Syriza’s triumph

Prime Minister Alexis Tsipras’ plans to take Greece out of the stranglehold of austerity gain support ahead of the country’s negotiations with the European Union over the debt write-off.

Published : Feb 18, 2015 12:30 IST

Prime Minister Alexis Tsipras ()centre) after his government won the confidence vote early on February 11.

Prime Minister Alexis Tsipras ()centre) after his government won the confidence vote early on February 11.

IN his first major policy speech to the Greek Parliament on February 8, and only two weeks after leading his party, Syriza, to power in a sweeping victory, Prime Minister Alexis Tsipras did not disappoint his supporters. The highlight of the speech was his pledge to stay the course of the anti-austerity economic programme that his party had promised and his government had prioritised. His speech sought to dispel the confusion and conflicting interpretations that the last two weeks of negotiations between his government and its European partners had given rise to. He made it clear that there was going to be no swerving from the path Syriza had set when it went into elections.

To thunderous applause in the 300-member Hellenic Parliament, where Syriza has 149 elected members, the 40-year-old economist said he would be “unshakeable” in carrying out his government’s anti-austerity agenda. “We see hope, dignity and pride returning to Greek citizens. Our obligation and duty is not to disappoint them,” he said.

Tsipras called for a “bridge-programme”, a “fiscal space” to renegotiate and restructure Greece’s debt.

Greece has seen its debt billow since 2010 when the consortium nicknamed the “Troika” (eurozone countries, represented by the European Commission, the European Central Bank and the International Monetary Fund, or IMF) gave Greece a €110 billion loan to rescue it from sovereign default brought on by the recession. This followed credit-rating agencies downgrading Greek government debt to junk bond status.

The loan came with conditions: the implementation of tough austerity measures on an economy already hit by the recession. The prescription for reform included the privatisation of government assets, cuts in public spending, and structural reforms. The following year, deepening recession resulted in a second bailout loan worth €130 billion to be transferred to Greece. Finally, the IMF promised an extra €8.2 billion in loans for the period from January 2015 until March 2016.

The bailouts received by Greece amounted to over €250 billion from 2010. And yet, only a very small part of it—10 per cent according to conservative estimates —found its way into public spending. The rest went in interest and debt repayments to the very same creditors who advanced the loans.

Effects of austerity

The result was the worst financial and economic crisis to hit Greece in living memory. The consequences of the reforms-dependent loans, which began in 2010, were widely documented in academic and journalistic writing.

In their book The Body Economic , the public health scholars David Stuckler and Sanjay Basu discuss the effect that austerity had on public health in Europe and North America. In an interview to The Guardian , Stuckler said that in Greece austerity led to a “public health disaster”, as economists and financial managers sought to get health spending down to 6 per cent of the gross domestic product (GDP). He quoted the Greek Health Minister as saying: “These aren’t cuts with a scalpel, they’re cuts with a butcher’s knife.”

This resulted in a 200 per cent increase in HIV incidence in Greece, a youth unemployment rate of 50 per cent, and a 25 per cent increase in homelessness, the authors noted. Greece used to have the lowest suicide rate in Europe. During this period, it saw a rise of 60 per cent.

The devastating impact of recession and austerity created the political conditions for the growth of Syriza, a coalition of left parties that came together in 2012.

In the elections held on January 26, Syriza won 149 seats out of 300 seats in Parliament, just short of a majority. (In the 2012 elections it had won 71 seats.) The conservative New Democracy, a party in the former ruling alliance, won 76 (129 in 2012), the social-democratic Pasok party, also part of the ruling coalition, won 13 (33 in 2012). The right-wing fascist Golden Dawn party won 17 (one less than in 2012), and the Communist Party of Greece 15 (three more than in 2012).

It was to this electorally reformatted parliament that Tsipras unrolled his plans for Greece. He emphasised that his idea for a Greece-Europe contract would be reflected in a Medium Term Plan for National Reconstruction which “respects the eurozone operating rules, but does not condemn the Greece economy to external recession based on absurd and unreal requirement on primary surpluses, which are a different name of austerity”.

Tsipras shifted the responsibility for Greece’s continuation in the eurozone onto the European Union (E.U.) itself and its “tradition of respecting the popular will”.

Europe, he said, must rise above its “dark past” and life in “the era of monsters” which “led an entire people into humiliation”. Rather, it must remain “focussed on the democratic principle and tradition of respecting the popular will”.

Playing hard and soft

With the huge mandate his party has received, Tsipras is wisely playing to his party’s negotiating strengths. He has kept the two issues—the first, of internal policies and commitments, and the second, of external obligations and dependence—separate from each other. The message he is sending Europe and the troika is that they should respect the new political configuration in Greece, achieved through the exercise of democracy, and that as the head of government, it is his prerogative to decide how he will exercise his democratic mandate, which in this case is by fulfilling his party’s promises to dismantle the hated policies of austerity. As for the debt, he is willing to repay it but wants a partial write-off, credit-without-conditions, and a fair and implementable repayment schedule. And, as commentators have noticed, he plays both hard and soft.

For example, Greek negotiators have demanded that Germany pay reparations for the crimes of the Nazis in Greece during the Second World War, a demand that the German government has dismissed. Last year, a Greek commission of inquiry calculated that Germany owed Greece a total of around €160 billion (£120 billion) before interest, to cover a loan that the Greek central bank was forced to give the Nazi state, and the cost of damage from the Nazi occupation of Greece.

Syriza has also argued from the opposite side, by drawing a parallel between Greece’s own case and that of Germany’s post-War foreign debt resolution. At the London Conference of 1953, half of Germany’s 32.3 billion debt of Deutsche marks was written off by its creditors, a group that included Greece and 20 other countries.

This was the background against which Tsipras asked Parliament to vote on a set of measures that would lead Greece out of the stranglehold of the austerity agenda. He won a vote of confidence on his plan on February 11. The measures include restoring pensions, raising the tax-exemption threshold to €12,000 from its current level of €5,000, introducing subsidised meals for those living below the poverty line, rehiring 3,500 civil servants who lost their jobs under the last government’s public spending cuts, and raising the minimum monthly wage in the private sector from €586 (or €510 for under 25s) to its 2011 level of €751 by 2016.

Tsipras also outlined the steps to be taken to restore collective bargaining, extend the ban on foreclosures of primary residences, stop new privatisation schemes unless in the national interest, introduce a simplified tax system, fight corruption and tax evasion, and reform Greece’s public sector. The markets went into a frenzy—a sure sign of disapproval from investors and creditors —following his speech in which he also refused to apply for an extension to the €240 billion ($270 billion) bailout on the current terms.

Greece’s negotiations with the E.U. over the debt will be watched closely. Under the enormous pressure being put on it, Greece desperately needs funds to avert going bankrupt. Owen Tudor, a senior worker in the Trade Union Conference, United Kingdom, told Frontline : “When Syriza says that their debt is unsustainable, they are not being rhetorical. It is unsustainable.”

Meanwhile, the case for Greek debt write-off is overwhelming, and support for it is gaining ground. If Greece is forced out of the E.U. and the single currency market because it cannot pay its unsustainable debt, the political outcome will be disastrous for the E.U., as it will mean the collapse of a decades-old political project for a unified Europe. Greece, on the other hand, would emerge with laurels as the country that put its people first. Grexit might also have a multiplier effect.

Spain would be the next likely candidate. The left radical Podemos party is akin to Syriza in Greece in its outlook and demands.

In the short to medium term, Syriza’s political future is tied to its internal and external commitments. This for the present has pushed a potential problem area into the background, namely, the controversial alliance it forged with the right-wing Anel party, a move that was met with surprise and disappointment by its supporters within Greece and outside.

Syriza’s leadership explains it as a tactical necessity (see interview), but it is seen as an uneasy and opportunistic relationship between unlikely partners. The Communist Party of Greece, the KKE, would have been the natural ally of Syriza. The KKE, however, is deeply suspicious of Syriza and what it sees as the latter’s embarrassing stance on a range of issues, notably on the decision not to break from the E.U.

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