.

The announcement of national elections in Greece, roughly two years before the coalition government of New Democracy and Pasok completed their term, immediately sparked a renewed interest in this southern and economically peripheral European country. The relative silence that preceded this novel attention for the last two years was, at least in media terms, understandable. If Greece enjoyed an earlier moment of fame, it was primarily due to the unprecedented austerity measures imposed by the troika — the European Commission, European Central Bank (ECB), and International Monetary Fund (IMF) — in exchange for new loans, designed to “assist” the Greek state after it officially announced, in April 2010, that it was unable to repay its existing, “non-viable” sovereign debt (120 percent of GDP at the time). The reactions to the implementation of the austerity program were also pivotal in bringing Greece into the spotlight: general strikes, violent demonstrations, and the movement of the squares ensured, between 2010 and 2012, that the future of Greece’s “fiscal consolidation program” (to borrow the official economic jargon) was seriously threatened. Along with the memorandum imposed by the troika, what came under attack was the legitimacy of the political system,1 generating wild speculation about the future of Greece’s membership in the Eurozone, as well as the unpredictable consequences this could have for the EU, not to mention the global economy.

However, the movement which tried to halt the austerity program failed. The reasons are varied, and it is not within the scope of this article to explain them in detail. Suffice it to say that, as in every other social movement, this failure should be traced to both the violent determination of the government(s) to proceed with austerity at all costs (for which the ruling factions have paid a price) and the inability of the movement to transform itself from a defensive mobilization to protect existing conditions into an offensive attack on the conditions that created the crisis.

Nonetheless, the attention that Greece received was justifiable. Without exaggeration, one could argue that many of the political strategies of resistance which the international left has only read about in books were tried and tested in Greece in the years after the crisis: general strikes with massive participation, bringing economic activities to a halt; militant and violent demonstrations with constantly growing numbers of participation; neighborhood assemblies that sought to act as minuscule formations of self-organization, attempting to deal with immediate issues caused by the crisis; one of the most militant squares movements, which managed to call for two successful general strikes; a climate of continuous antagonism that gradually but steadily involved more and more people.

It is, however, no exaggeration to say that none of these inspiring moments managed to counteract the effects of the crisis and its management by the state. However exhilarating, promising, and tense these outbreaks were for those of us who participated in them, it has become imperative to understand their failure to achieve even a small (however reformist) victory.

In official terms, the crisis has only become worse in the last years. Overall unemployment has risen to 27 percent (from 12.5 percent in 2010), primarily hitting young people (60.6 percent for those aged 17-25); wage cuts across the public sector are between 30 and 40 percent, while in the private sector the number is only slightly lower (25 percent on average).2 Small businesses (the backbone of the Greek economy, constituting around 95 percent of all business activity) have been devastated by the crisis and the austerity measures (more than 250,000 have been closed), while cuts in the Health and Education budgets amount to more than 25 percent. Total GDP losses amount to 24 percent, while despite these cuts (or, as some would say, as a result of them), state debt in Greece has dramatically risen from 120 percent in 2010 to 176 percent of GDP today.

Unofficially, the situation is much worse. In the last two years, on top of reduced wages or forced unemployment, a nearly destroyed health system, and the alarming rise of neo-Nazis as significant players in the political landscape, people have had to live with the defeat of a social movement which gave many participants the hopeful feeling of making a leap into the open air of historical change. It was the disappearance of these antagonisms, followed by generalized feelings of disappointment and depression, that should serve as the background against which the recent elections should be considered. It is precisely the failure of the social movements to counteract austerity and the brutal devaluation that brought Syriza to today’s position. And while Syriza likes to present itself as the continuation of these movements, it is more accurate to explain its strength as a result of their weakness.

In this context of defeat, Syriza had come to represent for many people the last hope for any alleviation of the effects of austerity. This is also the line that has been predominantly adopted by the left media in Greece and abroad. A bombardment of positive and enthusiastic articles and reports in the last few weeks in left and progressive media outlets have created an atmosphere almost implying that Greece is in the brink of a social revolution. This is, however, quite clearly not the case.

Having said that, it makes no sense to critique Syriza and its program on the basis of abstract criteria of radicalism, anti-capitalism, etc. The reason is quite simple: Syriza is not, and never has been, an anti-capitalist party. It was never part of its program, its understanding of the world, and its expressed policies to question the capitalist system or its political representation. To say this is not to attempt to discredit Syriza, but to give an honest evaluation that takes into consideration Syriza’s own self-understanding, its historical role, and its practice as a parliamentary party within Greece’s political spectrum. It is beside the point to argue that Syriza has betrayed or fails to deliver a program that was never part of its politics in the first place.3

What is needed is not an analysis on the basis of a non-existent theoretical framework (Syriza’s supposed radicalism), but a sober understanding of the historical context of Syriza’s rise to fame, the objective forces that it is facing, and its own proposed remedies. It is only in this way that one can have a clear idea of what is at stake. Ideological battles and straw-men are clearly pointless at the moment.

.

Until 2009, Syriza was an insignificant player on the Greek political scene. It barely made the 3 percent threshold required to enter parliament, something that seriously undermined its influence within that institution. But things were not much better outside of parliament. For those of us who have been active in the Greek left and radical scene for more than 20 years, Syriza was never a force to be reckoned with. And though Syriza repeatedly attempted to draw forces away from social movements towards its parliamentary aspirations, none of these attempts were ever successful.4

It was only after the elections of 2012, which marked the downfall of Pasok as the government responsible for initiating the troika bailout and austerity program, that Syriza suddenly found itself with 17 percent of the votes, a result that caught everyone by surprise — even Syriza members themselves, who would have been content with 7-8 percent. It was then that Syriza first started contemplating the possibility of forming a government and started understanding that, from now on, what they formulate as policies will have to be realistic and realizable.5

Mesmerized by its unprecedented rise in the electoral ranks, Syriza used every opportunity to build support, widen its social alliances, and prepare itself to create the first left-leaning government in Greece since Pasok’s victory in 1981. However, as is the case with every left-wing party, Syriza is very suspicious of social movements that it cannot directly control. Thus, in parallel to the increase in its electoral support, Syriza took care not to support outbreaks of social antagonism, even at moments when those seemed in a position to bring the government down and put a halt to austerity, as they continually promised.6 The official explanations by Syriza officials in relation to these incidents was typical: denying any wrongdoing, Syriza hid behind the excuse that “the people” (this abused and nonsensical phrase) were not ready for an escalation. A more intelligent approach would be to recognize that a political party which sees parliament as the center of political activity is not interested in allowing the uncontrollable and radical potential of a social movement to determine developments or its policies. Today, almost two years after the last expression of street-level subversion, Syriza can sweep the floor and capitalize on the defeat of a movement, content with the thought that the majority of people have shown that they prefer to place their hopes in political representation rather than their own activities.

.

Trying to find out what exactly Syriza has planned for the day after the elections is, however, no easy matter. Looking at the various statements and proclamations of Tsipras, Syriza M.P.s, central committee members, and sympathizers, one could easily drive oneself crazy trying to extract a coherent position from an abundance of contradictory and self-refuting opinions. (This is something that the right wing tried to capitalize on in order to show that Syriza has no program after all.7) However, because Syriza will be forced to deal with the real economy, its European counterparts, and the global economic system (and not some imaginary movement), Syriza’s proclamations when addressing exactly those is a relatively safe way to understand its actual policies.

The main thrust of Syriza’s political and economic program, as its spokesmen spelled out at the Thessaloniki Expo in September 2014 (and have repeated ever since), boils down to four key points: first, the immediate management of the humanitarian crisis in Greece; second, immediate measures for re-boosting the economy; third, a national plan for “regaining labor”; and finally, an institutional and democratic restructuring of the political system. These programmatic theses require, according to Syriza, that certain things be in place: a restructuring of Greece’s sovereign debt; a direct connection between loan repayments and growth; a disentanglement of public spending from the memorandum agreed to with the troika; and a European “New Deal,” i.e., the introduction of Quantitative Easing by the ECB.

The program for dealing with the humanitarian crisis aims at tackling some of the devastating realities of post-memorandum society, by reconnecting electricity and providing food vouchers for 300,000 families; providing free healthcare for all; ensuring housing for all; and supporting low-income pensioners. The plan to regenerate the economy rests on an ambitious program of restructuring the tax system to ensure the collection of unpaid taxes; an immediate stop of foreclosures (for the main house of a family); the abolition of the recent heavy tax on property; the writing-off of debts (36 percent according to banks) with no possibility of repayment; the return of the minimum wage to 751 euros monthly, something that is supposed to increase GDP by 0.5 percent. The idea of “regaining labor” has to do with the return of pre-memorandum work relations, and in particular the re-introduction of collective bargaining and an end to unlimited layoffs; and the ambitious creation of 300,000 new jobs and 300,000 unemployment beneficiaries. Finally, in terms of the democratic restructuring of the political system, Syriza aims at abolishing M.P. privileges, a thorough examination of the licenses of the mainstream media, and the reopening of the state television (ERT).

Leaving aside certain (quite important) details8 and the parts of the program that concern the “democratization” of the political system, an immediate question concerns the exact cost of this program and where the money is going to come from. According to Syriza’s own calculations,9 the cost of this program is 11.36 billion euros. And where will the money come from? This is where it gets difficult.

.

There are two main pillars upon which Syriza plans to finance its program: debt restructuring and the introduction of Quantitative Easing. Not surprisingly, these are the most controversial aspects of the forthcoming negotiations.

The question then arises, how Syriza will be able to justify such a deviation from its anti-austerity program. The internal financial problems shed some light on this. To begin with, for Greece to be able to sort out its economic chaos, a balanced budget is absolutely critical. And though Samaras’ government (with the assistance of the European Commission) announced a surplus budget in April 2014, in reality no such surplus existed. 16 As a result, the budget at the moment is (more or less) at 3 billion euros, an amount that has to be found immediately, before Syriza even starts contemplating how to secure the funds for its €12 billion program. On top of this three billion euros, Greece has to come up with 31 billion euros to meet old and new loans from the troika (shared by the IMF and the ECB and maturing between late February and August 2015). So where will Syriza get the money for all this? The answer is not easily found. And most probably, the reason is that there is no answer. Syriza’s own plan, so far, for securing these funds consists of reforming the tax system; attracting foreign investments and encouraging private ones in order to generate growth; and increasing the minimum wage.

We see that both pillars of Syriza’s financing program from external sources, though not necessarily unrealistic in themselves, are premised on a continuation of austerity that undermines any enthusiasm for the future, at least in terms of the forthcoming negotiations. And it becomes more and more obvious that at a political level, some agreements can be made (allowing Greece in the QE program and renaming debt restructuring “extension,” in exchange for a certain continuation of austerity) allowing both parties of the “negotiation” to save political face and appear as victors.

The January 22 announcement by Draghi that the ECB will actually introduce QE in the Eurozone, a program which will engage in sovereign bond purchases, does indeed mark a relative change of policy in the Eurozone. 14 But the devil is in the details, and one had to sit through the Q&A session after the announcement, to hear Draghi explain what everyone more or less suspected: Greece will not be part of this QE, or at least, it will participate only to the extent that it keeps implementing the measures spelled out by the troika. 15

If Greece was in a position to create a surplus, issue new state bonds, sell them to the ECB, and finance its repayment scheme (with a generous extension in place), there would be no need for austerity. Syriza would thus be in a position to decide exactly what it wants in terms of the internal budget, allocate spending and income on the basis of its own agenda, and even re-enter the market with new bonds. Quantitative easing is, however, premised on exactly this idea: that the ECB will purchase state bonds, lock them away in a dungeon in Brussels, and forget their existence. It is for this reason that the economic powers pushing for austerity and restructuring (with Germany at the lead) specifically rejected the possibility of QE, as it would cause them to lose the bargaining leverage they have for imposing these policies.

Quantitative easing (QE): The idea is simple. What is the most important means by which harsh austerity and economic restructuring is imposed on Greece by the troika? Sovereign debt. Greece’s inability to finance the repayment of previous loans or bonds means that the markets are unwilling to lend money to Greece. Given that within the Eurozone and the euro currency Greece is not able to devalue, default, or do something similar (as Argentina or Iceland did), the Greek government should be given the money to repay its loans from the IMF and the ECB, in exchange for a “consolidation” program, i.e. austerity.

Leaving aside these primarily ideological debates, the truth is that it is not entirely unlikely that the debt could be restructured (as it was before, in the far distant past of 2012), and the main reason is that everyone knows that its actual full repayment is more or less impossible. But — and this is the key point — as in 2012, this restructuring will probably occur in a way that ensures the lenders’ finances, 13 and with a clause that requires some form of austerity to continue (even if it gets a more catchy name like “national reconstruction plan”). At the moment, and because the enthusiasm of the left seems to require a counter-argument from the right, debt restructuring is proclaimed by the EU to be unimaginable. But, reading between the lines, it seems that the EU is willing to consider a generous extension, which for anyone not completely confused by economic jargon, essentially means the same thing.

But even if we accept this lapse of reason, other problems arise. Why would the troika agree to restructuring and give Greece the opportunity to ease the debt burden? This topic has received a lot of attention and responses vary significantly. On the one hand, we have a chorus that explains that debt restructuring is entirely out of the question, adding that Greece should feel lucky that any money is actually given in order to save it from complete bankruptcy. This is a view shared (officially) by the German government, and the right-wing government in Greece. On the other side, we have the argument that debt restructuring is absolutely necessary for Greece to exit the downward economic spiral. Plus, the argument goes, “debt restructuring” is not a bad word. It has been done many times before (Syriza’s favorite example is the 1953 write-off to help Germany’s economic recovery) and it is considered by many economists as imperative to avoid default and to boost growth. This position is held, among others, by numerous economists and Syriza. 12

Do you get it? The master plan behind the idea of debt reduction is to allow Greece to borrow again, and thus increase its debt. 11 Genius.

The markets do not lend to Greece because the state debt is non-viable. Since, in order for Greece to repay the debt, a surplus of 4.5 percent is needed, it is clear that we cannot achieve any growth within this framework. It is that simple and understandable, and our international colleagues know this. Thus, when the debt is rendered viable again with a deal that a strong Syriza government will make, the markets will start lending to Greece at reasonable interest rates. 10

Debt restructuring: At the moment, Greece’s sovereign debt is at around 176 percent of GDP. (around 321 billion euros). The interest that this debt creates is paid by the new loans that the troika provides, since the Greek economy does not produce a surplus. This means, among other things, that in relation to the budget of the Greek state, both the debt and its interest are irrelevant. The question immediately arises: Why is it then important to reduce the debt? The answer to that was given by Giorgos Stathakis, chief economic policy maker for Syriza:

The problem with these proposals is manifold. On the one hand, a reform of the tax system could potentially secure some funds but it is a strategy that many governments have promised without any success. But even if Syriza did manage some tax restructuring, it would take a minimum of two years for this ambitious idea to produce actual income for the state. And in terms of growth, it remains to be explained how foreign or private investment will proceed when banks have stopped issuing (or are unable, in the case of Greek banks, to issue) new loans. Last but not least, even in its most optimistic scenario, the increase of the minimum wage only affects a small part of the workforce, its contribution to GDP is minimal, and it raises the uncomfortable question of what will happen to the rest of the wages. If we trust Stathakis’ claim made almost a year ago, they will be frozen at today’s levels.

.

In terms of the negotiations with the EU, Syriza has made clear that it wishes to remain within the Eurozone; it has clarified that it will not make any unilateral decisions — it knows that it needs the EU’s money to keep coming; and all that while renegotiating the terms of the bailout. At the same time, to its voters and to the left, it has promised a (minimal but still ambitious) semi-Keynesian public spending, low-income support, job-creating program, without taxing the rich or redistributing wealth.

It is clear that it is not possible for both of these scenarios to play out. For a negotiation to take place, both sides need bargaining cards. Syriza does not have one. But what it does have is the certainty that nobody in Europe wants a chaotic situation, the possibility of Greece exiting the Eurozone,17 or the uncertainty that would emerge from such drastic changes. If we add the fact that, upon closer examination, none of Syriza’s internal policies (that some people wish to present as radical, but in actuality seem to have a scary resemblance to the first memorandum agreement of 2010)18 are such as would prompt the EU to interpret Syriza’s government as, for example, Jacobin presents it, the situation becomes somewhat clearer.19

In line with Europe’s strategy in the crisis so far (i.e. kicking the can down the road), and far from the enthusiasm that sees Syriza’s victory as a turning point against European austerity, the following months will most likely be characterized by a cat and mouse charade: Syriza will ask for more time to re-adjust its program to the economic chaos it inherited from the previous government; it will ask for more time for QE to reach Greece; it will ask for more time until their (only) ally in Europe (the Spanish Podemos party) actually wins an election in December 2015 (if it does). In the meantime, it can implement a few spectacular policies that will be empty of actual content (such as the increase of the minimum wage) to give the impression that it is actually changing things. And if the EU has decided to play along (and so far they seem to be on board), they can extend the same courtesy to Syriza as they did to New Democracy and create an atmosphere of economic recovery with fictitious surplus budgets and exits to the market. Meanwhile it seems that a certain form of austerity will continue, but in a way that only a left-government could get away with.

.

Predictions are often problematic. The complexity of the issues, the variety of important factors, and the unpredictability of social subjects forbid such attempts, and usually discredit those who make them. This realization, however, has ended up opening a space in which people feel free to say anything at all, with few consequences. This is what happened lately with Syriza: the left found a long awaited rallying-point to proclaim the “last chance to end austerity,” while the right warned against irresponsible “radicalism.” Both were, once again, wrong.

It was remarkable, though not really surprising, that hardly any of the willing supporters of Syriza took the time to examine its expressed economic program. Repeating a few key phrases was enough to render Syriza the hope for the future of Greece (and Europe, for that matter), while any detailed analysis of Syriza’s proposed remedies was postponed to an indefinite moment in the future.1 It was as if the left thought it impolite to present Syriza as a social-democratic party with progressive sensitivities, treating a close look at its expressed program as unnecessary — if not intrusive.

The present age prefers the appearance to the essence, as was said a long time ago, and the greatest illusion is defended as vigorously as possible. Syriza came to represent something almost sacred for today’s disoriented left, and the rules for talking about Syriza’s past, present, and future were set from the beginning: it is a sympathetic and small Marxist party, far from the dogmatism of the Stalinist KKE; a bearer of the hopes of the tormented Greek people to catch a breath outside of the suffocating grasp of austerity; an honest fighter which will do its best to alleviate the worst effects of the crisis. If anyone criticized Syriza, they were surely ultra-left inhabitants of the ivory tower. Evoking the need to be “painfully realistic” and down to earth, Syriza’s supporters paradoxically scorned any actual attempt to be realistic. It seems as if no contradiction was allowed to spoil this commonsensical approach. Apart from the actual facts, that is.

In essence, and taking the best-case scenario, Syriza was merely proposing a Keynesian model of dealing with the crisis. For people like Paul Krugman or Joseph Stiglitz, this is as radical as it gets. Building a straw man of German-led invariance, Keynesian policies came to represent an oasis in the desert of neoliberalism. But what gives credit to all these pro-Keynesian writers (i.e. their hostility towards neoliberalism) masks certain easily-forgotten historical realities about social-democracy: its starting point is to urge capital to understand labor both as a cost and an investment; it prefers to see workers as both consumers and partners; it rejects the necessity of confronting the totality of social relations, insisting instead that the solution for the problems that capitalist social relations create lies within capitalism itself. On the bottom line, its goal is to liberate the potentials which neoliberal hard-headedness has undermined, promising that it is in a better position to manage capital. What it fails to realize is a very simple fact: Keynesianism already tried to save capitalism, and it ended in failure. Why this is considered such an offensive thing to say, is hard to understand.

If you still want to be social democrats

.

In my article in the February 2015 issue of the Rail I tried to explain that beyond the enthusiasm and the wishful-thinking, a Syriza government would be forced from day one to at least secure the funds to implement its program (however minimal it was). Given that the Greek economy has been under the close scrutiny of the troika (EU, ECB, IMF) for the last five years, the choices with respect to debt repayment and public spending are limited. International lenders, who seek to ensure their money and to enforce austerity, have spelled out a set of rules. Of course these rules are subject to change, and would definitely be hard to apply if and when an insubordinate population decided (unilaterally, to use a catch phrase of late) to proceed with a non-payment campaign at all levels that would disrupt any possible negotiation. But no such movement has emerged, and Syriza had made it clear that it is not interested in defying these rules. As a result, the development of recent negotiations was not so hard to predict.

The main argument in the previous article was that Syriza did not have any serious bargaining cards. It wished to remain within the Eurozone, it needed the money of the EU (both to keep making interest payments, as well as to finance its own program), and it was not willing to take any unilateral actions. At the same time, Syriza was hoping for an easing of the terms and a chance to effect certain changes (such as “dealing with the humanitarian crisis”) that would have no immediate fiscal costs and would thus be irrelevant to the troika.2 The only possible card that Syriza had to play was the fact that nobody wanted to even consider a Grexit (a Greek exit from the Eurozone), as the consequences of this remain entirely unpredictable and most likely catastrophic for the Eurozone as a whole. If there was any question during the last few weeks, it was whether Syriza was prepared to play this card to the end.3

The choice of Yanis Varoufakis as finance minister added a lot of suspense to the upcoming negotiations, giving the opportunity for a number of reports to create an atmosphere of upcoming conflict. The main reason for this was Varoufakis’ chosen form of diplomacy: instead of deliberating behind closed doors and following the approach of the previous government (signing “agreements” with their eyes closed), he decided to bring Syriza’s agenda out in the open: the repayment of Greece’s debt was proclaimed an obvious impossibility for a country that has a debt ratio of 175 percent of GDP and is in its sixth year of recession. Consequently, another way had to be found and if a debt haircut was out of the question, a debt extension would have to be agreed upon. At the same time, the troika would have to be abolished as an institution and austerity would have to be re-examined. In only a few days, Varoufakis emerged as a veritable celebrity whose wardrobe choices received as many comments as his economic proposals, both described as radical and uncompromising. Once again, neither of the two are true.

Varoufakis was simply smart enough to realize that the only chance to get any leeway was to force European leaders to publicly oppose his commonsensical approach, risking in this way to present themselves as complete idiots (no one in their right mind could possibly claim that Greece’s debt is viable). His second provocative claim, the abolition of the troika, was a non-threat: it was already suggested a day before Varoufakis’ infamous press conference by Pierre Moscovici of the European Commission. And as far as a debt extension was concerned, it was seen as a reasonable demand, supported even by Finland — whose opposition to bailing out Greece has been even stronger than Germany’s.

Until Monday the 16th of February, and despite the various war cries from left and right, anyone interested could see a lot of signs to verify the almost general acceptance of the above script. Syriza had already watered down its pre-election “Thessaloniki” program,4 any discussion of the debt was framed around a possible extension, and Varoufakis openly said that 60 to 70 percent of the previous memorandum agreements were acceptable to Syriza, as they contained measures they were happy to implement themselves. The stage was set for a deal that would allow everyone to walk away a winner.

Inadequate critique of an inadequate program

.

As if wishing to prove that politicians still have a role to play, the Monday meeting of the Eurogroup suddenly and unexpectedly turned into a complete flop. Instead of reaching an agreement based on a text that more or less reflected the above-mentioned consensus, Greece was suddenly presented with a text that even the Samaras government would have had difficulty in accepting. It not only rejected all of Syriza’s compromises, but it essentially demanded that Syriza would have to pretend that it was never elected. This development was indeed quite a shock. Not because it ridiculed democratic procedures and elections, as some commentators argued, or because it demonstrated Germany’s will to humiliate its opponents and supporters (one should not forget that the rest of Europe had also agreed to follow the script). The main reason was that this sudden change of heart was entirely unnecessary.

Leaving aside the spectacular presentation of Syriza as the enemy par excellence of austerity and the incarnation of hope in Europe, the details of the original and rejected agreement draft were more than enough to give all players the chance to present themselves as winners—while continuing pre-existing policies. Syriza could pretend to have negotiated hard (winning what it could in the process), Germany could present itself as invariant as before, and Europe as a whole could continue its favorite game of “kicking the can down the road.”

One could speculate endlessly about the possible reasons behind this diplomatic breakdown. Nonetheless, it makes no difference. For after a week of suspense, orchestrated panic, and secret documents, a final agreement was reached that was, well, more or less the same as the one rejected on Monday. Once again, in this endless saga of the Euro crisis, Grexit was avoided in the eleventh hour, the markets were relieved, and life could go on as before.

Unity and division within appearance

.

On the part of Syriza, the main aim of the negotiations was to achieve some kind of extension, meaning a period of grace which would officially allow them to work out the best way out of recession (or the best way to present their departure from their program). Furthermore, for reasons unknown, the abolition of the troika was deemed crucial, and Greece was only to negotiate with “the institutions.”5 Varoufakis was also insisting that no further checks and controls would be accepted, in order to evaluate the effectiveness of the reforms. Last, but not least, it was hoped that the negotiation would achieve a reduction of the surplus budget expectation (3 percent this year, 4.5 percent next year) to a level which reflects the actual potential of the economy.

On the other hand, the Europeans (assigning Germany the role of the bad cop, while the rest pretended to be good cops) wanted some written confirmation that Greece would honor its obligations (i.e. ensure that it will do its best to repay its debts and continue some form of austerity), that it would not start to implement its (minimal) program in a way that runs counter to these obligations, and that it would refrain from unilateral actions.

Looking at the final signed document, as it came out on Friday, the 20th of February, one would have a hard time convincing any reasonable person that one side of the “conflict” lost. Greece is allowed to draw up its own program of reforms, but they need to be accepted by the “institutions.” The troika’s bureaucrats are deprived of their frequent visits to Athens to evaluate the implementation of the program, only because Greece will send the results on its own. The money that Greece was receiving will keep coming — in order to be used to pay back interest — but only after the evaluation is complete. Finally, the plus-three percent surplus budget goal is replaced by one which is considered “appropriate” for 2015, whatever that means. Syriza agreed not to make any unilateral decisions, and it has earned a four-month extension during which it will not be “bothered” by Europe. Ah, and the word “bridge” was added to signify the transition from the one situation to the next.

Make no mistake: this is a rather embarrassing deal for Syriza (and even more so for its supporters), and one which may in time threaten the coherence and popular support that its government enjoys at the moment. But this much was clear long before the agreement was signed. If one had bothered to read the initial document that Varoufakis was prepared to sign on Monday, it was obvious that much of what had excited the left (for no clear reason, by the way) was already out of the equation.

Notes to serve as a history of our future

.

Most analyses after the past weeks’ suspense tried to make sense of what happened by evoking a number of narratives. The more simplified ones would point at Germany’s reluctance to accept any kind of deviation from its program, as well as its capacity to enforce its will on the whole of Europe. Syriza was seen as a threat to Germany’s pro-austerity ideology, and this was an attitude that could only be dealt with by humiliation. On a slightly more sophisticated level than this (borderline psychotic) explanation, is the argument that Greece’s insubordination would trigger more significant players in Europe6 to bet against austerity, possibly with better chances to win.

In any case, the explanations claimed that Syriza’s compromise was founded on its inability to withstand pressure from the key players in Europe, while the much-advertised early signs of a bank run were eventually identified as the main reason behind Syriza’s capitulation. All narratives concluded in the same way: Syriza’s bluff was not credible enough for the experienced German economic advisers, the economic situation of Greece was too weak to demand any kind of changes, Germany’s superiority too strong to allow any deviations. Syriza must now try to justify the agreement to its voters, and it must also prepare them for the worst.7

None of the above explanations are in themselves entirely wrong, but they all share a common fallacy. They explain recent developments by, paradoxically, ignoring the fundamental background upon which all these discussions and negotiations are based: the continued economic crisis in the Eurozone.

What about the crisis?

.

The ability to struggle against the devaluation and immiseration caused by capitalist crisis (and its management) is not determined by high-profile Eurogroup meetings, ECB decisions, and good (or bad) diplomatic exchanges. At best, when these meetings do not simply represent an attempt to reinforce the necessity and legitimacy of the political class, they come to reflect existing dynamics and contradictions of existing struggles. When there is an absence of struggles that would otherwise force politicians to mediate and manage conflicting interests, these encounters are merely useful in maintaining politics as a separate sphere, left to the devices of experts.

There is no upsurge of struggles in Greece. Perhaps more important, there are no struggles in other parts of Europe that could potentially link up with each other and render the Eurogroup and other gangs obsolete. This crucial realization means that negotiations at a European level reflect a discourse which is centered around different approaches on how to manage capitalism, and more especially, how to manage the continuing economic crisis.

It is at this level that one should understand the “failure” of the recent negotiations. Explaining the results by pointing at Germany’s arrogance or Greece’s weakness only serves to mystify the fact that it is not national pride which is in conflict but opposing strategies of crisis management.

What Varoufakis clarified at every opportunity was that his proposals are not merely proposals which would get Greece out of the gridlock it was in, but solutions for the Eurozone crisis as a whole. Austerity was under attack not merely for destroying the Greek economy but because it was, according to Varoufakis, destructive for the Eurozone as a whole. Instead, what was proposed was a Keynesian model of a “surplus recycling mechanism” which would correct structural fault lines, and would allow for the transfer of surplus profits from surplus nations (like Germany) to depreciated ones (like Greece).8

Among other things, this approach indicates a very particular understanding of European integration (albeit different from the dominant one), a proposed change in its structural setup, and an aggressive way of dealing with the crisis at the moment. It also claims to call into question the priority of short-term economic hegemony over long-term capitalist sustainability.9

It was therefore as an alternative capitalist strategy for the crisis that Syriza’s suggestions were rejected, indicating that the current form of crisis management, though it might create some “statistical anomalies” in the South,10 remains dominant and uncontested. And while it is well outside the scope of this article to elaborate on the Keynesian “solution” to the crisis, or to deliberate on different strategies as to how to save capitalism from its internal contradictions, suffice to say that the Keynesian model refuses to recognize that its form of capitalist management has already failed and it is in part responsible for the prolonged deterioration of capitalist profits which led to the crisis.11

The bitter victory

.

Occasionally, in the streets and barricades of Athens in 2010 and 2011, a complaint would be voiced: Why are we Greeks so divided? (This approach was directed to the cops as well: “We are also struggling for you,” some used to shout at them.) Syriza’s rise to power has in fact managed to give strength to this ridiculous idea, rather than defeat it. As a result, and rallying behind the specter of national unity and a “national liberation” struggle against Germany, the crisis and its solution can be portrayed as a matter of national dignity. For anyone who retains any common sense, an appeal to patriotism is the exact opposite of a strong social movement capable of defeating capital’s imperatives, for there is historically no bigger obstacle to the development of class struggle than national identification. But this is exactly what Syriza has achieved, possibly more than anything else.12

However, this development is not merely an ideological victory of left patriotism. It accurately reflects a material reality, which seems to be the predominant result of the trajectory of the European Union. For while it took centuries of trade, political unification, cultural exchange, and wars to form the European nations, the economic development of the EU and its crisis seem to point towards the reappearance of archaisms that had supposedly been eradicated. There is no deviation here. As Dauve argues, “[o]ne of the objectives of liberalization, after 1980, was to do away with this protective national framework: the strongest English union will always be less influential in Brussels than in London.” In response, as soon as the crisis shook the foundations and expectations that a near-decade of stability and growth had created, centrifugal dynamics have been busy dismantling the European dream. Some of the oldest European nations see the emergence of local separatist movements (Spain, Brussels), while others mobilize their populations by appealing to national fronts (France, Greece) against EU directives. All in all, and faced with the abstract influence of the “global market,” European countries attempt to protect themselves from the crisis by reverting to protectionism and/or xenophobia,13 and even though this might allow for a temporary truce from social antagonisms, it is hard not to recognize that these are clear signs of deterioration.

No matter what last week’s developments will mean for Greece, Germany, or the Eurozone, the dynamic that has been unleashed by the crisis and its management points towards a dissolution of this monetary union. The strategy of kicking the can down the road will reach its limits, and the ability to “pretend and extend” cannot go on indefinitely. Instead, no matter how many extensions are given, and no matter how these will be digested by the populations that have already lost too much, it should not come as a surprise if an economically more significant country of the Eurozone (Italy would be the prime example) decided that its chances as a pole of value creation are better outside the euro. Irrespective of how successful European leaders feel the latest agreement with Greece has been, and how Syriza will be able (or not) to sustain itself within this compromise, no one should ignore the unavoidable conclusion: the only thing that was achieved in the end was to convince a country with the highest rate of approval for the EU to accept a fragile extension, while continuing an already devastating deterioration of their conditions. With or without the threat of Keynesianism, it is nonetheless clear that the continuation of the existing strategy for dealing with the crisis, if implemented in Italy or France, will have an outcome that will not allow everyone to keep grinning like idiots.

Notes

One should also note that a similar reluctance was found in many radical critiques of Syriza. It seemed enough to express Syriza’s acceptance of parliamentary politics, the State, or other unacceptable concepts, to evoke a Pavlovian rejection. Though its heart might be in the right place, this approach tends to overlook significant aspects of social-democracy (above all, its rejuvenated ability to get electoral support) and ends up describing itself rather than its object of critique. The whole discussion of the debt extension had this aim: to spread out repayments and thus make the burden less harsh. On the other hand, non-fiscal measures would include things like granting citizenship to second generation immigrants, refrain from opening up new types of prisons (C-type), or rehiring 3,000-4,000 sacked public employees. To the extent that such measures were not driving the Greek budget away from its obligations, the troika had no reason to disagree. The fact that Syriza was not willing to play this card meant that its strongest bargaining position (the Grexit and its unimaginable consequences) could actually be used against it during the negotiations. For example, the increase of the minimum wage was moved to 2016, as businesses would be “shocked” if it was introduced suddenly, as Minister of Economy Giorges Stathakis claimed. Moreover, opposition to privatizations was replaced by promises of a “review” of specific projects, while certain private interventions could “make use of public assets … to the extent that there exist guarantees of the respect of labor and environmental regulations, as well as a business plan that proves that the investment is in favor and not against public interest” (Tsipras’ programmatic statement of the government, February 7th, 2015). All in all, the measures that were designed to deal with the immediate threat of the “humanitarian crisis” were also postponed. Don’t try to look for the difference between the two, there is none. Spain’s Podemos party is steadily increasing its percentages in view of the December national elections, while France’s Le Pen is already considered a veritable threat. Italy is also a key player in these narratives, as it is one of the strongest economies in the Eurozone and one with little reason to remain within it. The recent agreement concerns, as mentioned, a four-month period. When this period is over, a new financial loan agreement will have to be drawn up, as debt obligations will actually increase come July and August, thus making it clear that not only is the memorandum saga not over, it has just received a generous upgrade. The “surplus recycling mechanism” is a notion devised by Keynes in the 1940s, which was meant to force creditor nations to increase domestic prices and reinvest their surpluses. By applying equal pressure on creditor and debtor nations to adjust trade imbalances, debtor nations would have their debt burdens eased. The problem, however, is that surplus nations have little reason to accept such mechanisms, their benefits being only long-term (by investing in depreciated areas, they support the creation of markets for future exports) and conditional. And it implies a penalty mechanism for countries which chose to allow their trade surplus to exceed their trade volume. If there is one element of truth in the accusations about Varoufakis’ arrogance, this has nothing to do with his wardrobe selections. It has to do with a common feature of contemporary Keynesians, which is the notion that they know best how to save capitalism. “Just as money is crystalized labor and not a mere entry on a screen, credit has meaning only because it is supported by future gains, by possible value creation, therefore by profitable work: if that support is lacking or insufficient, credit loses its reality. Some countries deeply in debt (Russia, Algeria) have managed to pay back their creditors, thanks to a rentier position because of their having gas and oil in their soil. Most other debtors have to cut back their budget, or to privatize. Minimizing social services reduces public debt but ultimately weakens productive potential. Selling key sectors to private business brings in quick money, but here again there is no guarantee that these activities will be run more efficiently in the interest of capitalism as a whole.” (Gilles Dauve, In for a Storm: Crisis on the Way.) On this topic, I would suggest Andrew Kliman’s excellent work A Failure of Capitalist Production: Underlying Causes of the Great Recession (2012 Pluto Press). For some commentators, the degree of national unity that has been expressed in the last few weeks surpasses that achieved during the Olympic Games of 2004. Contrary to various falsifications, and in line with Syriza’s choice of the Independent Greeks party as their coalition partner, the patriotism of Syriza (and the left in general) is not a strategic, lesser-evil choice. It is part and parcel of the foundational myths of the left in Greece. Belgium and Germany recently passed laws to deter migration from other European countries. At face value, these are just attempts to “protect” their welfare systems from being “abused” from (primarily) southern Europeans who are forced to abandon the economic devastation of their countries. But in essence, such measures are de facto cancelling the foundational structure of the EU.

Cognord

Brooklyn Rail

July 2015 Brooklyn Rail

Questions and answers