By Sotiris Kontogiannis
Downloading PDF. Please wait... Issue 367

Eurozone crisis: can Greek workers defy the bankers?

This article is over 10 years, 5 months old
Greeks must accept austerity, it is often argued, because the alternative would be worse. Sotiris Kontogiannis argues for a workers' default against the bankers
Issue 367

The government and the media in Greece are conducting a scare campaign against the prospect of a default and exit from the eurozone. The measures imposed by the “troika” (the International Monetary Fund, the European Union and the European Central Bank) may be harsh, they say. Many people may suffer. But the alternatives are even worse. Without the assistance of the troika, Greece would default on its debts. The state would run out of money. Salaries and pensions would have to be suspended. The Greek banking sector would be completely cut off from European and international financial markets. Banks would close and cash machines stop working. Imports would stop, the supermarket shelves would empty and people would starve. Petrol stations would run out of fuel and people would be forced to live in cold and darkness.

Back to the drachma?

In the end, they say, Greece would be forced to abandon the eurozone – or even be kicked out – and return to using the drachma, the old national currency, which would be immediately and severely devalued, by 50, 60 or even 70 percent. People would lose their savings, while salaries would be reduced to peanuts. Then the profiteers, who in the meantime would have transferred their wealth to Swiss and other foreign banks, would come back and buy up everything for nothing.

All these scary predictions are accompanied by reams of “scientific studies” and “special reports” with lots of numbers, charts and projections. Kathimerini, the prestigious Greek daily newspaper, wrote in November, “According to studies…recession in Greece would amount to [a contraction of] 7.6 percent, unemployment would reach 18.5 percent, inflation would shoot up to 20.2 percent…the new currency would be devalued by 75 percent.”

It is not just the impossible level of precision – inflation would shoot up to 20.2 percent, not 20.1 percent or 20.3 percent – that makes these analyses so ridiculous. Worse the economists who made these predictions are the same people who, three years ago, completely failed to see that the crisis was approaching. In October 2008, one month after Lehman Brothers investment bank collapsed, the same paper was reassuring its readers, “Even the most pessimistic analysts do not predict that recession is going to knock on the door of the Greek economy…The Greek financial system is not confronted with the problems that the international banking system is facing, at least not to the same magnitude. It has a strong deposit base and is not, on the same scale, dependent on the international inter-bank market, which is now frozen. Moreover the Greek banks have not invested in the dangerous sub-prime bond market, as the American and European banks have done, for obvious reasons: they were enjoying high returns from the traditional banking activities.”

Today, according to official data, unemployment in Greece has reached 20.9 percent. Greece’s economy shrank an annual rate of 7 percent in the last three months of 2011. These are figures very close to the predictions made by Kathimerini back in November – but they are not the result of a default and an exit from the eurozone. It is their “rescue” plan that is immersing Greece in the cold and darkness.

The scary scenarios are not just based on shaky predictions. They are mainly based on crude lies. It is a lie that, without the assistance of the troika, the Greek state would not be able to pay for salaries and pensions. Greece has received, until now, €73 billion from the troika – but not a single cent from these billions has been used for pensions or salaries. In 2011 the total amount that Greece paid to the Greek, European and international bankers in interest and capital repayments exceeded €63 billion. The troika contributed just €35 billion of this. Greece had to rely on taxes and new short-term loans from the Greek banking sector to bridge the gap.

The latest deal agreed by EU leaders is no better. Of the €130 billion that Greece is going to receive, private bankers will directly pocket at least a half – €30 billion as a sweetener for accepting the “haircut” in the face value of Greek government bonds, €6 billion in interest payments, €30 to €40 billion (or even more) for recapitalisation. Another €35 billion will go directly to the central banks of the eurozone states. The remainder will be locked in a special account, monitored by the troika, and used exclusively for future debt repayments.

Ship-shape profits

It is not true that Greece will sink into poverty and hunger if it does not “honour its obligations” towards its creditors and is cut off from international money markets. The Greek economy does indeed have a balance of payments deficit – which means that the income from tourism and exports is not enough to finance its imports. But some of these imports are consumed by the working class and the poor. In 2011, for example, the Greek economy spent almost €4 billion importing ships. Ships are, of course, an investment. Many people will think that, in a country with so many islands, this is a useful investment. But the vast majority of these ships are tankers. They are investments that will add hundreds of millions to the profits of shipowners but will not add a cent to the public coffers. Greece has the biggest merchant fleet in the world, not because “Greeks are born to be sailors”, but because shipowners are exempted, by law, from taxpaying. If their interests remain the priority then we are surely going to starve – with or without defaulting.

There is no end to these lies and phony arguments. Greece is not even self-sufficient in food production, they say. Even cereals and sugar are imported. This is, again, a ridiculous argument, especially when expressed by hardcore neoliberals, the same people who insisted that in order to be competitive Greece must specialise in those sectors where we have a “competitive advantage”. The success of a national economy in the modern globalised capitalism is measured neither by its self-sufficiency nor by its heavy industry.

The Greek crisis is not a result of the failure of Greek capitalism but of its past successes. In 2010, despite its deep recession, Greece was still one of the wealthiest economies in the world. A small country with only 11 million inhabitants, it occupied 32nd place in the list of richest nations. The roots of this success were planted back in the first years of the 1990s. The West had just won the Cold War and Greece’s northern neighbours (Albania, Yugoslavia, Bulgaria and Romania) were in the orbit of the defeated Eastern Bloc. For the Greek ruling class this was a huge opportunity – Athens could become a hub for the plundering of our Balkan neighbours.

In the 1990s the Greek ruling class “discovered” the banks. New banks were founded. Foreign banks were bought and branches were opened in almost every big city in the Balkans. One of the richest shipowners, the late Yiannis Latsis, became, almost overnight, a banker. His bank, Eurobank, is now one of the biggest in the region. For the ruling classes it was party time – especially after 2002 when Greece joined the eurozone. The Greek economy was booming – growth rates were two or three times higher than Italy’s or Germany’s. Money was flowing in from all over the world to be invested in this small miracle economy.

The bubble bursts

But it was a miracle built on speculation – a bubble based on paper profits and expanding international credit. The present Greek debt crisis is mainly the product of the bursting of this bubble. The exposure of the Greek banking system to toxic US subprime mortgages was indeed small – but its exposure to the equally toxic plundering of the Balkans was huge. In October 2008 the right wing government of Kostas Karamanlis handed over €28 billion to the bankers in order to “shield” the banking sector from the international crisis.

That figure has now risen to more than €100 billion, mainly as collateral. Now they are going to get another €30 to €40 billion – this time in real money, to recapitalise themselves. The state will become the biggest shareholder in all Greek banks. Normally this would mean that the state would also control the banks. But this will not be the outcome – the recapitalisation will be done through special shares which do not grant voting rights. In other words, the indebted Greek state will borrow €30 to €40 billion and then simply hand this money over to the Latsis family and the other bankers.

It is obvious why the ruling class is trying so hard to persuade us that a default and an exit from the euro would be such a disaster. For them it would be a disaster for sure. It is not just the billions that the bankers are going to pocket – they have bet everything on their Balkan-looting game. For them it is a matter of life and death. And they are ready to take any risk in order to succeed.

On the streets

But they are running out of steam. It is not just the economy. The working class is in the streets and the political system is in now on the verge of collapse. On 12 February hundreds of thousands of people besieged Plateia Syntagmatos, the square in front of the parliament in Athens, in order to protest against the new EU deal. Huge rallies took place at the same time in all the major cities in Greece. It was a huge crowd – the entire centre of Athens became a demonstration, and then a battlefield, when riot police tried to disperse people with batons, tear gas, sound bombs and arbitrary arrests. No one knows exactly how many people went onto the streets this day, but it was surely one of the biggest rallies in recent history. It was probably bigger than the rallies of 19 and 20 October that overthrew the government of George Papandreou.

Instead of smashing the movement, the attacks have strengthened working class resistance. The mass demonstrations and rallies are just one part of the picture. Beyond them is the strike wave. We have had 18 general strikes in two years – something unprecedented even by Greek standards. But these were strikes organised by the trade union bureaucracy – one- or two-day strikes, called under the pressure of the working class.

Now the ruling class is confronted with a series of permanent strikes in the private sector, with spectacular strikes organised by workers themselves. The workers in Halyvourgia, one of the three big steel companies in Greece, have been on strike for over 100 days. Eleftherotypia, one of the big daily Greek newspapers, has not been published since December 2011 because of an indefinite strike. Even worse for the bosses, the journalists and workers have issued their own strikers’ paper called Ergazomenoi (“The Working People”). The paper disappears in hours from the kiosks. The last issue sold over 31,000, a number that Eleftherotypia could never reach. Another example is the TV channel Alter. The workers there have also been on strike for over three months. They had their own programme under workers’ control, and managed to broadcast it for weeks, defying the attempts of the bosses to shut it down. The spirit of the rebellion is now even spreading to smaller workplaces. An example is Loukisas, a small company with 35 workers in Peristeri, an Athens suburb, who are also on indefinite strike.

Political crisis

The resistance is transforming the economic crisis into a political crisis. Pasok, the Labour-style party of George Papandreou and Evangelos Venizelos (the minister of finance who is actually running the current government of Loukas Papademos) is falling apart. In the latest polls it is getting between 8 and 12 percent. Over 20 Pasok MPs refused to vote for the new EU deal in February and were immediately expelled from the party. New Democracy, the Greek Tories, are now moving fast in the same direction. After pretending to be against the EU deal, Antonis Samaras, the Tory leader, is now openly supporting the government and its harsh measures. He was also forced to expel over 20 of his MPs after they refused to support the deal. Now one of these expelled MPs has announced the formation of a new right wing party. The ruling parties in Greece are in a huge crisis, one that resembles the “Tangentopoli” scandal in Italy in the early 1990s that destroyed the two dominant government parties, the Socialist Party of Bettino Craxi and the Christian Democratic party of Giulio Andreotti.

The left is growing fast in Greece. According to the polls, parties to the left of Pasok would get over 40 percent support if there were elections today. In Italy the left was also very powerful in the 1990s. Workers had a huge opportunity but, unfortunately, the leaders of the left spoiled this opportunity: the crisis left Silvio Berlusconi, the Northern League’s Bossi and the one time fascist Fini in power. There is no doubt that the ruling class in Greece is plotting similar scenarios.

But history is not blindly repeating itself. “Men make their own history,” wrote Karl Marx, “but they do not make it as they please; they do not make it circumstances chosen by themselves, but under circumstances existing already, given and transmitted from the past.” No one can predict the outcome of the war that has broken out between the workers and the ruling class in Greece. But one thing is sure: the workers of Halyvourgia, Eleftherotypia, Alter TV, Loukisas and the hundreds of thousands of people who fought with the police on 12 February, will not easily step back.

Sign up for our daily email update ‘Breakfast in Red’

Latest News

Make a donation to Socialist Worker

Help fund the resistance