On Friday, February 20th Greece signed a joint statement with the Eurogroup of Finance Ministers which amounts to an abandonment of the programme on which Syriza won the election on January 25, as well as government policy statements made since then. What are the details of the deal?
The statement first of all makes it clear that what has been agreed is an extension of the bailout, not a new “bridging-loan” which is what Greek finance minister Varoufakis had been asking for. Furthermore, the statement adds that the “extension of the Master Financial Assistance Facility Agreement (MFFA)… is underpinned by a set of commitments”. In plain language the extension of the bailout comes with an acceptance of the Memorandum of Understanding.
The statement also makes it clear that the troika (IMF, European Central Bank and European Commission) will continue to review and approve, or otherwise, the policies of the Greek government. They are now called “the institutions” rather than the troika, but their powers remain in place.
This is a major climb-down on the part of the Greek government, which had won the election on the basis of rejection of the Memorandum and the troika. In several speeches to the Greek parliament, Alexis Tsipras had made it clear over and over again: “the troika is finished, the Memorandum is finished”.
And these major concessions are made in exchange for what? The Greek government gets a promise of disbursement “of the outstanding tranche of the current EFSF [European Financial Stability Fund] programme and the transfer of the 2014 SMP [Securities Markets Program] profits.” (The SMP profits are those made by the ECB by holding Greek bonds, that is, interest the Greek government has paid the ECB).
However, none of this money is going to be released until after the Greek government presents “a first list of reform measures, based on the current arrangement, by the end of Monday, February 23”. Furthermore, “The institutions will provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April."
In other words, the Greek government can present any proposals it wants, within the limits of the current agreement, but then the troika (“the institutions”) will decide whether the list is acceptable or not.
The agreement makes it clear that “only approval of the conclusion of the review… by the institutions will allow for any disbursement” of the money owed to Greece.
The statement also clearly specifies that the Greek government can take no action without permission from the troika: “The Greek authorities commit to refrain from any rollback of measures and unilateral changes to the policies and structural reforms”. Yes it is true, there is a clause that says that this only applies to measures “that would negatively impact fiscal targets, economic recovery or financial stability”, therefore affecting almost any substantial measure that the Greek government might want to take. But even here, whether measures taken by the government are covered by this clause or not will be “assessed by the institutions.”
This is yet another 180 degree turn from the stated policy of the Greek government. Earlier in the week, when proposing right-wing, New Democracy leading figure, Pavlopoulos as his candidate for president, Tsipras made a very clear statement that as of Friday, February 20, the government was going to put to parliament two bills to start to roll back the austerity measures of the referendum. One of them was the restoration of collective bargaining which had been abolished by the troika.
This act of defiance, which would have been met with enthusiasm by Greek workers, enraged the German capitalists. In a sharp reply to a letter from Varoufakis on Thursday, February 19, Schäuble demanded a whole series of things from the Greek government, including: “Third, Greece has to publicly confirm that it will refrain from unilateral national measures to roll back the current program. The authorities will with immediate effect not take any initiative or implement any measure or policy which is inconsistent with existing commitments under the current program or aggravate the fiscal situation. This includes refraining from announced labour market and social reforms to be voted in Parliament this week.”
This is the arrogance of German capitalists dictating policies to the Greek government, in reality a continuation of the undemocratic and humiliating imposition of brutal austerity measures on the backs of Greek working people which the troika has carried out in the last four years.
This is not all; the statement also contains the following pledge: “The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely.” Varoufakis had already abandoned the original idea contained in the Thessaloniki program that there was going to be some European debtors’ conference which would lead to a substantial write-off of the debt and a postponement of the rest. This is what the Thessaloniki program said: “Write-off the greater part of public debt’s nominal value so that it becomes sustainable in the context of a ‘European Debt Conference…’ Include a ‘growth clause’ in the repayment of the remaining part so that it is growth-financed and not budget-financed. Include a significant grace period (‘moratorium’) in debt servicing to save funds for growth.” This is now replaced by full and timely repayment!
Any progressive measure the Greek government wants to take will now have to be within the strict limits of fiscal targets which will be agreed by “the institutions”. This means that the Greek government, in the midst of a devastating economic recession, will have to fund any measure in favour of working people by either implementing cuts in other areas or raising revenue.
Varoufakis has hinted that these can be done by clamping down on tax evasion and petrol smuggling. There is no doubt that Greek capitalists are evading tax. What is more doubtful, however, is whether they can be forced into paying. The Greek oligarchs have already engaged in a campaign of sabotaging the democratically elected government of Syriza through systematic flight of capital and deposit withdrawals which they will now intensify. Their money is safely stashed in foreign bank accounts abroad.
Varoufakis has tried to explain that this statement contains some positive concessions which the Greek side has won. The main one is that the target for primary surpluses in the budget will be reviewed. But what does the statement actually say about this? “The Greek authorities have also committed to ensure the appropriate primary fiscal surpluses or financing proceeds required to guarantee debt sustainability in line with the November 2012 Eurogroup statement. The institutions will, for the 2015 primary surplus target, take the economic circumstances in 2015 into account.” In 2012, the Eurogroup already talked of postponing the target of a 4.5% primary budget surplus to 2016. All the statement adds is that the troika will decide on a different target. No figure is given, however. Certainly not the 1.5% hinted at by Varoufakis.
So, what does this statement mean?
First of all it clearly demonstrates that the democratic will of the Greek people, as expressed in the elections on January 25, is in direct contradiction with the interests of European capitalism. This is always the case in bourgeois democracy, where the people are allowed to vote for different parties, but the main decisions are always taken by a handful of unelected bankers and capitalists. In this case this has been expressed in the most brutal manner and in the shortest space of time possible. The reasonable and justified aspirations of the Greek people (restoration of the minimum wage level, collective bargaining rights, an end to privatisation, free energy for households which cannot afford to pay, etc.) cannot be fulfilled within the limits of capitalism in crisis.
British journalist Paul Mason put it succinctly when he asked Dijsselbloem at the press conference after the Eurogroup meeting: “What do you say to the Greek people, whose democracy you’ve just trashed.” In another statement Schäuble indirectly answers that question thus: “the Greeks certainly will have a difficult time to explain the deal to their voters.”
Secondly, it reveals the utopian character of the premise on which the Thessaloniki program rested, i.e. that the radical measures it contained could be achieved through a negotiation with the lenders. The Communist Tendency of Syriza and the International Marxist Tendency warned about this before the election. As we explained, the European capitalist class was not prepared to make any significant concessions to the Greek government. The only way to implement the concrete measures contained in the Thessaloniki program was to break with capitalism.
Thirdly, as well as an economic reason (the crisis of capitalism) there was an important political reason why the European ruling class was not prepared to make serious concessions to Syriza: the threat of a good example. Had the Greek government been allowed to implement the battery of measures it had announced, rolling back significant parts of the austerity program imposed by the troika over 4 years, then the people of Spain, Portugal, Ireland and beyond, would have demanded the same. This could have led rapidly to the downfall of the already unpopular right-wing governments in these countries. It would have also put the French and Italian governments under strong pressure to change their policies. This could not be allowed. As explained by several sources, Spain and Portugal were amongst the harshest during the negotiations in opposing any concession to Greece.
The agreement has already come under heavy criticism from within Syriza. The first to break ranks was Syriza MEP Manolis Glezos, a veteran of the resistance against the Nazis, who published a harsh statement: “Renaming the Troika into Institutions, the Memorandum of Understanding into Agreement and the lenders into partners, you do not change the previous situation any more than if you were to rename meat into fish.” He correctly explained that “the people voted in favour of what SYRIZA promised: to remove austerity, which is not the only strategy of the oligarchy of Germany and the other EU countries, but also the strategy of the Greek oligarchy. To remove the Memoranda and the Troika, to abolish all laws of austerity.” And he added: “Now a month has passed and the promises have not turned into practice. Pity, and pity, again. On my part, I APOLOGIZE to the Greek people because I have contributed to this illusion.”
Glezos did not limit himself to criticising the agreement but he made an appeal for Syriza members to organise opposition to it: “SYRIZA members, friends and supporters at all levels of organizations should decide in extraordinary meetings whether they accept this situation.”
In its statement against the agreement, the Communist Tendency of Syriza has also called for an emergency party congress to discuss the matter, as well as calling on Syriza MPs, particularly those from the left wing of the party, to vote against when it is discussed in Parliament.
Another Syriza MEP, Sofia Sakarofa, who was expelled from PASOK in 2010 for refusing to vote for the first bailout said: "The people gave us a mandate to end the Memorandum. We have no political legitimacy to do the opposite."
So far, however, the leading figures of Syriza’s Left Platform have not taken a clear position. As a matter of fact, they all voted for New Democracy Pavlopoulos as president of Greece, even though some voiced their disagreement. Only one Syriza MP, Ioanna Gaitani, refused to vote for him.
Some who oppose the agreement will ask themselves, what was the alternative? The agreement was signed under extraordinary pressure and blackmail. It is reported that the final straw was a report that the level of deposit withdrawals from the Greek banks had reached €1bn in one day. But, surely, it should not surprise anyone that the capitalists were going to sabotage the actions of the Greek government. It was to be expected that the European capitalists were not going to make concessions to the Greek government simply on the basis of reasonable argument. Did the Syriza leadership not have a plan B?
From the beginning the Communist Tendency of Syriza warned of this and argued that the only way to wage this battle was by taking decisive defensive and preventive actions against the capitalists: capital controls, nationalisation of the banks and financial institutions, expropriation of the oligarchy, repudiation of the debt. Even from the point of view of those who argued that concessions could be wrested through tough negotiations, surely one can understand that if you go to the bargaining talks disarmed you are not going to get anything. On the contrary, from day one, Varoufakis has been making more and more concessions. The agreement on February 20 is the logical conclusion of the whole strategy of the Syriza leadership.
There was an alternative, yes, but it implied breaking with the logic of capitalism and mobilising the working people of Greece and the rest of Europe. No one can say that this was not possible. The first statements of the government, which were seen as a radical and uncompromising rejection of the Memorandum, the troika and austerity were met with overwhelming support.
In the opinion polls Syriza jumped from the 36% it won in the election to 45%, while New Democracy collapsed from 27 down to 18%. When asked if they supported the government’s stance in the negotiations, a massive 81% said yes. This was the basis for taking bold measures against capitalism, explaining to the population that faced with unsurmountable opposition from the troika, this was the only way forward.
As it became ever clearer during each round of the “negotiations” that the Greek government was making more and more concessions, the mood started to change to a more critical one. The masses wanted the government to adopt a firm stand, but instead they have seen backsliding all along the line. This is where the “realistic” approach of Varoufakis and co leads. They thought they were being clever; instead what we have is a Left government bending to the pressures of European finance capital.
It is still not too late. Syriza rank and file members must organise opposition to this agreement. The Left Platform has a particular responsibility in this. The way forward is to break with the troika, cancel the debt, implement the anti-Memorandum measures of the Thessaloniki programme in their entirety, and appeal to the workers of Greece to mobilise behind these measures. European workers are watching attentively what is happening in Greece and they would also respond. Either this the ground will be prepared for the eventual strengthening of the right-wing reactionary forces in Greece.