The vilification of Greek resistance to austerity has been a recurrent feature of media coverage of the eurozone crisis. Sadly most of the leading left wing parties across Europe have also been unable to provide a convincing answer to these attacks. The general response of much of the European left has been to replace the right wing paradigm of the “lazy Greek versus the disciplined German” with another simplification: that of right wing nationalism against the eurozone versus left wing, pro-EU internationalism. They fear leaving the eurozone would be a concession to nationalism.
There is now a big debate among much of the European left about whether or not Greece should stay in the eurozone. Socialists should be clear that staying within the eurozone would automatically involve accepting at least some austerity measures. For those who want to fight all cuts, our starting point therefore has to be the demand that Greece defaults on its debt and consequently leaves the eurozone.
From its very beginning following the creation of the European Coal and Steel Community, integration has been based on the needs of European capital. While national governments agreed to limit their sovereignty in order to enable economic and political cooperation, there has never been a serious democratic opportunity to question the ideological roots of the integration.
European workers have also been the victims of increased exploitation as markets have been deregulated. A good example is the introduction of the euro as common currency. The main incentive was to promote greater financial market integration between member countries. The ideological basis for the introduction of the common currency was grounded in neoliberal economics. Investors would no longer have to worry about exchange rates and money would flow from countries with a relative abundance in capital to more capital-scarce countries, thereby offering higher returns on investment.
The idea is nothing new. In the 1990s Mexico and most East Asian economies pegged their currencies to the US dollar. And as with Mexico and East Asia, this recipe initially seemed to work for the eurozone as well. The problem with this approach is that any inflow of capital can suddenly stop as investors find other, more profitable investments – the result is often a financial crisis.
Another structural problem is the massive expansion of the German export sector. This growth is mainly based on growing exports of hi-tech goods within the EU. Not only has it been at the expense of German workers, it has also been at the expense of other EU countries such as Greece that were unable to compete with German economies of scale. It is not the “irresponsible behaviour” of weaker eurozone countries, but the very ideological foundation of the EU that led to the crisis.
How then should socialists respond to this? The question is no longer if, but when, and crucially, how will Greece default on its debt? A Greek default on its debt would certainly not be a panacea to all problems. The Greek ruling class would no doubt attempt to impose Greek austerity rather than EU/IMF austerity and that would have to be resisted as well. But there are a number of options for default.
A default can happen under supervision of the IMF and EU or independently. Based on past IMF debt-reduction deals we can safely assume that any deal would only increase the problem. In July 2010 Greece made a deal that aimed to reduce its debt by 21 percent, but had to provide massive collateral guarantees to banks with the net effect that its debt increased. Moreover, a sharp rise of Greek sovereign debt has been largely caused by exorbitant interest rates. In 2010 alone Greece paid €51 billion in interest on loans.
During his electoral campaign, Pasok leader (and now prime minister) George Papandreou quoted Rosa Luxemburg in declaring that Greece faced a choice between “socialism or barbarism”. Papandreou seems to have opted for barbarism. But his statement does indicate the alternative to his savage policies. The only force that is actually able to defeat the austerity measures is the Greek working class.
Socialists must be clear about what a genuine default should look like. The non-recognition of the debt and the refusal to repay it would inevitably lead to the collapse of Greek banks, which are heavily exposed to Greek government debt, raising the prospect of an immediate government bailout. But who gets bailed out – bankers and rich investors or workers and pensioners – will be decided by the class struggle. We should demand the banks are put under workers’ control. If all this means that Greece is forced out of the eurozone, then socialists should shed no tears.
By arguing for Greece to stay within the eurozone, the left is not avoiding nationalism but is avoiding a genuine challenge to austerity. Arguing against a default concedes EU or IMF austerity measures from the beginning. The militancy of the Greek working class already indicates an unprecedented potential for a radical alternative. If Greece were to default on its debt it could become a beacon across Europe for resistance to all cuts elsewhere, laying the basis for a real internationalism based on workers’ struggles, not a bosses’ currency.
The ideological crisis in the ruling class opens unprecedented opportunities in the fight for another Europe, one governed in the interest of Europe’s workers.
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