Greece on the Edge

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Greece on the Edge

Prime Minister Alexis Tsipras on election night, January 25, 2015, in Athens. (Photo: Joshua Tartakovsky)

Syriza, particularly Finance Minister Yannis Varoufakis and Prime Minister Alexis Tsipras, has been playing a long game since the election. It has tried hard to please Germany and the Eurogroup while not compromising on its key principle: namely ending austerity which entailed the continued privatization of public assets and cutting of government social programs at a time when a third of the population is in dire poverty.

In the meeting held between the Greek and German finance ministers,  Varoufakis and Schäuble, the differences between the two positions were crystal clear.  Varoufakis was speaking about his deep respect for Germany and the rich historical cultural heritage it provides. At the same time, he warned that just as in German history in the 1930s, difficult economic times and deep recession means that fascism is on the rise in Greece. “When I return home tonight,” said Varoufakis,  “I will find a country where the third-largest party is not a neo-nazi party, but a nazi party.”  Varoufakis was referring to the Nazi party Golden Dawn which has been growing in popularity, is highly supported by at least 50% of the anti-terrorist police squads, and whose members have called for and carried out the killing of immigrants.

The message was clear: precisely since Varoufakis respected Germany’s immense cultural contributions and the fact that it developed a new society following the fascist era, Varoufakis wanted Germans to realize that with the current austerity in place, and 26% of unemployment among adults, the danger of the rise of fascism is not a wild fantasy but a very realistic possibility. He did not seek to play on German guilt but to gain an understanding and sympathy for his own country’s predicament and an appreciation of the dangers posed in the current economic conditions.

Varoufakis’ call fell, to a large part, on deaf ears. While Leftist Party Die Linke and dedicated German solidarity volunteers have been advocating for Merkel to realize Greece’s immense predicament and offer a debt reduction, an end to austerity and stimulation of the economy to create demand, the mainstream German media has castigated the Greeks as lazy, irresponsible and as ones who are “playing games” by evading their financial obligations. Varoufakis’ genuine plea has not been fully covered in the German media.  An article in Der Spiegel for example, did not name “Nazis” or “Golden Dawn” but mentioned only that Varoufakis spoke about an obscure “humiliation” in the 1930s and the present. The important linkage between economic depravity and the rise of fascism was overlooked.  Therefore, Varoufakis’ risky move of touching on a taboo subject for the sake of eliciting deeper understanding, has utterly failed.

In recent weeks, the Greek government has gone to great lengths to reach a compromise with the Eurogroup. Prime Minister Alexis Tsipras visited several European capitals with the hope of gaining support, but the the European Central Bank last week, however, announced that it would no longer accept Greek debt as a collateral for liquidity. The move has placed Greece under immense pressure as new money borrowed will now be under a much higher interest rate.

The negotiations between Greece and the Eurogroup can be rightly characterized by distrust, suspicion and a conversation between deaf people who were deprived of learning sign language.  Greece said it would agree to 70% of the memorandum, but that it would not agree to the neoliberal demand to have a balance surplus at 4.5% which would mean that it could not provide social services to its impoverished population. As an alternative, it suggested a 1.5% surplus instead. Germany demanded a continuation of the current austerity plan while Greece asked for an interim agreement loan of 4-6 months, during which time a a new plan could be negotiated. The German media has, for the most part, presented Greece as seeking to avoid its commitments, while failing to acknowledge that austerity has not only resulted in difficulties for the majority of citizens but has stifled growth and suffocated the overall economy. Eurogroup Chief Jeroen Dijsselbloem kept talking about how Greece must “move forward with the current programme” while overlooking the realities.

In recent negotiations, tricks were played. Varoufakis was presented by EU Commissioner Moscovici a document to sign which stated that a loan extension will be provided for an interim period, after which the major issues will be discussed and solved.  Dijsselbloem, however, presented Varoufakis with a different document which called for the continued implementation of the current memorandum. Varoufakis refused to sign.  An EU source denied Varoufakis’ version of events.  The Wall Street Journal failed to mention that Varoufakis was given a different document. He was instead portrayed as stubborn and inflexible, if not a trickster.

Since elected, Syriza has gone to great lengths to build bipartisan support within the country and unite the people. Rather than seeking to practice vengeful and narrow policies to further its own interests, and following the historical moment in which the Left has finally gained power, Syriza formed a coalition with the right-wing Independent Greeks, much to the ire of its supporters. Yesterday, Tsipras nominated Prokopis Pavlopoulos , a right-wing former minister of New Democracy, for the position of the President of Greece. This nomination was successfully passed in parliament.  At the same time, Tsipras presented the issue of negotiating with the Eurogroup not as a question of radical socialist politics but as an attempt to restore national dignity and correct historical injustices, including the forced loan made interest-free of the Greek National Bank by the German occupying forces which was never repaid.

Tsipras has managed to unite the people behind him, even if he is increasingly antagonizing his base at Syriza. Polls revealed that if elections were to be carried out now, Syriza would win 45.4% rather than 36.34% it did in the recent elections. Well-attended recent rallies in support of the government were held in Syntagma Square in Athens, a unique  phenomenon in a country where people tend to gather opposing, rather than supporting, the government. Syriza succeeded in gaining  a united front against austerity. The people appear to be roundly supporting the Greek government in the ongoing negotiations with the Eurogroup.

However, time is running short and the space for maneuvering is becoming rather limited. The European Central Bank recently decided to give Greece another emergency credit line as it is running out of funds, but this is the last sum available in the former agreement. It is not a new gift. Time is running short as by the end of the month agreements must be reached and interest payment must be made.

On February 18, Varoufakis made several major concessions which reveals that he may be bending under pressure. In his letter asking for a loan extension, he committed to refrain from taking “unilateral actions” by the government “which would undermine the fiscal targets” laid out by the Troika. This would mean that the Greek Government would not be able to implement the generous social programs which it promised to enact since then it would not meet the balance surplus demanded by the Eurogroup.  Furthermore, Varoufakis conceded to the Troika’s supervision during the interim period, while earlier Tsipras said Greece will no longer take orders from the Troika.  Despite these major concessions, the request for a loan was rejected by Germany.  The fact that Germany ruled out the request even before the Eurogroup has convened on the issue, exposes its dominance of the Eurozone.

The line taken by many in the Eurogroup has been to dismiss Greece at every opportunity, not to honestly acknowledge its dire economic situation but to demand instead that Greece will abide by its agreements and continue on its path of self-destruction. Germany reasons, probably rightly from its vantage point, that if it concedes to the anti-austerity demands made by Greece, Spain, Ireland and Italy may follow, asking for debt restructuring of their own.  According to journalist Paul Mason, the Spanish prime minister has been particularly outspoken against submitting to Greek demands. Many observers suggest this is due to his fear of the rising anti-austerity Podemos party. In addition, the Greek government has been portrayed as an irrational actor with some in Berlin even calling for Varouakis’ replacement

However, with its arrogant behavior and constant rejections, the Eurogroup risks the possibility that Greece will exit the Euro. Perhaps some believe that Greece will not have the audacity to leave and that it can be coerced to accept unfavorable conditions to avoid what has been called the Grexit – an increasingly possible scenario.  On Friday, another Eurogroup meeting is being held, but time is running short.  Greece will come under immense pressure as its monetary reserves will probably be cut off if an agreement is not reached.

The time to test Syriza’s resolve has come. Cyprus surrendered following a threat by the IMF to cut it short of funds. Now Greece will be faced with this and worse. Will the sacrifices made by Syriza in order to gain popular mobilization hold ground and pay off, or will Greece surrender its sovereignty, be bought-out and submit as an obedient  "debt colony," if to borrow the words of Varoufakis?

So far, Greece has refused to continue with the austerity program and has attempted to please the Troika and make ways into Germany’s heart.  However,  it is showing signs of gradually giving in. In other circumstances, Syriza’s politicians may have been co-opted but this time, if they do, they will face immense public anger. If Greece surrenders to the Eurogroup’s demands and continues with the current austerity program, it will fail to deliver on its election promises and will likely encounter the wrath of the public at home.  The citizens of Greece need to see an immediate improvement in their economic conditions. If their situation remains the same, Syriza’s days could be numbered. No genuine economic growth that will affect society for the better is possible under austerity. In a next round of elections, it's possible Syriza could be replaced by Golden Dawn, with some speculating it would form a unity government with the New Democracy party. Therefore, it is fair to assume Syriza will not surrender, not because it does not want to but because it cannot.

The chances that the Eurogroup will provide Greece with a solution of dignity, rather than a miniscule step below or above its existing poverty, remain slim. So far, the Eurogroup led by Germany has treated Greece as an irresponsible adolescent whose gestures and pleas are to be rejected while leaving no room for considerable concessions.  Germany has wisely chosen the policy of postponement, hoping Greece will get tired and other countries will not be encouraged by the Greek example.

The possibility of exiting the Euro has in recent days appeared increasingly reasonable. Greece stands a far better chance of salvaging its economy by exiting the Euro, defaulting on its debt, and seeking new loans from the BRICS, particularly Russia and China.  Developing a new economic model and providing social programs free from the constraints of the Eurogroup may yet prove itself as the best chance Syriza has to remain in power.  The coming days and months will reveal how capable Syriza remains to deliver on its promises.  The possibility that Greece be sacrificed on the altar of austerity appears more and more likely, therefore making the option of a Grexit no longer a wild fantasy.  Either way, decision time has come.

Joshua Tartakovsky

Joshua Tartakovsky is a journalist living in Greece.

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