Troika’s ultimatum to Greece - A coup in the making

The latest provocative demands and ultimatums placed by the troika on the Greek government have one clear aim: to destroy it. They cannot be interpreted in any other way and all the pieces of the puzzle are now falling together.

Let’s recap the events of this week. On Monday, 22nd June, the Greek government presented a proposal which met the latest demands from the troika (now known as “the institutions”, the International Monetary Fund, European Central Bank, and European Commission) for a primary surplus of 1% of GDP for 2015 and 2% for 2016. This mean cuts and increased revenue of 2.69 billion euros for 2015 (1.51% of GDP) and 5.21 billion for 2016 (2.87 percent of GDP). The figure was even slightly higher than what had been demanded by “the institutions” (1.5% for 2015 and 2.5% for 2016), as Tsipras pointed out in his covering letter (full text).

These proposals broke several of the “red lines” the Greek government had announced they did not want to cross. Prior to that, the government had already made significant concessions to the troika, breaking with key points of Syriza’s Thessaloniki electoral program. They included the continuation of the privatisation program, measures related to pensions worth 2.1bn euro, increased VAT rates worth over 2bn euro, increased corporation tax and a one-off profits tax worth 1.7bn.

On Monday night, the Eurogroup meeting ended and it seemed that these proposals had been accepted “as a sound basis for an agreement”. Let us be clear: the 22nd June proposal was a new Memorandum, a new package of cuts which would fall mainly on working people and pensioners. It did not even include any agreement on debt reduction. These measures were met with opposition from within Syriza and by workers and pensioners in Greece who marched against it.

Over the next 48 hours the whole agreement unravelled. These concessions were not enough. The IMF demanded more. Tsipras was presented with a detailed counter-document (see here) with substantial changes, marked in red like a school teacher would do with an unruly pupil, which had to be agreed by Greece.

What is the essence of these counter-proposals? It amounts to a reshuffling of the 8bn euro package so that working people will pay more of it and capitalists will pay less. Let’s look at the details.

Regarding pensions, the troika demands that the increase in the retirement age to 67 years be brought forward from 2018 to 2015. The abolition of the solidarity grant (a top-up payment for poorer pensioners) to be brought forward to 2017 (instead of phasing it out until 2020 as the Greek government had proposed). The troika proposes a higher increase (one additional percentage point) in pensioners’ health care contributions than what the government had proposed. In summary, pensioners should pay more and their pension rights should be reduced faster.

Regarding VAT (which is a regressive tax hitting working people most) basically the troika proposes higher increases than those agreed by Greece. This would mean raising 1% of GDP instead of the 0.74% in the Greek government proposals. The troika’s demands are quite specific and would mean, for instance, bringing VAT on basic food products like milk, oil and cheese up from 13% to 23% (a 10% increase in their price). The troika also insists that food service should pay the full 23% VAT rate which would hit the tourist industry.

The most important part of the troika’s counter-proposal is the scrapping of a one off 12% profits tax on companies earning over 500,000 euros (1.35bn savings for big companies), in addition to insisting that corporation tax should not be increased from 26 to 29%, but to 28% (saving capitalists another 137 million euros).

These proposals are absolutely scandalous. They are accompanied by an air of arrogance and imposition which hints at the fact that there are further political reasons behind this latest move. As he travelled to Brussels on June 24, Tsipras tweeted: “The repeated rejection of equivalent measures by certain institutions never occurred before - neither in Ireland nor Portugal. This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed.”

Clearly, these latest proposals are a provocation. Furthermore, the troika has issued an ultimatum, which expired on 25th June at 11.00am Brussels time, for the Greek government to agree to them - or else they would put their own document to be voted by the Eurogroup for approval. This is the language of war. How can the Eurogroup pass a document regarding policy in Greece which doesn’t have the support of the Greek government?

Troika manoeuvring to destroy Syriza’s government

The troika is fully aware that the 22nd June proposals from Greece were already the maximum that Tsipras could offer without committing political suicide. It was not even clear whether he would be able to get them passed through parliament without losing his parliamentary majority and having to rely on opposition MPs voting for them.

For the troika to demand even more after that can only mean that their aim is to break Syriza and destroy the current government. For weeks there have been talks of the need for a government of “national unity” (read: a government which can impose further austerity onto the backs of working people). On the very day that the troika was making impossible demands on Greece, the leader of the centre right pro-European party To Potami (The River) went to Brussels and met with European Commissioner Moscovici. It is highly unusual for a leader of a non-government party to meet with EU officials. The party leader Theodorakis declared that they would support any European proposal that the government would put to the vote and opposed the calling of early elections.

The leader of New Democracy, Samaras, was more specific, as he called for the formation of a transitional government of national unity excluding Tsipras (and himself), if the current government majority was unable to get a deal with the troika passed in Parliament.

What these statements mean is very clear: the Greek and European ruling classes want to split Syriza, removing the obstacle of its left wing in the parliamentary group, in order to create a more pliable government which can get this new austerity Memorandum passed. Such a government could be created with the right wing of Syriza's parliamentary group and the pro-European bourgeois opposition parties. Of course this needs to be done, To Potami and New Democracy agree, without new elections, as their result cannot be guaranteed. The president of the Republic, the right wing Pavlopoulos, elected at the proposal of Syriza, will probably play a key role in any parliamentary manouvering. 

This manoeuvre has a name. It is called a coup. Not a military coup, but a parliamentary one. They want to destroy a government which was elected on a mandate of ending austerity and the Memoranda, and replaced it by an unelected one which carries out precisely the opposite policy.

Syriza must be forced into a humiliating defeat “pour encourager les autres”, to send a clear message to working people in Greece and other countries (particularly in Spain) that anti-austerity governments are bound to fail. That there is no alternative.

Of course, here Tsipras is the victim of his own policies. For five months, the troika has extracted concession after concession from the Greek government without getting anything in exchange. This was done, we are told, in the hope of getting substantial debt reduction and better repayment terms, which would allow the Greek economy to start to recover.

Even at this late date, the troika has not offered anything of the sort. Germany is extremely reluctant to make any concessions regarding debt relief as it would bear the brunt of those and it would have to make German workers pay for them.

The arrogance of the troika is even more scandalous if one looks at its track record. The austerity policies imposed on Greece were supposed to reduce debt to a manageable level and allow the Greek economy to start to recover. The opposite has been the case. As was to be predicted, these extreme measures have sent Greece back into recession and made the debt spiral even further out of control.

Time to change course

It is time to put an end to this. The only way forward is to make a decisive stance and reject the troika’s demands. Even at this late hour, if Tsipras was to turn to the Greek people and say: “We made concessions, we broke our own program in order to get a deal. But the troika wants the workers to pay for the whole package and let the capitalists off. We cannot accept this. We need to repudiate the debt and take control of our own economy. If we do that we can appeal to the international solidarity of European workers”. He would get massive support. His track record for the last five months make this an unlikely prospect.

What about the Left Platform within Syriza? The Greek media is full of speculation about the number of MPs who would be prepared to vote against this humiliating compromise. CC member Stathis Kouvelakis has correctly described it as an austerity package and issued an appeal to mobilise against. However, the main leaders of the Left Platform remain silent. The Greek media reports that the main figure of the Left Platform who is also a government minister (and therefore co-responsible for the 22nd June proposal), has said he wants to wait and see the final deal before he comments.

It has to be said: the only tendency within Syriza which has warned of this outcome from the very beginning is the Communist Tendency. At each stage it has pointed out the utopian character of the idea that a deal could be reached with the troika which would allow for the application of Syriza’s election program. Unfortunately, the Communist Tendency is still very small, with only two members on the CC of the party.

It is not too late. But the only way forward is through struggle. The experience of the last five months also means that, even despite the mistakes of the leadership, now a majority of the Greek people can see clearly who is to blame for the lack of an agreement.

According to a poll published by Left.gr, 69% of the people blame the troika for the lack of a deal, while only 22% blame the government. Interestingly, 63% of the people say they do not fear Grexit, which is a big change from the previous situation. The Greek workers are fully aware that being expelled from the euro on a capitalist basis would be an economic disaster, but they can no longer withstand a continuation of the present state of affairs. While only 12% of the people say that the Greek economy would be better under a new austerity package, 17% think it would be better with Grexit. The majority, 71% think none of them is an option.

These figures also underline the point which the Communist Tendency has stressed: the solution is neither Grexit nor the euro, but socialism. An alternative needs to be offered which deals with the justified fears of the people about the consequences of returning to the drachma within capitalism. That alternative is socialism, the collective ownership of the means of production, distribution and exchange under the democratic control of the working people. This would have to be combined with an internationalist appeal to the workers of Europe.

The only way to reverse the current impasse is through mass mobilisation in the streets. The full rage of the Greek population must be expressed. The masses must regain the initiative and break through the schemes and complots at the top. The responsibility of the Left Platform is enormous. They now command the support of about 45% of Syriza’s CC. If they were to come out publicly with a bold position rejecting the deal, they would probably tip the internal balance, but they would certainly command the support of a large majority of the population.

The stakes are high. A defeat in Greece would be a defeat throughout Europe. The beginning of a serious fightback in Greece would encourage workers across the continent who are already desperately looking for an alternative to austerity, where working people are asked to pay for the crisis of capitalism.