Greece: rescue? At what price?

Submitted by AWL on 24 June, 2015 - 7:14 Author: Theodora Polenta

At the meetings of EU prime ministers and finance ministers on 22 June, it looked like grey smoke was coming out at the end of the negotiations.

For the first time, our “partners” (except German finance minister Wolfgang Schäuble) spoke as if the Greek government were nearing a deal. Whether a new deal, or another short-term extension of the existing deal, was not clear.

The latest proposal, submitted by the Greek government in the early hours of Monday morning 22 June, has superseded the previous 47-page “memorandum-lite” document.

Although it looks as if Greece’s position within the eurozone may have been temporarily saved, there was no rejoicing from the Syriza government and the Syriza leadership.

The Syriza leadership narrative about a new Keynesian deal to save Greece and the Euro being achieved through rational negotiations and through playing on the contradictions and splits between our “partners” has been trashed.

Rather than rejoicing, there a feeling of numbness and an implicit recognition that the government’s last “red lines” (let alone the Thessaloniki declaration, on which it was elected), have been grossly violated in favour of the ruling class and international creditors.

The stance of the Syriza Left Platform ministers and MPs is still unclear.

The main article in Avgi, Syriza’s newspaper, of 23 June states that for the first time in five months of negotiations the news from Brussels is promising.

Avgi concedes that an agreement will be “difficult” and that the Greek side “had to cover most of the distance”. However, in an ongoing effort to reduce working class expectations, Avgi claims that the agreement is still beneficial for the working-class majority and is still better than an agreement that would have been reached if New Democracy and Pasok where in government.

Avgi claims that the tentative agreement avoids the reduction of pensions to 360 euros, as was envisaged in the previous Memorandum, and the elimination of auxiliary pensions and the Pensioners’ Social Solidarity Benefit (EKAS). It says that the government is also negotiating a return to collective bargaining agreements, which will allow better wages and work conditions.

The article claims that the Syriza government has achieved a general shape of fiscal policy that could shift the burden of “savings” from lower to the middle and higher incomes.

It recognises that the government’s proposals are a retreat from the election commitments of Syriza. It describes aspects of the agreement as ideologically unpleasant and says that the government will make systematic efforts to reduce their effects.

In reality, the Greek government’s new “offer” includes:

A. Payments by the workers, pensioners and popular strata. These include permanent anti-labour measures, specifically:

(a) Increase private sector workers’ social security contributions by 1%. This is an indirect reduction of the private sector wages. Increase both private and public sector workers’ contributions to auxiliary pensions.

(b) Maintenance of the Memorandum “solidarity levy” on wages. For incomes lower than 30,000 euros the “solidarity levy” contribution is maintained at the Memorandum level; for higher incomes it is increased.

(c) Introduction of a pensioners’ 5% contribution to auxiliary/supplementary pensions for healthcare.

(d) An increase of pensioners’ healthcare contributions from 4% to 5%.

(e) Gradual abolition of “early retirement” over three years, starting 1 January 2016.

(f) Increases in indirect taxation, especially VAT, which hits poorer people much harder than the well-off. 30% of food will be transferred to the high VAT rate of 23% (from 13% today). The government also proposes to abolish the reduced VAT rates applied on the Aegean islands.

B. Payments by business and corporations: these measure are mostly temporary rather than permanent.

(a) Increase of the employers’/bosses social security contribution, plus a one-off ad hoc contribution from companies with net profits in 2014 of more than 500,000 euros.

(b) For 14,930 companies with profits above 100,000 euros, the income tax rate will be increased from 26% to 29%.

(c) Increase from 10% to 13% in taxation for private owners of cars of over 2,500 cubic centimetres and for ship owners, aircraft and swimming pools.

(d) Taxes on television advertising with target revenues of 200 million euros.

(e) One-off auctions of mobile telephony licences and of licences for online gambling

(f) Reductions in military spending.

For the 2015-2016 period, the burden of the €8 billion fiscal measures is predominantly carried by the working class majority. €4.5 billion worth, 57% of the total, comes from direct and indirect reductions in wages and pensions and additional taxation, and €2.8 billion worth from business and corporations.

And things can only get worse. The “partners/institutions” have yet to seal the agreement. And as the next D-Day approaches and the pressures increase the government to reach a deal at all cost, the proposals are likely to be modified further for the benefit of the creditors The government’s achievement in exempting electricity bills from the 23% bracket of VAT is a drop in the ocean.

According to the office of national statistics the number of people in poverty in Greece now exceeds six million. According to the same study, the total additional taxation burden of the working class majority has reached 300%. The increase has been 125% for the middle class and only 12% for the ruling class.

The only consolation that the government is hoping for is a vague promise for a restructuring of the debt (sometime in the distant future), which is not going to be far from the November 2012 debt restructuring proposal and is a far cry from Syriza’s programme of a pan-European debt summit which would abolish the majority of the debt with debt repayments.

The “grey smoke” that has come out of the euro-talks is actually jet black for the working class majority, pensioners and youth. The working class has to take the steering wheel and become the compass of Syriza and the revolutionary left in and outside Syriza.

For those who do not want in the idea of “the government of the Left” to become a “parenthesis” there is only one answer: fight to block this destructive agreement. We do not accept this government’s capitulation to old and new memoranda!

The Syriza MPs, the Central Committee, and the Political Bureau alongside Syriza’s rank and file should take a clear position, resist the flagrant breach of the government’s popular mandate and demand the holding of an emergency conference of Syriza to adopting a program of rupture with the EU/ECB/IMF Troika and the Greek capitalist oligarchy.

Inside Syriza, besides the Left Platform, which has been targeted by the mainstream media, there are other components of the revolutionary left and diffuse left-radical forces and voices. The coordination of these forces is now indispensable in order to avoid a political tragedy and to keep alive the hope created by the establishment of Syriza as a unifying and radical operation on the left.

A government of the Left which defies the blackmail exerted by the EU leaders and the IMF on behalf of the bankers must be prepared for expulsion from the euro and transition to a local currency. But a local currency within the context of capitalism is not going to solve any of the major problems. On the contrary, it is going to exacerbate them.

Socialist measures are needed for the functioning of the economy and for working-class survival: nationalisation of the banking system, nationalisation of strategic sectors of the economy, an economic reconstruction plan, cancelling the debt, democracy in the production process with social and workers’ control.

On the basis of such a socialist perspective and programme there is hope, both for the Greek working class and for the pan-European working class who will support and embrace the initiative and the prospects offered by the Greek labour and popular movement. Capitalism, facing the most profound international crisis since the 30s, offers only despair.

Kolonaki, Filothei, Kifissia, Kefalari, Varkisa, Voula, all the rich suburbs of Athens, took to the streets on 22 and 17 June in the first protests in Syntagma Square against the Syriza government. According to the placards of the kitsch ultra-neo-liberals, these were demonstrations “Against the Soviet past and further Sovietisation of Greece”.

They had all the accessories: coloured whistles and standardised placards in Greek and English. And, for the first time in the Greek crisis, dozens of protesters got into parliament undisturbed by the police.

There was no sign of riot police. Syriza representatives commenting on TV were politically critical of the “protesters”, but defended and acknowledged the right to protest.

The demonstrators cried “We are remaining in the euro”; whilst at the same time they were rushing to the ATMs and banks so as to stash their savings outside Greece.

New Democracy [ND, Greek equivalent of the Tory party], was the main mover, but To Potami and Pasok, with the full support of Greece’s bourgeoisie, were striving to rally mainly upper middle class people, but also some sections of workers and youth, to put pressure on the Syriza-ANEL government to sign a new Memorandum.

“Imagine Greece out of Europe? We will become like Hoxha’s Albania” commented two fearful bourgeois ladies. “Please Jesus, help us stay in Europe”, said the placard of a “gentleman”. They see “Tsipras and his government” as a “red threat” or “the red junta”. For them, the Greek civil war of the 1940s is not over.

Working-class mobilisations and rallies have been called by Syriza, Meta, and Antarsya, as well as the trade unions of the private and public sectors, against the blackmail of the creditors.

The working-class movement should demand loudly and firmly that the government should end the “negotiations”, should abolish all Memorandum laws, and should implement the commitments of Syriza’s Thessaloniki declaration.

Protests against austerity, and in solidarity with the struggle of the Greek people were also held over the weekend 20-21 June in Brussels, Amsterdam, Vienna, London, Rome, Paris, etc.

Syriza left-winger Stathis Kouvelakis published this statement on his Facebook page late on 23 June:

Such a package of measures, comparable at all points to the potion administered continuously in the country for five years, can only cause further recession, unemployment and poverty.

And this in a country that has lost a quarter of its domestic product in five years, with unemployment affecting more than one person in four and one third of the population below the poverty line.

We will have to take stock of the political trajectory that led a government that was carrying a popular hope well beyond the borders of this small country to where we are now. But it is not the task of the hour.

Right now, we need to mobilise and lobby:

• The Greek Government, for as long as the agreement is not signed, so that it does not do the irreparable. A capitulation of the Syriza government will have incalculable consequences for the progressive forces in Europe and in the world, we need to get the message.

• The parliamentary group of Syriza, so that its members do not vote through an agreement completely contrary to the mandate entrusted to them less than six months ago by the Greek people.


25 January: Syriza wins Greek election and forms coalition government with Anel.

21 February: Initial agreement between eurozone finance ministers and Greece on extension of “bailout” agreement. But no cash released until Greece submits new cuts plan.

22 June: Emergency summit of EU prime ministers and finance ministers. Greek government submits yet another plan, which EU leaders call “a good starting point”.

24 June: Eurozone finance ministers' meeting.

25 June: Scheduled EU summit.

29 or 30 June: Last dates the German parliament can be recalled to approve a further extension of “bailout”. On paper, this extension could bring the Greek government credits totalling €16bn.

30 June: End date of current extended “bailout”, and deadline for €1.5bn Greek loan repayments to the International Monetary Fund.

20 July: Two bonds totalling €3.5bn fall due to the ECB. Another €3.2bn is due for two more bonds held by the ECB on August 20.

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