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alexis tsipras
With Spanish Election Results, Anti-Austerity Fever Spreads Across Europe
This means Rajoy will have to form a coalition or minority government with the Socialist party, which won 91 seats, or newcomers Podemos and Ciudadanos, which secured 69 and 40 seats respectively. Any of these results could see progressive policies breaking austerity's stranglehold on the country, where the Popular Party government has been pursuing harsh budget cuts and tax increases.
Podemos leader Pablo Iglesias--who formed the party in January 2014 with a group of fellow leftist university lecturers, inspired by the grassroots protest movement Los Indignados--hailed the birth of "a new Spain."
Addressing supporters in Madrid late Sunday night, Iglesias added: "Spain is not going to be the same again, and we're happy. Our fight against corruption goes ahead."
Meanwhile, Socialist party leader Pedro Sanchez said the results prove voters want a change in political direction, telling a crowd early Monday that "Spain wants a move to the left."
And Greek Prime Minister Alexis Tsipras and his former finance minister Yanis Varoufakis, whose Syriza party is allied with Podemos, went further than that, heralding the election results on social media as evidence of growing opposition to austerity policies that have swept the European continent.
As Reuters pointed out on Monday, the "outcome was reminiscent of a similar situation in neighboring Portugal, where the incumbent conservatives won an October election but a socialist government backed by far left parties was ultimately sworn in."
Austerity has now been politically defeated in #Spain, as well. Parties seeking to serve society made a strong showing #20D
-- Alexis Tsipras (@tsipras_eu) December 21, 2015
According to the Associated Press:
Under the constitution, King Felipe VI will invite a party leader--normally from the party with the most votes--to form a government. The nominee must garner a majority of deputies' votes in Parliament in a first round to take office, or the most votes in the second round.
Deputies take their seats by Jan. 13 but there is no time limit on staging the first vote. If the candidate is not immediately successful, Parliament has two months to elect a prime minister or call a new election.
Among several potential outcomes is a coalition government helmed by Socialist leader Sanchez.
As Guardian correspondent Giles Tremlett writes on Monday: "A Podemos-backed Sanchez government would open a new anti-austerity breach on Europe's southern flank, as Spaniards reject a new economic model based on low wages and extreme job instability. Unemployment is still 21% in Spain, and the country's economy is smaller than it was in 2008. A vote for Podemos was also, in a confused and erratic European Union, a vote for increased sovereignty."
Or as the Guardian's Owen Jones wrote in advance of the election, "This election matters--not just for Spain, but for Europe too."
How Greece's Creditors Trounced Syriza
Syriza's victory produced a collective sigh of relief. The old political dynasties of PASOK and New Democracy, Greece's ruling parties that had racked up enormous debt over 40 years of entrenched corruption and economic mismanagement on a grand scale, had finally fallen. Syntagma Square, the nerve center of anti-austerity protests since 2010, now opened up for celebrations.
Yet come mid-summer, Tspiras himself was ramming through a new bundle of pension cuts, sales tax hikes, labor regulation rollbacks, and privatization schemes every bit as austere as the ones he'd run against. Greece's European creditors had given him no choice, he lamented, but to begrudgingly implement a slate of measures "I don't believe in."
Tsipras may have accepted the role begrudgingly, but he played it convincingly. He effectively transformed Syriza into a pro-austerity party, purging dissenting ministers from his cabinet as the party's left flank bolted the bloc. Having lost his parliamentary majority, he then announced new elections to bolster his hold on power, launching a campaign urging the Greek people to vote for Syriza as a pro-memorandum party free from the insitutionalized corruption of previous governments. The move elicited anger, widespread disappointment, and disillusionment. Twenty-nine Syriza legislators abandoned the party to form the rival Popular Unity party.
Greeks will go to the polls again on September 20, with the country as mired as ever in economic and political turmoil. How did it come to this?
It's worth recalling what it was that Syriza once ran against.
The hope invested in the party came after five long years in which New Democracy and PASOK effectively defaulted on the people, shifting the responsibility for 240 billion euros in debt by private investors and banks onto the public.
The loans the old ruling parties requested from Greece's "troika" of creditors -- the International Monetary Fund, the European Central Bank, and the European Commission -- to pay that debt came at a steep political and economic cost: Unelected technocrats in the EU's headquarters in Brussels drew up some 143 memoranda laws, with thousands of attached articles, which were enacted by legislative decree or rammed through parliament under suffocating, creditor-imposed timetables.
The combination of deep wage and pension cuts, sweeping public sector lay-offs, and regressive taxes -- alongside the decimation of the country's public health and education budgets -- shrank the Greek economy by 25 percent, pushing it from a recession into a full blown depression. It triggered the largest drop in living standards since the end of World War II.
By 2013, over 44 percent of the Greek population had an income below the poverty line. National unemployment rocketed from around 7 percent in May 2008 to over 25 percent in February 2015. Youth unemployment rose even higher, hitting 50 percent last February even after tens of thousands of young people emigrated.
Since 2010, public sector wages have been slashed by nearly half, private sector employment has collapsed, and pensions have been cut by 44 percent. Whole extended families are being supported by one grandparent's 400-euro monthly pension, or one worker's monthly minimum wage of 520 euros. Child poverty has nearly doubled to 40 percent -- the highest rate in the developed world.
Small businesses and the self-employed were also hit hard. "Business is bad and I am barely hanging on," says 47-year-old Yiannis Skarakis, who runs a digital products and services business. "Taxes have increased significantly with the austerity measures. I always pay what I can, but if it's a choice between paying taxes and feeding my children, I choose to put food on the table."
On the other hand, the austerity program is working very well for the creditors, who have a huge profit incentive in maintaining the debt status quo.
According to the Jubilee debt relief campaign's latest analysis, "the European Central Bank and its member national central banks are on track to make between EUR10 billion and EUR22 billion of profit out of lending to Greece, if Greece pays its debts in full."
"The European Central Bank has acted exactly like a vulture fund," adds Jubilee economist Tim Jones, "buying up debts cheaply during the crisis, refusing to take part in a necessary restructuring of the debt, and demanding to be repaid at a large profit."
War
Almost immediately after taking power, Syriza plunged into an asymmetrical war with Greece's creditors and their neoliberal economic model. The loan terms, party leaders said, had to be renegotiated in light of Syriza's democratic mandate to ease austerity within the Eurozone.
But the creditors were indifferent to Syriza's political arguments. And besides, the European Central Bank had a trump card: cash flow.
Greece has been unable to borrow from the markets since 2009, and without loan financing since August 2014. On February 4, shortly after Syriza took power, the European Central Bank stopped accepting Greek bonds as collateral, replacing its normal funding operations with a drip-feed of weekly approved emergency liquidity assistance. It also capped Greece's treasury bills at 9 billion euros, down from the normal 16 billion, and excluded Greece from the trillion-euro quantitative easing program for southern European countries.
The result was a full-blown liquidity crisis. The Greek government had to scramble to fund its daily operations even as it tried to renegotiate the devastating terms of previous bailouts.
Increasingly desperate to avoid default as the negotiations dragged on, the government started draining public coffers, including national health insurance and pension funds, to pay public sector salaries and service debt. In an extraordinary move, the prime minister issued a legislative decree in April to municipal governments and public entities, including hospitals and schools, to transfer their cash reserves to the Central Bank of Greece.
This was not popular, and the consequences were severe.
"The public hospitals are in dire crisis," explains Dimitris Sildiris, who owns a restaurant south of Athens. "My 83-year-old mother was recently admitted to Agios Pavlos hospital in Thessaloniki for kidney dialysis. They don't have basic supplies like medicines, bandages, bed linen, even toilet paper, and the patients' relatives have to fill the gap. Hospitals are even boiling hypodermic needles for re-use. This is explicitly forbidden and doesn't happen anywhere, not even in Africa! The fact that Syriza drew on hospital cash reserves to pay the debt is unforgivable."
Referendum
Tsipras went into office vowing to break the austerity chokehold Greece's creditors had placed the country in. But he also needed cash, and the troika insisted that Athens could only receive fresh loans if it committed to the austerity program.
Looking to break the stalemate, Tsipras announced a referendum for July 5, calling on voters to reject the creditors' proposal for further austerity measures in exchange for loan financing to Athens.
What followed can only be described as blatant political interference by European politicians and bureaucrats. They immediately framed the referendum as a vote on Greece's Eurozone membership, openly campaigning for both a Yes vote and the overthrow of the Syriza government.
But they didn't just campaign. When the referendum was announced, the European Central Bank tightened liquidity to the Greek banking system yet again, prompting the government to impose capital controls to prevent a months-long bank jog from becoming a bank run.
ATM cash withdrawals were limited to 60 euros per day. Retirees -- many of whom had become sole breadwinners for their families -- had to queue outside Bank of Greece branches on July 1 to withdraw just 120 euros of their monthly pension, without knowing when the remainder would be available.
Meanwhile, Greece's oligarch-owned corporate media aggressively spun a false narrative of a panicked public and widespread social unrest. Discredited former prime ministers went on TV to advocate a Yes vote as stations ran file footage presenting Turkish victims of the 1999 earthquake and account holders in the 2012 Cyprus banking crisis as distressed Greek pensioners.
Yet the resistance to austerity persisted. A June 29 rally for a No vote proved particularly extraordinary, not only for the sheer numbers and diversity of the crowd -- from toddlers to grandparents -- but because exactly four years earlier, over 100,000 people had gathered in the same spot to protest the first troika austerity measures. The second No rally held on July 3 was even bigger. At both rallies, the atmosphere in the jam-packed crowd was electric. Greeks had overcome fear. A new mood of defiance, empowerment, and celebration prevailed.
The result? An emphatic victory for the No side, with over 61 percent of Greeks voting to support their government's stance against the creditors.
Defeat
It was a triumphant moment, but it wasn't to last.
Tsipras took the referendum result to the Eurozone summit on Saturday, July 11 to strengthen Greece's hand in the negotiations, even as the ECB threatened to cut its lifeline to Greek banks without an agreement by Sunday night.
After a gruelling weekend of talks, Tsipras was presented with an ultimatum: Greece would either remain an indebted ward of Germany, the dominant Eurozone country, or face a disorderly exit from the Eurozone and the total collapse of the Greek banking system. After 17 hours of all-night talks, Tsipras signed the "agreement" shortly after dawn on Monday, albeit with a proverbial gun to his head.
Thus Greece ceded its sovereignty to its creditors, who now hold legislative and executive power in Greece. Germany now essentially controls Greece's finances and its banks -- and even has the power to veto Greek laws, since draft laws must be submitted for approval to creditors.
The business of the Greek parliament was reduced to rubber-stamping hundreds of new austerity laws that will gouge 12 billion euros from the depressed economy. It was these laws that Tsipras was charged with ushering through Athens, alienating and purging many of his own MPs and Central Commitee members in the process.
One particularly egregious set of provisions in the new memorandum marks 50 billion euros of Greek state assets -- from regional airports servicing busy tourist destinations (already snapped up by the German government firm Frapport) to utility companies and islands -- for transfer to a privatization fund under creditor control. An added clause prevents their future re-purchase, depriving Greece of strategic income-producing national assets.
It was an unambiguous defeat. They "crucified Tsipras in there" a Eurozone official attending the summit told the Financial Times.
Resilience
In Greece, reactions have been mixed. Many view Tsipras' capitulation as unavoidable under the circumstances, and they respect Syriza for fighting in Greece's corner until the bitter end.
Others say the ultimatum didn't occur in a vacuum. Both Tsipras and then-Finance Minister Yanis Varoufakis, critics counter, accepted most of the austerity measures at the start of negotiations, focusing instead on easing the rest while keeping Greece in the Eurozone. Crucially, they never questioned the legitimacy of the debt itself, despite the findings of the Preliminary Report of the Truth Committee on Public Debt, which concluded that the majority of Greek debt is illegal, odious, and unsustainable. And, they say, the Syriza leaders improvised their way through months of negotiations, draining the public coffers to service the debt while refusing to seriously prepare for a Eurozone exit should Germany's position prove intractable -- as it has been for five years. That effectively deprived Greece of its only real leverage in the negotiations, and left Greece at the mercy of the European Central Bank.
These critics see Tsipras more like Judas the betrayer than Christ the crucified. They lament that the Euro Summit "agreement" is far more extreme than the program Greek voters rejected on July 5. And they ask why Tsipras called a referendum if he wasn't prepared to honor the result.
"What does Tsipras think he's doing?" asks 29-year-old Ourania Tzavara, a bartender from Athens. "We voted no!"
"We do not have the right to turn the people's no into a yes," added former parliament speaker and Syriza MP Zoe Konstantopoulou, who will stand as an independent on September 20. "We have a duty to honor their verdict."
Exhausted by an 8-month-old government that brought a new memorandum instead of a new anti-austerity era -- and weary of frequent elections and governments that don't represent them -- a quarter of Greek voters polled in late August were undecided. By mid-September, Syriza and New Democracy -- the latter revived with a new leader from the old guard -- are both polling at around 27 percent. Some say they won't be voting, because regardless of who's in power, the outcome seems to be the same.
Yet Greeks remain determined to stop their free-fall into poverty, halt the mass exodus of their youth, and reclaim their future. "It's a huge blow but we have to re-group and keep going," says Irini Katsou, who co-owns the Athens restaurant with Sildiris. "Just because Tsipras surrendered doesn't mean that we have to."
Reports: Greek Prime Minister To Resign, Announce Snap Elections
Though a call for snap elections was ultimately expected, many assumed they would not be held until after a confidence vote in Parliament. Tsipras' preemptive resignation was not widely foreseen, though the ruling government is compelled to give over power once the election is officially announced. Media outlets report that Tsipras will address the nation tonight to make his resignation official and make clear his reasons for doing so.
According to the Guardian:
Once he submits his resignation the prime minister would be replaced by the president of Greece's supreme court, Vassiliki Thanou-Christophilou - a vocal bailout opponent - who would oversee the elections as the head of a transitional government.
Tsipras won parliamentary backing for the tough bailout programme last week by a comfortable margin despite a large-scale rebellion among members of his ruling leftwing Syriza party, nearly one-third of whose 149 MPs either voted against the deal or abstained. Syriza governs in a coalition with the rightwing, anti-austerity party Independent Greeks (Anel).
The revolt by hardliners angry at what they view as a betrayal of the party's pledge to fight austerity left Tsipras short of the 120 votes he would need - two-fifths of the 300-seat assembly - to survive a censure motion and he was widely expected to call a confidence vote this week or next.
He has now decided to skip that step, deciding instead to go straight to the country in an attempt to silence rebels and shore up public support for the draconian three-year bailout programme, which entails a radical overhaul of the Greek economy including further tax hikes, spending cuts and major reforms of health, welfare, pensions and taxation.
Tsipras appears to have calculated that it was better to call the elections early, before the effects of the new bailout measures - including further pension cuts, VAT increases and a "solidarity" tax on incomes - started to make themselves felt.
Describing the announcement of new elections as a potential opportunity for the Greek people, Mark Weisbrot, co-director of the Center for Economic & Policy Research, said it is not too late for the nation to consider an orderly exit (or "Grexit") from the Eurozone as a viable alternative to further foreign debt bondage and imposed austerity.
" European Union officials have already said that, under the new agreement, the Greek economy will remain in depression for this year and next," Weisbrot said. The most recent bailout package, he continued, "is not for the Greek people - this is the Greek people being thrown overboard."
Many people in Greece, including Tsipras, have accepted the "continued punishment" from foreign creditors because they think the alternative would be worse, explained Weisbrot. "But," he said, "it is unlikely that Greece would remain in depression for longer than what is forecast for the current program, if the country were to issue its own currency. And it could avoid some of the worst 'reforms' that the European authorities are demanding."
The coming economic downturn in Greece, Weisbrot predicted, "will be one of the worst depressions in modern times."
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Germany Profits from Greeks' Hardships
As Greeks suffer in multiple ways the effects of the economic crisis their country is going through, Germany has profited handsomely from the Greek crisis. This is a conclusion of research carried out by the Halle Institute for Economic Research (IWH). The study shows that the Greek debt crisis resulted in a reduction in German bund rates of about 300 basis points (BP). This led to interest savings of more than EUR 100 billion (equivalent to more than 3 percent of gross domestic product (GDP) during the period 2010 to 2015.
According to the study, Germany would still benefit if Greece defaults on all its debt. The savings would still be substantial if Greece does pay or pays at least in part. This is the result of investors' increased demand for German bonds because of the greater safety they provide. Many investors would lend money to the German government at extremely low rates rather than risk losses on higher return enterprises.
Greece missed two key payments to the International Monetary Fund (IMF) in June and July, and the terms for a third bailout need to be reached by August 20. On that date, Greece next debt repayment to the European Central Bank is due. Although Greek officials were optimistic about the results of the negotiations, German officials were more cautious. Steffen Seibert, Chancellor Angela Merkel's spokesman, said that "thoroughness comes before speed".
After Contentious All-Nighter, Greece Bailout Approval Spurs Rebellion
"I do not regret my decision to compromise," Tsipras said as he defended the deal in parliament. "We undertook the responsibility to stay alive over choosing suicide." He admitted to lawmakers the deal was no triumph, "but we are also not mourning over this difficult agreement. I have my conscience clear that it is the best we could achieve under the current balance of power in Europe, under conditions of economic and financial asphyxiation imposed upon us."
The bailout bill, which Greek Finance Minister Euclid Tsakalotos described during the all-night session as "a tough agreement, with many thorns," passed by a comfortable majority. The government needed the bill to pass in time for Tsakalotos to head to Brussels to meet his Eurozone counterparts, who will decide later Friday whether to approve the draft agreement.
"But the vote laid bare the depth of anger within Tsipras's leftist Syriza party at austerity measures in exchange for 85 billion euros in aid," Reuters reports, "as 43 lawmakers--or nearly a third of Syriza deputies--voted against or abstained."
Former Finance Minister Yanis Varoufakis was among the Syriza members to vote against the deal. Earlier this week, he said: "Ask anyone who knows anything about Greece's finances and they will tell you this deal is not going to work."
Meanwhile, a statement signed by more than a dozen Syriza dissenters is calling for people across Greece to mobilize and form a "united movement" for democracy and social justice. The bailout deal, they say, "reverses the Greek people's mandate that went against neoliberal policies on the July 5 referendum."
By a 62 percent majority, the Greek people on July 5 rejected a bailout offer from foreign creditors that would have imposed further austerity and economic hardship. The bailout deal approved by the Greek Parliament on Friday is considered even harsher than the one that was on the table in July.
"We need to continue on the path of July 5 until the end, until we overthrow the bailout policies, with an alternative plan for the next day, for a democratic Greece, reconstructed and socially just," the statement reads. "We call for the creation of a nationwide movement, by establishing committees against the new Memorandum, austerity and the country's new guardianship."
It is being widely reported that approval of the bailout, and the resulting rebellion, will likely force a confidence vote that could pave the way for early elections.
As Reuters explains:
[T]he vote left the government with support from within its own coalition below the threshold of 120 votes in the 300-seat chamber, the minimum needed to command a majority and survive a confidence vote if others abstain.
In response, government officials said Tsipras was expected to call a confidence vote in parliament after Greece makes a debt payment to the European Central Bank on Aug. 20--a move that could trigger the government's collapse and snap elections.
A senior lawmaker, Makis Voridis, from the opposition New Democracy party said his party would vote against Tsipras's coalition, raising the odds it would be toppled.
Still, some of those who rebelled against Tsipras on Friday could still opt to support the government in a confidence vote, as could other pro-European parties like the centrist Potami and the center-left PASOK, leaving unclear the final outcome.
The Guardian is live-blogging the Eurogroup's Friday meeting in Brussels.
Follow the developments on Twitter:
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