pre-election box of promises) as a minimal Keynesian program, with no real chance of reversing the catastrophic consequences of five years of violent devaluation. Back then, to say this was nothing short of blasphemy. An enthusiastic left was roaming around the globe speaking of a radical left, proclaiming an end to austerity, blowing a wind of change. Criticisms of Syriza and its economic program were cast aside as indications of an unrealistic and arrogant ultra-leftist dogmatism.

Today, the very people who supported Syriza in widely read articles and interviews are forced to admit a certain “moderate Keynesianism”1 in the initial program as well as a real distance between that program and today’s agreement. The happy chorus has stopped singing about the “end of austerity/Troika/etc.,” and has made a hard landing onto the desert of the real.2

It seems it took five months to openly admit what was already clear from the February 20th agreement. And while for those who put their trust in Syriza it is somewhat understandable that hope dies last, for those close to the decision-making process of the Greek government, such naiveté is, to say the least, suspicious. For if something has become crystal clear in the last few months, it is that Syriza was not negotiating with European officials; it was actually negotiating the ways through which the continuation of austerity will be accepted by its own members and by those who will be forced to endure its consequences.

Decline and fall of the
spectacle of negotiations

From the February 20th agreement in the Eurogroup onwards, it had become clear that Syriza was in no position to implement its Thessaloniki Program. After it became clear that they had no leverage to impose a discussion on debt reduction and an admission of Greece into the Qualitative Easing program of the ECB(European Central Bank),3 Syriza’s last chance was to rely on a show of good will from the Troika (which was kind enough to accept a ridiculous name change into “Brussels Group”), in exchange for social and political stability in Greece’s troubled territory. A clearly misunderstood version of the “extend and pretend” policy that the Eurozone has been following since the beginning of the crisis was seen by Syriza as a possible win-win for everyone: both the Troika and Syriza would pretend that austerity is minimized, while its essential character would remain unchanged.

However, a combination of the orchestrated irritation caused by Finance Minister Yanis Varoufakis and his inconsistencies, and the more substantial fact that any lenience towards Greece might spiral down towards Eurozone countries with more significant GDPs, meant that this sort of divergence from austerity was out of the question.

The only remaining way to salvage the spectacle of “negotiations” was to engage in a PR campaign which would offer different narratives to different audiences. In this process, what was a series of humiliating compromises in the Eurozone meetings was constantly transformed into a “harsh negotiation” for the Greek audience. Varoufakis became a cause célèbre, whose ability to annoy German Finance Minister Schäuble became a source of national pride in Greece. A mixture of hope beyond proof, disbelief, and the non-existence of political opposition made the task even easier for Syriza’s think-tanks. To top it up, one only needed to throw in a series of incomprehensible figures and decimal points. The self-evident truth of the abandonment of any prospect of minimizing austerity consequences was mystified through a steady production of numbers and statistics which left even experienced “experts” baffled.

Who gives a fuck
about an Oxford comma?

In the last few weeks, the “drama” of the negotiations reached its zenith. Back and forth in Brussels, during meetings upon meetings, technical details and strong words were exchanged. It seemed like both sides did their best to uphold a continuously climactic situation, offering cliffhanger after cliffhanger to the addicted spectators. Will a deal be reached? Will we see a Grexit? Is austerity going to continue, or will the “radical left” government of Syriza restore democracy in Europe? How will the markets, these guardians of truth, react?

As soon as one took a closer look at the negotiations, the disagreements and the actual source of this endless conflict, a cloud of boredom descended. Will the fiscal surplus be 0.6%, 0.8%, or 1%? Will Value Added Tax (VAT) be raised by 2% or 3%, and which exact commodities will these increases affect? Will parametric measures equal 2% or 2.5% of GDP? And what about administrative measures? Will there be an ESM-ECB debt swap?

The ease with which both Syriza and the Troika threw around these numbers was nothing but an indication of their contempt for their actual meaning. For what was there to see behind these numbers but imaginative variations which denoted tax increases, direct and indirect wage and pension cuts, and privatizations? How could one possibly miss the accord between the “radical left” and “neoliberal Europe” in their discussions about the need to modernize, to make the economy competitive, to perform a series of structural reforms that, as we were informed by Mr. Varoufakis, are essential for Greece to “stand once again on its own feet”? Can someone really remain confused after the announcement that paying the (hated and formerly to be abolished by Syriza) property tax of ENFIA was “the patriotic duty of Greek citizens”?

The narrative chosen for the internal audience of Greece in order to transform apples into oranges was not only based on the “creative ambiguity” of the Finance Minister. On the side, the PR hacks of Syriza started cultivating the idea that the lenders were treating them so unfairly that not a single unilateral law can be passed by Greek parliament without the approval of the Brussels Group. And thus, in a simple twist, collective bargaining, the increase of the minimum wage, and other measures aimed at tackling the “humanitarian crisis” were put on ice and delegated to a distant future.

To a certain extent, this intransigence of the Troika was, of course, evident. But it was also clear that Syriza selectively used this fact as a useful alibi. For a lot of people failed to understand how, while any measure that was supposed to relieve impoverished proletarians was blocked by the Troika’s intransigence, this never stopped Syriza from making long-term economic deals with Greece’s most important capitalists.

How can Syriza’s members and fervent supporters explain, for example, the recent handing out of lucrative public works like waste management to Bobolas’s company Ellaktor?4 Or maybe offer some reasonable justification why Bobolas’s contract to financially exploit the highway tolls was extended to forty-five years? Are we really meant to swallow the idea that the reason behind the new agreement between the Attica local municipality and Siemens (a company under investigation by Syriza’s government for money laundering and corruption) was simply that the deal was “already at an advanced level and could not be stopped? Last but not least, we would be really interested to hear someone explain (in radical-left fashion, please) the statement by deputy Finance Minister Nantia Valavani that any increase in the taxation of wealthy ship-owners runs against the Greek Constitution.

What was initially only felt as a glitch in the screen of the “first-ever-left-government” soon became a inevitable conclusion. Syriza’s government had decided that its allegiance rested not with those who believed that austerity would stop, but with those (inside Greece and in Europe) who were afraid that a left-wing government might prove unable to implement the “necessary” restructuring that austerity is meant to deliver.

A brief look at the language chosen by Greek officials in the course of the “negotiation” reveals as much. Moving away from the abolition of the Troika, the reduction of debt, the series of immediate measures to deal with the “humanitarian crisis,” the Newspeak of Varoufakis was indicative of their self-understanding and selling point:

A common fallacy pervades coverage by the world’s media of the negotiations between the Greek government and its creditors. The fallacy, exemplified in a recent commentary by Philip Stephens of the Financial Times, is that “Athens is unable or unwilling—or both—to implement an economic reform program.” Once this fallacy is presented as fact, it is only natural that coverage highlights how our government is, in Stephens’s words, “squandering the trust and goodwill of its Eurozone partners.

But the reality of the talks is very different. Our government is keen to implement an agenda that includes all of the economic reforms emphasized by European economic think tanks. Moreover, we are uniquely able to maintain the Greek public’s support for a sound economic program.

Consider what that means: an independent tax agency; reasonable primary fiscal surpluses forever; a sensible and ambitious privatization program, combined with a development agency that harnesses public assets to create investment flows; genuine pension reform that ensures the social-security system’s long-term sustainability; liberalization of markets for goods and services, etc.

So, if our government is willing to embrace the reforms that our partners expect, why have the negotiations not produced an agreement?5

Inside Greece, however, the narrative was strangely different. Syriza was proclaiming that it would never cross its “red lines” and would not agree to a program that ignores its mandate, while it started circulating the notion that the aim of the Troika was to bring down the government. This spectacle of a government strongly committed to fulfilling its pre-electoral promises (repeated extensively by the foreign press) was in stark contradiction with the fact that that government had entirely abandoned them, but it did serve a purpose: Syriza’s support increased, while it skilfully pre-empted any ridicule of the “negotiation” process.

Interestingly, the Brussels Group and interested parties played along with this narrative. Article after article and statement after statement highlighted theunwillingness of the Syriza government to fulfill its obligations to the lenders, its fragile commitment to the “necessary” reforms, its denial of restructuring.6 When these explanations appeared to lose their effectiveness, the go-to-villain was ready at hand: Syriza’s internal opposition.

There is really no other way to explain the latest stage of “negotiations” than as a veritable piece of theatre, meant to convince both sides (and the public glued to the screens) that there is such a thing as a “negotiation”—even though its exact characteristics are somewhat slippery. The roles were interchangeable: sometimes it was Syriza who raised the flag of no-compromise; in another case, the “negotiations” were torpedoed by the IMF, which curiously echoed Syriza’s (long-abandoned) demand for a debt restructuring as a prerequisite for any deal. And when in May Syriza came up with a forty-seven page proposal officially declaring their will to continue with austerity, the negotiations collapsed after Eurogroup counter-proposals demanded further cuts at a level not ever demanded in the last five years of non-negotiated austerity.7 Notions like irrationality and absurdity were hard to keep contained.

Post mortem ante facto

For the past weeks, spectators found themselves trapped in a “groundhog day” experiment: every Eurogroup meeting was announced as “the meeting to end all meetings,” every inability to reach a conclusion was seen as a straight path to Grexit, every time the “markets” reacted negatively to the continued instability … and every single time, the conclusion was a pre-recorded message which proclaimed that “progress has been made, but a lot of work is still needed.”

In this race to the finish, and despite the nonsensical comments, it became clear that what was at stake was merely the ability of Syriza to pass further austerity measures as either a victory or an inevitability. Or both. When it started to surface that Syriza’s own proposal would not be easily accepted by all its members (and, perhaps more importantly, by those who would pay for it), stronger means were employed. The ECB joined the dance, threatening a cut of ELA funds, a move that would force the Greek government to impose capital controls (and essentially pave the way for Grexit), while a variety of European officials started proclaiming that a possible Grexit would not have the devastating results that people think.8

Whether this was a conscious decision or not is slightly beyond the point. But the result of this spectacle of absurd intransigence on behalf of the Troika produced a very specific outcome: Syriza found itself in a position to present the basis of its forty-seven-page proposal as the “only realistic ground for any negotiation,” while violently rejecting the (absurd) counter-proposals. This portrayal of Syriza as actually defending “red lines” (both internally and externally), while accepting further austerity, seems to have broken the spell. For the first time, all interested parties seem to agree that a deal has been reached and can be signed by all.

At the moment (this was written on June 28th), all eyes are now on the question whether Syriza will manage to pass this proposal in parliament. Some of Syriza’s own ministers and MPs, have publicly declared that the latest deal is in fact worse than the one the previous government rejected, and proclaim that they will refrain from voting it in. It is debatable whether Syriza will actually manage to convince its “rebels” that the deal is a victory and an inevitable outcome of the “negotiations,” let alone make them adopt an approach that says that this deal “buys Syriza time to focus on the defeat of neoliberal policies.” But here is the catch: this does not change much.

If Tsipras believes that the agreement will not pass in parliament, it is very likely that he will call for elections. At the moment, reasonable polls put Syriza well ahead of any other party, and obviously in a position to gain an overwhelming majority. As a result, elections at the moment would only help Syriza consolidate its position and, more importantly, form a government with the explicit and democratically verified mandate to[…] sign the previous agreement. And this time without any internal opposition.

The only problem with this whole saga lies elsewhere. The agreement signed (either now or after a new election) will impose crippling taxation; it will reduce pensions; it will proceed with privatizations; in short, it will aggravate the very reasons why Greece has been in turmoil (in one way or another) for the last five years. Looking beyond the insignificance of political games and spectacular “negotiations,” the agreement that Syriza wishes to implement might make its European counterparts happy, but does nothing to stop or even minimise the actual crisis and its social consequences. What the last five months have shown is only that the “extend and pretend” policy works well inside the Eurozone. But its troubled times are far, very far from being over.

Update (July 2)

Just when a deal seemed finally to have been reached between Syriza’s government and the Troika, all hell broke loose. Negotiations broke down, Greece defiantly rejected the Troika’s latest proposal and on June 27th Tsipras announced that a referendum is to be held on July 5th, which many have (mis)interpreted as a referendum on whether Greece will remain in the Eurozone or not. To top it all, banks were closed (until the referendum) and capital controls were put in place forbidding money transfers abroad and limiting daily withdrawals to €60 per day.

“ATMs and Anarchy” by Sharon Mollerus (flic.kr/p/67vBj9),
used under (CC BY 2.0) / Desaturated from the original.

As I explained in the article, a deal of this sort would have been very difficult to pass. And this is exactly what Merkel herself hinted to on June 25th, just before everyone was about to sign, when she proclaimed that the real problem is whether it will be signed off on by the Greek parliament (i.e. whether Tsipras can guarantee the compliance of his own party). At the moment, it became quite clear that this was not very likely.

In what can only be explained as the troika giving a (risky yet) helping hand to Tsipras, the signing of this deal was sabotaged by the last-minute addition of a number of inexplicable measures that Syriza had already rejected (while incorporating a series of harsh austerity measures in its own forty-seven-point proposal). Suddenly, Syriza landed back in the seat of a defiant, left-wing government and the Troika appeared once again as an intransigent, neoliberal evil lender.

On the morning of June 27th people woke up to meet a Syriza reminiscent of its pre-election bravado: defiant, drawing red lines that will-not-be-crossed, denouncing European anti-democratic procedures. Only difference, for those who cared to notice, was that this time round, Syriza’s “red lines” included an explicit continuation of austerity with pension cuts, new taxes, and privatizations. Varoufakis had used Syriza’s continued public support as an important selling point. But it looked like this was not
entirely ensured.

The announcement of the referendum seems to have the purpose of ensuring this “public support.” And though everyone appeared to be taken by surprise by this development, a closer look at what is at stake reveals quite a lot. The question of the referendum is whether Greek citizens approve of or reject the proposal of the Institutions (Troika) made on June 25th. Not Syriza’s counter-proposal, not a previous Troika proposal (there have been many), nothing of the last five months. Now this means very specific things.

A “yes” vote is quite clear-cut. It essentially means that the majority of the Greek population is willing to allow the Troika to continue shaping its economic policies, with the government reduced to its previous role of simply and hastily ratifying the already-made decisions. A “no” vote, on the other hand (which is what Syriza is propagating), is not as clear. It includes those who wish a Grexit; those who want to continue negotiations; those who would accept an “honorable compromise” with slightly less austerity, and a whole number of others that fall somewhere in between these categories.

Now if a “yes” answer prevails, Syriza will resign (they have already announced that much), since while they will respect the democratic decision of the referendum, they are unwilling to be the ones to implement its consequences. Thus, and most probably, a temporary coalition government will be formed (most likely with the participation of New Democracy, PASOK, and Potami) who will then be charged with implementing the harsh austerity that the Troika’s latest deal included. In the meantime, Syriza can enjoy a position of a very sizeable official opposition, eat popcorn, and wait for the temporary government to announce elections a few months down the road (with Syriza’s victory a most probable outcome). If a “no” answer prevails, Syriza is more or less given a free hand to interpret the result as it sees fit. It can push for a Grexit and a return to the drachma (though they have explicitly said this is not what they want), it can restart negotiations (either from their own forty-seven-point program or from scratch), it can make use of “creative ambiguity” to reach some other deal.

In short, the situation seems to be a win-win scenario for Syriza, something that has not escaped the attention of the main opposition parties which, after trying (and failing) to get the referendum cancelled, are now engaged in a vicious (and mostly hyperbolic) propaganda war which results in stark polarization of Greek society and the adding of votes to the “no” side.

One might chose to believe that European counterparts were genuinely surprised by these developments or not. In any case, their reaction has so far been rather conciliatory: the non-payment of the IMF was officially not treated as a sovereign default, capital controls were not interpreted as a direct path to Grexit, and they seem awfully pre-occupied to ensure everyone that they will do their best for Greece to remain in
the Eurozone. The only exception seems to be Germany, whose go-to narrative in relation to the Greek crisis seems to have backfired on them. The constant propaganda that lazy Greeks are being fed German hard-earned money, without committing to any of the reforms and their obligations, has led many in Germany to wish for Greece to be kicked out of the Eurozone. Useful as this fairy-tale might have been in the past, it now appears to have the opposite effect. And Merkel might soon have to come clean and explain that, in fact, Germany will lose its money and start paying for this crisis only if Greece exits the Eurozone.


Endnotes

  1. C. Lapavitsas, “The Looming Austerity Package,” Jacobin, June 12, 2015.
  2. It is peculiar to note that those on the left of Syriza (like Lapavitsas), only recently re-discovered their opposition to the euro and the EU. In their new role as Syriza’s MPs and internal opposition, they urge (whom exactly, is not very clear) a fresh examination of alternatives. As far as we have seen, this anti-EU alternative is precisely what they have been propagating for the last five years. So, in reality, they have a five-year-long background in this quest for the holy grail, giving them a decent head-start and the opportunity to finally present their
  3. Any debt reduction, or any ability of the Greek state to issue bonds and finance itself, would single-handedly eliminate the Troika’s leverage for imposing austerity.
  4. Bobolas, one of the best-known capitalists of Greece, was recently “arrested” by Syriza’s government on tax evasion charges of approximately €.4 million. He immediately paid less than half of that (€1.8million) and was released with all charges dropped.
  5. Y. Varoufakis, “Austerity is the only deal-breaker,” Project Syndicate, May 25, 2015.
  6. Within Germany, Greece’s primary opponent during the negotiations, many members of the Christian Democratic Union of Germany (CDU) party of Angela Merkel openly called Syriza a “communist” government.
  7. One of those newly added demands was an abolition of the Pensioners’ Social Solidarity Benefit (EKAS) benefit, which amounts to a minuscule financial assistance (between €100-€150) for those who receive pensions of less than €300 a month.
  8. It has become a common absurdity to claim that a Grexit would have minimal consequences. As Frances Coppola correctly put it recently, “If Greece were to leave, others would be likely to follow, either because of speculative attacks as in 1992, or because of popular unrest and political change. This would threaten the very existence of the Euro. The oft-expressed view that the rest of the Eurozone is “firewalled” from contagion was never credible and is now evidently false: bond yields are already spiking in other Eurozone periphery countries. The ECB cannot be seen to force out one country while protecting the rest from contagion. That would destroy its credibility as an independent body immune from political influence.” (F. Coppola, “The Greek Negotiations: Many Angry Words And No Way Forward,” Forbes, June 19, 2015).

CONTRIBUTOR

Cognord is unfortunate enough to have been born in Greece, and fortunate enough to have participated in the social movements which attempted to put a halt to the capitalist devaluation of that country. Shortly after the farewell party of the movement (the magnificent general strike and intense riots of February 12, 2012) he left Greece and settled in a cold place. Occasionally, he writes articles about his native land.

Advertisements