Wednesday, 22 November 2017 / TRUTH-OUT.ORG

Syriza's Ultimate Hope Is for an Honorable Compromise With Greece's Lenders

Monday, February 09, 2015 By C.J. Polychroniou, Truthout | Op-Ed
  • font size decrease font size decrease font size increase font size increase font size
  • Print

Greek Finance Minister Yanis Varoufakis enters his ministry for a meeting with Deputy Assistant Secretary for Europe in Athens, Greece, Feb. 6, 2015.Greek Finance Minister Yanis Varoufakis enters his ministry for a meeting with Deputy Assistant Secretary for Europe in Athens, Greece, Feb. 6, 2015. (Photo: Kostas Koutsaftikis / Shutterstock.com)

Having been at the forefront of the struggle for change and the quest for an end to the regime of debt peonage imposed on Greece by its international creditors since the start of the infamous European Union (EU)/International Monetary Fund (IMF) bailout program, Syriza took the ball the moment it entered the game of political governance, and, with lightning speed, scored a couple of first-half touchdowns against the country's euro partners and in particular Germany, the half-witted, semi-hegemonic power in the deformed monetary union known as the eurozone.

To be exact, a few days after a Syriza-led government was sworn in, Yanis Varoufakis, the flamboyant and undeniably brilliant minister of finance, informed Jeroen Dijsselbloem, the head of the eurozone group of finance ministers who was in Athens for talks, that the Greek government will no longer negotiate over debts with the troika of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). The Dutchman was so shaken up by this announcement that he had a difficulty extending his hand to Yanis for a post-game handshake.

With the exception of the docile, incompetent and thoroughly corrupt politicos who served previous Greek governments and the hard-core neoliberals who always seem to take Germany's side, there was hardly a Greek who did not rejoice at this act of defiance and disobedience. The reason for this is quite simple: Greeks have been experiencing over the past five years not only ungodly pain caused by barbaric, anti-social policies inflicted on them by their euro partners in their attempt to squeeze the nation dry (with Germany having been by far the biggest winner of the euro crisis), but real national humiliation: They have been described mostly by northern Europeans as lazy, unethical and profligate who should consent to having their national cultural patrimony sold to repay their country's debts.

In the days that followed, Greek prime minister Alexis Tsipras and Yanis Varoufakis sought to enlist support for Greece's cause (which can be summed up as a renegotiation of the debt and an end to the vicious austerity measures that are strangling the Greek economy) by visiting several European capitals, with the minister of finance carrying in his pocket a proposal to pull the country out of debt serfdom based on "smart debt engineering" and bond swap schemes, in full awareness that Syriza's pre-election call for an official debt write-off is unlikely to materialize any time in the near future, given Germany's staunch opposition to the whole idea.

Varoufakis' proposal envisioned two types of bonds: one type indexed to the country's growth rate and replacing European rescue loans, and another type - what he called "permanent bonds" - which would replace Greek bonds held by the ECB. In Varoufakis' view, the plan to swap some debts for new growth-linked bonds makes sense because it would stabilize the nation's debt-to-GDP ratio and substantially reduce the possibility of a default and may even allow some breathing space for fiscal policy.

As anyone truly familiar with the mindset of the eurozone neoliberal officials should have anticipated, Germany and the ECB rejected the proposal without giving it a second thought. Keeping Greece on a tight lease has been Germany's strategic objective since the start of the crisis, and Berlin isn't going to relax its grip on the Greek economy now that a new radical government is challenging its hegemony and European-style neoliberalism.

Nonetheless, the vibrations of Syriza's bold direct actions were felt everywhere: President Obama appeared for a quick moment to side with Syriza in its tough battle with Germany over austerity (because the White House is livid with the long-standing anti-growth policies pursued by Berlin at a time of stagnant global growth), while Russian president Vladimir Putin said his government would consider giving financial assistance to Greece (in an obvious attempt to stick a finger in Europe's eye and to secure a close economic and political collaboration with Greece) so the country can meet its short-term financing needs without having to borrow from its EU partners and thus remain trapped in Germany's imposed austerity policy.

Some of Europe's leaders (particularly in Italy and France) also made some public announcements sympathetic to Greece's cause, prompting even greater enthusiasm among Greek government officials and Syriza supporters for the chosen strategy (which, alas, was going to change Europe itself!), but one would have to be a complete nincompoop to count on Europe's political elite for solidarity. Both Italy and France are seemingly in support of pro-growth policies, but their real commitment is to the stability of the eurozone, which suggests that they won't align against Germany when the going gets rough.

Syriza ought to know that European social democrats are worse than their neoliberal counterparts. In the past, they have used the social agenda to get elected only to enforce neoliberalism and run roughshod over all working people. Their unequivocal support for the bank bailouts, the liberalization of the labor market and pseudo-progressive employment schemes speaks volumes about what European social democracy stands for in the era of predatory capitalism: a Trojan horse for the full incorporation of contemporary societies into the neoliberal system. A left that believes that today's social democrats are fighting for the social state is either a left that is programmed to display Machiavellian opportunism or a plain sell-out left.

Indeed, as Syriza's international public campaign intensified, even while making compromises on the way such as giving up on the idea of a debt write-off (hence the proposal for bond swaps), Greece's euro partners became increasingly annoyed with the new government in Athens. The ECB announced shortly thereafter that it would no longer accept Greek government bonds as loan collateral, and both Europe's leaders and Washington changed their tune and begun to exert pressure on the Greek government to reach a compromise with the troika. In other words, they want the Syriza-led government to stick to the terms of the bailout program that is suffocating Greek economy.

Greece's bailout program ends on February 28, and its euro partners want to extent it while Athens wants to scrap the 240-billion-euro bailout program and is asking for a "bridge agreement" without the presence of troika in Athens.

It is clear that Greece's new government is not looking for an open confrontation with the country's international lenders but, instead, for an honorable compromise. It has sent messages along these lines from day one, even while engaging in defiant rhetoric. In addition to dropping demands for an official debt write-off, which was a sign that the Greek government is willing to meet its euro partners half way, the minister of finance said the government would maintain a primary budget surplus of up to 1.5 percent of GDP and that it would embark on more, not less, reforms.

While cracking down on tax evasion and public sector corruption have been at the core of Syriza's strategy for "a new Greece" (one should not be surprised if the Greek prime minister announces before the expiration of the bailout program on February 28 the arrest and imprisonment of a couple of corrupt oligarchs and politicians in an effort to demonstrate to frau Merkel his government's commitment to reforms), the Syriza government also appears willing to back down from its pre-elections promises to reverse privatization.

In the same vein, the creation of hundreds of thousands of new jobs for the unemployed - a key component of Syriza's economic program - will be downgraded from permanent to temporary status. As such, all the fuss about guaranteed employment will end up, in all likelihood, as a mere scheme for recycling unemployment, while the humiliatingly low wages offered to those hired for "public service" jobs will ensure that private sector workers get locked into a future of low-wage work and continued poverty. In addition, it is certainly given that Germany will veto other components of Syriza's economic program, including the proposal to increase the minimum monthly wage to pre-crisis levels.

Syriza's leaders and ignorant pundits maintained all along that Greece's way out of the crisis rested with a strategy of negotiations over debt in conjunction with a firm commitment to keeping Greece in the eurozone. In other words, there was no reason to have a plan B because Greece had morality on its side. According to this highly superficial perspective, Greece remained in a dead end because all previous governments had failed to aggressively pursue a negotiation strategy with the country's bailout architects.

Now Syriza's government officials are discovering that Greece's international creditors will have none of that; in fact, the eurozone's masters are clearly ready to go to great lengths to dispel what they perceive to be policy illusions on the part of the Syriza government and, by extension, take the steam out of the southern radicals elsewhere, such as Spain's Podemos, who seem to be following on Syriza's footsteps.

Syriza has its work cut out, not only on the economic front, but also in the realm of international affairs. Its close affinities to Russia are making even more difficult its relationship with Europe, and, in due time, the Greek government may also encounter the wrath of Washington.

The road ahead for the new Greek government is long, very steep and quite dangerous. It is clear that its leaders embarked on a campaign to shift the balance of power in Greece's favor by having the cake and eating it, too - remaining in the Eurozone, but without having to accept the terms of its neoliberal regime. They scored a couple of quick touchdowns early in the game - the public announcements against troika, which generated lots of domestic and international public support for Greece's cause - but their opponents are now on the attack, and they could deal the Syriza-led government a lopsided defeat.

Syriza's mistake was that it entered the game of political governance with too much faith in Europe and in its own strategy of negotiations without the need for a plan B. Under these circumstances, and with an apparent ideological shift toward the center already under way, capitulation to Germany's commands appears almost inevitable.

Indeed, at this juncture, one can only hope that the eurozone's masters will exhibit at least some common sense and offer the Syriza-led government a deal that can be interpreted as an honorable compromise. The financially battered country deserves at least this much. If not, Greece should get ready for a return to the drachma!

Copyright, Truthout. May not be reprinted without permission.

C.J. Polychroniou

C.J. Polychroniou is a political economist/political scientist who has taught and worked in universities and research centers in Europe and the United States. His main research interests are in European economic integration, globalization, the political economy of the United States and the deconstruction of neoliberalism's politico-economic project. He is a regular contributor to Truthout as well as a member of Truthout's Public Intellectual Project. He has published several books and his articles have appeared in a variety of journals, magazines, newspapers and popular news websites. Many of his publications have been translated into several foreign languages, including Croatian, French, Greek, Italian, Portuguese, Spanish and Turkish. He is the author of Optimism Over Despair: Noam Chomsky On Capitalism, Empire, and Social Change, an anthology of interviews with Chomsky originally published at Truthout and collected by Haymarket Books.

Related Stories

Greece and Its Lenders Agree on Austerity Plan
By Rachel Donadio, Niki Kitsantonis, The New York Times News Service | Report
Greece and the Euro: Is the End Near?
By Paul Krugman, Krugman & Co. | Op-Ed
Greece and the Crisis of Europe: Which Way Out?
By Marjolein Van Der Veen, Dollars & Sense | News Analysis
GET DAILY TRUTHOUT UPDATES
Optional Member Code

FOLLOW togtorsstottofb


Syriza's Ultimate Hope Is for an Honorable Compromise With Greece's Lenders

Monday, February 09, 2015 By C.J. Polychroniou, Truthout | Op-Ed
  • font size decrease font size decrease font size increase font size increase font size
  • Print

Greek Finance Minister Yanis Varoufakis enters his ministry for a meeting with Deputy Assistant Secretary for Europe in Athens, Greece, Feb. 6, 2015.Greek Finance Minister Yanis Varoufakis enters his ministry for a meeting with Deputy Assistant Secretary for Europe in Athens, Greece, Feb. 6, 2015. (Photo: Kostas Koutsaftikis / Shutterstock.com)

Having been at the forefront of the struggle for change and the quest for an end to the regime of debt peonage imposed on Greece by its international creditors since the start of the infamous European Union (EU)/International Monetary Fund (IMF) bailout program, Syriza took the ball the moment it entered the game of political governance, and, with lightning speed, scored a couple of first-half touchdowns against the country's euro partners and in particular Germany, the half-witted, semi-hegemonic power in the deformed monetary union known as the eurozone.

To be exact, a few days after a Syriza-led government was sworn in, Yanis Varoufakis, the flamboyant and undeniably brilliant minister of finance, informed Jeroen Dijsselbloem, the head of the eurozone group of finance ministers who was in Athens for talks, that the Greek government will no longer negotiate over debts with the troika of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF). The Dutchman was so shaken up by this announcement that he had a difficulty extending his hand to Yanis for a post-game handshake.

With the exception of the docile, incompetent and thoroughly corrupt politicos who served previous Greek governments and the hard-core neoliberals who always seem to take Germany's side, there was hardly a Greek who did not rejoice at this act of defiance and disobedience. The reason for this is quite simple: Greeks have been experiencing over the past five years not only ungodly pain caused by barbaric, anti-social policies inflicted on them by their euro partners in their attempt to squeeze the nation dry (with Germany having been by far the biggest winner of the euro crisis), but real national humiliation: They have been described mostly by northern Europeans as lazy, unethical and profligate who should consent to having their national cultural patrimony sold to repay their country's debts.

In the days that followed, Greek prime minister Alexis Tsipras and Yanis Varoufakis sought to enlist support for Greece's cause (which can be summed up as a renegotiation of the debt and an end to the vicious austerity measures that are strangling the Greek economy) by visiting several European capitals, with the minister of finance carrying in his pocket a proposal to pull the country out of debt serfdom based on "smart debt engineering" and bond swap schemes, in full awareness that Syriza's pre-election call for an official debt write-off is unlikely to materialize any time in the near future, given Germany's staunch opposition to the whole idea.

Varoufakis' proposal envisioned two types of bonds: one type indexed to the country's growth rate and replacing European rescue loans, and another type - what he called "permanent bonds" - which would replace Greek bonds held by the ECB. In Varoufakis' view, the plan to swap some debts for new growth-linked bonds makes sense because it would stabilize the nation's debt-to-GDP ratio and substantially reduce the possibility of a default and may even allow some breathing space for fiscal policy.

As anyone truly familiar with the mindset of the eurozone neoliberal officials should have anticipated, Germany and the ECB rejected the proposal without giving it a second thought. Keeping Greece on a tight lease has been Germany's strategic objective since the start of the crisis, and Berlin isn't going to relax its grip on the Greek economy now that a new radical government is challenging its hegemony and European-style neoliberalism.

Nonetheless, the vibrations of Syriza's bold direct actions were felt everywhere: President Obama appeared for a quick moment to side with Syriza in its tough battle with Germany over austerity (because the White House is livid with the long-standing anti-growth policies pursued by Berlin at a time of stagnant global growth), while Russian president Vladimir Putin said his government would consider giving financial assistance to Greece (in an obvious attempt to stick a finger in Europe's eye and to secure a close economic and political collaboration with Greece) so the country can meet its short-term financing needs without having to borrow from its EU partners and thus remain trapped in Germany's imposed austerity policy.

Some of Europe's leaders (particularly in Italy and France) also made some public announcements sympathetic to Greece's cause, prompting even greater enthusiasm among Greek government officials and Syriza supporters for the chosen strategy (which, alas, was going to change Europe itself!), but one would have to be a complete nincompoop to count on Europe's political elite for solidarity. Both Italy and France are seemingly in support of pro-growth policies, but their real commitment is to the stability of the eurozone, which suggests that they won't align against Germany when the going gets rough.

Syriza ought to know that European social democrats are worse than their neoliberal counterparts. In the past, they have used the social agenda to get elected only to enforce neoliberalism and run roughshod over all working people. Their unequivocal support for the bank bailouts, the liberalization of the labor market and pseudo-progressive employment schemes speaks volumes about what European social democracy stands for in the era of predatory capitalism: a Trojan horse for the full incorporation of contemporary societies into the neoliberal system. A left that believes that today's social democrats are fighting for the social state is either a left that is programmed to display Machiavellian opportunism or a plain sell-out left.

Indeed, as Syriza's international public campaign intensified, even while making compromises on the way such as giving up on the idea of a debt write-off (hence the proposal for bond swaps), Greece's euro partners became increasingly annoyed with the new government in Athens. The ECB announced shortly thereafter that it would no longer accept Greek government bonds as loan collateral, and both Europe's leaders and Washington changed their tune and begun to exert pressure on the Greek government to reach a compromise with the troika. In other words, they want the Syriza-led government to stick to the terms of the bailout program that is suffocating Greek economy.

Greece's bailout program ends on February 28, and its euro partners want to extent it while Athens wants to scrap the 240-billion-euro bailout program and is asking for a "bridge agreement" without the presence of troika in Athens.

It is clear that Greece's new government is not looking for an open confrontation with the country's international lenders but, instead, for an honorable compromise. It has sent messages along these lines from day one, even while engaging in defiant rhetoric. In addition to dropping demands for an official debt write-off, which was a sign that the Greek government is willing to meet its euro partners half way, the minister of finance said the government would maintain a primary budget surplus of up to 1.5 percent of GDP and that it would embark on more, not less, reforms.

While cracking down on tax evasion and public sector corruption have been at the core of Syriza's strategy for "a new Greece" (one should not be surprised if the Greek prime minister announces before the expiration of the bailout program on February 28 the arrest and imprisonment of a couple of corrupt oligarchs and politicians in an effort to demonstrate to frau Merkel his government's commitment to reforms), the Syriza government also appears willing to back down from its pre-elections promises to reverse privatization.

In the same vein, the creation of hundreds of thousands of new jobs for the unemployed - a key component of Syriza's economic program - will be downgraded from permanent to temporary status. As such, all the fuss about guaranteed employment will end up, in all likelihood, as a mere scheme for recycling unemployment, while the humiliatingly low wages offered to those hired for "public service" jobs will ensure that private sector workers get locked into a future of low-wage work and continued poverty. In addition, it is certainly given that Germany will veto other components of Syriza's economic program, including the proposal to increase the minimum monthly wage to pre-crisis levels.

Syriza's leaders and ignorant pundits maintained all along that Greece's way out of the crisis rested with a strategy of negotiations over debt in conjunction with a firm commitment to keeping Greece in the eurozone. In other words, there was no reason to have a plan B because Greece had morality on its side. According to this highly superficial perspective, Greece remained in a dead end because all previous governments had failed to aggressively pursue a negotiation strategy with the country's bailout architects.

Now Syriza's government officials are discovering that Greece's international creditors will have none of that; in fact, the eurozone's masters are clearly ready to go to great lengths to dispel what they perceive to be policy illusions on the part of the Syriza government and, by extension, take the steam out of the southern radicals elsewhere, such as Spain's Podemos, who seem to be following on Syriza's footsteps.

Syriza has its work cut out, not only on the economic front, but also in the realm of international affairs. Its close affinities to Russia are making even more difficult its relationship with Europe, and, in due time, the Greek government may also encounter the wrath of Washington.

The road ahead for the new Greek government is long, very steep and quite dangerous. It is clear that its leaders embarked on a campaign to shift the balance of power in Greece's favor by having the cake and eating it, too - remaining in the Eurozone, but without having to accept the terms of its neoliberal regime. They scored a couple of quick touchdowns early in the game - the public announcements against troika, which generated lots of domestic and international public support for Greece's cause - but their opponents are now on the attack, and they could deal the Syriza-led government a lopsided defeat.

Syriza's mistake was that it entered the game of political governance with too much faith in Europe and in its own strategy of negotiations without the need for a plan B. Under these circumstances, and with an apparent ideological shift toward the center already under way, capitulation to Germany's commands appears almost inevitable.

Indeed, at this juncture, one can only hope that the eurozone's masters will exhibit at least some common sense and offer the Syriza-led government a deal that can be interpreted as an honorable compromise. The financially battered country deserves at least this much. If not, Greece should get ready for a return to the drachma!

Copyright, Truthout. May not be reprinted without permission.

C.J. Polychroniou

C.J. Polychroniou is a political economist/political scientist who has taught and worked in universities and research centers in Europe and the United States. His main research interests are in European economic integration, globalization, the political economy of the United States and the deconstruction of neoliberalism's politico-economic project. He is a regular contributor to Truthout as well as a member of Truthout's Public Intellectual Project. He has published several books and his articles have appeared in a variety of journals, magazines, newspapers and popular news websites. Many of his publications have been translated into several foreign languages, including Croatian, French, Greek, Italian, Portuguese, Spanish and Turkish. He is the author of Optimism Over Despair: Noam Chomsky On Capitalism, Empire, and Social Change, an anthology of interviews with Chomsky originally published at Truthout and collected by Haymarket Books.

Related Stories

Greece and Its Lenders Agree on Austerity Plan
By Rachel Donadio, Niki Kitsantonis, The New York Times News Service | Report
Greece and the Euro: Is the End Near?
By Paul Krugman, Krugman & Co. | Op-Ed
Greece and the Crisis of Europe: Which Way Out?
By Marjolein Van Der Veen, Dollars & Sense | News Analysis