By Alex Callinicos
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Greece deal is about more than just debt

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Issue 2442
European leaders are scared that any sign of success for Syriza will encourage others like Podemos in Spain
European leaders are scared that any sign of success for Syriza will encourage others like Podemos in Spain (Pic: Podemos)

There was something very peculiar about the agreement thrashed out between Greece’s radical left Syriza-led government and the Eurogroup of finance ministers. 

There’s nothing odd about protracted negotiations, reconvened meetings and cliffhangers. 

But usually the parties try to present the final deal in ambiguous terms, so that everyone can claim victory. Yanis Varoufakis, the Greek finance minister, did try to spin the agreement this way, talking about “constructive ambiguity”.

This is despite the fact that he had been forced to apply for a renewal of Greece’s “bailout” under the supervision of the hated Troika of the European Commission, European Central Bank (ECB), and International Monetary Fund—things he had ruled out only a few days earlier.

But Varoufakis’s main antagonist, German finance minister Wolfgang Schauble, did the opposite. He sought to rub in Syriza’s humiliation after the deal was struck on Friday last week. “The Greeks certainly will have a difficult time to explain the deal to their voters,” he said.  

So why has Germany taken such a hard line? It’s not because of the money. Nobody seriously believes Greece can repay its vast £249 billion debt. It’s what the debt makes possible.  As the academic Slavoj Zizek put it, “the true goal” is “the indefinite continuation of the debt that keeps the debtor in permanent dependency and subordination.”

One of Schauble’s senior officials told the Financial Times newspaper, “If we go deeper into the debt discount debate, there will be no more reforms in Europe. There will be joyful celebrations in the French presidential palace and probably in Rome, too, if we go down this path.”

In other words, what Germany is worried about is continuing with the programme of neoliberal reforms that have been imposed on Greece, Ireland, Spain, and Portugal.


Germany and the European Union (EU) are trying to generalise these through the EU on the basis of the March 2012 Fiscal Pact. “Reform” in the context means cutting and privatising public services, undermining workers’ collective bargaining power, and the like.

A mixture of motives lies behind the fixation on “reform”. As we have seen in Britain, one ruling class reaction to the crisis has been to use it to radicalise neoliberalism—restructuring societies to entrench the dominance of the “free” market that precipitated the crisis in the first place.

But there are defensive motivations as well. During the 2000s the German ruling class overcame a long period of stagnation and rebuilt the export economy by squeezing wages.

They fear this model may be undermined if economies shattered by the crisis are rescued by government intervention financially underwritten by the EU. 

Hence the drive to use the bailouts to generalise the German model. In southern Europe, where the competition comes from east Asian economies with much lower labour costs, this means a brutal squeeze on living standards.

Syriza’s election victory represents a mortal threat to this project. If austerity were rejected in Greece, this would give an enormous fillip to Podemos, the new radical left movement in the Spanish state, and encourage greater resistance elsewhere in Europe.

So Syriza has not only to be beaten, it has to be seen to be beaten. Of course, its multitude of supporters have been busy pointing to silver linings in Friday’s deal. 

There may be wriggle room for Varoufakis in the list of “reforms” he must submit to the Eurogroup for approval. And maybe Greece will be allowed to spend a bit more.

Let’s hope so. But Germany has a powerful weapon in the Greek banks, which are leaking money. Last week the ECB threatened to cut off the aid that keeps them alive. 

The Financial Times newspaper quoted a “senior international banker” saying, “They are squeezing them on everything, it’s part of a system to suffocate them, to make them realise the end is coming, to realise it is time to get on their knees.”

This is by no means the end of the fight. But it should be the end of the illusion that austerity can be ended by negotiating with the EU. Only mass struggles can beat it. 


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