In Greece, ten million people change ‘European project’ forever


The Greek elections could change everything, writes Luke Cooper

Alexis Tsipras, leader of the left coalition Syriza

Perhaps it was inevitable that attention would focus on François Hollande’s defeat of Nicolas Sarkozy, in what is undoubtedly a major blow to Europe’s political right. After all, the fall of Sarkozy potentially undermines the Franco-German consensus at the heart of the EU project, and leaves German Chancellor Angela Merkel more isolated than before. But it is Greece – a country that has been in recession for nearly five years and whose people have suffered austerity on a level unimaginable in other Western states – where parliamentary elections may prove to be a watershed moment for “Europe”.

That’s not Europe as in the geographical land mass, but the “project of Europe” as it was conceived in the Treaty of Rome to work towards “ever greater union” to “eliminate the barriers that divide Europe”. In Greece the central contradiction of this historical project now lies exposed. In a nutshell, this can be summarised in two questions: what if one of the “barriers that divide Europe” is the ‘winners and losers’ logic of the market, and what if the misery of some states lies directly in the fact that others are profiting from that logic?

A new dawn in Greek politics

The results of the Greek parliamentary election speak for themselves, with a dramatic collapse in support for the traditional ruling political elite. The conservative New Democracy party won 18.9 per cent of the vote – down from 33.5 per cent at the last election; Pasok, the closest thing Greece has to social democracy, won just 13.2 per cent of the vote – down from 43.9 per cent.

Since the overthrow of the military junta in 1973-74 these parties dominated Greek politics. Whatever happens in the months and years ahead, their unchallenged supremacy has momentarily been broken, opening up a chance for a radical realignment of politics. A classic polarisation between the right and left has now taken hold, with new parties formed in the cauldron of discontent emerging, while those who have for years stood on the fringes of the nation’s politics now find a hearing for their ideas amongst millions of people.

The big winners are the parties of the anti-austerity left. Syriza, the Coalition of the Radical Left – which unites relatively moderate eurocommunists with more radical left wing forces – made a dramatic breakthrough, forcing Pasok into third place, and winning 16.4 per cent of the vote, compared to the less that 5 per cent it won back in 2009. KKE, the Greek Communist Party – whose distinctive brand of Stalinism has traditionally combined a relatively minimal set of demands on Greece’s rulers with the style and rhetoric of ultra-left ultimatums – won 8.5 per cent of the vote, a less than 1 per cent increase on 2009. The Democratic Left, a newly formed party that came out of Synaspismós (the largest component of Syriza) and was later joined by a split from Pasok, took 6.1 per cent of the vote. And on the far right, Independent Greece, an anti-EU conservative party took 10.6 per cent of the vote, and the neo-Nazi, hard line fascistic Golden Dawn won 7 per cent of the vote – an astonishing increase on the 0.3 per cent it won in the last elections.

Question of Euro exit now posed

There is no shortage of historical parallels, where the economic logic of debt bondage amid a global slump in output has driven a social crisis resulting in a political polarisation. It is predictable – given that so much of the ideological justification for the European Union lies in the fallout of the inter-war crisis of the last century – that Germany, 1933 has cast its dark shadow over the Greek events. Then as now, external financial obligations (“war reparations”) put unsustainable demands on an entire people, and the noble ideals of liberal internationalism enshrined at the time in the League of Nations ran up against the harsher realities of how capital distributes wealth unequally across the international system. It is perhaps telling that it is city market bloggers who appear most taken by the trauma of this historical parallel.

In response to the vote, the Greek stock market fell by 6.5 per cent – its biggest daily loss in five years – fearing that political paralysis or anti-austerity parties would now prevail. And the bond markets have now largely priced in a Greek exit, leaving the country unable to borrow privately and entirely dependent on EU bailout funds.

Under the Greek constitution the party that wins the largest share of votes automatically gains another 50 seats – a breathtakingly undemocratic measure designed to avoid the political instability of coalition rule. But even with this boost for the New Democracy, the total number of seats in parliament it has with Pasok remains two less than the 151 needed for an overall majority. With Syriza ruling out participating in a government of “national salvation”, attention then turned to whether the Democratic Left will support such a coalition. But their leader has called for a broad coalition of the centre-left parliamentary parties, i.e. one that excluded the New Democracy. But, even if Syriza agreed to participate, they would not have a workable parliamentary majority because of the electoral rule that gives an additional 50 seats to the party that has the largest share of the popular vote. With no party likely to be able to be able to meet the 151-seat threshold new elections may well be called in a months time.

The Greek political elite will ask the same question again in the hope that the possibility of an exit from the European Union is sufficient to scare the electorate into giving the “right answer” this time and grant the pro-austerity parties a workable parliamentary majority.

The run on the Athens stock market indicates that most big global investors are now working on the assumption that Greece will be forced to leave the European Union.

The ironies of history

Such is the extent to which the financial crisis of 2008 has de-stabilised the old assumptions of capitalist politics, that the once impossible suddenly appears highly probable, the Maastricht Treaty actually contained no mechanism for leaving the Eurozone and remaining within the European Union. The simple reason is that its architects believed the ideological assumptions underpinning the “globalisation” years; that ever-greater unity of liberal states would bring peace and prosperity to Europe and the world. Even if some contested these “new realities”, it didn’t really matter, because history was on the side of “Europe”.

The people of Greece exist between resistance and tragedy – and a tragedy on a historic level. But like all tragedies the course of the Eurozone crisis has no shortage of irony. It is after all Germany that has imposed a shocking level of austerity on the Greek people; a 22 per cent cut in the minimum wage; a target of 150,000 public sector job losses; 15,000 public sector workers placed on immediate “labour reserve” with wage cuts of 40 per cent and notice they would be fired within a year; 50 billion euros of privatisations; health service cuts of over 1 billion euros; 300 million in pension cuts; and the list goes on, and on. Four years of austerity has led to successive contractions in Greek GDP, i.e. a long-term and deep recession, which in turn has undermined Greece’s ability to pay. In 2011 unemployment had risen to 15 per cent, but stands at 50 per cent amongst young people. It is running a vast trade deficit and the next round of cuts will further cripple its domestic economy.

That’s why the old adage that those “who do not learn from history are doomed to repeat it” strikes a chord for any reader of the Greek events; for Germany more than any other state should understand the consequences of austerity on this scale. But Merkel is adamant, after the election she made clear that in her opinion “the most important thing is that the programs we agreed with Greece will be continued”. As far as the EU rulers are concerned, no matter that the electorate is rejecting austerity, they are determined to enforce it.

Neoliberalism still ascendant

Compare this austerity to the actions another hegemonic state, the United States, took in 1948 to prop up war-ravaged Europe: the Marshall Plan. The parallel is informative, because it emerged directly out of the desire to halt the march of communism by creating an economic shield around the capitalist states of Western Europe. For us it poses the question of whether capitalism has lost its ability to reform itself given that now, in our times, there appears to be an absence of a credible threat to the market system. If our age is marked by what Mark Fisher calls “capitalist realism” – the “widespread belief that there is no alternative to capitalism” – then elites no longer “fear socialism” and so there is no compulsion to introduce reforms that attempt to “humanise” the market system.
Indeed, one of the remarkable things about Greece has been the preparedness of its political elite to undertake the austerity programmes in order to remain in the “European project”. Partly this expresses a political and ideological rationale. Entry into “Europe” was fundamental to the assumptions of post-1974 Greece. Konstantinos Karamanlis, the founder of modern Greece, saw entry into the common market as fundamental part of its transition to a modern and “civilised” liberal nation and successfully resided over their entry in 1981.

But partly also in Greece, like so many other states on the Eurozone periphery, a wealthy and technocratic elite have grown rich from the Eurozone project. And they as much as other big international investors stand to profit from the protection of the Greek financial sector and the dramatic “re-structuring” of its domestic economy that imposes the costs of the crisis on to its working majority. But while this nexus of economic interests groups is undoubtedly powerful, it will be the political decisions of a small layer of individuals that might prove decisive as to whether Greece will be able to remain in the European Union.

Elusive alternative?

One of the challenges for those of us that want to actually go beyond capitalism and use the social crisis to rebuild faith in the socialist alternative is how we relate to situations like Greece where a broad based rejection of the logical outcome of the project of capitalist Europe is juxtaposed to a lack of belief in a credible alternative. Most opinion polls in Greece for instance still show that a majority favour remaining in the European Union but do not want to accept the costs that have become attached to it. Although Greece was not featured in a recent global surveyon attitudes to capitalism, in Spain = which is experiencing a similar economic contraction – some 42 per cent believed “a fundamental alternative to free market capitalism was needed” – one of the highest proportions. In Greece, the biggest gain of the current electoral crisis has been Syriza, whose alternative strategy does not fundamentally reject a “capitalist answer” to the crisis and has an ambiguous position in EU membership. The much more radical alliance of the left, Antarsya, won 1.4 per cent of the vote – a dramatic increase in its previous results – but still not anything like as credible a vote.

The current crisis may be destabilising many of the old assumptions, but instilling belief in an alternative remains elusive for the radical left. In Greece the scope for compromise with the European Union that would be acceptable to Syriza exists. But to achieve it would require fundamentally uprooting the neoliberal assumptions that remain dominant within “the project of Europe”. For a start it would require completely transforming the financial and banking system into public enterprises, allowing the state to take a far wider presence within the economy per se, and, in turn, create mayhem on the global stock markets as the increased presence of the state would “squeeze out” opportunities for capital. The comparison with the conditions that surrounded the Marshall Plan in 1948 is indeed telling, because the scope for a social compromise between labour and capital existed then given the growth opportunities for capital within the war-ravaged economies of the West. But as David Harvey argues in his Brief History of Neoliberalism, it is one thing to give workers an increased share of wealth as the economy is undergoing an overall expansion, but to do it in conditions of stagnation or decline is quite another. And thus while politics undoubtedly plays a role in the unfolding events that can’t be reduced to the economic, there are nonetheless structural exigencies in contemporary capitalism that make austerity a “rational” choice.

Overcoming capitalist realism

Greece remains a special case within Europe given that it has felt austerity on a scale that no other European state has yet experienced. But the great fear is whether it is only a matter of time that other countries witness similar convulsions under the whip hand of austerity. In its own way it gives a peculiar twist, to Marx and Engels’ famous formula from Communist Manifesto that capitalism “creates a world after its own image”. The question is whether the image of Greece spreads ineluctably across Europe – either in the form of the semi-globalisation of austerity economics to Spain, Italy, et al, or if an exit from the Euro encourages others to follow suit. That’s why economically the European Union could well withstand a total Greek default and exit, but its political costs will be enormous. Even though the Union will continue with participants prepared to accept the economics of austerity, it will no longer represent an open, globalised project of liberal internationalisation, but will more come to be seen as an elitist and deeply unjust neoliberal project.

The situation in Greece is perhaps best described as what Émile Durkheim’s Suicide termed the “state of anomie” – where ties within a community are thrown into chaos as it descends on a path of breakdown, conflict and instability that it cannot escape. For Durkheim this arose from a lack of institutionalised social ethics, but in its concrete historical incarnations, most notably in inter-war Germany, it has arisen not from a lack of ethics incorporated into a liberal system of law, but from a disjuncture between this moral code and the failure of capitalism to realise the universal prosperity that it took as its raison d’être.

In situations of breakdown the opportunity for anti-capitalist transformation arises indubitably but there is no shortage of instances where far right forces have prospered too. If, however, there is a positive side to the legacy that the 20th century left behind for us today it is a popular aversion to the totalitarianism that blighted attempts at radical social change in the last century. And while we should not be complacent, we can take confidence from the fact that it will not easy for fascist forces to prosper in these circumstances, even though we must be keenly aware of how the perceived “failure of socialism” represents an enduring challenge to the socialist project. It is thus both vitally necessary to the success of our project, and equally necessary to give it any hope of gaining a mass, popular appeal, that we stress its democratic and anti-authoritarian character – that we want workers to “take hold of their own lives”. In this regard, the Greek crisis gives a powerful example of the sham character of liberal capitalist democracy; for its voters rejected austerity in 2009 and got more austerity. Now in 2012 they have rejected austerity again, but they still have a political system that rules above the people and is subject to the demands of global capital.

Here, then, a key task of the radical left must be popular agitation for fundamental anti-capitalist transition which extends democracy right down into the economic structure of our society. But it also needs to popularise a series of immediate policies that push in the direction of a break with the logic of capitalist markets. A good start is to build mass movements that are actively demanding that the international financial markets, which lent to Greece at their own risk, do not get a penny in return; to create jobs in the public sector through a punitive tax on the rich; and take into public control the vast wealth that is still concentred in their hands of small minority within the polity. But at the same time, we need to build forms of organisation, in the context of these enveloping mass movements, that show in embryo a different kind of society is possible, by democratising the workplace and building forms of political organisation that start to empower workers from below.

The only example that we have at our disposal for when workers’ successfully “took the power” in this way remains Russia, 1917, where it was soviets, democratic forms of workplace power, that provided the crucial agency for the transfer of power to working people and it was their decline and bureaucratisation that led to the revolutions’ defeat.

How to form similar bodies – that draw on the best of recent popular movements, such as the social assemblies of the Indignados but extend this form of organisation deeper into the workplaces – is a key question within Greece. This is especially so given that the deepening austerity has made developing popular control of the public sector a vital necessity simply to maintain basic social services on which workers depend. But at the same time, the ‘political question’ – of where state power lies and who it defends – needs to remain front and centre of the renewal of popular anticapitalism. In these tumultuous global times, in Greece’s deep state of anomie, and relatively recent experience of military rule, the left has to remain alert to the danger of a closing down of the democratic process entirely. This would be doubly likely if radically anticapitalist forces started to gain a wider hearing.

All these questions need to be subject to a wider ranging debate on the global left. The return of strategic left wing thinking – that has been long discussed and whose arrival was heralded at various points in the last ten years – needs to become real. The Greek crisis will change the European Union forever, but it also represents a dramatic testing ground for all radical left wing ideas that claim to offer a way out of “anomie”.

Crucially, we cannot see the Greek crisis as a “Greek affair”, but as one that affects all of us. After all, if the people of Europe are to escape the barbaric realities that the “European project” has now imposed on them and to avoid the terrors of the last century, then they we need a different kind of “European project”, one not based on capitalism, but on the principles of a democratic, working class internationalism extending across all borders.



  1. Paul Newton
    May 9, 2012 at 3:50 pm · Reply

    Thought this was interesting..sp passing it on
    from Kasama Project
    I would like to share some of the thinking and questions that have been going through my head as of late:

    1. I have noticed that a great deal of the response (among radical people in the U.S.) to the jolting political developments has been starting from whether enough seats can be attained to form a left government. Actually, it seems no government can be formed, which is probably a very good thing — from the point of view of revolutionary openings.

    But more, merely counting parliamentary seats and seeking one or another left coalition is a wrong starting point:

    The main thing to note here is that the long-standing establishment political parties of capitalism have been shattered, that the Greek parliament has become increasingly polarized between a hard left and a hard right. This is more what a society looks like before a revolution or a civil war than before some grand resurgence of social-democracy and rescue of capitalist stability.

    A communist orientation in such moments and crises requires exploiting these cracks and fissures to unravel the previous system.

    That’s why the point is not the seats (even though seats play a role in certain revolutionary programs of agitation) — it is who is establishing a revolutionary alternative (at one real existing social pole) — increasingly opposed to a horrific and fascist alternative acting as an opposing pole. The center is not holding.

    2. It is notable that KKE (the “traditional” parliamentary and trade union based Communist Party in Greece) experienced virtually no change in its electoral presence (which under these conditions is a measure of its broader influence and support).

    In the middle of this historic crisis, where others are growing or shrinking in sudden ways, the KKE is frozen (for the moment) presumably around its “traditional” institutional support. They have not benefited from a significant swing of many people from establishment capitalist politics to leftwing politics. As has been noted, this partially has to do with a widespread distaste for their long-standing sectarian hatred of more radical forces, and their refusal to consider alliances with the hard left.

    But I suspect that it also has a great deal to do with the reality that KKE actually has a very old social base, among a specific sub-section of the industrial working class in Greece. That section of society, while not without strategic importance, is not where a revolution can come from at this moment: it is relatively ossified and cut off from the rapid changes sweeping Greek society. The KKE is not particularly connected politically with the immigrant workers who have entered Greece, with unemployed and laid off workers from former state industries, or with the middle classes with no future..

    This is why KKE has chosen to present itself using antiquated nostalgia, including a decision to adopt the former Soviet leader Joseph Stalin as one of their defining symbols. They are appealing to an older section of society that had it peak (and reference points) in the Greek Civil War following World War 2.

    The KKE,has been pursuing a parliamentary path — seeking influence within mainstream Greek politics using their trade union base as a lever. For them to accept an alliance with more radical forces (including specifically SYRIZA) would mean abandoning attempts to come to power by being the “responsible” forces among the discontented people. Their strategy has now failed — as so many competing strategies within the previously existing political mainstream. Their choices are now to liquidate themselves into the diverse rising leftist pole of SYRIZA, or to abstain in a hostile way (and seek to hold on to their traditional influence over one very small section of society). They have chosen the latter.

    3. I have read some articles, which claim the main problem is a lack of unity of the left, such as this one written by the Marxistiki Foni forces in Greece, and circulated internationally by the International Marxist Tendency (IMT).

    While making a somewhat correct criticism of KKE’s right-sectarianism, they also, under the banner of “left unity,” criticize an alleged sectarianism of the more radical left.

    “Furthermore, it is time that SYRIZA abandoned its present structure as a weak alliance between a large traditional party (Synaspismos) and several small left-wing organisations and ‘individuals’ and transformed itself into one big mass party to organise the working class and the youth.”

    At the heart of this argument is a call that the revolutionary left-wing within SYRIZA dissolve itself, and allow the larger social-democratic wing of SYRIZA come into its own, unopposed. The current leader of SYRIZA, Alex Tsipras, ultimately represents a road of seeking socal-democratic reforms (as an answer to the crisis). And the call for generalized “left unity” is a call for extinguishing aspirations of revolution and a radically new socialists system — and of having everyone fall in behind such social democratic politics.

    The less radical wing SYRIZA is not simply social-democratic. The calls of Alex Tsipras for a “Greek New Deal” are obviously non-revolutionary, but they are also almost certainly impossible. Synapismos (that right-wing within SYRIZA) envisions a society where all debts and austerity are cancelled, and Greece suddenly develops a new flourishing of social-democracy and radical environmentalism… rooted in an essentially capitalist economics.

    Such a development is almost impossible to imagine. It is in fundamental contradiction with the current interests of the “Troika” that currently rules Greece (the European Union, the International Monetary Fund, and the European Central Bank) — without being in fundamental opposition to the system that has given rise to that Troika.

    In other words, abandoning or suppressing revolutionary aspirations — of actually seizing power and breaking out of the domination of oppressive institutions — will not serve the people, even if it is done under the banner of “left unity” and beating back the fascist Golden Dawn.

    While communists have benefited in many ways from operating within larger radical formations — like SYRIZA — they also need to speak with the own voice, and move with their own aims.

    The Communist Organization of Greece (KOE) and others have written that this situation is how openings emerge for radical transition stages.. And I think we should understand such polarization as a part of the pre-cursor to revolutionary attempts at power, and even possible civil war.

  2. John Grimshaw
    May 9, 2012 at 4:11 pm · Reply

    It is widely reported today in the media that the KKE refused point blank to even speak to SYRIZA about the possibility of doing a deal. In fact if you look at their on line position statement they make it clear that they will never talk with anyone in whatever election. The statement is couched in traditional Stalinist fashion i.e. very long, very small print and with constant references to the correct decisions of the CC. They talk about the need to avoid bourgeois deviations and praise those workers who correctly voted for them. They also admit that if they had campaigned as part of a front (presumably with SYRIZA) they would most likely have got more votes. For them leaving the Euro and the EU is very important and as Luke says above SYRIZA don’t really even mention it. Not only is the KKE’s position sectarian it is also sterile because they don’t have any answers to the conundrum they find themselves in. If they think just leaving the euro etc. will solve Greece’s problems it won’t just more misery but without the EU to blame. Alternatively they could be putting forward a revolutionary programme and leading workers in a fight to seize the state but they don’t do that and its difficult to see they could when they despise workers and others who don’t see the correctness of their positions. This is the party that marches separately on demonstrations.

    As an electoral aside there will almost certainly have to be new elections as Luke says. If the KKE were to change its mind then I estimate SYRIZA’s share of the vote would have to rise from its current 52 seats to about 75 (this assuming the KKE’s vote doesn’t go up) in order to get the majority with just the two parties.

  3. John Grimshaw
    May 9, 2012 at 4:13 pm · Reply

    Sorry here is the KKE’s statement.

  4. Luke Cooper
    May 9, 2012 at 8:07 pm · Reply

    Thanks for your comments – especially for your lengthy remarks Paul, which I think I largely agree with, but with the proviso that I have not followed closely the arguments amongst the Greek far left.

    I certainly agree, however, that the call for Syriza to simply become a social democratic / eurocommunist party, that the IMT appear to be making should be treated with a bit of caution.

    If, after elections in June, Syriza emerges as a leading force within a Greek government, then it will be very important for revolutionaries to organise independently so as to apply pressure and to check the inevitable concessions that they make to the Greek ruling class.

    I notice that Yannis Almpanis, who is a a Greek supporter of Syriza, argued in his blog post, that Greece faced a choice between a Germany 1933 scenario, and taking the “Left Latin American road” – I’m sure this is indicative of the consciousness of many of their activists.

    But it confronts the problem that, unlike Chavez in Venezuela, there are no oil reserves in Greece on which such a project could rest – it is in an economic tailspin (check out the trade deficit figures by the way, they are quite jaw droppingly bad).

    Best wishes,


    Yannis’ blog post:

    • May 18, 2012 at 2:20 pm · Reply

      The “Left Latin American road” is not confined to Venezuela. Argentina defaulted and restructured its debt to foreign creditors in 2002 and it has no oil. Look at the tremendous gains in the standard of living under Morales and MAS in Bolivia. Even Iceland decided to hell with paying foreign bankers, and they certainly don’t have any oil.

      Greece has plenty of wealth to spread around when the government isn’t auctioning off the country’s assets at fire-sale prices and paying foreign banks. I think the oil/Venezuela argument is economic determinism.

      • Luke Cooper
        May 20, 2012 at 12:08 pm · Reply

        I am certainly no economic determinist (!) and I take on board what you are saying. But Chavez was able to introduce substantial social welfare programmes AND cultivate a state-capitalist “Bolivarian bourgeoisie”. Venezuela’s oil wealth gave him a certain room to manoeuvre, which the Greek government does not have to the same degree. In any case, we will see, it’s obviously a very open question.

        • Pham Binh
          May 21, 2012 at 2:45 pm · Reply

          To be clear, I never accused you of being a determinist, I said the particular argument you raised was a determinist one. The left has a nasty habit of conflating people’s positions, ideas, and arguments with people themselves, thus because you made a determinist argument somewhere on the internet, you are now therefore a determinist, because I argued that the existing sects ought to liquidate into a broader, common anti-capitalist organization, I am a liquidationist.

          This “method” of “argument” (which is really character assassination) has held as back just as much as fantasies about how the Bolsheviks organized have.

          • Luke Cooper
            May 21, 2012 at 2:51 pm ·

            Lol, I’m not sure how we got onto this! Fair dos. But I think if I was prone to making economically deterministic arguments, then there would be some justification to the idea I was indeed an economic determinist. There is a relationship between people abd ideas and to say so need not imply character assassination! 😉

    • GrahamB
      May 20, 2012 at 9:33 pm · Reply

      The Latin American road is Argentina 2001 not Chavez’s Venezuela, and an option touted by Nouriel Roubini and Paul Krugman amongst others – and many far to the left. The comparison doesn’t hold up, Argentina had the advantage of rising commodity prices as an exporter, imports less of it’s food and of course was working in much more favourable economic conditions. And poverty levels – already very high – rocketed between devaluation and recovery.

      What can be taken from Argentina is the blossoming of participative
      democracy and workers occupying closed factories and re-starting production – workers cooperatives, some of which I believe still exist.

      I would have thought that the revolutionary Left in Greece (e.g. Antarsya) should not only actively support Syriza but join them -it’s a coalition of left forces after all. The election of a Syriza led government would be of tremendous importance in itself – the most left-wing government in Europe. Second, ensuring that Syriza does not compromise on out-right opposition to the Memorandum may become an immediate issue. Third, it’s still a big leap from the politics of the Syriza leadership to revolution – approx 1.5% of the vote as against 20% – and the bigger the audience the better.

      Would a left-wing government compromise with the troika? Probably, but will it be given the chance? There are numbers flying around on the economic impact of a Greek default and exit, though I would guess that it would (just) be manageable for the EZ, not least as it’s been expected for a considerable time (quite unlike the banks where bankruptcy can occur with virtually no warning). Contingency plans have been made and it’s now openly voiced. There is no formal mechanism for the expulsion of a member state from the EZ but an exit would be precipitated by simply stopping the tranches, followed by default – a forced exit.

      The election of Hollande may result in more funds for the EIB and further action by the ECB, and they’re attempting to replace the rhetoric of “austerity” with “growth and austerity”, but there is little disagreement over Greece that is considered “too far gone”.

      A Syriza led government is probably not the most likely outcome according to recent polls and some kind of unity coalition, as attempted recently by DIMAR, may come again if there is still deadlock after the next election.

      Whatever does happen, the war against austerity in Greece will only be successful with pressure applied from outside by mass movements in other countries. It’s almost certain that there will be a full-blown bailout of the Spanish banking system (more than a third LTRO) at some point. Will the funds be sufficient? And a bank bailout after the Spanish people have already suffered two years of deepening recession will be incendiary politics.

      • Luke Cooper
        May 21, 2012 at 2:55 pm · Reply

        I agree with pretty much all of this, but would add the proviso that should Greece default “chaotically” ie unilaterally, then an exit from the euro is likely but not certain.

        It’s government would have no avenues to borrow credit internationally so would either have to (a) “find” wealth in national economy through punitive taxation on rich, nationalisation and capital controls (a radical position, which might allow them to keep euro and put onus in Germany/eu to expel them) or (b) print money, which would obviously require their own currency and could cause hyper inflation.



        • GrahamB
          May 21, 2012 at 3:45 pm · Reply

          I think a unilateral default would lead to exit. If this isn’t the case the troika, Germany, Cameron, etc. are indulging in one of the biggest games of bluff in history.

          They’re working hard to position the forthcoming election in Greece as a vote on the Euro rather than on austerity. Translation: Don’t vote Syriza. They’re desperate to get that unity coalition government.

          If they don’t get it, they’ll move to plan B of forced exit, hoping they can avoid contagion – dramatic bank runs in Spain. Deposits in Bankia, the fourth largest bank that was part-nationalised, are already on the decline.

          • Luke Cooper
            May 21, 2012 at 8:21 pm ·

            Yes, I agree. But I’m not the only one who has actually pointed out “default and exit” are not necessarily the same thing. Ken Clarke – obviously an unusually pro-European Tory – made that point over the weekend.

            The reason that Cameron, Sarkozy, etc have posed it in those terms is entirely logical and actually quite honest from their perspective. They see the Greek public deficit and they say, “if you are in the euro then you have to borrow from us to stay afloat, if we don’t lend to you then you will have little choice but to print money, i.e. your own money, i.e. restore the Drachma”.

            But Syriza may be able to raise enough cash through punitive taxation and capital controls domestically and therefore stay in the Euro (but violate practically every european directive going). This would mean it didn’t have to resort to printing money and bring back the Drachma.

            I think this is the logical consequence of the Syriza, “yes to the euro, no to austerity position” if they see it through. But it would involve an almighty clash with Greek bosses and European financial capitalism that I very much doubt their leaders are really willing to do politically. They are moderate eurocommunists after all.

          • billj
            May 22, 2012 at 10:47 am ·

            A default will mean that Syzria will leave the Euro, not least as the Europeans will want their money. They’re not going to allow them to take E150bn for nothing.
            I agree with Graham the task of revolutionaries is to force Syzria to stick to their programme. They’re already getting visits from the German ambassador, the EU president etc. They’re trying to map out a deal post election. Most likely it’ll be something the abandonment of the extra cuts, and an interest rate reduction. And they’ll be telling them that the Colonels and Nazis are getting organised.
            Socialists should say that Syzria need to stick to their guns, and prepare to defend the government against the reaction. That means people’s committees, defence organisations etc.

          • May 22, 2012 at 1:33 pm ·
          • billj
            May 22, 2012 at 1:54 pm ·

            Yes and no. We’re talking about disorderly default aren’t we? There hasn’t been a disorderly default. Yet.

  5. billj
    May 10, 2012 at 4:46 pm · Reply

    If Syzria have the majority following the relection in June there’s two basic possibilites it seems to me;

    1) they do a deal with the EU/IMF. The EU could force private bondholders to write off the rest of their debt, could lower the interest rate on the debt they hold etc. as Bloomberg point out the EU have a definite interest in avoiding a wholesale write off;
    In addition there’s probably a lot of the Syzria leadership who would like to cut a deal.
    2) They don’t cut a deal – in which case Greece exits the Euro. The economy will collapse and there will either be socialism or fascism/military coup.

    • Luke Cooper
      May 11, 2012 at 12:07 pm · Reply

      Re point 1: yes, I saw that after writing this – watch this space for a Syriza climbdown after a June election win. But, it should be remembered that, Syriza’s parliamentary right actually split off a few years ago to form Democratic Left, and they are a relatively plural coalition so an outright sell out may be to difficult to achieve without pulling them apart.

      2. I think there are more contingencies involved than that, but certainly any default and euro exit would require massive state intervention into economy (1930s style), because as it stands Greek public spending is still in the red, so they require bailout funds just to keep show on the road. I think it’s interesting that Latin American populism is being touted as a “model”, but admittedly that would come under heavy pressure from Greek bourgeoise so a coup can hardly be ruled out.

  6. billj
    May 11, 2012 at 1:15 pm · Reply

    There might not be an election of course if Pasok can stitch up a deal with the Democratic Left and the New Democracy. Even then there probably would be a renegotiation of the bail out.
    A default would require the nationalisation of the banks, rationing of food and fuel, massive taxation of the rich, financial controls, limits on capital export, etc. There would also likely be sanctions from the EU/USA etc. so there’s two choices, either the workers could to it and make the bosses pay, or the bosses could do and make the workers pay.
    So that’s either socialism or fascism/military coup.
    The economy is in a far worse state than Argentina in the early 1990s and has fewer options being on the edge of Europe rather than Latin America.

  7. Luke Cooper
    May 13, 2012 at 12:19 pm · Reply

    I take the point, I guess I am quibbling over whether the measures that you describe would be necessary in the event of a chaotic would constitute “socialism”. Or whether they are quite compatible with a “state capitalist” orientation that could be carried through by a left populist regime. In any case, I agree that the stakes are very high indeed.

    This piece by Paul Mason is essential reading. He anticipates a moderate Syriza government that strikes a harder bargain with EU but nonetheless accepts some of it’s demands. I would have thought, however, that given Syriza is a plural coalition that it could well fracture in the event that it renegaded on promises to end austerity. Also very interesting analysis of who is voting for them.

    • Luke Cooper
      May 13, 2012 at 12:21 pm · Reply

      That should read “chaotic default”. Bloody iPhone!


  8. billj
    May 13, 2012 at 12:47 pm · Reply

    The expropriation of the bourgeoisie by the working class would constitute socialism. Or at least the bourgeoisie would certainly think so!

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