[Debate] (Fwd) Greece interpretations (Seymour, Roberts)

Patrick Bond pbond at mail.ngo.za
Wed Nov 2 19:16:02 GMT 2011

Richard Seymour ("Lenin's Tomb").

Would European capital sacrifice Greece to protect profits?
Answer: what do you think they've been doing?  On Monday, the Greek 
Prime Minister announced that his government would hold a*referendum* 
the latest Euro austerity package.  And look at the reaction to this 
ostensible democratic naivete.  Stock markets slide everywhere.  The BBC 
expresses its*disbelief* 
<http://www.bbc.co.uk/news/world-europe-15555449>: "For whatever 
reasons, George Papandreou was standing up for democracy."  German and 
French politicians throw tantrums, demanding accountability.  Papandreou 
has been summoned to Cannes to explain himself and get*chewed out* 
PASOK MPs have defected, and the Blairites are calling for Papandreou to 
resign.  The*cabinet* 
backed the PM, but a no confidence motion is being raised in parliament, 
and the government could easily*collapse* 
the end of the week.  Yesterday, Greece 's military top brass was*sacked 
and replaced* <http://www.athensnews.gr/portal/8/49916>by the PASOK 
defence minister.  The ides of march forestalled?  I'll come back to that.

The decision to hold a referendum is a tremendous risk for the 
government.  As Costas Douzinas*puts it* 
"Assuming it is not withdrawn amid all the political turmoil afflicting 
the ruling party, the vote is planned for January, and the issue will 
presumably be the latest bailout. But the real question will be: "Euro 
or drachma?""  As Papandreou has put it, the referendum would be on "our 
European course and participation in the euro".  PASOK are talking as if 
they can*win* 
referendum.  Maybe they really believe this, because as yet most Greeks 
don't see the need to leave the Euro.  Polls show that 70% favour 
staying in.  But if the choice is between the Euro and a reasonable 
standard of living, it's very possible that people will choose their 
living standards.  And even if a referendum happens now, it won't be 
over the present deal, which isn't going to be on the table.  In the 
most polyannaish situation imaginable, Merkel et al would concede that 
things have reached a critical impasse, offer a much better deal, and 
allow Papandreou to put this to the electorate.  But that looks very 
unlikely at the moment.  Almost all the 'haircuts' applied to Greece 's 
debts so far have been to the disadvantage of Greek banks, not French 
and German banks.  Substantial further reductions would harm politically 
dominant class interests which makes it highly unlikely to happen.

One can imagine the fears that pro-Euro politicians would work with: 
banks collapsing, international capital flight, currency instability, 
rapid inflation or deflation, house prices slumping, years of painful 
re-financing, and Greek isolation within Europe .  And that's 
not/just/scaremongering.  Default would pose a set of challenges that 
can by no means be wished away.  But it would allow Greece to stop the 
massive annual interest payments to bondholders, which Greece 's 
productive base simply can't sustain, and prevent the need for further 
austerity.  A*people's default* 
<http://www.socialistworker.co.uk/art.php?id=26550>is conceivable.  A 
people's austerity is not.  Yet, if the scare tactics were going to 
work, one would have expected the middle classes to cave already, and 
that has not happened.  The PASOK government has created a situation now 
where there's a realistic possibility of Greece simply pulling the plug 
on the Euro.

The consequences for the Euro as a viable currency would be dire.  
Douzinas is probably right that the managers of the ECB and the EU never 
intended to push Greece to the point that it may end up withdrawing from 
the euro.  Yes, they're turning Greece into a basket case.  Yes, they 
are literally asset-stripping the entire economy, presumably because 
they don't expect it to be a viable export market any time soon.  Yes, 
it's a*death spiral* 
But, they apparently imagined, that's no reason for anyone to go off in 
a huff.  But French and German banks are probably unwilling to sacrifice 
a single cent of the debt interest they believe they have coming to 
them.  After all, there isn't much money to be found elsewhere.  As 
Michael Burke points out, the recovery in profit rates facilitated by 
the attack on labour over the last few years has been accompanied by 
a*slump in corporate investment* 
There's little for the banks to invest their money in but speculation 
and debt.  The EU leaders have said clearly that the main elements of 
the current deal are not up for renegotiation.

So, we're back to*the ides of march* 
<http://www.wsws.org/articles/2011/nov2011/gree-n02.shtml>.  The 
replacement of the top generals, despite bland official assurances that 
it's all regular, suggests that PASOK smelled a coup in the works.  
There have also been hints that Papandreou may be unwise in going to 
Cannes , as a lot can happen while he's out of the country.  The 
opposition are*feigning outrage* 
<http://www.athensnews.gr/portal/8/49916>, hinting that PASOK themselves 
are the agents of a coup, but that seems unlikely.  Now, the EU may not 
prefer a military coup, if it was possible to orchestrate the political 
collapse of the government through a no confidence vote, and facilitate 
a new right-wing New Democracy-led government.  But the structures of 
the European Union have always been profoundly anti-democratic, and the 
politics of austerity, pushed most aggressively by the EU, are pushing 
the institutions of capitalist democracy to their limit.

Consider what Greece is up against.  Guglielmo Carchedi, in a*superior 
class analysis of the European Union* 
argues that the project of economic and monetary union is driven by 
European capitalist oligarchies, led by German oligarchies, with the aim 
of creating a new superpower.  This would, of course, be an imperialist 
power, re-asserting European influence after decolonisation.  It would 
allow Europe under united Franco-German leadership, to compete with the 
US by overcoming the limited scale of national markets and production.  
As importantly, it is a reaction by capital against the post-war 
influence of communist and socialist parties in Europe , and an attempt 
to create a political framework that would systematically reduce the 
power of labour.  The project of European unification has, on these 
grounds, been successful.

But, a consequence of Carchedi's analysis is that, far from reflecting a 
community of interests, the EU is necessarily characterised both by 
class antagonisms (the working class has always made its presence felt, 
even while it has been excluded from the construction of the EU) and by 
national or inter-imperialist conflicts (Franco-German competition, and 
the predatory relationship between core and peripheral economies).  The 
antagonisms at the heart of the EU could blow the whole project apart.  
The neutral (but intensely ideological) language of the mass media and 
the political classes treats the suppression and management of those 
antagonisms (in the interests of the dominant capitalist oligarchies) as 
a merely technical problem, albeit one complicated by various 
pressures.  This is why they don't understand when politicians invoke 
'democracy'.  What has democracy got to do with it, they think, when 
Everyone Knows What Needs To Be Done?  We're all in it together, after 
all.  (This ideology was expressed concisely in a tweet I saw this 
morning, complaining that Greece was 'letting the team down': the 
hashtag said, '#globalvillage'.)  In this view, the exclusion and 
suppression of working class insurgencies is a duty of 'responsible' 
politicians serving the general interest.

Greece's PASOK government has tried its best to fulfil its brief as a 
responsible government.  But the severity of the crisis is overwhelming 
its ability to cope, and its referendum gamble has offended its masters 
in Europe .  There is a continent of surplus value at stake.  There is 
an imperialist super power at stake.  There is decades of institutional 
construction and refinement at stake.  There is a whole austerity 
formula at stake.  For that reason, I suspect there'd be corks popping 
in Cannes if the government fell by one means or another.

    Greece: going under

By michael roberts

The Greek prime minister George Papandreou's call for a referendum on 
the bailout package agreed with the EU leaders and the IMF sounds like a 
move towards democracy.  The Greek people are apparently going to be 
asked whether they want to accept or reject massive cuts in living 
standards, public services and employment in return for money to fund 
their government's debt payment to Europe's banks, insurance companies 
and pension funds that are refusing to lend to them.

But this is really a political manoeuvre by Papandreou.  He is 
surrounded on all sides by opposition to the deal: from within his 
so-called 'socialist' party; from the trade unions; from the right and 
left opposition; and from the people (according to polls, 60% are 
against the deal).  His name is mud.  The Papandreou family has been 
ruling Greece on and off ever since the war.   He wants to save his 
name.  So he is trying to appear as the "innocent" and simply as the 
executor of voter's intentions to get out of the hole he has put himself 
in.  If he loses the vote on Friday, he can resign or call for early 
election without losing his face. If the parliament endorses the 
referendum, he can claim that the outcome is the voter's wish which he 
needs to follow.  He is using the typical tactic of a leader in a 
corner: a straight vote to shut everybody up: either accept the deal 
with the dreaded Troika or face being kicked out of the Eurozone and an 
even worse situation for the Greek populace.  This is not really a 
referendum aimed at giving the Greek people a chance to decide their 
future; it is really a statement along the lines of /"you are having one 
leg broken; but if you don't agree to that, then both legs will be broken."/

The referendum may never happen.  Papandreou has got the reluctant 
backing of his Cabinet but he may lose the confidence vote for his 
government in parliament this Friday night.  So then the President may 
call a general election.  Where would that take us?  Well, the 
right-wing conservatives hold a lead in the polls (although most people 
don't want to vote for either of the main parties).  The right-wing 
opposition says that it would 'renegotiate' the bailout agreement with 
the EU leaders.  And there is no doubt that Greece still has some 
bargaining ploys.  If the Greeks reject the deal as it stands and the EU 
leaders don't back down, then Greece will default on its debts, causing 
huge losses in the banks and financial institutions across Europe and 
also threaten to cause a debt crisis in Italy and Spain, driving the 
whole region into a new slump. That's a powerful bargaining tool.  But 
the right-wing opposition are not proposing to default on the Greek 
government debt.  On the contrary, their idea of renegotiation is simply 
to change the burden of the Troika's deal away from Greek capitalist 
businesses and put more of the burden onto the people.  They want lower 
taxes on property and corporate profits; they want more privatisation 
and sell-offs of state assets and they want bigger cuts in public 
services and spending, dressing this up by arguing that lower taxes 
would boost growth.

There is another alternative that the referendum (if it takes place) or 
an election could provide.   The Greek people could reject the Troika 
package and the government could decide to default, Argentina-style, on 
all its debt held by the private sector (the banks, insurance companies 
and private pension and hedge funds).  That would cut Greek government 
debt by EUR200bn, or 80% of GDP at a stroke, halving its debt burden 
immediately.  It could also insist that the official or public sector 
holders of its debt (namely, the EU governments, the emergency EU fund, 
the ECB and the IMF) agree to, say, a  five-year grace period where 
there is no repayment and also a reduction in the interest they are 
charging.  In that way, the burden of the remaining debt would be 
reduced sharply.  The EU could also release the EU structural funds 
available for economic growth and jobs, worth about 6% of Greek GDP.  
This would provide an opportunity for the government to restore public 
services and increase employment (especially of tax collectors to find 
the missing billions that the 1% of rich Greeks have not being paying).

Reneging on its debts would mean that the Greek banks would be bust and 
the public sector social security fund would be seriously in deficit.  
But the EU deal already agreed to fund more money for the banks.  They 
could be brought straight into public ownership and organised to provide 
credit for an expansion of investment, instead of buying government 
bonds.  The social security fund could be replenished too.  The 
government could impose capital controls on any attempt of the rich and 
the big corporations to spirit their cash out of Greek banks and abroad 
(although they have been allowed to do that already!).

No doubt, the EU leaders would refuse to accept such a 'renegotiation' 
of the bailout package. But a real socialist government in Greece could 
mount a huge campaign to convince other socialists in Europe and 
Europe's people, that driving Europe into a slump in order to meet 
payments to the very banks and financial institutions that caused the 
crisis is the wrong way and there is an alternative.  Indeed, other 
governments under pressure from their financial vultures could introduce 
similar policies so that Europe's banking system comes under public 
control and is then aimed at servicing the investment needs of 
productive businesses and households and not just as financial 
speculation machines.  So there would be a Europe-wide strategy for jobs 
and investment based on public control and ownership of credit,.

If that gained no support, Greece would probably be expelled from the 
Eurozone and be forced to adopt a national currency devalued by 
financial markets.  That is no easy or preferable solution as some on 
the left have argued.  Devaluation may make Greek exports cheaper but it 
will also make the debt of corporations hugely larger as those debts 
will still be in euros or dollars.  Many Greek companies would be 
bankrupted.  They would either be taken over by foreign concerns with 
huge job losses or (preferably) have to be nationalised.  As for public 
sector finances, even excluding interest payments that would not need to 
be paid under a full default, government tax revenues still would not 
match spending unless tax collections were increased and economic growth 
and employment recovered.  The Greeks could start printing their own 
drachmas but at the risk of massive inflation, already engendered by 
devaluation delivering much higher import prices.

But then all these headaches are going to happen any way if the Greeks 
vote against the EU-IMF deal.  At least, if the Greeks opt for default 
and an alternative programme for growth, they can reduce the damage to 
the population at large.  Under the Troika deal, they are handing over 
control of their economy to Europe's capitalist leaders for at least a 
decade and face austerity and lower living standards in order to pay off 
government debt for a generation.

A recent article in the British Lancet medical journal explains what 
that will mean.  Since the Greeks took the financial medicine of the EU 
bailout packages,unemployment has risen from 6.6% to 17% and youth 
unemployment from 18.6% to 40%.  Using European Union statistics, the 
Lancet authors surveyed socio-demographic data obtained from 12,346 and 
15,045 residents of Greece in 2007 and 2009, respectively.  It records a 
sharp rise in people reporting their health as "bad" or "very bad." The 
study attributes a marked rise in HIV infection in 2010 to increased 
intravenous drug use, prostitution, and weakening of HIV prevention 
programmes.  The survey reveals a big increase in people not using 
physician, dental, and hospital services. The problems include long 
waiting times, travel difficulties, and budget cuts affecting both 
public and private hospitals. Hospital services have deteriorated 
through staff and supply shortages often remedied only through bribes.  
Diminished primary and preventative care services have led to high 
admission rates to public hospitals, up 24% in 2010, 8% so far in 2011. 
That trend relates also to private hospital admissions falling 25% in 
2010. NGOs have long operated "street clinics" in Greece to serve 
immigrants, but now Greek citizens now make up 30% of users.  Mental 
depression figures are up, and between 2007 and 2009 suicides rose by 
17%; in 2010, by 25%; and in the first half of 2011, 40%. Suicide 
hotlines report that 25% of callers speak of serious financial 
difficulties. Homicide rates doubled between 2007 and 2009.

Putting the demands of the Troika to the vote of the citizens of Greece 
is Papandreou's last desperate play.  He sees that popular resistance to 
years of fiscal consolidation and 'restructuring' the economy to meet 
the demands of the bankers would make the country increasingly 
ungovernable.  But the whole crisis also shows that the so-called 
solution agreed by the EU leaders only last weekend is nothing of the 
kind.  Implementing it means a decade of misery for the people in 
Europe's weaker states and years of low economic growth and high 
unemployment i.e. a depression.

But as there is no alternative being presented by the Greek government 
or by the other 'socialist' governments in Europe, the Greek people may 
still vote yes in any referendum because they fear it could be worse 
outside the Eurozone.  Or they may yet vote in a right-wing government 
to implement even worse attacks on their public services.

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