Readers of Stranger Things may recall my post on the victory of Syriza, a party dominated by left-wing college professors, in the Greek parliamentary elections. Since January I have periodically followed their efforts to renegotiate the terms of Greece's bailout agreements with the EU. The talks collapsed in late June, as the “Troika” (the European Commission, European Central Bank, and International Monetary Fund) refused to accept the Greek government's proposed budgetary concessions, and Prime Minister Alex Tsipras withdrew from the talks. David Attewell summarized the negotiations on Lawyers, Guns & Money:
1) In February Syriza and the Troika reached a preliminary agreement: Syriza could set its own fiscal policies if they achieved the Troika's budget-surplus targets.
2) In June, after the Greek government delayed a loan payment, Greeks began a “slow-motion bank run.”
3) The Troika used the crisis to take a much harder line: it rejected Syriza's proposed mixture of tax increases and pension reforms, and demanded higher VAT (value-added taxes) and deeper pension and defense cuts. Most would disproportionately burden the poor and middle class.
I agree with Attewell's conclusion about the Troika's ultimatum: “It's difficult to escape the conclusion that the creditors'...proposals were about regime change more than economics.” The Commission, ECB, and IMF wanted to crush Syriza and force the Greek electorate to vote in a more agreeable group of center-right technocrats.
Euclid Tsalakotos, a Syriza party official and scholar, observed that the EU and ECB consist primarily of bureaucrats and financiers who despise everything about academics. According to an interview with one of Tsalakotos' colleagues, when Tsalakotos went to Brussels in 2013, he wanted to argue and reason with EU officials, as professors prefer to do. However, they merely “recited rules and procedures” and expected their Greek subordinates to fall into line. Granted, Syriza's officials have employed some inflammatory rhetoric since they won the elections, but they did so in the context of negotiating and arguing with European officials. The officials, however, prefer ultimata to negotiation.
I suspect Alex Tsipras pulled out of the negotiations with the Troika because he understood that the European Commission and ECB had made his government an offer it could not accept – not without collapsing. Calling a referendum on the Troika's proposal may have been Tsipras's attempt to demonstrate this point. The results of that referendum, held on July 5, surprised even Syriza: over 60 percent of voters said “No,” including most young and working-class Greeks. With considerable cluelessness, Le Monde wondered “how these young people who had grown up with the Euro, Erasmus program, and European Union are turning against it.” Reported Strathis Kouvelakis of the Syriza Left Platform, “the response from all of those interviewed was simple: we have seen what Europe is about, and Europe is about austerity, Europe is about blackmailing democratic governments, Europe is about destroying our future.”
Europe's heads of state and the wealthy financiers they service have little interest in the young, and even less in democratic referenda. The ECB had on June 30 tightened the screws by ending “liquidity support” to Greece's banks, forcing the government to close them and introduce capital controls. (David Attewell observes that by this action the European Central Bank abrogated its core role, which is “to stop bank runs.”) After the referendum, German officials proposed a five-year exclusion of Greece from the Euro – which would have become permanent, since European leaders would not allow Greece back into the Eurozone if its economy crashed as a result. Paul Krugman argued that Greece should simply drop the Euro and deflate its new currency. However, in the short and medium term this would cause much hardship. Greece depends on imports of food and medicine and has few exports beyond tourism.
Tsipras and his government decided that repudiating the referendum and capitulating constituted their least-worst option. The Greek parliament accepted on July 16 a new deal exchanging 86 billion Euros in bailout funds for tougher austerity measures and the forced sale of 50 billion Euros of state property. Thereby they surrendered much of Greece's sovereignty to the unelected Eurogroup. Former Finance Minister Yanis Varoufakis said as much, calling the agreement the modern equivalent of the Versailles Treaty. If I recall correctly, that treaty ultimately made its primary victim, Germany, a threat to the rest of the continent. But then, Europe's bankers and conservative elites rather liked Hitler, didn't they?
On the moral implications of the whole imbroglio, finally, this essay on Interfluidity takes the best tack. Author Steve Waldman admits that Greece's government had deep and persistent problems, including systemic cronyism and widespread tax evasion. European banks lent it money anyway, assuming that Greece's membership in the EU would protect their investments. When Greece got into trouble in 2010, European leaders decided to bail out its creditors and impose harsh costs on the Greek people (not just the government). There was plenty of blame to go around for Greece's financial problems, but since 2010 Europe's officials and bankers have crafted a morality play in which Greeks belong to an irresponsible and evil nationality, and other Europeans remain lily-white. This “betrays the ideals of European integration,” and subverts the fundamental purposes of the EU and the Euro: to replace nationalism with international cooperation and prevent another World War. The Union's current political leaders would rather line their pockets, grind down the remnant working class and young people, and let their successors deal with the consequent political explosions.
Speaking as an American, though, from a country that has curtailed voting rights, saddled its young people with crippling debts, bailed out bankers, and reintroduced debtors' prisons, I suppose I shouldn't throw stones.
(And, yes, I stole the title for this post from someone else. Wish I remembered who it was.)
The above photo is by Yannis Kolesids, via Jacobin Magazine.