Can Europe Make It?

The challenge...

An open letter to Yanis Varoufakis, on democracy, debt, banks and currency. Read Varoufakis' reply here.

Alexis Cukier Patrick Saurin
4 October 2016

Greece's Finance Minister Yanis Varoufakis at the Finance Ministry after the referendum overwhelmingly rejects creditors' demands for more austerity, July 5, 2015. Angelos Christofilopoulos/Press Association. All rights reserved.Dear Yanis Varoufakis,

While in your article “the European Left after Brexit”, published on the 5 September on Mediapart, you set yourself apart from the positions of supporters of Lexit such as Tariq Ali, Stathis Kouvelakis, Vincenc Navarro and Stefano Fassina, you seem to align on certain political positions supporting an alternative to the neo-liberalism as desired by many left wing forces in France, Greece and in other countries. Therefore we can only approve of your call to disobey the EU.

Considering your article was presented essentially as a rebuttal of arguments of the supporters of Lexit, we wanted to contribute to the debate by submitting to you some reflections and in posing some questions concerning four subjects crucial for the construction of an alternative in Europe: democracy, debt, banks and currency.

1) Democracy

The movement that you have created, DiEM25, “Movement for democracy in Europe”, rightfully accords a central place to the questions of democracy and civic activism. How therefore does one explain your signature on the 20 February 2015 agreement with the Troika which explicitly disavows the Thessaloniki programme upon which Syriza was elected and which brought you into government?

As you know, the majority of the population and the core of the forces of the left were opposed to this agreement because it accepted the privatisation of public assets in Greece, unachievable economic objectives and the commitment “not to disobey” the diktats of the Troika– contrary to the position that you presently hold. Those who at the time claimed that this agreement would inexorably lead to the capitulation of the government were proved right.

DiEM25 promotes a “constituent process” and you declared in your last article that you are in favour of “plans for redeployment of the current institutions”. What precisely does this “redeployment” mean to you? Are you in favour of a dismantling of the treaties and the current institutions of the European Union in order to replace them with others within the framework of a new union? Do you not believe that democracy in Europe goes beyond disobedience toward a radical reconsideration of the foundations of the current European Union which are engraved in stone in the treaties (free not distorted competition, absence of supervision of the ECB whose sole preoccupation is inflation etc.) and in the practices which structure Europe: fiscal and social dumping, speculation, tax fraud, high unemployment, an environmentally destructive economic model, wealth inequality, etc?

2) Debt

As you know, on 4 April 2015, Zoe Konstantopoulou, then President of the Greek Parliament, established a Truth Commission on the subject of Greece’s sovereign debt. On that day, you participated in the meeting without tackling the question of debt but rather discussed the banking system more generally. At the end of the month of June 2015, the Commission issued its report that almost the entirety of Greece’s sovereign debt was illegal, illegitimate and unsustainable and in this regard should not be repaid.

Lawyers, an independent expert from the United Nations and members of the Commission reiterate that fundamental human rights (to food, housing, healthcare, access to education etc.) should be ensured before the payment of debt as is recognised by article 103 of the Untied Nations Charter and article 53 of the Vienna Convention on the Law of Treaties.

However, when you were minister of finance and confronted with the uncompromising attitude of the members of the Eurozone, you did not seize upon the report of the Truth Commission on sovereign debt. You did not advance nor do you presently advance the position of total unilateral suspension of reimbursement of the debt as recommended by the Commission and supported by the legal basis of the state of emergency recognised by the international courts, even though such a measure would be ideal for laying the foundation of a “progressive agenda”, given that at the time the Commission presented its findings the recommendation of a debt default was proposed with being associated with Lexit.

In view of these findings, why did you not support the Commission which everyone would agree was working “on a pragmatic, radical, concrete and progressive agenda, which engaged the grass roots and the progressive experts”, to use your own words?

Why in 2011 did you not support the citizens audit committee on Greek debt (ELE) which was established? Does option 3, “Disobedience” which you recommend, consist of proposals not to repay illegal, illegitimate and unsustainable debt? In other words, should the default on this debt not constitute part of the “precise plan of immediate action” which you call for?

3) The banks

As you were able to verify as minister of finance, Greece was subjected to the pressure of private banks and the extortion of the ECB. Throughout 2015, the Syriza government did not cease to bail out banks under private control without any notable positive effects being observed.

What do you propose to break with this model of unwavering support for a private banking system which has not only proved to be inefficient but also and above all to be by its nature pernicious?

Are you favourable to the establishment of a public banking system allowing notably the State and local public actors (such as municipalities, public hospitals and public housing organisations) to borrow at 0% in order to finance their investments?

Let’s remember that the private banks refinance themselves via the ECB at a rate of 0% or even -0,4%. As the Syriza government took power in January 2015, in a context where the Greek banking system was dilapidated and incapable of participating in the establishment of a politics of social progress, was it not possible to organise an orderly bankruptcy process for the private banks (that is to say, protecting the deposits of small savers) instead of recapitalising the banks and giving them guarantees on tens of billions of euros of pure loss, while at the same time these banks remained under private control? And why maintain Yanis Stournaras at the head of the Bank of Greece, who used all of his capacities to oppose the implementation of the policies of the government, refusing for example to communicate to the Truth Commission on Greek Sovereign Debt the information it requested in the context of its work?

4) The currency

Should a government which wishes to implement its policies, especially with regard to a policy of social progress breaking with the dominant anti-democratic and austerity-based model not retake control of its central bank in order to manage the creation of money and its monetary policy?

When Syriza arrived in power in January 2015 and the ECB refused to grant liquidity to Greek banks, why did the government in which you were a member not devise and implement concrete monetary alternatives, whether it be the return to a national currency under democratic control or even an electronic currency (similar to Ecuador at the beginning of 2015) complementary to the Euro, managed by public authorities for the payment of goods and services of necessity as well as taxes?

This is certainly a complex debate, but why did you not engage in it publicly when you were a member of the government and give the Greek people the possibility to decide democratically on this issue? Beyond the specific case of Greece, in your opinion which monetary alternatives could be used against the strategy of monetary asphyxiation that the Troika employs against any attempt to break out of the iron cage of austerity by other countries?

In conclusion, do the “alternative programme for European progressives” and the “head-on confrontation with the European establishment” that you call for as well as the call for “disobedience” that you have launched not require the implementation of an action plan containing radical measures such as:

  • 1) disobedience of European treaties and the respect of fundamental human rights inscribed in particular in multiple texts of international law
  • 2) the non-payment of the portion of sovereign debt which can be demonstrated in an incontestable manner as illegal, illegitimate and unsustainable, as was the case for Greece
  • 3) capital controls (notably as a defensive measure agains the extortion of the ECB)
  • 4) a halt to the privatisation of common goods and the reversal of those which have already taken place
  • 5) the socialisation of the entire banking system
  • 6) the recreation of European, national and local institutions assuring a true democracy

From our point of view, if such a programme required the exit of the European Union, we accept this fact because we prefer the struggle for social progress- even if we are not certain to win this combat - to a resigned acceptance of a European Union with the guarantee of perpetual austerity.

This letter was originally published in French on Mediapart.

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