[Marxism] Michael Roberts: Greece, crossing the red lines
daynegoodwin at gmail.com
Tue Apr 28 15:45:20 MDT 2015
Greece: crossing the red lines
Michael Roberts blog
April 28, 2015
. . .
Tsipras’ move towards making more concessions and perhaps dropping the
non-negotiable ‘red lines’ that Syriza won’t allow to be breached
would probably get support from the Greek people, at least if the
current opinion polls are correct. One poll found that 79% of Greeks
want to stay in euro and 50% want to reach a compromise rather than a
rupture (36%). Around 63% of Greeks want to avoid a default on the
Greek government’s debts. And if there is a deal that breaks the red
lines, then Greeks would prefer a national unity government (44%)
rather than a referendum (32%) or new elections (19%) to confirm it.
Syriza still leads in the polls with 36% of the potential vote
compared to 22% for the right-wing New Democracy; 5% for the social
democrat Potami, 3% for the bankrupt PASOK and now just 5% for the
fascist Golden Dawn and the Communists.
. . .
Ironically, the Syriza government is still running a budget surplus of
€1.7bn in the first quarter of this year. It has managed this by just
not paying its bills to government suppliers or to the health service
and schools. In doing this, it can meet the wages of public sector
workers and pensions. The problem is that unpaid taxes are rising
steadily, reaching €3.5bn in Q1, although the growth in this deficit
has been slowing. People, especially rich people and businesses, are
unwilling to pay their tax bills if they think that Greece will soon
be thrown out of the Eurozone and the government will default on its
debts and devalue Greek euros. They want to hold onto all the euros
they have got.
. . .
There is a possibility that if Syriza makes enough concessions on:
reducing pensions; raising VAT; allowing privatisations and
introducing ‘reforms’ in labour markets, then it could get the €7.2bn
and also negotiate a third package for after end-June that would meet
future ECB and IMF repayments and yet not impose too heavy an
austerity package. Apparently, Tsipras, Merkel and the Eurogroup have
agreed that the primary budget surplus target will be reduced from
3-4% of GDP a year to around 1.5%. And if the Eurozone economy starts
to recover, that could also pull up the Greek economy through higher
exports and more inward investment. That is the scenario that Tsipras
and the Syriza leaders are looking to.
. . .
Of course, this ‘way out’ means that Syriza will still be conducting
(if ‘lighter’) fiscal austerity by running a surplus on the government
budget at a time when Greek unemployment remains at over 25% and the
economy is still contracting in real and nominal terms. Indeed, Greeks
have already suffered a fiscal austerity adjustment equivalent to 20%
of potential GDP since 2009.
. . .
Back in February, I posed the issue as an impossible triangle. Syriza
could not reverse austerity, stay in the euro and remain united as one
party in government. One or more of these aims would have to go. It
seems that the Tsipras will opt for staying in the euro, even if he
cannot reverse austerity or write off Greek government debt. The
question then becomes a political one: what will the left within
Syriza do? Will they too swallow any deal, especially if Tsipras puts
it to a referendum of the people and wins the vote? Or will they split
the party and force Tsipras into an alliance with the opposition
(national unity) to get any deal approved by parliament?
There is still the possibility that the austerity terms demanded by
the Troika are just too much for the Syriza leadership to accept and
the Greeks will opt to default on the repayments in June. The IMF
allows a 30-day ‘grace period’ to meet overdue debts, so default is
not technically immediate, although there would probably be a run on
the Greek banks. The government would have to impose capital controls
to stop money leaving the country or even just under the mattresses.
Introducing capital controls is not breaking any Eurozone rules, so
technically, Greece would still be a member of the Eurozone. But the
run on the banks would mean that the ECB would either have to step in
fund the gap or the banks would go bust. The question of Greek
membership of the Eurozone would then be posed.
. . .
The alternative to grasp the nettle: demand the cancellation of the
euro and IMF loans (the original demand of Syriza) or default; impose
capital controls, take over the Greek banks and appeal to the Greek
people for support and the European labour movement. Let the Euro
leaders make the move on Eurozone membership, not Syriza. The problem
is that now the Greek people have been led to believe that there is
only one way out: a deal with the Eurogroup on increasingly bad terms.
The alternative of a socialist plan for investment and a Europe-wide
appeal is not before them. (see my post,
The Tsipras-Varoufakis approach of concessions now and hope for a
better capitalist economy down the road could work for a short while.
But it won’t reverse the terrible losses in incomes, jobs, education
and health that those Greeks who have not been able or willing to
leave the country have suffered. And what happens when the next slump
in the world economy comes along?
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