by Costas Lapavitsas published at the Guardian
The new government in Greece wants to spearhead an alliance of leftwing forces across Europe, but we know we face powerful adversaries
Alexis Tsipras, leader of Greek party Syriza
‘The actions of the Syriza government have generated an enormous groundswell of popular support in Greece. There is a palpable sense of relief and national pride among ordinary Greeks.’ Photograph: Kostas Argyris/Demotix/Corbis
Monday 2 February 2015 17.38 GMT
The inaugural week of the new government in Greece has already delivered a considerable jolt to EU politics, and there is much more to come. First, it is necessary to deal with the widely circulated canard that the coalition government between Syriza, the party which I represent in parliament, and the Independent Greeks (Anel) signifies an unholy “red-brown” alliance. Anel is not a soft version of the fascist Golden Dawn. It is a nationalist party that speaks for broad sections of grassroots conservatism, and they have consistently opposed the disastrous policies of austerity. Indeed, with regard to Greece’s national debt, its position might even be considered to the left of Syriza.
Needless to say Syriza would have preferred to form a government alone, but the election results did not allow it. To its shame, the Greek Communist party refused to join or even support a Syriza government. There is no other party with anti-bailout credentials in the Greek parliament. The dilemma for Syriza, therefore, was either to form a government with Anel and apply the anti-bailout programme, or let the country go to fresh elections, which would have been disastrous for both economy and society.
We did the right thing.
Greece no longer considers the troika to have a valid institutional status
The reality of Syriza in power began to emerge as soon as the government was formed. A succession of ministers made remarkable announcements while taking office: reversal of electricity and oil privatisations, the re-employment of sacked public sector workers, the scrapping of labour deregulation, raising the minimum wage and more. Meanwhile, the new minister of finance declared that the country will no longer negotiate with the troika of the European Commission, the European Central Bank and the International Monetary Fund. Greece will not submit to the planned assessment of its bailout programme, even if that means not receiving a further €7.2bn of troika funding this year. Indeed, the country no longer considers the troika to have a valid institutional status. To cap it all, Greece appeared to differentiate itself from EU policy regarding sanctions on Russia.
The reaction of the Athens stock market was immediate: share prices collapsed, particularly those of banks. It is likely that financial pressure will re-emerge this week since banks have been losing liquidity and international investors are very jittery. The reaction of European policy makers, meanwhile, has been one of astonished disbelief, hardly masked by diplomatic niceties. Irate phone calls have doubtless been made to Athens during the past few days.
The Syriza government is inexperienced, but it would be a mistake to think of it as a group of agitators picking fights with all and sundry. What it is actually doing is applying the “line” – in old-fashioned leftwing terms – by which it won power. To be specific, it is applying the “good euro” line claiming that the European monetary union, and indeed the EU, could be radically transformed from within. The leadership of Syriza has absolutely no intention of pulling Greece out of the EMU. Furthermore, it believes that the costs of “Grexit” would be so severe that Europe would not force Greece out of the common currency. On this basis it thinks that if a powerful alliance of leftwing forces emerged across Europe, the nightmare of austerity could be ended, the debt burden could be assuaged across the continent, policies to increase employment could be adopted, and the welfare state could be re-strengthened. Europe would be transformed.
It is no wonder that the actions of the Syriza government have generated an enormous groundswell of popular support in Greece. There is a palpable sense of relief and national pride among ordinary Greeks, a sense of recapturing some dignity after years of being treated appallingly. Other encouraging developments have been the powerful international voices speaking in support of Syriza, including that of President Obama.
There is a sense among ordinary Greeks of recapturing some dignity after years of being treated appallingly
However, the real test for the “good euro” will come only when Berlin and Angela Merkel begin to show their hand.
The harsh reality is that the EU has substantial leverage over Greece. The country has major debt repayments in the coming period, the largest due in early summer, which will be impossible to meet without fresh funding. The domestic programme of Syriza, moreover, remains insecurely funded, even if the government aims simply to achieve a balanced budget. Income tax has been falling, partly because of the extraordinary tax pressure imposed by the troika, and partly because of the disruption of the election. It will take a major and rapid reorganisation of tax collection to secure funding for the planned measures to relieve those worst hit by the crisis. And the banks continue to be absolutely dependent on liquidity provided by the ECB and are susceptible to deposit flight.
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The pressure on Syriza to water down its demands and comply with the core requirements of the bailout programme is likely to be ferocious. If the Syriza leadership is not to buckle under the strain it is vital that it should receive strong international support, including good, practical proposals on how to deal with the massive difficulties ahead. Further discussion is needed, for instance, on whether Greece should repay in full the part of its debt that is owed to the ECB and the IMF (roughly €70bn out of a total of €320bn). The legal and moral basis of that debt is well and truly open to dispute.
The “good euro” line is coming face to face with reality, and two things are of paramount importance: first, the forces of austerity currently strangling Europe should not be allowed to crush the Syriza experiment, or turn it into a moth-eaten compromise; second, Syriza should make solid and meticulous preparations for all eventualities, a point that is well understood by many within it. The rest is political chitter-chatter.