Tag Archives: Syriza

Can Syriza reform Greece?

It is interesting to note that media coverage of Greece has almost disappeared. For a couple of weeks in July, Greece and its troubled negotiations with the Troika was front page news, with rolling minute by minute reporting from Brussels and Athens. What most motivated this frenzied coverage seemed to be the prospect of a massive failure, with all the political bloodletting that would result. Great for selling newspapers and filling TV programmes. The main question was could Greece stay in the Eurozone or even in the EU or was the much talked about Grexit about to happen? When a last minute deal was somehow agreed the media quickly lost interest in the whole thing. The complex negotiations over a new long term deal for Greece is way beyond the interests or competence of our media. This tells us a lot about the media and its love of simplifying and bidding up any story. The latest media frenzy – the migrants at Calais, confirms yet again the failures of our media.

However this post is about Greece and the prospects for real change.  By whatever circuitous route it has been achieved it looks like Syriza is on the verge of securing a long term financial deal that will provide the country with support and stability over the coming few years. That this is a poor deal and not good for Greece is at one level, besides the point. For what Greece needs above all else is radical change, and only Syriza is in a position to ensure that this radical change is of a progressive and transformative nature. But in order to do this Syriza needs time and this is why a new financial package is so important. Syriza needs the time and space to turn away from negotiating deals with the Troika and get fully engaged in the serious business of transforming Greece.

This is in large part the key message from a longish article by Stathis Gourgouris on Open Democracy, entitled The Syriza problem: radical democracy and left governmentality in Greece. It is well worth reading in full as Gourgouris outlines in some detail the complexities both of Syriza as a coalition and of the challenges facing the government. The success of Syriza is vital for the people of Greece, but not only for Greece, but for the prospects of successful radical change elsewhere in Europe.

While most of the media attention is on the euro, the real challenge facing Syriza lies in Greece itself. As Gourgouris puts it: “Syriza needs time so as to set in motion the governance of its essential task, which is not so much the settling of accounts with the EU but, above all, the radical reorganization of Greece’s long term corrupt social and political institutions.”

It is in this context that reaching a deal that will bring stability to the country’s finances is of such importance. In the long run transforming Greek society away from the clientelist institutions and practices that have gone on unchecked for decades will do more for the people of Greece than anything else. It is also worth noting that even in times of great austerity, radical change can take place. Perhaps the immensity of the austerity that will be forced on Greece may even help win political and popular support for implementing the kind of radical change Greece so desperately needs.

The prospects for this are quite encouraging. As Jan-Werner Müller reminds us in an article for the London Review of Books, Syriza was elected on a platform not just to end austerity, but to tackle and change the root causes of the underperforming Greek economy. Austerity has not ended but much can still be done in reforming Greece. And as Müller points out, “Given his overwhelming support among citizens and the collapse of the conservative New Democracy and Pasok, Tsipras has a chance to become a great reformer.”

If Syriza is to achieve this then it needs all the support it can get. Tsipras and Syriza remain popular in Greece, but continuing support from the rest of Europe would no doubt be welcome. This support should include the left. We need to go beyond bewailing the nasty Troika and support whatever practical measures Syriza can enact to begin the radical transformation of Greece.

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Syriza – And Now?

As a former UK Prime Minister once said, a week is a long time in politics. Mind  you, it did not take a whole week for the political situation in Greece to gyrate almost 180 degrees. The big No vote against the EU imposed austerity measures barely lasted a day. Greece has now put forward new proposals which look remarkably like the one they rejected a week ago. These new proposals have even been enthusiastically approved by the Greek parliament. What is going on?

As I and others have consistently pointed out there is a yawning chasm at the heart of Syriza’s platform. This was to end austerity and to stay in the Euro. It was never made clear how they would be able to achieve both. The first, ending austerity, was not and still is not, something that Greece can do on its own. It needs the agreement of the infamous Troika, which is not really just three players, but anything up to 21. To get an agreement on changing the bailout conditions and thus ending austerity, Greece needed the approval of all 18 of the other eurozone members. Some of whom need to get Parliamentary approval to do so. Some are smaller and poorer than Greece, and they find it difficult to understand why Greece needs so much additional support.

The other big problem for Syriza is that while an overwhelming majority of Greeks want both an end to austerity and to stay in the Euro, Syriza never explained what might happen if both were not achievable. In large part this may be because the majority in Syriza regards euro membership as essential for the long term future of Greece. In this they are supported by an overwhelming majority of the Greek population. Polls consistently show anything between 70% and 80% in favour of staying in the eurozone.

However Syriza never really engaged with the people of Greece in terms of what alternatives there might be to not getting an agreement with the EU. Which makes last weekend’s referendum all the more puzzling. It is all very well to say you want to strengthen your hand in the negotiations, but for that you need to be able to threaten the others with something. That something could only be a default and with it a possible Grexit. But this is precisely what Syriza refused to do. It made it crystal clear that a No vote was not a vote for either default or Grexit. So what precisely was the point of the referendum?

Some informed commentators, with good contacts with leading Syriza members, have stated that the Syriza leadership expected to lose the referendum. They had reached the end of the road and wanted someone else to take on the burden of agreeing a new deal, with the extra austerity this would entail. This reading certainly makes some sense and is further borne out by the fact that after the resounding No vote, Syriza had no new proposals in place. It took until late on Thursday evening for their new plan to reach Brussels.

Whatever he expected from the referendum, given the massive No vote, Tsipras had no choice but to continue as Prime Minister. However he moved quickly to shore up his position by getting formal support from the main opposition parties in the Parliament. Hence the big vote in Parliament for the new EU proposals. Everyone now awaits the various meetings which will take place in Brussels tomorrow, Sunday. Most commentators expect the EU to agree on a new package for Greece, though it is by no means guaranteed.

What next for Syriza? If the deal goes ahead then the current financial crisis should end, and the banks reopen. The reforms will need to be legislated for and then implemented. Something that has not really happened up to now. Though the new austerity measures will be hard for many Greeks and completely unnecessary in economic terms, there is still much that a radical left government could do. Not everything depends on money. Once the negotiations are over, perhaps Syriza can spend more time on actually governing and implementing some of the small, but essential changes that will in time improve things for the majority of Greeks. Reducing the rather large military spending for example.

Other radical left forces in the EU need to reflect long and hard on the recent developments in Greece. In particular do not promise to achieve two objectives that are likely to be incompatible. In the case of Greece this was promising to end austerity and stay in the Euro. It is not that these two objectives could not be achieved, but rather that, given the current configuration of power within the EU, it was most unlikely. Power in the EU rests with the governments of the member states. And to the misfortune of Greece, almost all of these governments are right wing governments, some of them very right wing. All are committed to austerity and neoliberalism. All have been legitimately and democratically elected, so this is not a conflict between democracy and unelected institutions.

This should not have been news to Syriza. Which makes it all the more incomprehensible that they pointlessly stuck to their original plan. Which seems to have amounted to nothing more than hoping that the other 18 eurozone governments would be swayed by the eloquence of Varoufakis. In this situation it matters not a jot that Varoufakis may be right. What matters is that the others have the power and Greece did not and does not.

The only alternative to accepting a bad deal was to go for no deal and default and probably leave the eurozone. But the people of Greece, including the Syriza government, have consistently made clear that that choice would likely be even worse. Many commentators have urged Syriza to go for a Grexit, on the grounds that a devaluation would speed up an economic recovery and that anyway, things are so bad that they cannot get any worse.

I think they are wrong on both counts. Those arguing for a return of the Drachma and a massive devaluation point to the likes of Argentina and Canada as examples of where this has worked. This seems to me to ignore both that Greece and its economy is nothing like either Argentina or Canada, and just as importantly the global economy is pretty much stagnant at best right now. In the previous examples, both Argentina and Canada benefitted from rising global demand. Not to mention that Greece imports more than it exports.

As regards the argument that things are so bad, why not just go for it, this seems to me to be irresponsible in the extreme. Just to remind some people, things can actually get worse. In fact things can get a lot worse. The people of Greece need all the support they can get, but false promises of a new dawn are the last thing they need just now. Syriza in government can still make a difference to the lives of the majority of Greeks. Not as much of a difference as they would have liked, but still a difference. Let us wish them well and offer any support we can.

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Greece – what is Syriza’s plan?

The rather sudden and unexpected decision by the Greek government to hold a snap referendum on the latest proposals from the Troika has caught everyone by surprise. Something does need to be done to bring this long running and seemingly never-ending merry-go-round to an end, one way or another. Whether this particular referendum will help resolve the crisis is open to question.

The basics are pretty well known. Greece is effectively insolvent. Its debt burden is too great for it to have any prospect of ever repaying this debt. The unprecedented additional austerity measures proposed by the Troika, in the view of most people, will only make things worse. Most of the additional loans go immediately back to the lenders in the form of repayments on previous loans. Hence the merry-go-round analogy. Very little of the loans go to helping the Greek population. While the greater the austerity the greater the long term damage to the Greek economy.

Yet the Troika seem even more determined than ever to force further austerity on Greece. As Paul Krugman puts it, it has been an act of monstrous folly on the part of the creditor governments and institutions to push it to this point.

How should Greece respond? The Syriza led government has responded by proposing to hold a referendum for next Sunday. The Greek parliament has voted in favour of holding this referendum. But will the referendum provide a clear cut result for a way forward?

Various international observers seem to think so. Paul Krugman for example supports the referendum for the following reason: “… until now Syriza has been in an awkward place politically, with voters both furious at ever-greater demands for austerity and unwilling to leave the euro. It has always been hard to see how these desires could be reconciled; it’s even harder now. The referendum will, in effect, ask voters to choose their priority, and give Tsipras a mandate to do what he must if the troika pushes it all the way.”

This is in line with the view of those who believe that leaving the Euro offers the best option for Greece, at least in the long run. Unfortunately the actual question being put to the Greek people does not support this interpretation. According to Reuters, Greeks will be asked the following question: “Greek people are hereby asked to decide whether they accept a draft agreement document submitted by the European Commission, the European Central Bank and the International Monetary Fund, at the Eurogroup meeting held on June 25.”

Alexis Tsipras, the Greek Prime Minister has stated that an emphatic “no” vote would strengthen Greece’s negotiation position. The obvious question here is negotiating what? An improved bailout agreement or an exit from the euro? The referendum question says nothing about the euro and only refers to the bailout agreement. There is a further doubt about the validity of the referendum and that is that the draft document referred to, in effect no longer exists. So the Greek people are being asked to accept or reject a proposal that is no longer available. What’s the point of this?

A further problem with the referendum is that in order to secure any kind of strengthening of Greece’s negotiating position, Greece needs to still be in euro by the time the referendum is held. Will it? The Greek government has asked the EU to extend the current agreement for another two or more weeks to allow the referendum to take place, but this has been rejected. Unless something is agreed today, Sunday, then on Wednesday, 1st July Greece will have defaulted on its repayment to the IMF. Before then, absent an agreement with the EU/ECB, there will most likely be a run on Greek banks. To prevent this the Greek government will have to declare an extended bank holiday and probably institute capital controls to prevent euros draining out of Greece.

This is where it all gets very messy indeed. Greece almost certainly needs to default on most, if not all of its debts. The real issue is whether this is done in an orderly and agreed manner, or is done abruptly without agreement. This could happen if Greece is either forced out of the euro, or voluntarily decides to leave the euro.

The big problem for Syriza is that all the indications are that a large majority of Greeks want both an end to austerity and to stay in the euro. Which is why the referendum question does not mention the euro. However if by the time the referendum is held, next Sunday, it is clear to all that a rejection of the bailout agreement means leaving the euro, how will the Greek people vote then?

For underlying all this is the uncomfortable reality that there is no good option for Greece in the short to medium term. And the long term may be a very long time coming. Leaving the euro will not bring about an end to austerity. It may change who suffers most from continuing austerity, but things are likely to get even worse for many Greeks with a euro exit. There is no short term, painless fix for the Greek economy.

A further complication is that many legal and economic commentators have opined that even with a default there is no need for Greece to leave the euro. In fact it seems there is no legal, treaty based way for any eurozone country to be expelled from the euro. So, at least in theory, Greece could default on some of its debt, and try and remain in the euro. What this might mean in practice is unknown and at the moment unknowable. Much would depend on how willing the ECB and Greece’s partner countries would react. The prospects do not look good.

A final point on the portrayal of the referendum as a battle between democracy and the nasty world of finance. This is just nonsense and not at all helpful. Democracy is not just for Greeks. A commentator on another site puts it nicely and succinctly. “It is normal that a vote in Greece is not binding for Germany, France, Ireland, and the poorer than Greece countries of Eastern Europe. The Greek vote is valid only for Greece’s government. The democratically elected governments of the remaining Euro Group are negotiating according to their own voters opinions. The outcome may please some and not others.”

I agree with Paul Krugman that the governments of the eurozone countries have been acting with monstrous folly in relation to Greece. Alas democracy has never guaranteed the election of sane and reasonable governments. In the eurozone all governments have the same democratic validity. It does no good to anyone to pretend that the wishes of the Greek people are more worthy than the wishes of others.

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Greece – between a rock and a hard place?

The recently elected Greek government has won itself some breathing space as a result of last Friday’s agreement with the other members of the Eurozone. Not much of a breathing space, just four months, and in the meantime there are strict conditions attached to the extension of the current finance agreement. However an immediate collapse has been averted and the ball is now firmly in the hands of Syriza. As I have previously written, Syriza has a strong case, at least in economic terms. Alas, the key decisions will be taken by politicians and not by economists. The Greek government has to persuade a majority of the other governments of the Eurozone. The omens are not looking too good.

It is worth emphasising here that it is not helpful to describe this as the rest of the Eurozone ignoring or thwarting the wishes of the democratically elected government of Greece.  All the governments in the Eurozone are democratically elected. You and I might not like who has been elected, but we must respect their rights as much as the rights of the Greeks. And for Syriza to achieve its twin objectives – an end to austerity and to remain in the Euro – it needs the agreement of the other Eurozone governments.

An end to austerity and stay in the Eurozone?

The difficulty for Syriza is the twin nature of these objectives.  Most Greeks almost certainly agree with these two objectives, to end the austerity measures in place in Greece, and to stay in the Euro.  However it will be very hard for Greece to get a majority of Eurozone governments to agree to this, other than some cosmetic changes. The reason is that some countries, such as Germany, Austria, Finland and others, are wedded to the virtues of austerity. Austerity is seen as much as a moral issue and has been good for them. So they see no reason why Greece should be let off the hook, as they would probably put it. Other governments, such as Ireland, Spain and Portugal, which have willingly agreed to their own austerity programme, have no interest in supporting an abandonment of austerity for Greece.  They would have a damming political price to pay if austerity was seen to have not been necessary after all.

Syriza has been elected on the promise to end austerity and stay in the Euro.  What if that proves to be impossible? This is the great unknown at the moment. If an agreement, acceptable to Syriza is unforthcoming, then the people of Greece will have to choose between maintaining austerity or leaving the Euro. While many non Greeks, on both the right and the left, would love Greece to exit the Euro, it is not at all clear that most Greeks agree. So far opinion polls have consistently shown a majority in favour of remaining in the Eurozone. Though some members of Syriza are for a Euro exit, the majority are not and Syriza’s election platform was to stay in the Euro. So if push comes to shove, and the people of Greece have to choose, it is quite possible that they will choose to stay in the Euro and just put up with the austerity. In this respect it is worth reminding ourselves that Syriza only won 36% of the votes in the recent election.

Can austerity be ended anyway?

The other difficulty for Syriza and for all Greeks is that ending austerity may not be achievable anyway. At least not in the short and medium term. If there is no agreement with its partners, and Greece does decide to leave the Euro, or is somehow forced out, the options are none too good. Leaving the Euro would almost certainly mean a default, at least in practice. While this would at a stroke remove the debt overhang, the country would for some time have no access to borrowing. The government does run a budget surplus, so would be able to pay its way in Greece. However the big downside would be the creation of a replacement for the Euro. Whatever this is, New Drachma?, it would be worth very little. While this would help Greek exporters, it would punish all those who rely on imports. And here is the rub for Greece – its imports are probably more important than its exports. Greece has not much of a manufacturing base and just about all of its energy needs are imported. All of which have to be paid for in Euros or dollars. Which would become terribly expensive for most Greeks. Even the much vaunted tourism depends to some extent on imports – energy, transport etc.

This can of course change. As some imported goods become too expensive for most people, local substitutes will be found. Alas this will take some time. In the short and medium term, leaving the Euro and the massive devaluation that this implies, offers little, if any, gain for most Greeks.

The outcomes facing Greece are not good. The best outcome would be for the other Eurozone countries to admit the error of their ways and change tack on austerity, not just for Greece for all of the Eurozone. All the other outcomes just prolong the agony and suffering of lots and lots of Greeks. As someone once said, a week is a long time in politics, so let us hope that four months is long enough for something good to turn up.

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Is the EU about to implode?

Things are not looking good for the EU at the moment. The recent election of Syriza as the new government of Greece has unleashed some rather disturbing passions. All in response to their reasonable request for a new approach to the debt burdens hanging over many EU states. Unfortunately we are witnessing yet another round of the blame game, this time played out by the member states. As ever Paul Mason in his blog gets succinctly to the heart of the matter – a clash of wills between Germany and Greece. You can read his post here.

As Paul himself recognizes this is all very silly, but alas, potentially very dangerous. The real heart of the matter is how to clear up the mess created by the financial crisis of 2008/08.  A crisis that was not brought about by irresponsible governments. A crisis that was created by individuals and private businesses across Europe. Michael Pettis, an economist at Beijing University has publishes an excellent and detailed overview of this crisis and how it has still to be resolved.  It is a longish piece, see here, but well worth the effort. If Pettis’ article is too daunting, Matthew Klein from FT Alphaville has penned a neat summary of some of the key points. You can read Klein’s piece here.

Pettis concentrates on the eurozone, though it is worth bearing in mind that the crisis started in non euro countries as well, including the UK. Though it is fair to say that the crisis has affected the eurozone more damagingly than elsewhere. Pettis’ analysis is clear that as he puts it, “the euro crisis is a crisis of Europe, not of European countries.”  He calls upon some detailed historical evidence to justify this claim. He goes as far back as 1871 to demonstrate how even Germany has in the past had to suffer similar damaging consequences from too high and too sudden capital inflows.

As many others have regularly pointed out this is not a morality play. And it should most definitely not be presented as plucky little Greece versus nasty Germany. It is worth reminding ourselves that a majority of Greeks have been prepared to vote for parties committed to maintaining the current crippling austerity measures. Even with Syriza’s victory, they and the other anti austerity parties did not win over half the votes. So some Greeks, perhaps a majority, seem to be quite happy to see their fellow citizens continue to suffer. Equally not all Germans are to blame for the current austerity fetish which dominates the thinking of just about all governments in the EU. We should not need to be reminded that German workers have had to endure stagnant wages for over a decade.

The reality is that some people and some businesses, in particular the banking and finance sector, acted very, very irresponsibly. This happened across Europe. For every irresponsible Greek borrower, there was an equally irresponsible German banker. Quite why the workers of Greece or Germany should have to pay the price of this irresponsibility is a bit of a mystery.

The failure to resolve this financial crisis is what has caused the continuing economic mess across Europe. Pettis is very incisive on this point, when he writes, “The financial crisis in Europe, like all financial crises, is ultimately a struggle about how the costs of the adjustment will be allocated, either to workers and middle class savers or to bankers, owners of real and financial assets, and the business elite.” Well there doesn’t seem to have been much of a struggle here. All, and it is worth emphasizing this, all EU governments signed up for the current never ending austerity measures, this effectively putting all the costs onto workers and middle class savers.

At  least up to now, for with the emergence of Syriza and an explicitly anti-austerity government in Greece, there may actually be a struggle as to who should bear the costs of resolving the crisis. We can see why the governments of Germany and other right wing governments in the EU want to maintain the current approach. It benefits their key supporters – bankers, owners of real and financial assets and the business elite, to use the words of Pettis. This also explains why they are so alarmed at the arrival of Syriza.

What this does not explain is why have all the traditional mainstream left parties across Europe also signed up for this austerity nonsense? For this seems to me to remain the key political question. Just think of the roll call of once proud and once powerful parties of the left who now are fully signed up with their right wing counterparts – Labour in the UK, the SPD in Germany, PSOE in Spain, PS in France and of course PASOK in Greece.

Why did they all do it? What led all these self defining parties of the left and of working people, to become willing cheerleaders for neo-liberalism and never ending austerity? The other key, as yet unanswered question, is why has it taken so long for left critics of austerity to come together and form electoral alliances on an alternative to austerity? Perhaps the rise of Podemos and the victory of Syriza will encourage this process in other European countries.

The danger in all this is that the current crisis descends into a right-wing, nationalist extremism. There are no shortage of parties on the right who are already advocating this as a way forward. The growth in popularity of parties such as UKIP, the Front National and other ultra right wing groups should be a wake up call for the left. For all the faults of the EU, its break-up is most unlikely to usher in any kind of paradise for working people. More than ever we need to be building alliances across the EU to bring an end to austerity. We need to do all we can to prevent this crisis descending into a Germany versus Greece contest and instead work to bring working people across Europe together to hold rapacious bankers and business to account.

 

 

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Syriza – What next?

Syriza’s victory in yesterday’s general election in Greece has predictably created a bit of a media frenzy. Shockwaves are apparently spreading out across Europe. While the success of a radical left coalition is welcome, we must be wary of expecting too much, too soon. First up it is worth reminding everyone that though Syriza “won” the election they did so with just 36.3% of the votes cast, on a 64% turnout. This is hardly a ringing endorsement of Syriza or their policies. Due to the peculiarities of Greece’s electoral system, this 36.3% share of the vote enabled Syriza to end up just two seats short of an overall majority in Parliament. They have though concluded a deal with another anti-austerity party, the small, right wing Independent Greeks, to form a government.

What will this new Syriza government do? With the Independent Greeks they have a majority for their anti-austerity plans and, with the support of other leftish parties, for their economic and social policies. The key issue though is can they deliver? It looks like everything will depend on reaching some kind of deal with theTroika – the EU/ECB/IMF – over the country’s massive debt. Syriza is proposing a massive debt restructuring, which would essentially involve a large write-off of much of the debt and would tie future repayments to growth in the Greek economy. All pretty reasonable and sensible stuff, which of course begs the question of why it has not already happened.

This is where Syriza will come up against the Troika and the rigidity of their policies – never ending austerity, with the clear underlying message that it is all the fault of the Greeks themselves – too lazy, too profligate and too corrupt. Channel 4’s economic editor, Paul Mason has been very good at trying to explain the issues at stake. His worry is that there may be an unbridgeable mismatch of expectations between the two sides. On one side, the largely largely centrist, or centre-right mainstream economic thinkers who favour continuing austerity and who dominate the thinking of just about all the governments of EU states. On the other side, and pretty much alone in the EU, Syriza, who want to end austerity, promote co-ops, rebuild the welfare state and workers’ rights, kick the IMF out of EU decision making and slash back the power of a political oligarchy that has gotten rich throughout every crisis. For more on this mismatch of expectations, visit Paul Mason’s blog here.

This does not meant that a deal is impossible. The EU and its member states try to avoid either/or clashes. I fully expect the EU, the ECB and even Germany, to engage with Syriza and seek some kind of compromise agreement. This is where it will undoubtedly get messy. Just how much is Syriza prepared to concede in order to stay in the EU and in the Eurozone? For all opinion polls show that a large majority of Greeks want to stay in both. Reaching an agreement could prove be very messy and very difficult for Syriza.

An inspiration to others? This is clearly what has excited so much of the media attention. Those on the right are fearful that Syriza emboldens other radical left groups and parties, while those of us on the radical left are hopeful that this is indeed what happens. All eyes will soon turn to Spain where a general election is due later this year. There, Podemos, another new party with radical left polices, is making all the running. In Spain there is the further complication of how the campaign for Catalan independence will impact on the results.

Though the success of Syriza is already an inspiration to others on the radical left, any kind of repetition elsewhere will very much depend on how successful the party proves to be in government. Governing is always a messy affair with all kinds of compromises. It is likely that Syriza will be put under some added pressure from both within and without Greece. Some people and businesses, banks in particular, will have a lot to lose if Syriza are even halfway successful. We wish them well – not only Greece depends on them.

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