Explosion in Greece as Simitis Tows the Blair line

Events in Greece are especially relevant to the British Labour Movement because right wing PASOK (Socialist Party) leader Simitis is pursuing similar policies to those of Tony Blair and so-called "New Labour." This has led to an explosion of anger, not only on the streets, but in the trade unions and in PASOK itself. The PASOK union leaders were pro-Simitis one year ago, but now they have been forced into semi-opposition. Under pressure from below, they called a one-day general strike on April the 8th. Alan Woods reports.

Workers out in general strike

"They are transforming work (at Olympic Airways) into slavery. We believe that Olympic employees and workers will not become slaves." With these words, Manolis Patestos, leader of the main union at Olympic Airlines, summed up the reaction of the workers to the vicious package of cuts announced by the government of Kostas Simitis in the wake of the devaluation of the drachma in March.

Events in Greece are especially relevant to the British Labour Movement because right wing PASOK (Socialist Party) leader Simitis is pursuing similar policies to those of Tony Blair and so-called "New Labour." Previous PASOK governments under the late Andreas Papandreou pursued a cautiously reformist line which made important concessions to the Greek workers and peasants. This was possible because of the boom in world capitalism in the 1980s and generous hand-outs from the EU. But now all has changed.

Within the general crisis of world capitalism, Greek capitalism is one of the weak links. Although it is not the backward agricultural economy of the past (60% of the population now lives in cities), Greece still lags far behind the rest of the EU. Yet Simitis remains firmly wedded to the idea of joining EMU. This "moderniser" has enthusiastically embraced the Maastricht conditions, which act as a justification for a savage policy of cuts and austerity. At the heart of this was the so-called "strong drachma" policy.

The drachma was held at an unrealistically high rate in an attempt to combat inflation. But this policy (like the "strong pound" here) had a devastating effect on Greek industry and agriculture. Although Greece came out of recession in 1994, the economy has been crawling along. Officially GDP (gross domestic product) grew by 3.9% in 1996, but in fact there was hardly any growth in industry and agricultural production actually fell. This meant that unemployment has stuck at around 12%. Tourism was also down by 0.5% in the last two years—a sure sign that the spending power of the workers and middle class in Europe was not what it was. Other economic indices were no better. The level of public debt—at 112% of GDP—is among the highest in Europe.

Inflation

The one area where Simitis could boast of success was inflation which had been brought down to a "mere" 4.5%. This earned Simitis the (muted) plaudits of international big business. But even this success was very relative. If we bear in mind that the (official) average rate of inflation in the EU is 1.6%, the weakness of the Greek economy becomes glaring. And now the "strong drachma" lies in ruins. Realising the weakness of the Greek economy, the financial markets launched an attack against the drachma, beginning last Autumn. At a meeting in Athens in November, I predicted that this would inevitably lead to devaluation, despite all Simitis' denials. Now this has been borne out. The drachma has been devalued by 14%.

Simitis and his friends tried to put on a bold face. It was, they said, all part of a plan, not a defeat at all! Then why did they spend $70 billion to defend the drachma? The measure was taken reluctantly and under pressure from the "markets" (i.e. the big banks and monopolies) which once again showed their power to undermine the policies of elected governments. In order to cover his bare backside, Simitis hastened to reassure people that it was only a "small" devaluation which would not reduce living standards and would mean, at most, a price increase of about 2%. Where Simitis got his figures from, no-one knows. But the very next day, the TV announced that prices of basic products were being put up by huge amounts, sometimes even double. There were angry scenes in supermarkets as Greek housewives saw what they were being asked to pay. Simultaneously, old age pensioners were demonstrating in the streets of Athens. Yet the stock exchange was booming, registering the support of big business for Simitis—at least for now.

The government, egged on by big business and its friends in Brussels, hastened to stick the boot in, announing further privatisations. The attack on the workers of Olympic Airlines is only part of a general strategy. Simitis is blindly pursuing an agenda worked out by these elements, who wish to take back all the gains made by the Greek workers in the past period. As Athens News (21/3/98) put it: "The devaluation of the drachma is expected to lead to a spike in inflation. Officials have said keeping public sector wage awards down will be the key to making sure the rise is only temporary." In other words, the meaning of the devaluation is an attack on living standards, allowing prices to rise, but holding wages down. Indeed, this is the only purpose of the operation from the bosses' point of view.

This has led to an explosion of anger, not only on the streets, but in the trade unions and in PASOK itself. The PASOK union leaders were pro-Simitis one year ago, but now they have been forced into semi-opposition. Under pressure from below, they called a one-day general strike on April the 8th. Even before this there were a spate of strikes and walk-outs. The explosive mood on the shop floor and in society has placed class struggle firmly back on the agenda in Greece.