Greeks must fight the neoliberal EU

By Costas Douzinas
The Guardian, « Comment is free », Thursday 4 February 2010

Paul Bremer, the first post-war American viceroy, imposed on ravaged Iraq economic policies which the Economist called “a capitalist dream” regime. One is hard pressed to find a better phrase to describe the “stability” plan measures submitted by Greece and approved yesterday by the European Commission. The plan envisages a reduction of the country’s budget deficit from the current 12.7% of gross domestic product to 2.8 % in 2012, and promises immediate 10% cuts in ministerial budgets, a freeze on public sector recruitment, the abolition of various tax allowances and an increase in indirect taxation. As if this was not enough, Socialist prime minister George Papandreou announced on Tuesday, in a dramatic broadcast to the nation, further unprecedented austerity measures, including an immediate increase in fuel tax, an increase in the retirement age and cuts in civil service allowances amounting to 10% of salary for most civil servants and up to 40% for academics. As in Britain, universities are the first to be hit, seen as a secondary luxury despite the much trumpeted “knowledge economy”.

All this will be applied to the poorest country of old Europe that has youth unemployment at 25%, stagnating growth and the traditional industries of shipping, tourism and construction under immense strain. These measures will complete a vicious economic circle of rising unemployment, shrinking tax revenues and profiteering market valuation of economic policies. They will sink the country from its current deep recession into an enduring depression with no obvious way out.

Greece is in the eye of a profiteering storm,” Papandreou complained at his broadcast. He was referring to the reduction of Greece’s credit rating by three non-accountable private companies and the subsequent market speculation on Greek bonds financing the deficit, which led interest rates on sovereign borrowing to rise 4% above baseline. This is a repetition and intensification of the 1992 Soros attack on Britain’s currency, which led to the humiliating exit from the European Exchange Rate Mechanism, and the speculators’ attack on British banking in 2008. It marks a dismal state of affairs accepted by the European Union and governments: a few uber-capitalist hedge funds having brought down major banks are now betting on a country’s bankruptcy, hoping to bring it about through their self-fulfilling, short-selling positions.

There is no doubt that public sector employment and patronage have been used by the Papandreous and Karamanlis, , the ruling dynasties of post-war Greece, for political benefit, hugely augmenting the sector and its debt. There is no doubt that substantial tax evasion, corruption, and clientellism have contributed significantly to the current woes. But the cure is much worse than the disease and will be born as always by the usual victims: wage-earners, low-income groups, subsistence farmers and the unemployed.

On a broader front, Greece is becoming a test case for the new phase of neo-liberal correction in the wake of the economic and financial crises. The fiscal and taxation “stability” measures continue an idolatrous set of economic dogma that came to grief in 2008 but still dominates the thinking of European political leaders. The privatisation, deregulation and financialisation black arts have been theoretically rejected by many erstwhile believers, but are still dominant in the environs of a few elite business schools and the European commission. Obama launched last year a $787bn fiscal stimulus, which includes tax cuts, expansion of unemployment benefits and increased spending in education, health care, infrastructure and the energy sector; European Greece is condemned to fiscal starvation. Japan’s public debt is 225% of GDP and is financed through internal borrowing, with only 6% in foreign hands ; Greece is condemned to borrow on the foreign markets, paying interest that can only be called usurious. Economics commissioner Joachim Almunia was cynically clear about the aim of the “stability” plan, saying that Greece needs further “pension reform, healthcare reform, labour reform”. This is a brazen attempt to use a comparatively small debt problem to radically alter the class and state-society balance in a country known for its radical politics and militant unions.

The legitimacy of the European Union is based on principles of social justice and solidarity. Joseph Stiglitz reminded Europeans of their traditions in these pages by calling for a euro-bond issue to help Greece and other indebted economies. Such an immediate palliative would act as the tragic deus ex machina, but the neoliberal ghost has displaced god from the machine.

There is an even more worrying aspect to these catastrophic developments. Papandreou was elected four months ago on a platform of redistribution and social justice. He has now accepted to do exactly the opposite. This is a radical attack on politics and the best expression of the neoliberal hatred for democracy. Commissioner Almunia advised Greek politicians and the public to support the measures, adding a thinlyguised threat that revealed the staggering idolisation of the markets and the feigning of regulatory impotence. The markets could speculate successfully against Greek bonds, driving the cost of borrowing to unsustainable levels, only because the EU has set the public debt ceiling at an unrealistic 3%. The result is that the EU pushes Greece from one end, the markets from the other. This is a man-made perfect storm. Politicians and Eurocrats have accepted the role of bit players in a casino economy that has been declared above politics.

The violent impoverishment of large masses, the extensive privatisation of services and utilities through the radical reduction of the state sector, and the extensive dependency on foreign markets for servicing the debt amount to a loss of sovereignty compared to a state under foreign occupation, to an extensive re-arrangement of national assets in favour of capital and a serious European legitimation crisis.

Greeks are a proud people. They have been constantly bombarded by the media, the government and pliant academics intent on making them believe that they are to blame for the failures of a system none has ever voted for. Here in Britain we are well used to TINA; but we also know that there is always an alternative. Their current predicament puts Greeks at the forefront of a wider attack on the European principles of democracy, social justice and solidarity, always a little rhetorical but now comprehensively breached. Ideally, the government would forget the bogus orthodoxy that makes Greece as sovereign as Iraq and call for a national front to resist this barbaric attack. Such a move would mobilise national pride and a sense of injustice. It would divert Greek nationalism from its recent extreme, rightwing, xenophobic pathology to something much closer to the Hellenic tradition: the defence of democracy. Iceland called a referendum to decide on the repayment of its debt; so should Greece.

This is unlikely to happen, however, because the ruling party is too mortgaged to old clientelism and neoliberalism. The absence of a government-led reaction raises the stakes for the left, one of the strongest in Europe. The left has the historic responsibility to mobilise the Greek public against this tsunami of anti-democratic idiocy and injustice. The Greeks have shown that they know how to resist, from classical Antigone to December 2008 Athens. Already farmers have blocked main roads leading to the north and Bulgaria, making Barroso threaten legal action. Public servant strikes and a general strike have been called for later this month.

Additionally, the left must mobilise European public opinion. If the attack on mining communities and the NUM in the UK became emblematic of early neoliberalism, the attack on Greece is the beginning of its second phase. If Greece falls, the markets will no doubt attack Spain, Portugal, Italy and Britain next, with the European commission washing its hands Pontius Pilate-like, while sporting the robes of a tragic chorus. The future of democracy and social Europe is in the balance – the Greeks must fight for all of us.

Costas Douzinas, Professor of Law at Birkbeck College, Director of the Birkbeck Institute for the Humanities

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