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New austerity deal in Greece will make the crisis worse

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Issue 2462
 President of the European Central Bank, Mario Draghi, with Greek prime minister, Alexis Tsipras, last week
President of the European Central Bank, Mario Draghi, with Greek prime minister, Alexis Tsipras, last week (Pic: EU Council Eurozone/Flickr)

The Greek government thought it could reason with Europe’s “Institutions”—but they are out to crush and humiliate all resistance to austerity. 

An agreement was finally signed after an all-night summit of eurozone prime ministers last Sunday. It shows their determination to overturn the election of radical left party Syriza in January.

The European Union (EU), European Central Bank (ECB) and International Monetary Fund (IMF) make up the Institutions. They used to be known as the Troika.

The agreement they pushed is meant to cow resistance to austerity across Europe.

Slovakia’s Labour-type finance minister Peter Kazimir gloated that the deal was “tough for Athens because it’s the results of their ‘Greek Spring’”.

It is worse than the deal overwhelmingly rejected in Greece’s referendum. The cuts and VAT hikes have grown from £5.7 billion to £9.2 billion.

And with every detail it twists the knife. The first measures, including VAT hikes and pension cuts, were to be voted through the Greek parliament on Wednesday of this week.

A mechanism was to be put in place for “quasi-automatic spending cuts” if Greece ever fails to meet “ambitious” budget targets.

Other attacks are to follow a week later in return for a third bailout of Greece’s debt.


Along with more pension cuts, civil service job cuts and attacks on workplace rights, this includes direct attacks on democracy.

Some £35 billion of state assets, from public services to islands and historical ruins, are to be transferred to an “independent” body that can sell them off. They are dramatically undervalued.

The government will commit to “de-politicising” the administration—code for farming out its functions to unelected technocrats. And it will agree to run new laws past the Institutions before showing them to parliament or the people.

The Institutions acknowledge that the debt might be unsustainable. They blame the Greek government—yet the Institutions are the real problem.

Their first bailout barely even touched Greek government accounts, with more than 90 percent going straight to the private banks. 

This one will go straight back to the Institutions’ own accounts—but with interest paid by Greece. The IMF has already netted a cool £1.8 billion in interest off the back of Greek workers. 

Despite high hopes of debt restructuring, the agreement underlines that there can be no “haircuts” on the debt and that Greece has an “unequivocal commitment” to pay it. 

But the loan sharks’ own commitments are all written in sand.

They will work towards the bailout, and think about loosening the ECB’s stranglehold on Greek banks. But they make no promises—and reserve the right to pile on more demands.

Protesting against austerity deal outside the Greek parliament on Friday of last week

Protesting against austerity deal outside the Greek parliament on Friday of last week (Pic: Workers Solidarity)

Opposition in parliament grows

Opposition to the deal deepened in Greece’s parliament after the strike was announced on Monday. 

Both Syriza’s Left Platform and its right wing coalition partner Independent Greeks suggested they would vote no to austerity measures this week. 

Previously the Independent Greeks had voted to authorise the deal and the Left Platform had been split. 

Its members had been straining to find a way of supporting the government while opposing its deal.

The government is now reliant on the votes of the hated old parties of austerity that Syriza was elected to replace.

The party’s right wing—including the editors of its daily paper—are calling for an alliance with these parties and a purge of opponents of the deal. 

This would include figures well beyond the Left Platform, such as the influential speaker of parliament Zoi Konstantopoulou.

Children of migrants get citizenship 

Last week the Greek parliament passed a law to grant citizenship to some children of migrants born in Greece.

Though still bitterly opposed by the racists, it has been watered down to exclude around half of the 200,000 children who would originally have been legalised.

To be covered their parents must have been in Greece legally for five years by the time they were born—and they must have attended school and done well at exams.

Meanwhile the fascist Golden Dawn—which has benefitted most from the repression of migrants in Greece—has been given a publicity boost after its MPs voted no to the austerity agreement.

Greece’s privately owned media refuse to broadcast the details of the organisation’s trial for leading violent attacks and even murders of migrants and left wingers.

But they gave Golden Dawn leaders airtime even though this is in defiance of their bail conditions.

These media outlets credit the fascists for helping win the no vote.

The argument is nonsense—Golden Dawn was invisible during the campaign, and exit polls show many of its voters and members voted yes. 

But it shows that with the mainstream parties in crisis, parts of the establishment want to keep the fascists on hand just in case.

Eurozone argue over how hard to punish Greece

Eurozone leaders were panicked enough to hold a 17-hour overnight meeting to get the agreement with Greece. And the disagreements weren’t all coming from Syriza.

The French government wanted to consider some debt relief to keep Greece in the eurozone’s grip. Leading German politicians floated plans to “temporarily” kick it out.

Similar differences led to “a fierce altercation in the corridor” between Dutch prime minister Mark Rutte and his Italian counterpart Matteo Renzi.

Even the True Finns—a xenophobic minority party in one of the euro’s smaller member states—were able to threaten to throw a spanner in the works if the deal wasn’t harsh enough.

Mixed reactions on the financial markets suggested that the world’s bankers weren’t convinced Syriza would succeed in robbing workers on their behalf.

It’s hard for Europe’s rulers to agree on the details of their bank bailouts. The single currency gives all of them liability and none of them control.

But they are all forcing through austerity at home to try and boost bosses’ profits at workers’ expense. And none of them can afford to let Greece set a precedent for beating it.

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