Ever since the election of Syriza government in Greece in January, prime minister Alexis Tsipras and its main interlocutor with the Troika (The European Commission, the European Central Bank, and the IMF), finance minister Yanis Varoufakis, have become heroes of the anti-austerity left. Small wonder, enamored with austerity, the EU and IMF have managed the Greek catastrophe terribly, perhaps not so terribly as American politicians managed the bailout of Wall Street, while doing little for Main Street and borrowers — at least the EU forced a 50% haircut on the holders of some of Greece’s debt. The austerity program imposed on Greece only weakened Greece’s economy further and has rightly made Greece the poster child for proponents of a revival of Keynesian economics, and the rejection of the neo-liberal belief that austerity is always economically judicious. Syriza’s election seemed to signal the long awaited revolt against austerity that many of the left have long hoped for, and so support among the left in Europe and America has remained strong as the Syriza government’s showdown with the EU troika has come to a head. Yet recognizing that further concessions to the Greek people are necessary should not be seen as a vindication of Syriza’s tactics. For if their rhetoric has been right, Tsipras and Varoufakis have been the worst representatives of the anti-austerity movement imaginable, and in the end it will not just be Greece that will pay the price but the whole left, which has struggled to find a new purpose since the collapse of Communism.
For almost three decades now the post-1989 left lived in a dreamworld unable to offer justification for their critiques of the Washington consensus other than saying “its not fair,” and as such they have been unable to offer a real vision, leaving the “neo-liberals” looking like the only adults in the room. Syriza's management of the crisis and their negotiating strategy has been almost a parody of that problem. Rather than show some recognition of the broader political realities, i.e. that any further haircut the EU makes will effect millions of people, who are not terribly sympathic towards Greece, the Syriza leadership has just complained louder and louder about the unfairness of it all.
If that had worked in the intervening months this blog would not be written. What we have seen, however, is that the Troika has dug in. Meanwhile, people on the left continue to assume that it is the Troika that must budge first, as if the other EU governments are not beholden to their own people. Given Greece’s recent history with the EU, it ought to be clear that the EU countries have quite good reasons for demanding Greece commit to structural reforms before making further concessions to insure that the EU never has to rescue Greece again. For this story begins with the dodgy accounting and especially a big currency swap set up by Goldman Sachs Greece used to get into the Euro.
If that had worked in the intervening months this blog would not be written. What we have seen, however, is that the Troika has dug in. Meanwhile, people on the left continue to assume that it is the Troika that must budge first, as if the other EU governments are not beholden to their own people. Given Greece’s recent history with the EU, it ought to be clear that the EU countries have quite good reasons for demanding Greece commit to structural reforms before making further concessions to insure that the EU never has to rescue Greece again. For this story begins with the dodgy accounting and especially a big currency swap set up by Goldman Sachs Greece used to get into the Euro.
Now the EU shares some blame in as much everyone knew that had not historically managed to meet the deficit and debt limits required of entrants into the Eurozone, but it is also true that Greece went well beyond the fudging other countries did. The miracle of Greece making the Eurozone requirements already began to unravel in 2004, but the EU did not kick Greece out then. Then the discovery of the Goldman Sachs currency swap when the Greek debt crisis began in earnest only damaged Greece’s credibility further with among fellow Europeans, and understandably so for it showed the Greek government was willing to partner with a private investment bank to cover up the truth that ultimately affected all members of the Eurozone. Then came the decision by the Greek constitutional court to declare pension reforms made in 2010 has left other European governments wondering how they can ask their constituents to support more aid when Greeks have not brought their pension systems in line with other European states, so that Greeks can continue to retire earlier than anywhere else in the EU and often at extraordinary percentages of work salaries that would be unheard of elsewhere. That lack of sympathy is especially strong in East Central Europe where peoples all went through their own austerity programs just to get into the EU. Thus, Syriza’s decision not to accept concessions should not be seen just as standing up against neoliberalism as their supporters believe, but as a disregard for the principals that a united Europe which Greece has benefited from considerably. Rather Tsipras and Varoufakis have shown themselves to be stuck in the old mode of politics where national interest trumps all else.
Now that is not to say that the EU has been right not to signal in some way that further haircut of Greek bonds should be on the table pending reforms, but it is remarkable that Tsipras and Varoufakis have shown little open appreciation for the political difficulties such a haircut poses for other European governments absent irreversible concessions. (It is telling that it was the IMF, whose leadership does not have to worry about getting re-elected that leaked the need for a further haircut of Greek debt.) Worse since coming to power Tsipras and Varoufakis have never been honest with the Greek people. They won election by telling Greeks they could keep the Euro without paying the price that the other EU governments say it must. Perhaps we should not chastise them for that, after all politics is about winning elections. Unlike many great politicians who have come into office and then changed their tune, however, Syriza have continued to promise what they could not and still deny the reality that they are not the masters of Greece’s fate. So among the justifications for a no vote is the disingenuous proposition that because keeping the Euro is not in the wording of the referendum proposal that a No vote will not mean Greeks will have to abandon the Euro as seen in bullet points 5 and 6 from Varoufakis’s justification for a No vote:
Posted on July 1, 2015 by yanisv
5 Greece will stay in the euro. Deposits in Greece’s banks are safe. Creditors have chosen the
strategy of blackmail based on bank closures. The current impasse is due to this choice by the
creditors and not by the Greek government discontinuing the negotiations or any Greek thoughts
of Grexit and devaluation. Greece’s place in the Eurozone and in the European Union is non-
negotiable.
strategy of blackmail based on bank closures. The current impasse is due to this choice by the
creditors and not by the Greek government discontinuing the negotiations or any Greek thoughts
of Grexit and devaluation. Greece’s place in the Eurozone and in the European Union is non-
negotiable.
6 The future demands a proud Greece within the Eurozone and at the heart of Europe. This future
demands that Greeks say a big NO on Sunday, that we stay in the Euro Area, and that, with the
power vested upon us by that NO, we renegotiate Greece’s public debt as well as the distribution
of burdens between the haves and the have nots.
demands that Greeks say a big NO on Sunday, that we stay in the Euro Area, and that, with the
power vested upon us by that NO, we renegotiate Greece’s public debt as well as the distribution
of burdens between the haves and the have nots.
.
All this falls under Einstein’s definition of insanity — doing the same thing and expecting different results. Since coming into office they have acted as if the Troika is not the ultimate arbiter of what will be acceptable, and apparently even being kicked out of the council of ministers last week after announcing the referendum has not brought that truth home. Syriza was supposed to represent a new start in Greek politics, but has instead been a continuation of the same politics of wishful thinking that got Greece in this mess in the first place. If Greeks fall for that as they did 6 months ago, it will cease to be shame on Syriza, and become shame on the Greeks for continuing to believe something that is too good to be true.
Worse, for all of Varoufakis’s vaunted knowledge of game theory, he has shown little evidence that he has the same grasp of it in practice as he may have academically. The Syriza government’s brinksmanship over the past six months has been premised on the notion that the rest of the EU does not want to risk having Greece leave the Euro, setting the stage for destabilizing the Euro. For that to be credible, shouldn’t Syriza have been doing something to make Greece’s readiness to leave the Euro look serious? Despite getting moral support for leaving the Eurozone from leading economists, including Paul Krugman, Jeffrey Sachs, and Joseph Stiglitz, and guardedly even Martin Wolf, Varoufakis has apparently done nothing to make the threat look real. They have not educated voters on the advantages of leaving the Euro, and so as the bullet points above indicate, Syriza must retain the support of the majority of Greeks who wish to stay in the Euro to win the referendum. In so doing Tsipras an Varoufakis are risking not just their own political lives, but Greece’s political stability, while the rest of the Eurozone has by all accounts prepared for the contingency that Greece must abandon the Euro.
So what happens under the two possible outcomes of Sunday’s referendum? Let’s start with the no vote Syriza wants. It certainly looks most likely that Europe will begin to close the books on Greece as part of the Euro. As such Syriza is suddenly going to be very unpopular among the majority of Greeks who see staying in the Euro as their goal, and likely all the more because they have done so little to plan for this contingency. Under those circumstances, maybe Syriza will come into its own, but a popular revolt against a party that confidently promised so much without gaining anything seems a reasonable fear. For many, the result will be that the Greek crisis becomes seen not as the rebirth of a new left, but a wooden stake in the heart of an inherently economically reckless left. A victory for Yes doesn’t look much better for Syriza and the left; although, it will likely be better for the majority of Greeks who see keeping the Euro as a priority. The Syriza government will resign, there will be new elections, probably won by the center right, which will make the left look impotent against the “realities of economics;” although not without Syriza and the left winning enough votes on the claim that their failure was all the fault of a great neoliberal plot, thereby threatening the new government’s stability.
What might Syriza have done differently beyond being more honest about the possibility of leaving the Euro? Brutal as it may be, the key would have been to commit at the outset to implement the pension reforms that Europe has so clearly demanded as a means to demonstrate Greeks’ readiness to put themselves in line with the rest of Europe. In so doing, they would have committed to a vision of European unity in which the left can and must play an important part. Indeed, they could have used the need to adopt European norms on pensions to promote a parallel commitment to improve Greece’s notoriously stingy unemployment insurance system, so that old age pensions will no longer become the default safety net as is happening now, and which Syriza has used as its main justification for not reforming the pension system.
Above all accepting that Greece is beholden to its creditors six months ago would have ended the uncertainty that has unquestionably helped perpetuate Greece’s depression. Further, it would have finally removed the obstacle that has prevented the Troika from being more forthcoming, because the need for debt relief and Greeks desire to stay in the Euro has been its only leverage to insure reforms actually get done. In short, Syriza squandered six months during which the mercy it has demanded might have been negotiated. Now all that sounds more neo-liberal than most on the left would like, but this is the reality of the modern left. Progress no longer naturally leads to a socialist paradise. Complaining about unfairness is not enough, it is incumbent on the left to show vision and compassion in a more complicated world than Marx allowed for.
