June 20, 2011

GREEK SOCIETY has exploded into protest against austerity measures, threatening to bring down the government of Prime Minister George Papandreou and his center-left PASOK party. Meanwhile, the country staggers to the brink of default and economic collapse.

Three weeks of mass protests, public square occupations and spreading strikes culminated June 15 in a 24-hour general strike that brought the country to a standstill. Tens of thousands of people poured into the streets in front of the parliament building in Athens' central Syntagma Square.

Demonstrators, who clashed with riot police armed with clubs and tear gas, continued to mobilize over the weekend, as workers rejected Papandreou's desperate move late last week to reshuffle his cabinet in the hopes of breaking the paralysis gripping the state.

Papandreou will face a confidence vote this Tuesday, June 21. And the following week, the government is scheduled to debate and vote on another round of devastating cutbacks, justified as the necessary sacrifice to save the country from financial catastrophe if it defaults.

A 24-hour general strike on June 15 brought Greece to a standstill

Meanwhile, the anger in the streets is boiling over. Syntagma Square rings with the chants: "We owe nothing, we sell nothing, we pay nothing" and "We'll stay until they go."

"We didn't create the debt, they created the debt," Lina Pantazi, a 40-year-old public school teacher told the New York Times. Another protester, Antony Vatselas, a 28-year-old mechanical engineer, told Reuters, "We want them out. Obviously these measures are not going to get us out of the crisis." With tears streaming down his face from the tear gas, he continued: "They want only us to pay for it. And they are doing nothing. I want the debt to be erased. If this doesn't happen, there is no exit for Greece."

THE VAST majority of Greeks reject Papandreou's attempt to implement austerity measures demanded by the European Union, International Monetary Fund (IMF) and European Central Bank in return for a bailout package negotiated in May 2010 that was worth nearly $160 billion. This "troika" is threatening to withhold further funds for the Greek government unless it accelerates the pace of the cuts.

Featured at Socialism Hear Zach Zill at Socialism 2011 in Chicago, speaking on the panel, "The kids aren't alright: The global youth revolt." Check out the Socialism 2011 website for more details.

As a result of the bailout deal, Greece's population of 11 million is suffering its deepest social crisis in generations. Waves of draconian cuts, including a 20 percent wage cut for public-sector workers, reductions in pensions of up to 55 percent, and an increase in the retirement age have upended social life in Greece and decimated working-class living standards.

The proposal that is due to be voted on next week is a new five-year plan that would consist of a further 20 percent wage cut for government workers, the elimination of 200,000 public-sector jobs, another round of regressive tax increases that hit workers hardest, and an extensive fire sale of state-owned industries and public assets.

In response, the Greek movement against cuts has mushroomed into an angry popular uprising with roots among all sectors of the population. A movement of young people mimicking Spain's "Indignados" or "Indignants" ("aganaktismenoi" in Greek) has organized weeks of round-the-clock occupations of public squares Syntagma in Athens. Mass rallies at Syntagma each night drew thousands of people.

The labor movement has also escalated its actions. The two main union federations, the public-sector ADEDY and the GSEE federation, have called strikes in workplaces slated for privatization and shut down the country with last week's general strike, Greece's third of this year and the 11th since the crisis began.

Now, the strength of the protest movement has created splits within the ruling PASOK party and frozen the austerity proposals in parliament.

Several PASOK members of parliament defected or pledged to vote against the new measures, crippling Papandreou's government. A sense of fear and paralysis grips the Greek ruling class. Even the conservative opposition party, New Democracy, refuses to support the austerity measures--last week, it rejected Papandreou's offer to step down and make way for a "national unity" government between PASOK and New Democracy.

Papandreou had to resort to desperate measures. Over the weekend, he appointed his main PASOK rival, Evangelos Venizelos, as finance minister after dismissing George Papaconstantinou, who authored the new austerity plan.

But this reshuffle is unlikely to alter the situation. As Yannis Varoufakis, a professor of economics at the University of Athens, told the BBC, "The whole government is breathing its last breath. This is a transitional government that will be ineffective and will resemble one of the six governments in Argentina during its pre-default era."

The protest movement has spread into every corner of Greece, from the country's second-largest city Thessaloniki to towns on remote islands.

The movement has permeated society. On June 16, riot police were called in to confront a group of elderly demonstrators at a home for seniors--they bombarded government spokesperson George Petalotis with chants of "Shame, shame," and hurled fruit and yogurt at him when he arrived to address a PASOK meeting.

As journalist and author Paul Mason, reporting for the BBC in Athens, wrote: "You walk down Venizelos Avenue--the big business boulevard from Syntagma to Omonia Square--it is ghostly quiet...The street is under the control of the protesters...Every shop is shuttered...There are no 'bystanders.'"

HOW DID Greece get to this point? For more than a year, the so-called "sovereign debt" crisis has smoldered away in what's known as the Eurozone, the European countries united under the euro currency. The debt crisis stemmed directly from the global financial meltdown of 2008, which stretched the finances of the weakest members of the Eurozone, especially the so-called PIIGS--Portugal, Ireland, Italy, Greece and Spain.

These countries, in particular, veered toward insolvency as government debt grew far beyond the target for European Union member countries of 3 percent of gross domestic product. In response, the troika engineered a series of bailouts, starting with Greece in May of last year. Each was contingent on the state accepting harsh spending cuts, reductions in wages and pensions, and accelerated privatization.

According to the mainstream media, austerity is the necessary corrective for a country where workers supposedly enjoyed lavishly high living standards and extravagant social programs, as well as outdated protections for unions--this, the press claimed, was the source of the debt crisis.

But the Greek crisis is certainly not the result of too much money going to workers. When the financial crisis of 2008-09 struck, the Greek government--like other countries around the world, including the U.S.--wrote a blank check to rescue its banking sector, to the tune of at least 28 billion euros.

Before this, the Greek state was starved of revenue by drastic cuts in corporate taxes, which fell from a rate of 45 percent in the 1990s to 20 percent--and only 12 percent for banks. During the last years of the conservative New Democracy government under Kostas Karamanlis, there was widespread non-payment of taxes by major corporations and big capitalists.

The government has also wasted huge sums on frivolous expenditures or useless military equipment. For example, the massive stadiums and arenas built for the 2004 Olympic Games in Greece now sit empty. Greece also purchased a $100 million anti-terrorist monitoring system from a company called C4i--it has never been used.

Then there's the role of corrupt financial speculators like the U.S. super-bank Goldman Sachs, which advised its hedge fund investors to bet on a Greek default at the same time as it advised the Greek government to go deeper into debt.

The claim that austerity would "modernize" the Greek economy and get it back on track has turned out to be completely wrong. The cuts have worsened the crisis, sending unemployment climbing to 16 percent--31 percent for those under 30 years old--and causing Greece's GDP to plummet 4.5 percent since a year ago.

The Economist magazine admitted as much in a recent article:

Inherently, there are two conflicting economic tensions in the rescue packages. The first is that the austerity programs needed to cut deficits are killing the growth needed to make debt bearable...The other inherent tension is that the steps needed to improve competitiveness within the euro require prices and wages to be held down, making it even harder to cope with debt.

Despite the bailout, the Greek economy has been tottering on the brink for over a year--it will need another massive bailout to avoid default. Over the weekend, France and Germany--the main financial powers in the EU--reached two highly touted agreements over the nature and timing of the next bailout package. Significantly, private investors were protected from any losses in a potential Greek default.

Yet the key short-term issue remains--the next infusion of funds to the Greek government is due to come in only a few weeks, and it is contingent on the passage of the new austerity measures. Without those funds, the government will run out of money next month and will be forced to delay or cancel its debt repayments.

Even if the austerity proposals pass, the odds are that Greece will eventually default anyway. As George Magnus, senior economic adviser at UBS, said, "I don't think there is a question over whether Greece is going to default, it is just a question of whether it is an orderly or disorderly one."

The IMF knows this is the likely outcome. But it, along with European political leaders, with the support of the U.S., are using the crisis as an opportunity to force through massive privatization--not just of industry and assets such as post offices and airports, but also thousands of acres of prime real estate--and a huge transfer of wealth from the Greek working class.

IN THIS regard, the cuts have largely been successful--and they have caused severe hardship for workers whose living standards have been cut to the bone. To take just one example, last year, the government was forced to open its military hospitals to the public because public hospitals lacked funding needed to maintain adequate levels of staff and supplies.

Only a few voices of ordinary Greeks have come through in the Western media coverage, but they reflect the desperation. One demonstrator quoted in the New York Times, a 63-year-old retired nurse named Angeliki Kolandretsou, described having her pension cut to only $915 a month, at the same time as her 42-year-old son moved back in with her after being unable to find a job for five years.

Corina, a student in Athens, wrote on the BBC website:

We are a country at war. Protesters are fighting not only for their dignity, but for their right to protest...I am a student and my university is about to close because of a lack of funding. Many other universities are in the same position. Some of my friends will not be able to sit their exams. I don't know what I will do. I would like to study abroad, but I don't have the money. I just want my country to recover. We don't have a future here. This country is suffocating its people.

Because of their complicity with the troika, Greece's two main parties--which have governed since the fall of the military dictatorship in 1974--are totally discredited in the eyes of most workers. PASOK is in a shambles, and New Democracy, while opportunistically rejecting austerity, has no alternative.

In 2008, Papandreou came to power thanks to a landslide victory for PASOK, which was broadly supported by Greece's ruling establishment. The party with the traditional allegiance of Greece's working class was expected to be a better salesman for cuts and privatization.

But that allegiance has now dissolved. As Paul Mason described, the PASOK government has not only lost support for austerity, but "is beginning to lose its grip slightly on the actual functions a state should do."

The social crisis has summoned up the darkest elements of Greek society. Fascist gangs and neo-Nazis have taken to trolling the streets of Athens, targeting immigrants. Last month, fascists attacked a group of immigrant workers, killing one and injuring dozens. Reports from Greece describe the far right as a presence at the mass demonstrations--not to counter the protesters, but instead to try to capitalize on the despair and attract more supporters. Important rallies have been organized to defend immigrants, but it's clear the threat of the far right will remain as long as the crisis continues.

But the main beneficiary of the explosion of social protest has been the left. Though it remains small compared to the broader movement against austerity and the social discontent, there are promising signs emerging from the mass movement itself.

The Syntagma aganaktismeni have begun a daily routine--modeled the occupations of Madrid's Plaza del Sol and other Spanish cities, themselves inspired by the Tahrir Square mobilizations during the Egyptian revolution--of holding a popular assembly every night that draws hundreds of speakers and an audience of thousands. Reports from Greek activists also indicate that the aganaktismeni have begun reaching out to the organized working class.

The popular assemblies are shaping demands that fit the mood of rebellion and resistance--above all that Greece should refuse to pay its debts and exit the euro, and that the capitalists should be made to pay for the crisis. There is also an important democratic demand emerging--that European Union officials in Brussels, Paris or Berlin should not be allowed to determine the future of millions in Athens or Thessaloniki.

The Greek movement is growing stronger by the day and now represents the leading edge of Europe's popular struggles against austerity. Actions in the coming days and weeks will be decisive in shaping what looks to be a long hot summer in Europe.