Taking the blue pill
Far removed at the western tip of Europe, like the cousin one occasionally hears about, the ‘P’ that starts the ‘PIGS’ has been the subject of a thorough marketing operation that displaced its position in the European imaginary, from being ‘the next to follow Greece’ to becoming the success story of adjustment under the Troika and the ‘good student’ of austerity policies in the Eurozone. In spite of more recent warnings by the IMF, according to which the meagre economic recovery of the last year stands on shaky ground and can be offset at the slightest rise in oil prices or interest rates in the international markets, Portugal is frequently incensed by the German government and Eurocrats of all sorts as ‘the case that went well in Southern Europe’. A slight increase in exports (including revenues from a tourism boom in Lisbon and Porto), a precarious (and fading) trade balance equilibrium achieved through massive cuts in public spending and wages, extra revenues from a privatization plan that brought in investment from State-owned Chinese companies and Angola’s plutocratic elites (real estate purchases also increased significantly after several licensing rules were ‘simplified’ and special visas were conceded to big investors), are usually referred as proof that expansionary austerity is possible and that the failure of the policies prescribed by Troika in Greece is due to endogenous causes, beyond the reach of the European Central Bank, the European Commission and the International Monetary Fund. Simplifications such as these are bound to find traction in the international media, just as happened around the time the Memorandum was signed, in 2011, when the Portuguese, like the Greeks, were portrayed as ‘lazy big spenders’ that would soon be joined by the rest of the Southern European countries.
The fairy tale of Portugal as a ‘success story’ – even if we ignore the massive social cost it implied, with poverty affecting over 20% of the population (reports of hungry children passing out at school became frequent) and unemployment reaching a historical high of 17% (in spite of successive attempts by the Government to disguise the numbers with all sorts of publicly funded internship programs), resulting in mass emigration of over five hundred thousand people (the precise number is difficult to determine, but it is reasonable to admit that it was equivalent to 5% of the population) – is based on a persistent attempt to forget that none of the targets included in the memorandum (namely reduction of the State deficit and State spending) were achieved and that the fundamental change occurred when the European Central Bank started buying Portuguese public debt without limitation, thus bringing interest rates down and ending the relentless attack carried out by financial investors against the Southern European countries’ sovereign debt since 2010. Massive changes in labour laws, extraordinary taxes imposed on retired people and wage workers, along with blind cuts across the public sector (mostly in the national health service and the public education service, while the police budget was raised) were undertaken without any visible impact on the country’s competitiveness, economic recovery or fiscal discipline, but the European Commission, the European Central Bank and the Eurogroup, who have been persistently harsh in their judgements of Greece and its need for further ‘adjustment’, have been more than happy to select whatever data best suited their political agenda, so as to invent ‘diligent student’ of austerity.
The political nature of this marketing operation is ever clearer if we recall its chronology: it was the quick electoral breakthrough by SYRIZA in Greece and PODEMOS in Spain, both underlining the immense failure of the politics of internal devaluation, that created the need for a success case to keep alive the narrative upon which austerity in the South is served to the public opinion and voters in the North of Europe. The particularly servile posture of the Portuguese government helped make this operation successful, in a deal that suited both sides, since its internal unpopularity and political isolation (just a year and a half ago it was under a barrage of criticism from even neoliberal hardliners, and no minister could risk walking the streets unless surrounded by a wall of police) could only be compensated through an equally deceiving narrative for domestic consumption, portraying its actions as a ‘painful but necessary remedy’ that would show positive results in the medium-term, just as both the European institutions and the ‘markets’ were starting to notice. By some sort of coincidence, this medium-term coincides with both the Portuguese electoral calendar (general elections for parliament will be held next October) and the Spanish one (late December), while unexpected (?) Greek elections made confrontation within the Eurogroup a major focus of international attention.
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.