Thursday, June 25, 2015
Greece is being blackmailed Exiting the Eurozone is the only way out by Costas Lapavitsas
A few days ago the Greek government submitted a list of proposals hoping to break the deadlock with the “institutions” – the European Commission, the International Monetary Fund and the European Central Bank. The government basically agreed to tough primary surpluses: 1% in 2015 and 2% in 2016. To achieve these targets it proposed to raise VAT on a range of widely consumed goods as well as imposing a host of taxes on enterprises and families of “high” income. It also proposed substantial savings on pensions. The measures added up to roughly €8bn over 2015-16, and would be immediately implemented.
The package is certainly deflationary at a moment when the Greek economy is again on the threshold of recession. There is little doubt that it would contribute to output contraction and higher unemployment in 2015-16, particularly as there is little prospect of being offset by an investment programme funded by the EU. It is a major retreat by the government of Syriza.
To general astonishment, the response of the “institutions”, led by the IMF, was to demand even tougher measures to achieve the same targets. These include more severe increases in VAT, a lessening of the tax burden on enterprises and greater pension savings. If these demands are met, the government will not even be able to claim that it has shifted some of the increased tax burden away from workers and the poor.
For Greece as a whole, the prospect of a deal achieved on this basis would be simply appalling. The country would be forced to adopt harsh austerity measures dictated by the lenders, without any realistic possibility of substantial debt relief, or of a significant investment programme. The “institutions” are once again attempting to impose the policies that have failed abysmally since 2010, causing huge contraction of GDP, vast unemployment and mass impoverishment. It would be a national disaster accompanied by the complete humiliation of the Syriza government.
The real question is, will the government of Syriza accede to these extraordinary demands? Will it submit to blackmail? Syriza won the election in January 2015 with a strategy that promised to lift austerity and bring radical change to Greece, while remaining within the eurozone. It believed that its strong democratic mandate would help it succeed in tough negotiations with the lenders. Reality has proved to be very different as the lenders have used the framework of the eurozone to create a liquidity and funding shortage that has crippled the Greek side. At the same time, both the lenders and the domestic forces that wish to continue with the policies of austerity – including, mostly, the rich and the financial elite – have been scaremongering shamelessly about Grexit. Faced with the power of the purse, the strategy of Syriza is unravelling.
Greece and the government of Syriza have now come face-to-face with the ruthless reality of the eurozone. To keep the country in the monetary union, the lenders are demanding that it should submit to blackmail and accept policies that would lead to national decline. Greek society would face low growth, high unemployment, entrenched poverty and emigration of its skilled youth, as the experience of the last five years has shown.
There is an alternative path for Greece, and it would include leaving the eurozone. Exit would free the country from the trap of the common currency, allowing it to implement policies that could revive both economy and society. It would open a feasible path that could offer fresh hope, even if it entailed significant difficulties of adjustment during the initial period.
The choice ultimately rests with the Greek people. Despite the frequently reported polls presumably showing strong support for the eurozone, the reality on the ground is anger and frustration among workers, the poor and the ravaged lower-middle class. These are the social layers that could put the country on a different trajectory of growth with social justice. In this respect, it is incumbent upon Syriza to rethink its strategy and offer fresh leadership to the Greek people. In the coming days a significant intervention by its influential left wing, the Left Platform, can be expected. Greece needs a rapid public debate and a reshaping of policy. The country has the strength to survive and it will.
Democracy and Class Struggle welcome the efforts of Stathis Kouvelakis and Costas Lapavitsas to avoid an historic defeat for the Greek Left if Syrizia does the proposed deal with European Union and the Institutions which is still rumoured to occur..
The 21st Century in Europe demands that the revolutionaries in Syriza especially the Communist Organisation of Greece comrades step forward and exercise revolutionary leadership - the revolutionary communist pole in Syrizia and the Left in Syrizia must be bold and not hesitate to overthrow the reformists.
The 20th century was a century of reformist betrayal by social democrats we cannot afford a repetition of this in the 21st Century.
Varoufakis and Tsipras are already part of reformist history - but Greece and Europe must have a future and revolutionaries must fight for it on the streets.
Posted by nickglais on 6/25/2015 12:48:00 PM