Greece along with the eurogroup: capitulation or the dam of violating austerity?
George Papandreou was a capitulation. Tsipras and Varoufakis achieving four months and flexibility and new space to attain a genuinely new strategy was quite an achievement.
Did the new Greek authorities really destroy the trust of their eurozone counterparts, only to rules that are subsequently capitulate on a deal, showing austerity however? Instead, is there some hope for unemployed or all those impoverished or otherwise damage by the enforced austerity of the euro-crisis years? Is there more expect also for democracy across Europe? Or has been trampled under foot the IMF by eurozone finance ministers and the ECB?
That Yanis Varoufakis, as Greece’s finance minister, together with the intervention and support of Alexis Tsipras, Greece’s Prime Minister got some significant compromises for Greece, while not reaching everything Syriza first asked for, is a sizeable achievement – since Greece’s strength compared to 18 other eurozone member states is barely appreciable. Indeed, since the global economic crisis broke in 2007, followed by the intense eurozone disaster from 2010, the power in the eurozone group has been held by lender member states and institutions – notably Germany but also Finland, Austria and others – jointly with the European Central Bank (ECB), as well as the IMF. Cyprus, Portugal, Ireland and Greece have been dictated to throughout these years by the troika of the EU/European Commission, ECB and IMF.
Some of this one-way quasi-colonial rule has been only too public – not least the humiliation of former Greek Prime Minister, George Papandreou, driven by Angela Merkel followed rapidly by then French President Nikolas Sarkozy to withdraw a promised referendum in the conclusion of 2011.
Real change or papering over a climbdown?
Some analysts dashed to assert that Greece had lost, any changes agreed being only decorative – such as now referring to the troika as ‘the institutions’ (see for example Reuters’ investigation). Others, some in great detail, showed just how difficult a battle was fought as well as the space and concessions that was opened up as a result (see Norbert Haering’s exceptional review).
Greece did really compromise. The bailout was extended for four months using a continuance of many, indeed most, of the reforms in the bailout programme.
But Greece also procured a number of things. Greece now has space to negotiate and argue for a lesser main budget surplus – the eurozone ministers permit this to be discussed, no longer simply imposed at 3-4.5% (raising, as was the strategy, from this year to next). Varoufakis and Tsipras have a unique chance to argue for the 1.5% they have said makes more sense.
Greece got a recognition of the fact that it’s consenting this four month deal as a ‘bridge’ to a new deal – one where the Greek government has been clear it’ll negotiate for a leading debt-restructuring to let debt payments linked to growth, and policies that will boost growth. How successful Tsipras and Varoufakis will be in that discussion during the following four months is the key question – but that is going to be the moment to judge whether the Syriza government has delivered on its promises.
Greece reached a compromise on privatisation – consenting to continue with ones now under way but permitting it space to reflect on future privatisations. This is not small beer, it is a major crack in the eurozone’s (and the wider neoliberal) ideological attachment to privatisation that has been at notably high levels across southern Europe in the last couple of years as a direct consequence of troika imposed policies.
Greece also got arrangement that it will spend more on its internal humanitarian crisis – on medical care, on the poor and unemployed – though with money saved from elsewhere.
There are details and lots of other examples. Greece, again significantly, got to place its own new record of reforms forward – taken by the European Commission, the ECB and IMF (with some grumbling from the latter’s boss, Christine Lagarde), a list subsequently taken by eurozone finance ministers.
In essence, in a few short weeks, the new Syriza authorities has taken Greece from being a passive receiver and implementer of, in many cases deeply harmful, austerity policies to being a country that has recovered some – albeit not a complete – say in its reforms, in its approach to its nation’s social, economical, political and humanitarian catastrophe, and in its future management of its own debt.
It’s very difficult to see how this could be summarised as capitulation failure or a rapid U-turn. George Papandreou cancelling his referendum was a capitulation. Varoufakis and Tsipras achieving flexibility and new space and four months to attain a genuinely new approach was quite an accomplishment.
It was unlikely that the entire neoliberal economic ideology that’s driven the eurozone’s strategy to its disaster in the past five years and more in the space of a few weeks could be overthrown by the brand new Greek government – but that it has made some first dents in it’s not unclear. It is all rules-based, as if the rules are God-given and as in the event the rules can go against the rules of macroeconomics.. I insisted on discussing macroeconomics.”
Trust – Broken by whom?
Amidst the intense bargaining of the past weeks, tough words are spoken on all sides. Accusations of an imminent breach of trust came in particular from the seat of the eurogroup finance ministers, Jeroen Dijsselbloem, who talked of the final agreement produced being the beginning of “rebuilding trust”, while German finance minister, Wolfgang Schaeuble’s unconcealed anger at Yanis Varoufakis’ ‘Trojan horse’ tactic added further discharges and heat to the discussion.
Yet without this kind of shaking up of the terms of the debate, it’s indeed difficult to see how the new Greek government could have attained the compromises it did. If there had only been behind-the-scene negotiations in the eurozone finance ministers’ group, discussions would have followed the well worn tracks of the past several years.
However, the trust question really goes much broader than that. Where’s political trust in the EU, if democratic elections don’t produce policy change? And what’s happened to trust in an EU in European ideals and goals of peace, prosperity and solidarity, where youth unemployment is over 50% across large swathes of southern Europe? It’s surely one of the very most shocking elements of the euro crisis, that the EU’s leaders have looked on the destruction of hope with such equanimity for so many of the EU’s younger generations.
The reality that any accusations of the Greek government breach of trust came from the other eurozone finance ministers rather indicates how little challenge this powerful group has faced in recent years – either from fellow politicians or from the international and European media – in relation to their treatment of the catastrophe, and their betrayal of central European ideals through their equanimity in face of such socially, politically and economically damaging rates of youth (and adult) joblessness.
The lengthy four-month bailout for Greece, and the related reforms’ deal that has to now be executed, is just the very first phase in what is going to be a demanding and long set of discussions and discussions.
What Varoufakis and Tsipras have attained isn’t only a brief if essential breathing space but crucially the start of a challenge to austerity in Greece and across the EU. The challenges for the following stage are considerably larger: producing an arrangement which allows truly growth-oriented policies, including allowing, pace Keynes, demand to grow, and policies that undertake not worsen inequality and poverty, will require much more than just the levels of bargaining skill revealed by Greece so far.
But in exacting some compromise the fresh Greek government in the shortest of time, out of the EU eurogroup, has created some hope and some revitalisation of democracy in and beyond Greece’s borders, at a moment when it hasn’t been needed more.