Harry Konstantinidis, Guest Blogger
Harry Konstantinidis is an assistant professor of economics at the University of Massachusetts-Boston.
Most readers already probably know the sequence of events around Greece and its creditors over the last month, but they are worth reviewing: a fruitless and frustrating negotiation leading to a take-it-or-leave-it offer from the creditors; the announcement of a referendum (the first in more than 40 years) for the people of Greece to decide whether to accept the offer; a triumph of the No vote with 61.3% rejecting the offer, despite a visceral campaign in favor of the Yes vote by the Greek media and foreign politicians; the resignation of Finance Minister Yanis Varoufakis; a retreat by Syriza offering austerity for a deal; the creditors’ outrageous demand in a rather open attempt to push Greece or Syriza towards exit; and finally a roadmap towards a deal that no party really believes in.
The terms of the agreement reflect the creditors’ attempt to make Syriza renege on all its promises and cross all its “red lines,” except for euro membership. Sharp value-added tax (VAT) increases, the establishment of a privatization fund including 50 billion euros worth of assets, no restoration of collective bargaining rights or minimum wages, automatic cuts when fiscal targets are not achieved, vetting of all legislation by the Troika (European Commission, European Central Bank, and IMF), and the depoliticization of Greek public administration. The deal passed the Greek parliament without the support of almost one-fourth of Syriza MPs, rendering Syriza effectively a minority government and prompting a cabinet reshuffle. How could Syriza have agreed to such a deal? Wouldn’t Greece be better off introducing its own currency, rather than conceding both fiscal and monetary policy?
In order to answer this question, one has to understand the political identity of Syriza. Syriza has historically been a Europeanist party, differing from the Communist Party of Greece in its adherence to the notion that it is possible to change existing European institutions. It is worth noting that Synaspismos, the predecessor of Syriza, had even voted in favor of the Maastricht Treaty that laid the foundations of the European Monetary Union in 1992, viewing the treaty as a first—albeit incomplete—step towards a more solidaristic and unified Europe. Most of the Syriza MPs, even to this date, believe that Europe, rather the nation-state, is the locus on which to improve workers’ conditions and achieve positive social change. Thus, Syriza’s goal was not to exit the European (Monetary) Union, but to change it in favor of working people. Furthermore, Syriza never suggested that its goal was to abandon the euro: the closest the Syriza leadership ever came to proposing Eurozone exit was Tsipras’ saying in 2012 that “the euro is not a fetish.” In 2015, such ambivalences were abandoned.
After the electoral victory of 2015, Syriza’s strategy focused on showing that the magnitude of the crisis was not a product of Greece’s own doing, but a direct outcome of the Eurozone’s flawed architecture and the catastrophic austerity policies. Exiting the euro would let the eurozone off the hook for its mistakes. However, both Syriza finance ministers, Yanis Varoufakis and Euclid Tsakalotos, have openly stated that they were surprised at the lack of European willingness to engage in a substantive debate about the crisis and the remedies: Varoufakis was even chastised for “lecturing macroeconomics” to other finance ministers. Despite make little headway with its European “partners,” Syriza never chose to exit the European terrain.
Herein lies the weakness of the Syriza strategy: a weakness of political imagination. Syriza never opened a public discussion about the euro in Greece. How does the euro aid or detract the project of productive reconstruction that Syriza promised the Greek electorate? Is the euro a tool for workers or for financial capital? What would happen to one’s deposits and to one’s debts if Greece were to leave the euro? Would there be fuel, medicine or food shortages if Greece were to return to a national currency? The Greek oligarch-controlled media, which are now celebrating the agreement and praising “Tsipras, the statesman,” set the terrain domestically by equating the euro with progress and the drachma with catastrophe. The Greek collective imagination still clings to the euro as something beyond dispute, and significant parts of the left hold the same position. When—especially after the announcement of the referendum—the Greek media, the Greek opposition, and European politicians equated Syriza’s support of the No vote with the return to national currency, Syriza attempted to close the discussion, essentially embracing the catastrophic discourse associated with leaving the euro. Even after signing the deal on July 13, Tsipras has said that Greece was not in a position to leave the euro without foreign reserves, while Varoufakis equated leaving the euro to becoming “North Korea.” Could the Greek government have chosen to leave the euro last week? Realistically, the answer is no. Despite what various critics may claim, a significant part of Greek voters would have been unprepared for it.
However, no one can claim ignorance any more. By following a consistent pro-Europe agenda, Syriza managed to point the inconsistencies of the European currency union and its democratic deficits. When even the former chairman of the Fed comes out in support of the Greek position, and the IMF categorically rejects the viability of the Greek debt without debt relief, it is bizarre to call Syriza a “radical” or “extreme” left-wing party. One has to look elsewhere for zealots. Now, Greece and Syriza need to take actions that would allow it a stronger bargaining position in future negotiations. Given that the deal with the partners is not complete yet, and that certain circles in Europe will do their best to prevent any debt relief and stop the deal from happening, it is time for a leftist government to take actions that would allow Greece to be better-prepared for the next round of negotiations.
What does Syriza need to do in the very short-run? The Greek government, first of all, needs to (finally) attack the Greek oligarchy and tackle the web of intertwining relations between media, banks, and big business in Greece. Over the last five years, the Greek public has been taking loans to recapitalize the Greek banks in exchange for preferred stock: thus the management of Greek banks has stayed in private hands. While lending had come to a standstill, banks continued to make loans to insolvent private media, owned by a small number of Greek families with strong political ties. At the same time, the Bank of Greece (the national central bank) has refused to provide information about these loans, invoking bank secrecy. These relationships need to stop.
Furthermore, Syriza needs to start the productive reconstruction of the Greek economy. The negotiations with the creditors have dragged on for a long time, and have taken time from attention to domestic issues. If the Greek economy has any chance of recovering (either inside or outside the eurozone), Syriza needs to build and foster the productive structures that provide employment and allow the people of Greece to cover their basic needs. Even in the absence of fiscal space, a productive reconstruction based on self-management, new food systems striving towards food sovereignty, and increased public participation (through local assemblies and participatory budgeting) are imperative. So is, in addition, an open and frank discussion about how productive reconstruction can (or cannot) take place within the coordinates of existing European economic and political institutions.
Is this an easy task? No. But in the absence of fiscal and monetary policy, Greece doesn’t really have any traditional options left. If Greece wants to increase its leverage when the negotiations come to the next impasse, instead of just being a laboratory of austerity, it has to quickly become a laboratory of experimentation and radical imagination.
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