Syriza’s Victory
James Meek
Syriza's victory in the Greek general election is a hopeful moment for Europe. It shows how a radical left-wing political movement, brought together in a short time, can use the democratic system to attack three menaces: the rentier lords of jurisdiction-hopping private capital, the compromised political hacks of the traditional parties who have become their accomplices, and the panphobic haters of the populist right.
Nationalist-conservative movements, it turns out, don't have a monopoly on the anti-establishment wave. The future doesn't have to belong to Golden Dawn, Ukip, the Front National, Pegida, the Finns Party, Partij voor de Vrijheid or the Sweden Democrats. It could belong to Syriza, or Podemos, or Die Linke, or to an as-yet non-existent British movement – anti-austerity, pro-Europe – which would scoop up votes from Labour, Liberals, the Scottish National Party, Ukip and the Greens.
And these left-wing movements – so it seems now, savour it while you can – don't have to rely on street protests to get what they want. They can get it through an instrument long considered by socialist radicals to be redundant: the ballot box.
The ascent of Syriza signifies the emergence of a trans-European politics in a way the previous rise to prominence of the likes of the Front National and Ukip haven't. The eurosceptics want to push the European Union away. They want their politics to be more national. What makes Alexis Tsipras radical is not what he wants to do in Greece, but what he wants to do in Europe.
Tsipras's programme will work only if he manages to ignite the Syrizification of the entire Eurozone; if he can win the implicit support of voters in enough national elections across the continent to force Angela Merkel and her fellow pro-austerity north Europeans into the position of isolation that Greece is in now.
Greece risks ostracism and expulsion from the Eurozone if it renounces the terms of the loan ('unsustainable and will never be serviced,' Tsipras says) it got from Europe to enable it to pay off the previous loans it couldn't pay off.
The buzz in the financial world is that the risk of 'financial contagion' is low this time round, should Greece drop out of the euro. But that ignores the possibility of political contagion, on which Tsipras is staking his hopes; the idea that everything could be turned on its head and it become Germany, rather than Greece, that is pushed to make an in-out choice on the euro by an overwhelmingly anti-austerity Europe.
In an open letter to the German people published on 13 January in the business daily Handelsblatt, Tsipras laid out his argument. His complaint, he said, was not that Germany had given Greece too little money when his country was 'rescued' after its financial collapse, but that it had given too much; Europe, he said, had acted like a reckless banker who refuses to accept that he made a bad bet on a failing business, and instead of writing the loan off, lets the firm limp on, stagnating, not closing but unable to renew itself because all its profits go to paying debt instead of investment.
It is a disingenuous letter. Tsipras doesn't really think Germany gave Greece too much money; he thinks Germany and its fellow-creditors lent Greece too much, and didn't give it enough. A form of bankruptcy has always been open to Greece – quitting the Eurozone and defaulting. But Tsipras doesn't want that. He wants to stay in the Eurozone, and for Athens to be able effectively to print euros, to be allowed to break out of its austerity straitjacket and embark on a Keynesian programme of expansion.
I have sympathy for Germans clutching their heads at this. Why, they might ask, should we let the Greeks dilute our currency? To which the Greeks might answer that it is their currency too, and sometimes, when a currency becomes sluggish, a bit of dilution is what it needs. And Tsipras's demand is not as presumptuous as it sounds. There is a sense in which the bailout was a bailout of Greece's creditors – big financial institutions – rather than the country. Really what Tsipras seems to be seeking for Greece is something like the Chapter 11 bankruptcy rules that exist in America, where a company can file for protection from creditors, continue to operate, and still borrow money to rebuild.
But Tsipras is issuing a much deeper challenge than that to the existing European dispensation. He is demanding that the rich parts of the Eurozone take the same direct responsibility for the less successful, or unluckier, areas as the richer parts of Germany or France do for the poorer regions within their own countries. He is seeking the mutualisation of giving a damn from the Arctic to the Aegean.
This idea has always existed in the abstract, but Syriza's victory has given it flesh. And although it might seem Greece has no leverage, the European Central Bank's launch of quantitative easing (money-printing) is a move in Tsipras's direction. Who knows what influence a strong showing by Syriza's Spanish counterpart, Podemos, in December might have on Portugal, Ireland and Italy, and what the consequences in France might be? The European Union may yet fragment into something looser. But should it move in the opposite direction, it may not be on Angela Merkel's terms.
Comments
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26 January 2015
at
9:28am
Alfalfa
says:
"Savour it while you can" is about right. The electorate is fickle, in Greece and elsewhere, and the free-floating protest vote is likely to move on if it finds its expectations (whatever they might be) disappointed. The austerity bullies may yet work to undermine Tsipras, and standing up to them won't be easy. He will have to stand firm, and Greek voters too.
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26 January 2015
at
12:52pm
Alfalfa
says:
@
Alfalfa
So, now they've gone an formed a coalition with the Independent Greeks, and we're looking at a united populist front. Still, got to admire that kind of flexibility, in a way - can't imagine Die Linke agreeing on terms with Alternative für Deutschland, even if there is some overlap in their electorates. Amazing what a threat from outside can achieve.
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26 January 2015
at
11:42am
frmurphy98
says:
Can anybody refresh my memory as to why the troika bailouts of Greece, Ireland, etc. are mere loans - to be paid back with substantial interest, while our bailout of toxic City banks was an outright gift - with the banks themselves not being required to repay a single penny to the taxpayer?
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26 January 2015
at
1:30pm
JonathanDawid
says:
@
frmurphy98
The bank bail outs were needed because the banks in question had insufficient capital. That can't be solved with a loan, because a loan has to be paid back: loans are a tool to manage liquidity, not capital.
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27 January 2015
at
9:39pm
sol_adelman
says:
@
JonathanDawid
It will be intriguing to see whether the money recovered from sales of bank shares is used to restore areas of the public realm devastated by cuts.
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28 January 2015
at
8:13am
Alan Benfield
says:
@
JonathanDawid
It's still anathema to the Germans, whose representative in the ECB was simply outvoted in the question of whether to apply QE to the Eurozone. Mind you, whether QE does any good is still open to question, but it's maybe better than nothing.
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26 January 2015
at
5:14pm
marcadler
says:
No, the reason Germans are shaking their heads is because they're thinking, "How can a country be run so atrociously? How can you borrow so much money without the first notion of how you're going to pay it back?"
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27 January 2015
at
12:35am
andrewcurry
says:
@
marcadler
@marcadler: Every time people comment on stories about debt they demonstrate that pretty much everything David Graeber said in his book was true.
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27 January 2015
at
2:49am
marcadler
says:
@
andrewcurry
Sure, but plenty of people were saying that before the Greek bailout. Germany didn't want to bail them out. They want to transform Greece into Germany, which might sound quixotic, but remember, that was the basic motivation behind the EU, or at least the economic part of the motivation. All these borderline third-world countries (Portugal, Spain, Greece, etc.) would learn to work hard and save money just like their thrifty, industrious northern neighbors.
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27 January 2015
at
2:12pm
ander
says:
@
marcadler
marcadler says:
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27 January 2015
at
5:36pm
Alan Benfield
says:
@
ander
Respect. Totally agree.
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27 January 2015
at
6:08pm
ander
says:
@
Alan Benfield
Thanks Alan.
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27 January 2015
at
12:17am
zephyr1
says:
This author naively interprets Tsipras according to his (i.e. the author's) own personal dreams of what the world might be like. Tsipras is a brilliant politician who wears expensive watches and sends his children to elite schooling. Tsipras now faces a simple path: try to keep power by compromise with Europe, or, try to keep power by leaving the euro. He has joined forces with a highly corrupted minority party which will do as he wishes, always at a price. He might mistakenly lose power, but, everything else is secondary.
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30 January 2015
at
8:15pm
twelvemonkeys
says:
@
zephyr1
"Tsipras is a brilliant politician who wears expensive watches and sends his children to elite schooling."
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27 January 2015
at
1:48am
brodix
says:
Politics is a convection cycle of expanding energy and contracting structure. Liberalism is social expansion and conservatism is civil consolidation. Much of which plays out as economics.
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27 January 2015
at
2:22pm
stettiner
says:
Socialist Left in coalition with antisemitic Right; savour it while you can...
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29 January 2015
at
5:28pm
valentin vasilev
says:
One should be careful about looking for too broad a perspective. After all the Greeks were quite profligate in money matters for many years, partly as a result of their strategic ( in those days) location, i.e. as a NATO front line and all that... Not only did they spend too lavishly they also cheated...
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30 January 2015
at
5:56am
jmamoulakis
says:
Mr. Meeks has missed the point. Syriza may want a bankruptcy-like cancellation of most of Greece's debt, but also wants to return to the old business plan which brought Greece to bankruptcy in the first place: Principally, it wants to rehire all the public sector employees, reverse the privatization program, increase pensions and salaries to their pre-crisis levels, nationalize the ferry fleet, etc. Syriza imagines that this program can be financed by taxing the affluent Greeks.
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31 January 2015
at
11:22am
jomellon
says:
Rather than a new politics doesn't Syriza represent PR spin on 'no change' in Greece?
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1 February 2015
at
3:18pm
Oolong
says:
I'm intrigued by your reference to 'an as-yet non-existent British movement – anti-austerity, pro-Europe'. Why a non-existent one, rather than the not-very-unified Left Unity, or the resurgent Greens?
Read moreWas the commonsense of this discrepancy elucidated at the time?
But it's not right to say that the bank bail outs were gifts, They involved a mixture of loans (to address liquidity needs) and equity stakes (to provide capital) - i.e. the government acquired millions of new shares in the bailed out banks. The money from the equity stakes will be recovered when the shares are sold.
The lack of commonness was not in bailing out the banks with equity, but in trying to bail out countries with loans. Of course, a country can't issue shares, so the choice was between loaning the money to Greece or just giving it. The latter could have been done at zero cost by printing more euros, but of course that was anathema to the Germans (at least until last week), so loans it was.
Unfortunately, Germans are still obsessed with the hyperinflation between the wars. If they had any sense of history, they might notice that one of the reasons for the hyperinflation in Germany was the response of the German government of the time to the stagnation of the German economy because of a creditor nation (in this case, France) insisting a debtor nation (Germany, war reparations) repay its debt in full, despite the impossible austerity regime which this involved.
Ring any bells?
The difference then was that the Weimar government unfortunately had its own currency which, in response to their actions, went into hyperinflation. Within the Eurozone this can't happen, of course, so Greece just gets the austerity without the inflation.
Also, as Jeffrey Sachs has recently pointed out, the 'Wirtschaftswunder', which Germans like to see as a result of their Teutonic thrift and hard work, would have been impossible without debt forgiveness by the Allied governments (notably the US through the Marshall Plan) in 1953.
By the way, you'll have noticed how inflation is taking off in the Eurozone (-0.5%). Invest in wheelbarrow futures now...
The really unfortunate thing about Syriza's victory (the possible breakup of the EU can only be a good thing, but that's a side issue) is that it shows that Greece still doesn't get it, and neither does the European left in general. It really just comes down to telling the truth and keeping your promises. If you borrow money and promise to pay it back, you keep your promise. The left has never really believed in any of that stuff, though, which is why it keeps failing, over and over. The whole 20th century was that lesson, but it hasn't been learned, as Venezuela and Argentina are now showing.
How long will it take?
On the Greek debt: 11% ended up in Greece. Why? Not because Greece was profligate, but because the loans weren't much to do with Greece at all, but were actually about repaying German banks that had made foolish loans to Greece at full price - some people would call this moral hazard - and dumping the cost onto the Greek state rather than German bank shareholders. And don't get me started on 'odious debt,' but there's quite a lot of that in there too.
Thomas Fazi has more on this at Open Democracy. https://www.opendemocracy.net/can-europe-make-it/thomas-fazi/troika-saved-banks-and-creditors-%E2%80%93-not-greece
There were plenty of people saying that that wasn't possible, either.
"No, the reason Germans are shaking their heads is because they’re thinking,"
Thinking? Now? Why weren't they thinking before? The answer is that they were thinking before too. Before they were thinking about re-paying themselves. Now, they try to extract from Greece that which isn't there.
"possible breakup of the EU can only be a good thing,"
You are being insolent. The only beneficiary of such a breakup would be the American imperial project, which feels threatened by Europe's cumulative muscle. In filing cabinets in Washington you will find blueprints showing how Uncle Sam intends to go about it, and with whose British help.
"If you borrow money and promise to pay it back, you keep your promise."
If you lend money, and you don't get it back, half the blame is on you.
"The left has never really believed in any of that stuff, though, which is why it keeps failing, over and over."
While the right and its banksters keep going from strength to strength. With government's subsidy and bailout.
Half the reason why Merkel got into this (and that's just the Germans, we still have to consider the French) was in order to prevent Deutsche Bank (let alone a number of smaller German banks) falling over and taking a lot of shareholders' money with it (and possibly the GERMAN economy). This is just a microcosm of what happened everywhere: nations assuming the debt of banks and then insisting on repayment of foolish loans originally made by the banks (given that the borrower was also foolish and corrupt - but it takes two to tango).
Nobody asked nations to take over the foolish and prodigal loans of the banks. Classical theory says you should let them go to the wall. Why is everybody now paying for what seems to be a questionable decision by nations whose banks were creditors? Gordon Brown may have 'saved the world' (in his words, not mine), but at what cost?
What Eurozone creditor nations like Germany are doing now is really more akin to the activities of Vulture Funds than European solidarity.
Don't take this personally, but you're either an idiot or a troll.
Tsipras wears a Hilfiger watch ( ~ £100) and has a 2 year old and a 4 year old.
Both sides like to project to infinity and not accede to the feedback loops tying them together. So rather than normal, local cycles of growth and consolidation, we get these ever larger waves of global expansion and collapse.
Live and learn.
Now it's payback time and they are on their own. They cannot ignite anything and Tsipras is just a two-dimentional populist who might end up quite badly... But,then, he is a fan of Che Gevara, so he should know...
In this they are fundamentally mistaken: The problem is not principally the fiscal deficit, which could be fixed by improving the tax system. More important than the fiscal deficit for understanding the Greek economic crisis is the balance of trade and balance of payments accounts. The deficits in these in pre-crisis years indicates that consumption, exceeded the value of the goods and services actually produced in Greece by about 25 to 30 billion Euros annually, a short-fall that was financed by borrowing, mostly by the public sector.
Syriza's program for undoing the reforms and expanding public spending means that Greece would be resume running similar deficits in the trade and external payments accounts. More than the already existing debt, the problem for the Eurozone are these new deficits that loom in Greece future under Syriza's program. For even if all of Greece's debt were to be canceled, the Syriza government would need additional support in the form of new loans or grants at a level comparable with past to make ends meet. No increase in the tax revenues would be sufficient to pay for its program.
In all likelihood, these deficits will only continue to widen, and the level of future "borrowing" would only accelerate, since Syriza's general hostility to enterprise would entail rapid disinvestment and decline in production in the country. The idea that reversing austerity in Greece would result in reflating the economy is a total pipe dream. Under more favorable circumstances in the past, public deficit spending resulted only in increased domestic consumption, and weak, even declining production: Spending in Greece stimulated production in the countries where the goods avidly consumed in Greece are actually produced -- e.g., in the EU, in China, and the other providers of Greek imports.
Without the reforms which Greece's lenders tried to impose on the country, the conditions which lead to the crisis will impose themselves again. Syriza's program will, fairly quickly, lead to renewed insolvency. More ominously, insolvency now will mostly likely lead to desperate measures by Syriza to stay in power, which Europe will have to be ready to confront, sooner or later. And that confrontation will be less damaging to Greece, and probably to Europe, if it comes sooner rather than later.
What do they actually stand for?
- blame the foreigners, no self criticism,
- no emphasis on structural reform
- let's see if they actually take on the Greek oligarchs
- let's see what they want to do about the endemic corruption in Greece
of the small man as well as the large one
- are they going to show they will get serious about tax collection
Instead of all that very hard work, politically and economically, their policy is:
- default, borrow more money
(but this time as a left wing policy instead of a nationalist policy)
Looks like "Same old, same old" to me.