Can Europe Make It?

Crisis and reform: obstacles and possibilities for Greece and Europe

If the Greek government seems honest in its intentions to co-operate with the partners for a “mutually beneficial agreement”, the “working together for reform” rhetoric is hypocritical on the part of the EU institutions.

Dimitris Boucas
1 May 2015
Third pro-government protest in Athens, February 2015.

Third pro-government protest in Athens, February 2015. Demotix/Michael Debets. All rights reserved.Deep into the crisis years, in 2011, I spoke briefly to a well-known Greek academic and public intellectual who, to my surprise, was supportive of the Memorandum imposed by the Troika and the relevant austerity measures. I put to him the suggestion that perhaps his support, indicative of a large segment of the Greek intelligentsia, was premised on the expectation that through this painful process Greece might change to simulate a Weberian, German-like public administration. This would operate on a rational-legal basis as opposed to a political system embracing patronage and a clientelist culture. I recall mentioning the expression “possible collateral benefits” of the Memorandum; he seemed to agree, reiterating this same phrase.

In a recent openDemocracy article, written as a letter addressed to a newly elected SYRIZA MP of the isle of Samos, it is argued that the Greek people and the new government should work together if structural deformities of the Greek political life and the public administration are to be tackled. Such structural issues include bribing, incompetence of public servants, ineffective mechanisms, waste and misuse of resources, lack of accountability and transparency and the overarching premise of corruption at all levels.

All these are immediately recognisable to anyone who has lived in the country or has dealt with its state mechanisms. Significantly, for the first time in Greek postwar history, a government has pledged to address the chronic problems of intertwined interests, lack of transparency and democratic deficit. Its first months of governance have showed signs of mobilisation to start working in these directions. The content of their proposals to Brussels emphasise the necessity of real reform, while they have repeatedly expressed their intention to introduce an overall new ethos in Greek political life: deepening democracy, promoting transparency, and meritocracy.

But the current positioning of the equivalent of the Troika, the institutional partners of Greece, or so-called Brussels Group, has demonstrated over the last three months that real Greek reform is not part of their agenda.

To be sure, the partners do ask for extensive reforms, but of a particular kind: further compression of salaries and pensions, higher flexibility in employment (in a country where collective agreements have been blatantly over-ruled in the last three or four years), privatisations and so on. It is worth commenting on the particular insistence of the partners, for instance, on the SYRIZA government not passing their priority bill on humanitarian alleviation for people deeply affected by the crisis (lacking food, electricity and other basic commodities and services).

This bill was seen as one of the unilateral moves that Greece was not allowed to adopt under any circumstances. But when it comes to the real, structural reforms which large segments of the Greek population aspire to (certainly many on the Left who have been excluded from clientelist networks for decades) and which the SYRIZA government has promised, the Brussels partners have demonstrated a strong resistance.

Whilst the Greek government seems honest in its intention to co-operate with the partners and achieve a “mutually beneficial agreement”, the “working together for reform” rhetoric is a hypocritical one on the part of the EU institutions. The most obvious sign is that the discussion and negotiations are framed by the partners only in economic terms. The emphasis is on “quantifiable measures” that the Greek government should adopt, and on avoiding detrimental unilateral actions (such as the “humanitarian” bill mentioned above) that would add to the already incurred expenses of the Greek state.

The creditors need to be satisfied quickly before any more money can be given to the Greeks, while the EU mechanisms, not least the ECB, have orchestrated their actions towards increasing pressures on the Greek government to accept an agreement in their own terms.

In a recent European Parliament debate, GUE/NGL MEPs Neoklis Sylikiotis and Kostas Chrysogonos criticised the European Council and Commission for their role in the "financial extortion" of Greece. As Cypriot MEP Sylikiotis said: "The Eurogroup, the European Commission, and the European Council should all stop this financial extortion of Greece. An elected Greek government has demanded an end to the destructive policies of the Troika and the adjustment programmes, let them implement their own programme so they can tackle the humanitarian crisis and help the Greek people”. And Greek MEP Chrysogonos: "The President of the European Council talks to us about the need for structural reforms. To bring back growth we all accept that there should be reforms but the crucial question is what kinds of reforms are we talking about? The Council wants deregulation of the labour market so that labour is disorganised and defenceless vis à vis capital. This will certainly not bring growth, only recession”.

Clearly, the broader economic and social reforms inside Greece that the SYRIZA government has in mind cannot happen under such circumstances. The partners essentially dictate that the government continues pushing the weakest segments of the population towards more austerity and poverty, rather than providing the opportunity to work towards generating income from other sources through reform. The first time that a Greek government is really interested in a reform agenda, it is suffocated by its international institutional partners and given very small room for actually making reform possible.

When competition is violated

Why should this be the case? On one level, it can be seen as pure ideological attachment to the philosophy of austerity and to the principles of monetarism and neoliberalism that seem to have defined the EU agenda since Maastricht. A recent report by the Jubilee Debt Campaign mentions:

“Ahead of the payment of €462 million by Greece to the IMF on Thursday 9 April, figures released by the Jubilee Debt Campaign show that the IMF has made €2.5 billion of profit out of its loans to Greece since 2010. If Greece does repay the IMF in full this will rise to €4.3 billion by 2024…The IMF has been charging an effective interest rate of 3.6% on its loans to Greece. This is far more than the interest rate the institution needs to meet all its costs, currently around 0.9%. If this was the actual interest rate Greece had been paying the IMF since 2010, it would have spent €2.5 billion less on payments … All of this money has been added to the Fund’s reserves, which now total €19 billion. These reserves would be used to meet the costs from a country defaulting on repayments. Greece’s total debt to the IMF is currently €24 billion”.

In addition, as Tim Jones, economist at the Jubilee Debt Campaign states: “The IMF’s loans to Greece have not only bailed out banks which lent recklessly in the first place, they have actively taken even more money out of the country. This usurious interest adds to the unjust debt forced on the people of Greece.”

The above confirms two well-known facts: firstly, that the lenders have made huge profits in exploiting the Greek situation; secondly, that the bailout money to Greece is used in the first instance to recapitalise the banking system. What might be less known are the practices that banks have adopted in the crisis years. A 2011 Reuters report exposed the working of the Greek banking system. It demonstrated clearly the ways in which Greek bankers use the banking system to pump money into their other entrepreneurial activities leaving their own banks to go bust, and then be re-juvenated through borrowed money, adding thus to the debt of the Greek people.

At the same time, bankers and other entrepreneurs themselves make profits, often through offshore enterprises; profits that should be taxed in Greece leave for the tax paradises of Switzerland, Luxemburg, the Netherlands and elsewhere. In a recent comment to the Greek online newsroom, the Vice-president of the EU Parliament΄s TAXE Committee, Eva Joly, stated: “The Netherlands is one of the biggest corporate tax dodging havens...and their finance minister as head of the Eurogroup is forcing Greece to cut public spending while depriving the country of potential tax revenues”.

While the SYRIZA agenda is one of increased reform, governance and democracy, the agenda of the EU institutions is guided by a strange mix of governance as control (regarding the spending, income, or employment conditions for the population at large), while turning a blind eye on corrupt banking practices, creative tax avoidance, or blatant violations of competition.

While the Troika was insisting on layoffs, cuts in salaries, reduction in health and education expenditure, it was selective regarding other opportunities for generating income for the Greek state. One case in point is the scandal of the allocation of digital frequencies to the single candidate, namely the DIGEA consortium of Greek mainstream media, at the extremely low price of 18 million euros through a process that violated blatantly the rules of competition.

It is maybe striking that the EU mechanisms can go to such lengths in order to defend the rule of the market and the banking system. It is even more striking when these practices are inconsistent with the aforementioned principles of neo-liberal doctrine, as they are when competition is violated and when market deformities are introduced and result in the concentration of power in big corporations.

In other words, there seems to be more to these EU practices than a pure ideological commitment. As Donatella della Porta argues, neoliberalism has survived its crisis by making politicians complicit through wild lobbying, also at the EU level. The huge expenditure of public money to bail out banks and the cuts in capital taxation are indicative of the overlapping of political and economic power and of the corruption of representative democracy.

Syriza as a threat

Performer dressed as a banker representing IMF,ECB and Eurogroup at the protest.

Performer dressed as a banker representing IMF,ECB and Eurogroup at the protest. Demotix/ Michael Debets.All rights reserved.In this context, the resistance of the EU partners to the possibility of reform, as envisaged by SYRIZA makes perfect sense. Reform might introduce governance, transparency and accountability inside the Greek socio-economic formation, with obvious implications for the international branches of the current system of corruption and unaccountability. As mentioned in a recent article in the light of the deadlock in the negotiations with the EU partners, SYRIZA “seems to be entrapped in a logic and stance that is more European than that of the European partners… Rationality, democratic principles and justice do not even ostensibly constitute functional criteria for today’s European Union”.

Like the ancient Phoenix, Greece needs to be regenerated out of its own ashes. But Europe is in need of rejuvenation, too. The democratic deficit and lack of accountability at the level of EU mechanisms needs to be addressed. Reform inside Greece might be the starting point for international pressures by civil society and social movements for reform at the EU level. Whilst the neo-liberal paradigm appears hegemonic, the increasing lack of legitimacy of EU institutions and the rapid decline in trust creates a delicate balance which can produce tensions that swiftly go out of control. The insistence on austerity measures in itself might be a dangerous time-bomb if the Greeks and possibly other European peoples cannot bear them any longer. And the fiscal issue is only one of the deep structural issues that the EU is facing, migration being another obvious challenge.

A counter-hegemony (in Gramscian terms) might be established, where the dominant ideology is not of laissez-faire but of democratic accountability, fair taxation, social solidarity and cohesion. This will require continuous grassroots support, civil society mobilisation and citizen engagement to support the people who look to governments that might be proposing this alternative agenda.

Currently SYRIZA enjoys high levels of support by the people, extending far beyond the share of the vote it achieved in the January 2015 national election. However, this support should not be taken as a given perpetually. SYRIZA faces increasing opposition both from internal voices arguing for an exit from the Eurozone, as well as by its opponents in parliament.

Such opposition is underpinned by the mainstream media corporations which have an interest in presenting a negative picture of a government that has already proved its ambition to introduce regulation, proper procedures and healthier criteria into the Greek media landscape. Already there is a notable one-sided presentation of the negotiations by the Greek mainstream media which read delays and the absence of an agreement as lack of leadership on the part of the Greek government.

The people’s support under these circumstance might well be volatile if negotiations continue to prove fruitless, if the economy reaches a standstill, if people see no improvement in their daily lives and if negative sentiments are reinforced.

It is also essential that the SYRIZA electoral win is replicated in other European countries. Currently, PODEMOS in Spain is in good standing and a serious candidate for winning the next election. An emerging alternative political constellation at the European level might be a golden opportunity for an alternative politico-economic paradigm.

It goes without saying that such governments and political authorities ought to stay clean, non-corrupt, and independent of intertwined economic and political interests in order to maintain their legitimacy and the investment in hope which they embody. Civil society and citizen networks need to maintain their own mobilisation and exert pressures for institutional political and economic reform.

As Geoff Mulgan and Robin Murray have observed, connections between the citizen and the multiple levels of government are really crucial. Last, but not least, public intellectuals, many of whom have contributed through this very site their views about another Europe - namely one of peoples instead of banks - need to stay active and committed.

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