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The great refusal!

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Tsipras doesn’t buy the EU offer. The EU won’t accept Tsipras’ suggestions. Yet a compromise on the tax system and the public administration has been reached.

 

The electoral victory of the radical leftwing Syriza party in Greece poses a significant political challenge for the European Union. Prime Minister Alexis Tsipras’ government is the first in Europe to have been elected based on an open and explicit rejection of austerity policies. As such, voters have entrusted it to deliver this rejection to Brussels. And it has to be said, the Greek government has so far honoured its mandate, albeit with softer tones compared to its presidential campaign.

Before Tsipras and his finance minister, Yanis Varoufakis, pitched up in Brussels, the European institutions, besides the odd complaint and a few muted grumblings, had never had to face such head-on criticism. Ultimately, for the entire – and extended – duration of the crisis, it had become the accepted rule that all the governments of the indebted countries (regardless of their affiliation to the European People’s or Socialist parties) complied with the restrictive prescriptions of the troika (the European Commission, European Central Bank and International Monetary Fund). The operative word here being that there was no other way, no alternative.

A dogmatic approach that at least where Greece is concerned had lost credibility. So much so that the rejection of the European Union’s one-way measures was precisely what brought about such a sudden leftward shift of the electorate. A left wing that hadn’t suddenly changed tack and embraced militant Marxist ideals – it simply wanted to voice a strong message. Because after five years of fierce austerity, the Greeks are firmly convinced that this formula is either wrong or poisonous; either way, it is a path leading nowhere. So they might as well place their faith in Syriza and challenge Europe in the hope of obtaining something. 

Another factor often overlooked is the connection between troika policies and the interests of the local oligarchy. During the 2012 elections, the wholehearted backing of the centre-right New Democracy party and its leader, Antonis Samaras, by the European Commission and the German government sparked much debate. The New Democracy and the socialist Pasok parties had governed Greece for the previous 40 years and were therefore the primary factions to blame for the economic disaster. Logic had it that the European institutions, along with German Chancellor Angela Merkel, should have been pushing for a change in Greek leadership in order to marginalise the old, incompetent and corrupt political forces.

Instead, the opposite came about, for reasons that became clear soon enough: not only had Samaras given specific assurances of his readiness to comply with the troika’s directives in November 2011, as was revealed only years later, but he had also pledged not to upset business dealings between the Greek oligarchy, the European powers and German businesses in particular, with which Greece has had ties dating as far back as the early 1940s. One symbolic example is Nikolaos Christoforakos, the infamous SS collaborator whose son Michael was the head of Siemens in Greece and was heavily embroiled in a scandal involving extensive bribes handed out to diverse Greek governments by the German multinational.

The Samaras government’s first move immediately following the elections was to reach what was called an “extrajudicial compromise” with Siemens to suppress the scandal. The previous government also adopted the same attitude towards privatisations, the battle against tax evasion and even the nepotistic sacking of public employees. Ultimately, the troika, instead of severing ties between the Greek oligarchs and the two (former) government parties, did its best to reinforce them.

Thus, to Greeks, rejecting the troika became part of the same push to oust the privileged class and ensure that the repercussions of the crisis were shared equally. On these grounds, the EU had few objections to make, and it’s hardly a coincidence that the first reforms over which a compromise was reached between the Eurogroup and Tsipras’ government specifically concerned the tax system and public administration along with the urgent measures in favour of families with no income.

It should be noted, however, that Syriza’s proposed policies promise no alternatives to austerity, nor do they anticipate any possible political growth of the eurozone, apart from the old, established Keynesian recipes and a few strategies formulated by the economist Varoufakis before he became finance minister.

Tsipras’ explanation for this is that the search for an alternative to growth cannot take place on a national scale. According to the Greek prime minister, the crisis is European, so the growth strategy should be sought on a European level. And it will have to tackle the main problem raised by the Greek government that concerns the country’s debt. Tsipras maintains that the debt is a clear sign that the European policies applied to Greece have failed. When the crisis broke out in 2010, Greece’s debt stood at 111% of GDP. Five years later, it is 176%. A debt that is weighing down the economy and preventing a recovery.

Since 2013, at the expense of fearful sacrifices, Greece has been posting a primary budget surplus.

A result that is, however, endangered by interest and partial loan repayments that for 2015 alone amount to €29 billion. There has been talk of a possible third loan to Greece, though Tsipras’ government has categorically refused the offer, insisting that taking on new debt in order to pay off old ones is not a good policy. The problem is best confronted head on, perhaps in a European debt conference similar to the London Debt Agreement of 1953, often mentioned by Tsipras, in which debt relief was provided to cover most of Nazi Germany’s foreign war debts. 

 

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