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Monthly Archives: July 2015
As the debate around Syriza’s internal divisions and its future (and that of the left in Greece and Europe more generally) continues, it is perhaps surprising to hear old arguments being rehashed in favour of ‘tactical’ unity around Tsipras, a leader who betrayed his electoral mandate and is unwilling to face the consequences. In a piece in Jacobin Magazine, for instance, Sam Gindin and Leo Panitch argue that:
“Those who — like ourselves — believe that leaving the eurozone will eventually be necessary must acknowledge that this cannot be done immediately. A base for leaving must be developed, and this means taking the time to prepare for exit.
The continuing support for Tsipras suggests that there is time to deal with creating the necessary transformations within the state, and the creative plans that both maintain confidence in the government and allow people to organically learn why they need to move beyond the limits of integration within a neoliberal Europe.”
The problem is that once in power, people’s representatives easily forget who they represent and talk about the future of a country as something a few dozens intellectuals can plan and implement at will, sitting around a table – “of course the masses out there will understand”, “if we can just buy a bit more time to get the real revolution going”…
Meanwhile, the real alternatives for positive change are washed away by an unprincipled betrayal of all those who supported the Syriza project in January – it is unlikely that most of them are interested in or approve of erudite Marxist tactics, especially in a situation of deep crisis where their livelihoods are at stake.
Syriza’s dissenting leaders are no doubt under a lot of pressure to make the ‘right’ decision – should they break away or not? If they decide to remain in an uncomfortable ‘tactical’ alliance with Tsipras, they will also be held accountable for this debacle. The fear of a return of the old political classes might be enough to keep Syriza together for now, but in the long-term it would be a colossal mistake. It would burn the already diminishing credibility of the new left in people’s eyes, and open the way for neo-nazis and other chauvinist movements to steal the show and act as the only mass opposition to austerity and the memoranda.
Tsipras’ high personal ratings are a sign that he has rapidly adapted to the political arena, showing in fact many of the skills of seasoned politicians. He has been able to spin a successful narrative out of a spectacular defeat, but there is no substance or vision in this move – only the well-known trademarks of a professional politician who knows how to tell a good story to get out of trouble.
When more people will wake up to the reality of what the government has signed up for, the ratings will rapidly collapse, just like old parties like New Democracy and PASOK dissolved into thin air in a matter of months. Those who are interested in a progressive alternative to austerity need to think beyond polls and short-term power politics.
Nor are these issues confined to Greece. Italy has already seen the defeat of a corrupt and colluded left. A progressive alternative to European technocracy simply has no grassroots consensus, and the anti-austerity agenda has been hijacked by right-wing xenophobes and national chauvinists. In Spain, Podemos might end up in the same trap, especially if they follow in Tsipras’ footsteps and settle for a gradualist approach.
—> Wednesday night the Greek parliament approved a 977-page bill as required by the new EU memorandum. Syriza MPs only received it a day before the parliamentary debate. It is clear that nobody could possibly have gone through all the pages to have an informed debate. The hours of debate preceding the vote showed in fact that there was little talk of the actual measures under scrutiny.
We will have to wait for much more refined analysis to understand all the implications of the bill. What English-speaking analyses have reported so far is that the bill covered two main areas: a whole new Civil Procedure code – basically a reform of the civil justice system; and the implementation of the EU Bank Recovery and Resolution Directive, laying out rules for bank rescue – allegedly to avoid taxpayers to bear the burden, in practice to shift the burden towards bank depositors.
Important measures that have been downplayed by pro-agreement media:
– the EU directive now sets rules for bail-in (i.e. bank depositors’ haircuts) for banks recapitalisation in case of insolvency or bankruptcy; the rules will only come into force from January 2016, sparking speculation by some analysts that depositors will take a hit (i.e. they will lose part of their savings to recapitalise the Greek banks), and it is just a matter of when, rather than if. Business analyst Frances Coppola sees the continuation of capital controls as a prelude to bail-in of depositors. There are widespread fears of a repeat of Cyprus, where account holders with more than 100,000 euros lost money. In this scenario, Greek small and medium enterprises would take a major hit, further eroding any chance for economic growth and recovery;
– another hot topic is the issue of home repossessions on non-performing loans (i.e. large numbers of Greeks defaulted on their mortgages). Banks up to now have avoided mass repossessions. According to pro-agreement English-speaking Greek analysis outlet Macropolis, the new measures approved by the bill make it easier for banks to auction homes on non-performing loans. In his speech to the Greek parliament, Tsipras of course reassured with much emphasis that it would be the end of Syriza if the poorest and more vulnerable were not protected – he has not however said much about the real scope of potential home repossessions. This issue is connected to the bail-in. The general orientation of creditors is to make sure that Greek banks’ recapitalisation (accepted by everybody as inevitable) takes place with the least possible burden on international creditors (i.e. reducing the amount of money to be loaned to save the banks). This means of course that the hit will have to be borne by common people and the Greek economy.
—> Predictably, the bill was approved, with pro-agreement opposition New Democracy and PASOK supporting the government. The main attention was focused on Syriza internal dissent. 36 MPs voted no or abstained, down from 39 in the previous vote a week before – the fact remains that the Syriza-Anel coalition does not have a majority anymore. In another spectacular u-turn Varoufakis voted ‘yes’ – apparently arguing that he was already in favour of these measures before.
It is unclear what the implications of this continued dissent are. Syriza’s central committee has not been called yet, Tsipras seems to be stalling on that. There are contrasting views over the real intentions of the dissenters and whether there will be a split or not. Rumours about snap elections in autumn are rife – this seems to be a probable scenario if the dissenters leave and form a new party. Pollsters give Tsipras’ Syriza still firmly on the lead, and Tsipras ratings remain high – this is all to be taken with a grain of salt, these are the same pollsters who hugely underestimated the ‘no’ vote in the Greferendum.
Beyond the questionable numbers, Tsipras seems to be managing this transition pretty well. He has made strong inroads with the pro-agreement Greek media establishment, which was notoriously anti-Syriza and anti-referendum. The rhetoric of a heroic national leader crushed by the unbeatable powers of Germany and Europe, and forced into accepting an unfavourable agreement to avoid complete collapse, seems to be gaining ground. Syriza hopefuls are trying to make sense of Tsipras’ capitulation, while retaining Syriza’s ‘distinctiveness’ vis-a-vis the older political establishment. A popular narrative is that this is just a tactical move and in the end Syriza will rise again, ignore the agreement and get going with the long-term plan of radical and progressive change – but for now Tsipras needs more time to regain strength and come up with a viable plan, the story goes. Of course Syriza dissenters categorically reject such narratives as delusional, and claim that Tsipras’ choice has been disastrous and there is nothing heroic about giving in to creditors and betraying the Greferendum.
—> The Greek bill vote is another milestone of the agreement process, various government leaders and technocrats now estimate that the deal should be finalised in the second half of August. After €7.16bn disbursed as bridge funding last monday (all gone back to the creditors, mostly IMF and ECB), there is talk of another bridge loan to allow Greece to repay €3.2bn to the ECB, due on 20 August – the deal might not be finalised by then.
—> Talks from many quarters seem to confirm that debt restructuring is firmly on the agenda, even though we don’t really know how much, in what ways, what it really means etc. The Italian central bank governor noted yesterday that in fact interest rates on Greece’s negotiated debt repayments are quite low and the timelines spread over time – something that both Syriza and its opposers in the last election made sure to keep well hidden from public scrutiny. According to him, further extensions won’t be enough to sort out the problem, substantial debt relief needs to be on the agenda – translated, this is closer to the IMF line that part of the debt needs to be cancelled, something Germany is not even considering at the moment.
It is significant that high-level US officials continue to join in the conversation, reassuring that the talks are proceeding smoothly and that a deal will be struck and one that is not bringing Greece to its knees – something they did even during the heated days around the Greferendum. This is of course neither altruistic help for allies in trouble, nor merely a preoccupation for the stability of global financial markets. The US has very little interest in Grexit and will do whatever they can to avoid Greece falling into the hands of Putin – something a Grexit would make quite likely.
—> The bailout talks will now continue in Greece, the troika is about to return to its ‘debt colony’. The latest is that there are disagreements between troika chiefs and the Greek government over where the creditors will lodge. Of course this is more about the symbolic moment of capitulation which Tsipras is trying to manage by stalling and appearing like he’s got some say and leeway to contain the troika’s interference in Greek matters.
Major obstacles on the way – or should we say, other bitter pills to swallow for Greeks – are discussions around labour laws reforms that will further weaken workers’ position, market liberalisations and the even more controversial privatisation fund. The Greek parliament will have to approve more neoliberal measures in August. There also remains the open question of IMF disagreement with Germany and other EU countries over debt relief.
Yesterday, Zambia borrowed another US$1.25bn at 9.375% interest rate, much higher than the previous two eurobonds in 2012 and 2014 – which are now also facing higher interest rate repayments, over market doubts about the sustainability of Zambian public debt.
The problem is not so much the debt per se, but the lack of clear plans for repayments, and what the borrowed money is spent on. There is no doubt that previous eurobonds have had some positive redistributive effects in the economy and that significant infrastructure development (especially roads) has been achieved. But there are still concerns about how much of the money has been spent to finance personal and party interests, diverted from much needed public service improvements for the benefit of all Zambians. The danger with this latest payment is that is simply going to fuel an unstable government intent on distributing money for short-term electoral purposes – general elections for parliament and a new president will be held in little more than a year.
If Zambia doesn’t make a plan, this amount of exposure makes it vulnerable to painful restructuring, austerity and resource grabbing by creditors in the near future – as the structural adjustment programmes of the 1980s and 1990s, and more recently, the Greek crisis remind us. Full repayment for the first eurobond is scheduled for 2022. Peter Sinkamba, presidential candidate for the Green Party, does well by opening up the discussion on his Facebook page today. Other presidential candidates and parties should follow suit.
GREEK CRISIS ROUND UP 18 JULY 2015
– The main news from yesterday is that the German parliament has given mandate to start talks for the 3rd bailout, the new ESM loan, with a vast majority of 439 in favour vs 119 against. A significant fact is the increase of dissent from within CDU/CSU (Merkel’s centre-right alliance) compared to previous votes on Greece. All other countries that needed approval from parliament or special committees to go ahead have now been given mandate to start talks for the new loan (France, Finland, Austria, Latvia and Netherlands).
– EU countries have finalised details for bridge financing to allow Greece to honour upcoming debt repayments and clear arrears. €7.16bn will be provided by the European Financial Stabilisation Mechanism (EFSM) – the EFSM includes non-euro EU countries, British concerns that their money would be used for Greece have been addressed through a system that gives guarantees to non-euro signatory countries in case Greece fails to repay this loan.
– After the extension of ECB emergency liquidity, Greek banks are set to reopen on Monday, but capital controls (weekly withdrawal limit of €420; bans on foreign transfers) will continue for some time after that, according to various sources. This means the reopening is more cosmetic than anything, the viability of Greek banks remains a serious concern and will for some time.
– Ongoing talks around the 3rd bailout are already marked by a major division among the creditors. IMF director Lagarde has emphasised that Greek debt is not sustainable without major debt relief – implying that the IMF might not participate in the new bailout, to follow its mandate of not lending to countries that are not likely to be solvent. EU countries are counting on €16bn or so from the IMF, a substantial chunk of the €85-86bn package for Greece.
– There are also ‘quieter’ calls from all quarters, from international left-leaning economists to right-wing creditor government technocrats, suggesting that in the end Grexit might be the best option for Greece and for everybody else – perhaps it is just a matter of timing and providing a ‘sweet’ Grexit offer when it becomes clear that Greeks cannot or do not want to bear the burden of the harsh conditions imposed by the new bailout.
– Syriza’s internal crisis continues, with the majority of Syriza’s central committee members opposing the deal (109 out of 201; https://www.jacobinmag.com/2015/07/syriza-debt-tsipras-left-platform-kouvelakis/), it’s clear that the rift is much bigger than the numbers of dissenters in parliament. Last night Tsipras has announced a cabinet (mini)reshuffle, confirming Tsakalotos (who replaces Varoufakis), and replacing Lafazanis, energy minister and vocal opponent of the deal – he was also pushing for a gas pipeline deal with Russia, among other things – with former labour minister Skourletis. Other dissenting deputy ministers were also replaced. These are still early stages anyway, we will have to see in the next days – the next votes in Greek parliament connected to the bailout deal will be an important test. Many are now talking about possible elections in autumn.
– Another interesting development is the rising number of prominent left voices in the UK standing against a EU left solution to austerity and neoliberal policies, some hinting at Brexit in view of the 2017 British referendum on EU membership. In fact Cameron’s dangerous play of showing EU failures while hoping for reforms towards more national sovereignty to win a Yes might backfire, with increasing numbers of Tory eurosceptics seriously considering Brexit. The leader of UNITE, the biggest trade union in Britain, is threatening to campaign for a No vote if Cameron pushes for EU treaty changes that weaken workers’ rights. Events in and around Greece in the following months are certainly set to influence the voting behaviour of the British left. A paradoxical effect of the Greek turmoil might be an unlikely convergence of right and left on Brexit, for rather different reasons of course.
– Greek parliament approves bailout, but Syriza has lost its majority with many more rebel MPs voting against than in previous vote last week; 32 Syriza MPs voted no, 6 abstained, 1 absent (Varoufakis voted no); the vote took place amidst clashes outside parliament, so social tensions within the wider Left bloc increasing, and the Syriza rebellion still at the beginning of its course. The key question here is if Tsipras can go ahead with a new majority without elections – and if not, what would happen in the case of elections? A saga to be watched closely, majorly underplayed by moderate EU mainstream, busy portraying an image of stability.
– Some European parliaments (or their appointed committees) have to vote for European Stability Mechanism (ESM) bailout talks to go ahead; France predictably voted yes; Finland too – perhaps not so predictably; other countries yet to hold votes. German vote on Friday is particularly crucial, with Schäuble talking about Grexit while deal supposedly goes ahead.
– It seems like ‘bridge financing’ (money needed in the short-term for debt repayments and similar and avoid outright collapse of Greek financial system) will be from the European Financial Stability Mechanism (EFSM) – which is Europe-wide and includes countries outside Eurozone – including British money, despite huge resistance from UK Chancellor Osborne.
– The overall bailout estimated around 85bn euros; ESM won’t cover everything, IMF still expected to chip in, even though IMF is sending clear message that without substantial debt relief, Greek debt is unsustainable, and hence IMF has option to walk out. For now EU hawks seem to be opposed to any debt relief (i.e. cancellation of part of the debt), and have not committed to debt restructuring (i.e. grace periods and special rates to ease repayments of loans) – the Eurosummit draft agreement only talks about possibility of debt restructuring once other measures are in place.
– Another key element of the puzzle is the emergency liquidity by the European Central Bank (ECB) to Greek banks – a decision to extend liquidity by ECB is expected soon. Various quarters, including Greek government ministers, talk about extended capital controls to continue for weeks, if not months – even if bailout goes ahead as expected, ECB helps out etc.
A few key points from the deal struck this morning at the Eurosummit:
– More spending cuts and VAT hikes will have to be passed by the Greek parliament by Wednesday 15 July before Greece can start to negotiate the details of a loan from the European Stability Mechanism (ESM).
– Most controversial bit is 50bn Euros fund constituted by state assets: 50% sold off to repay for recapitalisation of banks; 25% towards repayment of ESM loan; the remaining 25% for ‘investments’. I guess this is the crux of the deal, Tsipras brings home a ‘stimulus’ package, although the money comes from sale of state assets, rather than loans.
– Another draconian measure would “automatically slash spending if Greece fails to meet its targets on primary surpluses (revenue minus expenditure excluding debt servicing costs)” [from Telegraph Greek Crisis live feed]
– For the rest, more liberalisations, structural reforms of justice system, and ‘austerity austerity austerity’
– Debt relief: no debt cancellation, only possible measures to help with repayments (i.e. more loans to repay loans, grace period for debt repayments).
The good thing is that the process will be so long that a lot of things can go wrong on the way – in the Greek Parliament, in future negotiations with the creditors, in the parliamentary votes required by Germany and other European states to release the ESM loan, etc.
From social media trends, it’s clear a lot of people are infuriated by the deal, so hopefully there will be enough pressures in Greece to break Tsipras’ ranks and start all over again.
“No” wins by a landslide in the Greek referendum on the EU bailout proposals. This can be a real game changer, for Greece, for Europe and for anti-austerity movements worldwide.
Greeks have gone through huge suffering because of austerity, African and Latin American societies had already been broken by the same policies through the 1980s and 1990s. In lesser degrees and not to the same extremes, most of us have suffered the effects of the 2008 financial crisis and the irresponsible policies of technocrats and pro-austerity governments – I can just think of close friends and family in UK, Spain, Italy, Swaziland, Zambia, South Africa, and US, for instance. From the hospitality industry to academia, from manufacturing to journalism, it’s been a true disaster, across most classes and age groups.
For young people who are trying to fulfil their aspirations and do something meaningful and dignified with their lives, it’s been harsh – I talk about this specifically because I am one of them. The hope springing from this victory is priceless – it’s a new lease of life in our daily struggles for individual and collective fulfilment and happiness.
It is primarily Greeks’ victory, but it is also in a smaller way “our” victory. All of us – except those whose interests are so entrenched with the status quo that all they can do is come up with justifications and explanations for what cannot be justified and cannot be accepted.
There will be turbulent days ahead, and Greeks are the most likely to bear the brunt once again of any degenerate response from technocrats and bankers. Yet, this is one of the most important victories in the fight against austerity since the rise of Thatcher and Reagan. Optimism and excitement can go a long way in the tough times ahead. Tomorrow we wake up with a different consciousness. We now know that our concerns, our criticisms, our demands, are not only just: they also have legs ‘out there’, they can become the majority consensus.
No to austerity and inequality; yes to a new deal for Greece, Europe, Africa and the rest of the world.