There are only three interesting questions about the interminable Greek crisis—which may finally be reaching a breaking point. The first is, will Greek prime minister Alexis Tsipras blink?
Three infamous “institutions” are supervising Greece—the European Central Bank, the European Commission and the International Monetary Fund.
In close consultation with Europe’s most powerful politician, German chancellor Angela Merkel, they delivered an ultimatum to Tsipras and his party Syriza last week. Only if their conditions are met would they release the money allowing Greece to continue repaying its creditors.
Two points are worth noting. First, the “institutions” are among Greece’s main creditors. So, absurdly, the argument is over them giving Greece money to give back to them.
Secondly, back in February the Eurogroup of eurozone finance ministers ruled out the obvious solution, to write off much of Greece’s foreign debt. This is what Syriza was elected to achieve.
Tsipras last week submitted his proposals. These were another attempt at “restructuring”—that is, shrinking the debt. The Financial Times newspaper leaked this document, commenting that “most of it is also politically unacceptable to eurozone lenders … [which] have proven singularly unwilling to countenance any debt relief—despite the fact the IMF has increasingly argued Greece’s debt is unsustainable without it.”
So what is the alternative offered by the “institutions”? More austerity and more neoliberalism.
They want VAT raised by one percent of national income, with the tax on most items at 23 percent. Pensions—already roughly halved—should be cut by another one percent of national income in the next two years.
The IMF also demands that Syriza not undermine labour market “reforms” pushed through by preceding governments by raising the minimum wage and strengthening collective bargaining.
It’s tempting to dismiss these demands as irrational. Ashoka Mody, formerly of the IMF, told The Telegraph they were “shockingly bad economics…I am frankly shocked that we are having any discussion about raising VAT in these circumstances. We have just seen a premature rise in VAT knock the wind out of a country as strong as Japan.”
This kind of criticism assumes that the dominant forces in the European Union (EU) care about the future of the Greek economy. This is an illusion.
Merkel, the Eurogroup, and the “institutions” want to humiliate, tame, and if necessary destroy Syriza, in order to crush opposition to neoliberalism in Europe.
Tsipras reacted by cancelling a planned meeting in Brussels, postponing a repayment to the IMF, and denouncing the proposals as “absurd”. He had strived to reach a compromise with the EU. But it is inviting him to commit political suicide by imposing more price rises and pension cuts on an economy already devastated by a 1930s-style depression.
A Greek cabinet minister told The Daily Telegraph, “In a strange way we are all breathing a sigh of relief. We were afraid of a bad deal that would split the party but this is so atrocious it makes life easier. None of us can accept it.”
If Tsipras stands firm then we will face a qualitatively new situation. The last time a left reformist government defied the forces of capital was Popular Unity under Salvador Allende in Chile, 1970-73.
This takes us to the second question. If Tsipras does blink, what will the left inside Syriza do?
Panagiotis Lafazanis, leader of the Left Platform and a senior government minister, has hinted at resigning if Tsipras makes an unacceptable compromise.
Will Lafazanis carry out this threat if necessary? For it to be effective, he and his allies would have not simply to break with the government but to unite with the left outside Syriza. In particular Antarsya, the Front of the Anti-Capitalist Left, has considerable weight among trade unionists, students, and anti-racists.
This leads us to the third, and most fundamental question. Will Greek workers fight a new bout of austerity? This isn’t a theoretical question for the left, inside or outside Syriza. It’s up to them to ensure the answer is a positive one.