Greece After the Referendum

EG-AE336_edp040_G_20150401142419Published: 11 July 2015
Author: Jonathan Clyne (Socialist Network Sweden)

?No? Vote a Major Victory
The widespread mobilisation expressed in the Greek referendum achieved with a single blow what months of negotiations without popular mobilisation had failed to do. It immediately caused a major split within the ruling classes of Europe. On one side, Italy and France are leading the compromisers. Donald Tusk has swayed wildly, but now seems to have fallen into line after pressure from the USA. On the other side, Germany leads a motley coalition of EU bureaucrats and politicians from Spain, Portugal, Ireland and some smaller Eastern European countries that have staked their careers on austerity. They and the self-righteous German leaders, who unlike most European countries have not practised much austerity at home, egged each other on into hysteria.

The issue was never really the repayment of debts. The IMF did not believe that it was possible as a recent document reveals. Most economists did not believe that either. Not even Angela Merkel, as revealed in her private telephone conversations tapped by the NSA and publicised by Wikileaks, believed it was possible. The whole negotiation was just a method of trying to push Syriza into disintegration and out of government.

European Integration in the Balance
In the past thirty years, European integration has proceeded at a pace few people on the left expected. Each crisis has not created disintegration but greater unity. This was possible while the price of greater unity could be passed on to the workers of Europe. It did not have to be at the expense of any capitalist class. It was bonanza time even for the hopelessly weak and corrupt Greek capitalist class. As long as there was no serious opposition, unity reigned. Now everybody is blaming somebody else after the Greek people punched a hole through their strategy. The stakes have been raised tremendously and it could mark the beginning of the end of the euro. And possibly the EU too.

The second consequence is less visible, but at least as important. A broad swathe of those that have suffered under austerity for years, or even decades, were thrilled by the referendum result. It is possible to say no! Marine Le Pen and Nigel Farage have been quick to pick up on the mood and try to exploit it for their nationalist policies. They can succeed only by distorting the result of the vote. It was not a no to either the EU or the euro. Above all it was a no to austerity, something they also stand for.

Turning the Referendum Result on Its Head
So, what did Tsipras and his government do in this favourable situation? They backed down completely. They have turned a massive ?No? into a ?Yes?. Overnight. The historical analogy that springs to mind is August 1914. After years and years, and decision after decision, that in the event of war they would not support their own bourgeoisie and lead workers into mass slaughter in the struggle against another country?s bourgeoisie, the most important leaders of the European labour movement backed down overnight. I had the same sensation as Lenin had when he first heard the news: this cannot be true. It must be a fabrication by the enemy to sow confusion. Now Tsipras?s turnaround has been confirmed.

However, there is a major difference between 1914 and 2015. The Greek government?s action will obviously not lead to a world war. Indeed, we are still on a rising curve for the left as they advance the struggle against austerity. Nevertheless, we have to be clear that this is a serious setback for the international working class. And especially for the vast majority of Greeks who will continue to get hammered into the ground.

Antarsya, the KKE, and others who already cried betrayal when the government signed a temporary agreement will puff themselves up and proclaim that they were right all along. They have great expectations that they will grow by leaps and bounds. But they will not. The working class has been defeated, and that is far more important. Those that cry betrayal at all times regardless of the situation will attract only a few.

Why did this happen?
Well, the prime responsibility rests of course with the European leaders, especially the German ones, and the European Central Bank. Hell-bent on pursuing the same policies that have led Greece (and other countries like Ireland and Latvia) into disaster for most of its people, they gradually strangled the Greek economy. First, they refused to pay out the remains of the loan that had been promised to Greece during an earlier bail-out. Then in February they stopped accepting Greek bonds, effectively making it impossible for the Greek government to borrow money anywhere else. Finally, once the referendum was announced, they stopped emergency funding of the Greek banks, closing them down which in turn started to shut down the economy.

However, the intransigence of the European ruling class should have been expected. They have never yet bowed down to intelligent arguments, friendliness, and willingness to compromise. On the contrary, like all bullies it enrages them. They hated Varoufakis beyond reason, precisely for this. Yes, bullies are prepared to throw a few crumbs to those that bow down in front of them. However, if one, like Varoufakis, appeals to bullies? sense of reason, that is the last thing they can tolerate. This is true even if one encourages them to look after their own material interests. Because there is no surer way of exposing them as a bullying mob, a mob that is driven by its lust for prestige and power and nothing else. All bullies have to pretend to themselves, and others, that they are bullying for the right reason or simply because the victim deserves no better.

Syriza Did Nothing to Prepare
Syriza did nothing to prepare for this bullying, even until the very last moment, and then in a half-hearted way. It was as if Tsipras expected to lose the referendum and was just looking for an excuse to get out gracefully. A number of reports seem to confirm this. The strategy was never to use the referendum for anything else but to reopen negotiations and hope for the best. Being locked into that perspective made failure inevitable.

Response of the Left
So far the Left Platform in Syriza has been unable to effectively respond to Tsipras?s abandonment of the Party?s anti-austerity programme. With their backs against the wall, the Left have understood they had an alternative that was neither feasible nor had popular support. This alternative contained three main points: nationalisation of the banks, deficit financing of reforms, and a Grexit leading to the replacement of the Euro with a Greek currency and through that an effective cancellation of the debts. While nationalisation of the banks is obviously the right thing to do, as is cancellation of the debt, neither a Grexit nor deficit financing can solve anything in a meaningful way. It is not dealing with the fundamental problem that has dogged Greece since capitalism was established in Greece and led to a series of defaults.

Greek Capitalism Offers No Way Out
Greek capitalism is a weak player on the world market. Tourism, shipping, Coca-Cola bottling and a few minor industries are competitive, but that is it. Unable to compete, Greek capitalists fritter away money on speculation, buying favours from the state, and luxury, rather than investing. The only way Greece can go forward is by creating a few more industries that can compete. But the programme of the Left Platform will not manage that. They will just cause chaos and a declining living standard, in a somewhat different way than by accepting the Troika?s terms.

The question which poses itself starkly is: should this just be seen as a heroic defeat which hopefully will eventually inspire a struggle for full-blown socialism in the whole of Europe? In my opinion, the answer to that question is most emphatically no. The alternative to the present mess is neither accepting the dictates of the Troika nor screaming betrayal and empty slogans about socialism. Nor putting one?s hopes in a turn towards socialism on a European scale.

The Change Must Start at the National Level
Inevitably, the struggle for power will be played out within a national framework, despite the relative integration of the EU. Although workers? struggle internationally is always inspiring, power has to be gained by winning national elections and mobilising nationally. Every national government will face the Greek problem if it tries to go beyond austerity. Of course, an increasing level of support can be garnered as more countries radicalise, but there will always be one or perhaps two governments that will be ahead.

Such a country will be forced to find a way to invest itself out of the crisis, if living standards are going to be raised. And this has to happen before the rest of Europe catches up and can implement full socialism. As explained in greater detail in my previous article (which led to a long discussion at http://socialistnetwork.org/debate-what-way-forward-for-greece-2/) a ?half-socialism? has to be implemented if one is not going to be forced into a humiliating retreat in the way that Syriza has been forced into by the bullies of the ruling classes of Europe. Investment can only get going if the Greek oligarchs are expropriated and Greece defaults on the debts to the Troika and uses the saved resources constructively. No amount of deficit financing can achieve the same effect.

The success of such an investment and export strategy depends to a large extent on Greece being able to export. The EU would be the easiest place to export to, if Greece is a part of it. And being part of the euro makes it even easier. To a certain extent, Syriza?s strategy has undermined this possibility. As long as the ECB refuses to act as it is mandated to do, to be the lender of last resort, Greece cannot avoid starting to introduce another currency. It has to start by printing IOUs, or scrip as some economists call it, to pay wages and pensions. It would be a first step towards a new currency. It would be a handicap, but a necessary step as long as the ECB continues to hold Greece to ransom.

(Even this might not mean that Greece has to leave the euro. There is no formal way of kicking Greece out of the Euro. It needs to be discussed if it possible to have two currencies for a period of time. Switzerland has that in some sense. Croatia had it in practice for a period of time.)

Would the Troika accept ?half-socialist? measures? Well, it would not like it at all, but if Greece had freed itself from debt-serfdom there would not be much that the Troika could do. Greece could?ve started to improve things and wait until the next anti-austerity government is thrown up in Europe. And the next. Instead of the present setback, that would truly have been the beginning of European socialism.

Now things will take more time. The baton has to be picked up by another anti-austerity government. If it has drawn the right conclusions from the present debacle in Greece, Europe (and the world) will have a bright future. In Greece, there will now be a period of absorbing the lessons of what has happened and trying to survive. The first battle against austerity has been lost, but internationally the war against austerity and for a fairer future has just begun.

If you would like to contact Jonathan about this article you can write to him at: bretorp@gmail.com

10 thoughts on “Greece After the Referendum

  1. Good article. But do you really think that the Syriza leadership wished for a yes-vote? What reports suggests that? I think they wished for a no-vote and hoped that the victory in the referendum would make the Trojka back down much more. And then they didn’t have a plan B except for accepting a new austerity package.
    I agree with the conclusions on the way forward.

  2. Here is a link to an article about this: http://www.telegraph.co.uk/finance/economics/11724924/Europe-is-blowing-itself-apart-over-Greece-and-nobody-can-stop-it.html. I also read another article where James Galbraith, economic adviser to the Greek government, made the same point. Can’t remember what article it was. I think the issue here is not that they wished for a yes vote, but that they expected one. Not so surprising considering that the opinion polls made a No victory look unlikely.

  3. Tsipra’s reversal of the Referendum result is of course a sad development in the tremendous experience of the past months in Greece. I think however that it is too early to draw the gloomy conclusions Jonathan seems to describe. A defeat of the Syriza Government was in any case inevitable without the assistance of the European working class in the form of another radical government coming to power in Europe. This is the game that Tsipras and Varoufakis were probably betting on: survival until the Greek experience spreads to the rest of Europe. They came close – too close to allow the European bureaucrats to give them more time. Their failure could go either way. It could lead to a serious setback in the form of ‘there is no alternative’ but this would be ‘no alternative because the dictators are too strong’. Or it could lead to encouragement to repeat the attempt elsewhere.
    As for Greece, I think Jonathan reads the possibilities wrongly. There is no way Europe would tolerate a ‘half socialist’ Greece – they could not tolerate even a left Government. The present situation will be played out in a timescale of months, if not weeks. Certainly not in a timescale that would give alternative policies the opportunity to prove the possibility of an alternative. The game is politics, not economics.

  4. Themos? comments indicate a weakness in my article. I drew the conclusion that the working class was defeated in Greece the moment the government put forward an austerity package and got the acquiescence of almost all of the Left Platform, despite the fantastic result in the referendum. A snap opinion poll reveals that 79 percent of the population oppose it, but there is no way a serious organised opposition to the government package can be organised at short notice. No group enjoys sufficient trust among a significant sector of the working class to get enough support for such an initiative. The KKE is large enough, but completely discredited itself by advocating abstention in the referendum. The rest of the left is insignificant. Protest against the package will remain scattered.

    Whatever the exact outcome of the next day?s frantic negotiations – Grexit or the imposition of colonial rule over Greece or some sort of compromise ? it will be serious defeat for almost all Greeks. Yet, in the article, it is as if I am still searching for immediate solutions like printing IOUs, dual currencies, etc., that could open up a better path. I could of course claim that I am merely trying to draw out lessons for the future. But to be truthful, I was letting hope go before reason. The defeat is going to take many years to overcome in Greece, although considerably less time outside of Greece. There are no quick fixes that have a realistic chance of being implemented.

    Is my perspective gloomy? I don?t think so. Recognizing reality as it is might not be pleasant, but it does not necessarily imply a gloomy future. I think this defeat is part of an inevitable process where the workers movement has to learn what works and what does not work. The decisive thing is that the movement is alive now and in the position to draw conclusions from its experiences.

    The main lesson is this: An anti-austerity government has to be pro-active. It cannot merely sit down and negotiate. Firstly, it must start to mobilise. The astounding success of the referendum shows that. It caused an immediate and serious split in the European ruling classes and sent an electric current, not of pity but of admiration, throughout Europe and wider. Secondly, an anti-austerity government must take concrete measures to prepare the way for a better economy. Starting with bank nationalisation and capital controls, continuing with a serious threat of defaulting on debts to the Troika, implementing a default if the threat is not sufficient to get a good deal, and then going on to expropriating the oligarchs in order to start planned investments, enabling the economy to compete on the world market.

    I must admit though that I find Themos? perspective gloomy, if I understand it correctly. He seems to imply both in his comment here, and in our previous debate, that the best thing the Greek government could have done is what it did (at least up to the turn-around after the referendum): Negotiate, hope that somebody will come to help, and then prepare for an inevitable defeat if nobody comes. How gloomy to confine anti-austerity governments to such passivity!

    As the referendum showed, in fact, as the history of working class struggle shows, an offensive struggle by the labour movement splits the ruling class. Passivity, or mere negotiations, unites them, as the whole history of European integration has shown. Never before have there been such open conflicts among the EU partners. In the past, unity proceeded either because the economy was going well or because during a crisis the workers could be made to pick up the bill without much resistance.

    The present split is between the German leaders and their dependents who have wanted to steam-roll Greece from the start of the negotiations, ‘pour encourager les autres’. Varoufakis writes on his blog that Dr. Schäuble told him personally that even before the Syriza government was elected, he had decided that it was optimal ?That Greece should be eased out of the Eurozone in order to discipline member-states resisting his very specific plan for restructuring the Eurozone.? No doubt, this restructuring would have led to a further strengthening of Germany within the Eurozone and the EU.

    As long as the Greek government was merely negotiating, giving up one red-line after the other, Germany and the others could agree to steam-roll Greece, slowly. As soon as the referendum revealed a heroic people prepared to fight, Germany revealed its fangs by suggesting that Greece to all intents and purposes becomes a colony ruled from abroad. They went as far as demanding that 50 billions euros worth of Greece?s best public resources be directly controlled and sold off by a fund chaired by Schäuble himself. The other main powers of the Eurozone took fright. They do not want to be the next in line to be put under direct German control. Italy and France tried to call halt, and even Boris Johnson, pretender to the Tory throne, wrote a vitriolic article condemning Germany. The USA is also interested in keeping the power of Germany limited, considering it is America?s third largest rival after China and Japan. Once the referendum was over, the USA became even more insistent that Greece gets an acceptable deal.

    There are always enormous tensions contained within the ruling class and between different ruling classes. The main reason for this lies in the competitive and hierarchical nature of capitalism. Among capitalists, there is a constant struggle about who is going to be top dog, and who is going to be flung into the gutter.
    Another source of tension and conflicts is the division of labour that exists within the ruling class between those that exercise economic power (the capitalists), political power (the government, the state), and ideological power (academia, the media, the church). There are further divisions within these categories. There are many different hierarchies, each pursuing their own interest.

    Although, economic power of the biggest capitalists is normally decisive, even they consist of hierarchies with conflicting interests. It is a fractious process to get the ruling class aligned along the same lines. It usually involves the distribution of bounties to all and sundry. The distribution of costs, because the working class says enough is enough, is a far more difficult task and has less of a chance of succeeding (except in war). That is why an anti-austerity government with an offensive strategy would have had more time than the months that Syriza had.

    Even under the best of circumstance, workers struggle in one country cannot go on forever. The unity of the ruling classes can be restored when the tide of the movement eventually turns down, opening the way for the imposition of a vicious and often bloody revenge. Then the ruling classes can agree on the distribution of spoils among each other. However, before that, time can be gained by pursuing a vigorous anti-austerity struggle, opening up a far greater possibility of the working class internationally being inspired to align its own interests.

    Without a functioning offensive strategy, a climb-down is inevitable, sooner rather than later. That is why both the right around Tsipras and most of the Left Platform climbed down. This is sad, but for me it is not the sadness that I feel when somebody gets hit by a bus. It is the sadness I feel when somebody commits suicide because they could see no way forward except taking their own life, just after a new and positive path became clear to their best supporters and friends.

  5. I want to comment on the issue of EU and EMU, which we discussed after SYRIZA was elected. I don´t think that the neo-liberal regulations of these institutions has had much to do with the crisis in Greece. And I don´t view a capitalist Greece independent from the EU and with a national currency as a viable alternative. And probably a re-introduction of a national currency in the midst of an economic meltdown for the country would cause problems. And in principle, probably none of the proposals or policies of the SYRIZA government would be incompatible with the statutes of the EU or EMU.

    BUT: I also don´t think that the Troika could accept such policies without signing their own death-notes. If a more intense mobilisation had taken place, the support of the european working class, labour movement and the left would have been much bigger. And the greek people would have been a much tougher enemy. But this would have raise the stakes even more, making it even more essential to quell the revolt. Perhaps it would have been short-sighted and fueled radicalization, but the western ruling class seem to act in quite a rash manner, trying to find short-term solutions, pushing problems ahead of them.

    So I think that a radical, offensive SYRIZA government would have had to choose between leaving the EU and EMU or getting thrown out. Especially if it had gone further with sweeping nationalizations as we have proposed. And no matter what the various statutes says, the Troika would find a way to throw them out. Perhaps they could learn a thing or two from the labour movement bureaucracy in this respect – there is always some way to frame opponents if it is necessary to preserve the privileges.

    Probably it would have been better to be thrown out than to leave, but I think it would have happened sooner or later. And for that reason, they would have needed a Plan B. How would a socialist or “half-socialist” country have coped with getting thrown out of the EU and EMU? To me it comes off as wishful thinking to describe Grexit as an impossible scenario if they had only mobilized the workers sufficiently. To not consider this possibility would have been irresponsible on the part of the SYRIZA leaders. Apparently they thought it would be impossible to avoid chaos and misery if Greece was thrown out of EU and EMU, and their conclusion was capitulation. What conclusions do we draw?

  6. The main thing here was to avoid making the currency issue the central question. To my mind a thousand times more important in Greece was the need for Syriza to develop a democratic socialist plan before the election on which to stand and win. I have written elsewhere how I think such a plan could have been developed and why it would have made Syriza even more popular both in Greece and abroad.

    In that case a Syriza’s win in January’s election would have had to be immediately followed by the democratic public ownership of the banks and the rest of the Greek financial sector. This would have stopped the outflow of funds from Greece which slowly but surely crippled its cashflow and allowed the ECB to gain a much greater stranglehold on the economy and economic life of the people.

    Also important would have been to begin immediate implementation of a plan to democratise the Greek media so that the mass of the population was able to receive the whole truth and not the lies of the super-rich who dominate the Greek press and TV.

    Sure, it would have been sensible for a Syriza government to visit the EU institutions and present a set of demands including for a moratorium on the debt. Not with any illusions but purely to demonstrate to the Greek people the nature of these institutions and the inhuman, anti-working class policies that they were insisting on. And to use the international media platform created to explain to the working people of Europe how the neo-liberal policies were not designed to provide good housekeeping but to cover up their past frauds and to deliver a massive increase in wealth for the rich (at the expense of the rest of us)..

    You recall the huge increase in Syriza’s popularity in the immediate weeks following the election and their first rounds of visits to Brussels, Paris and so on. In my view the same thing would have happened with a Syriza government pursuing a democratic socialist policy (possibly more so). This would have provided the political oportunity to announce a moratorium on repayment of all the debts and the speedy implementation of its plans to reorganise the economy on democratic socialist lines. Something that an even bigger majority of Greeks would have been able to understand and support.

    It is within that overall context that the decision would have had to be taken over the currency. We don’t have the technical knowledge to know what the position would have been then. How much Euro currency would have been available and so on. Certainly, from a tactical position, if it had become obvious that an exit from the Euro was necessary it would have been much better for a Syriza government to show that Greece was thrown out than for it to leave.

    But like I said earlier, in my opinion, euro or drachma was never the key question. It was how a Syriza government in partnership with the working people of Greece was going to reorganise the economy, and the nature of the international campaign to win support for their cause.

    Sadly, the Syriza leadership went into this fight with no plan beyond appealing for mercy from its enemies. It was like a boxer entering the ring with both hands tied behind his back and expecting to win by appealing to the good nature of his opponent.

    In general, the more radical Syriza would have been the more concessions it would have been offered by the IMF and the EU especially if its propaganda had been more effective at unmasking the corruption behind the whole debt question and the pro- rich direction of their policies. As it was, setting up a Debt Truth Commission two months into the government (calls for this were already several years old) meant that it never had the time or the ammunition with which to expose the debt from the outset. This allowed plenty of space for the bourgeois media to sell their lies and to pose the issue as the Greeks against the rest of Europe, when of course it was the working people of all the European countries who are being hammered into the ground for the same reasons. The Debt Truth Commission had to be have been done in opposition to become effective. Just one more failure to prepare for the battle.
    Pat

    P.S. IN case readers might think that we are writing with the benefit of hindsight, we have published articles on our website forecasting the Syriza retreat well before this year’s election victory. For example, here is one I wrote in March 2013:
    http://socialistnetwork.org/which-road-for-greece-part-2/

  7. In response to Eric’s point, the ability of the Troika to crush the Greek movement would depend also on its popular strength both in Greece and internationally. As we saw with the Russian Revolution, the battle for the hearts and minds of the people at home and abroad was crucial in the survival of the revolution. To our great advantage today we have instant online communication throuh which to get our message across.
    …In my view, the biggest weakness that Syriza had was
    1) Its inability to show that the so-cal Greek Debt were a big fraud designed to hide the corrupt transfer of wealth from the public sector to the private banks and the super-rich.
    2) Its lack of an alternative to offer to austerity. It was not good enough to just cry about the inhumanity of the austerity programme, it also had to demonstrate that it has a worked-out and thought-through alternative road to offer the people of Greece and working people across the world. If people across Europe could see that Syriza had developed together with the mass of Greek people a plan for the positive development of the country, a plan that would grow the economy and make it more self-sufficient, there would have been much greater support for a moratorium on the debts.
    …With a much higher level of public support and understanding of the issues posed by the Greek struggle it would have greatly boosted the fight against austerity in every country in Europe and set the EU leaders back on their heels, back onto the defensive.
    …In that context, aggressive measures by these leaders would have been politically difficult to justify and defend.
    …In that situation who know what would have happened and what possibilities there would have been for success?

  8. Pat, I agree that the Greek government should have handled their newly-gained power in an offensive manner and that many of the suggestions you put forward on how they should have done that are correct. Syriza has now lost the momentum they had after the election to engage broader layers of people in the process of change and the time for any measures to avoid capital flight and broaden democratic control has run out. In my view Syriza was elected on an illusionary program of replacing austerity with a growth strategy, regaining fiscal and political sovereignty while remaining tied into the EMU at the mercy of the EU institutions where political and creditor interests have melted together. The path they set out on when they formed that strategy inevitably led to where it ended last Sunday night. With staying inside the EMU being their top priority, what else could they have done? In a perfect world with massive mobilization of solidarity abroad and reformable democratic EU institutions autonomous of capital interest they may have been able to carry through a socialist program for restructuring the Greek economy. Under the ruling circumstances they had no leverage and the outcome was obvious. I cannot in my wildest fantasies imagine a scenario where the EU leadership would have even listened to proposals about public banks and workers control over anything. I do not know what the social consequences of a Grexit would have been. Neither do I know what they will be of the agreement now in the making and the next ones to follow, but I think that under the current circumstances, those are the alternatives and only the latter leaves any space to implement what you are suggesting. Neither Iceland nor Argentina have turned into failed states and maybe the worst horror scenario for the EU is that Greece would not turn into one either.

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