The extent of the concessions forced on Greece by the troika

The letter from the Greek government to the Eurogroup detailing the measures it is committing itself to implement as part of the agreement reached on Friday, reveals the extent of the retreat from Syriza’s programme. This has caused an uproar of opposition within the party.

The letter, sent in extremis on Monday, February 23, in the evening by Varoufakis, makes fundamental concessions on key aspects of Syriza’s Thessaloniki programme on which it stood and won the January 25 election. These include, amongst others, privatisations, collective bargaining and the minimum wage. The text of the letter reveals how small the room for manoeuvre is to implement even the measures aimed at providing immediate relief for the humanitarian crisis hundreds of thousands of Greeks are facing.

Let’s look at some of the details. In relation to public spending it opens the way for cuts with the following formulation: “Review and control spending in every area of government spending (e.g. education, defence, transport, local government, social benefits) – Identify cost saving measures through a thorough spending review of every Ministry and rationalisation of non-salary and non-pension expenditures.”

In relation to privatisation, Syriza had committed itself to stop al privatisations. Now the text says that no completed processes of privatisation will be rolled back: “To attract investment in key sectors and utilize the state’s assets efficiently, the Greek authorities will commit not to roll back privatizations that have been completed.” Privatisations which have already started will be completed: “Where the tender process has been launched the government will respect the process, according to the law.”

Finally, and more importantly, it leaves the door open for new privatisations when it says: “Review privatizations that have not yet been launched, with a view to improving the terms so as to maximize the state’s long term benefits, generate revenues, enhance competition in the local economies, promote national economic recovery, and stimulate long term growth prospects. Adopt, henceforth, an approach whereby each new case will be examined separately and on its merits, with an emphasis on long leases, joint ventures (private-public collaboration) and contracts that maximize not only government revenues but also prospective levels of private investment.” What this means is, yes we will privatise, but we will find the most favourable form of privatisation.

This part of the commitments clashes head on with what Economic Reconstruction Minister and leader of Syriza’s Left Platform Lafazanis said in his speech to parliament when presenting the programme of his ministry. He committed to stop all privatisations, but also to review some of the ones which had already been carried out. The present commitments of the Greek government would mean the continuation of the privatisation of the Port of Piraeus for instance.

Regarding the restoration of collective bargaining rights which had been abolished by the Memorandum of Understanding, the letter also represents a major climbdown. All there is now is a vague commitment to "phasing in a new ‘smart’ approach to collective wage bargaining that balances the needs for flexibility with fairness." This is very dangerous language, as we all know what “flexibility” means for the capitalists and instead of committing to restoring the abolished rights it talks about a “new”, “smart approach”.

Another significant policy which has been all but abandoned is the restoration of the minimum wage levels. The Thessaloniki programme says clearly “restoration of the minimum wage to €751.” This was repeated by Tsipras in his policy speech, though it was later said that such a measure would be introduced by 2016 and not immediately, and in conjunction with other measures to alleviate its impact on small businesses. The minimum wage was slashed under the Memorandum from €751 a month down to €586 and to €510 for those under 25 years of age.

The commitment to the Eurogroup now says the following:  “the ambition to streamline and over time raise minimum wages in a manner that safeguards competiveness and employment prospects. The scope and timing of changes to the minimum wage will be made in consultation with social partners and the European and international institutions, including the ILO, and take full account of advice from a new independent body on whether changes in wages are in line with productivity developments and competitiveness.”

There is nothing concrete in having an ambition to raise the minimum wage over time. But what is worse, even this vague undertaking is qualified by it being done in such a way as to safeguard competitiveness and job creation!! The capitalists will always and everywhere argue that a rise in the minimum wage will destroy jobs and make them less competitive! Furthermore, any rise will be done in consultation with the social partners (read: the employers will have the right to veto) and the troika (aka “the institutions”).

Finally, any humanitarian emergency measures (which were very detailed and costed in the Thessaloniki programme and are now vague, general, "highly targeted" and "non-pecuniary") will be implemented only as long as they do not affect the overall budget: "Ensure that its fight against the humanitarian crisis has no negative fiscal effect."

As we explained on Monday, this agreement means in practice that the Greek government agrees to have every single policy measure supervised and agreed to by the troika, restoring the previous situation of humiliating domination of the country by international capital. The room for manoeuvre which will be allowed to the Greek government will be extremely slim. For any progressive measure that the Greek government wants to implement it will have to find the money within the very strict limits imposed by the troika. This will mean either budget cuts or increased revenue.

The letter details a series of areas where the Greek government thinks it can find the money, mainly through tough action on tax fraud and evasion and attacking smuggling. It is doubtful how much money can be raised in this way as the main culprits have already withdrawn and taken their money away a long time ago.

German and European capital have designed this “agreement” (or rather capitulation) in such a way as to ensure they keep all the cards firmly in their hands. The democratic will of the Greek people, as expressed on January 25, has come up against the power of finance Capital, and Capital has won.

There is no point in trying to present this as a victory, “a battle which has been won” in the words of Tsipras. In fact this represents the practical demonstration, in the shortest space of time possible, of the bankruptcy of the idea that the concrete measures in the Thessaloniki programme could be implemented through an agreement with Greece’s “European partners”.

This was the whole idea behind the policy and strategy of the Tsipras leadership of Syriza and of his government core, particularly around himself, Finance Minister Varoufakis and deputy Prime Minister Dragasakis. The illusion was that within the limits of capitalism there was an alternative to austerity. That the European Union would allow the implementation of a “policy of growth” (of Keynesian stimulus) and that on the basis of this then most of the debt would be paid back at a later date.

In reality there is a certain truth in the argument. A debt of over 175% of GDP hangs like an albatross around the neck of an already depressed economy. It can never be paid back and the most serious bourgeois economists recognise this fact. However, German capital is not prepared to foot the bill which it then would have to make its own taxpayers pay. The interests of German capitalists are in contradiction to what would be “reasonable” from the point of view of Greek capitalism (and even European capitalism).

Brutal austerity policies have completely failed in Greece. Not only from the point of view of the destruction of the living conditions of millions of Greek working people. They have failed even if judged against their own stated aims (to increase competiveness of the Greek economy, therefore allowing it to grow and to pay its debts). The Greek patient, four years after this brutal “treatment”, has not responded to the “medicine”. There is no economic recovery and the debt to GDP ratio has increased by nearly 50 percentage points!

On the other hand, the idea that the European Union could be convinced to allow Greece to carry out Keynesian policies (which is what Tsipras and Varoufakis  advocated in essence) has been destroyed in just four short weeks.

The point is aptly made by Syriza MP Stathis Kouvelakis who says: “How is it possible that, only a few weeks after the historic result of January 25, we have this countermanding of the popular mandate for the overthrow of the memorandum? The answer is simple: what collapsed in the last two weeks is a specific strategic option that has underlaid the entire approach of SYRIZA, particularly after 2012.”

The troika demands its pound of flesh

Even after the Greek government made all these commitments, the troika wanted more and in different statements stressed, again, the point that it, and not the Greek government, had the last word about policy. Yes, the Eurogroup accepted the letter, which it considered “a valid starting point”, but it voiced a number of reservations.

The letter from the European Commissioner Moscovici stresses the following idea: “the Commission underlines the importance of Greece fully respecting its commitment undertaken at the Eurogroup of 20 February 2015 to refrain from any roll back of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions.”

The assessment by the International Monetary Fund, signed by Christine Lagarde, makes it clear that they want their full pound of flesh, and that, however humiliating the Greek climbdown is, the vampires want more blood: “We note in particular that there are neither clear commitments to design and implement the envisaged comprehensive pension and VAT policy reforms nor unequivocal undertakings to continue already-agreed policies for opening up closed sectors, for administrative reforms, for privatisation, and for labour market reforms.

And she adds: “Thus, it is important for me to emphasize that for the discussions on a completion of the review to be successful they cannot be confined within the policy perimeters outlined in the Government’s list.”.

Opposition within Syriza

Syriza-victoryOpposition against the agreement is growing within the ranks and the structures of Syriza, and also within the government, as the details are being digested and understood fully. To the voices of Syriza European MPs Glezos and Sakarofa now we have to add a number of members of parliament and even ministers who openly or behind closed doors are coming into opposition.

The Guardian described the mood at a Cabinet meeting on Tuesday, February 24: “Reports are filtering through that the atmosphere at the Greek government’s cabinet session this morning was very heavy, with enraged ministers openly objecting to the aid extension agreement signed in Brussels last week. From Athens, Helena Smith reports: The energy minister Panagiotis Lafazanis, who heads Syriza’s militant Left Faction, emerged from the meeting “seeing red” according to reporters who were there.”

During the meeting, a number of ministers complained that they had not even seen the text of Varoufakis’ letter before it had been sent to the Eurogroup.

Today, February 25, in a statement to a Greek paper, Lafazanis said specifically that privatisations in the energy sector, the process of which had already started, will not go ahead, in what seems to be a direct contradiction of the terms of the agreement. Lafazanis added that the agreement was not compatible with the party’s election campaign promises. Rudi Rinaldi, a member of the party’s political secretariat, commented that the government had backed down and that this “cannot be characterized as a success”.

An emergency meeting of Syriza’s CC has been called for the weekend at the request of 60 members, though this will be after the agreement comes into being. Opposition to the agreement is such that it is not even clear whether Tsipras will risk putting it to parliament. The argument is that this is not a new agreement, but an extension or amendment of a previous one which had already been passed by parliament. In effect Tsipras is saying clearly that he is backing just a modification of precisely the same bail out agreement which Syriza and the Greek people fought fiercely against two years ago.

Joan Hoey, a senior analyst at The Economist’s Intelligence Unit said: “Syriza is already facing criticism and dissent within its own ranks and may also encounter opposition from its coalition partner, the anti-bailout Independent Greeks. We expect implementation difficulties, given previous strong commitments made by Syriza to reverse previous reforms, stop privatisation, restore the minimum wage, etc., commitments which it has now had to drop. The issues on which the previous government fell—austerity and reform implementation—will not go away. The prospect is therefore for continued political instability in Greece and we forecast that the coalition will not last longer than 12–18 months. We continue to assign a 40% risk to a Grexit.”

The KKE has presented a proposal for a law repealing the Memorandum of Understanding, which the Communist Tendency of Syriza has supported, pointing out that it gives Syriza MPs an opportunity to express their opposition to the agreement.

If the Tsipras government continues down the road it has embarked on, it will end up in the same way as previous governments. It will lose support from its own members and voters, dissipating the huge enthusiasm it had previously generated by appearing to stand firm against the troika’s blackmail. It will provoke a crisis in its own parliamentary group and will be forced to increasingly rely on other forces to implement this agreement.

Ruthless pressure from German capital has forced the Greek government to retreat on all its commitments. It will now argue that there was no alternative, but this is not true. There was. There is an alternative. But not within the limits of the capitalist system. The alternative is to break with the limits imposed by the crisis of capitalism and implement fully the mandate of the Greek people. This would mean first of all to repudiate the debt, to implement strict capital controls and to take the fundamental levers of the economy into public ownership. Such measures would have to be accompanied by an internationalist appeal to the working people of Europe to support their class brothers and sisters in Greece and to follow their example.

An important battle has been lost. The war however, can still be won. The precondition for turning the situation around is to tell the truth and admit reality: capitalism cannot be reformed.