An article by Christos Kefalis
The last 10 days, from February 11th to February 20th, saw some critical developments in Greece. After a number of clashes in the Eurogroups of 11th, 16th and 20th February, an agreement was reached extending the “current arrangement” with the Troika for 4 months. This agreement, as is generally agreed, was a heavy compromise on the part of the Greek SYRIZA-ANEL government, putting into doubt the possibility to carry out its program, i.e. SYRIZA’s Thessaloniki program. There was another serious compromise too, when, on February 18th, Prokopis Pavlopoulos, a representative of the conservative camp and leading figure of the ND party, was elected President of the Republic.
The same period witnessed, on the other hand, some big demonstrations in Greece and other European countries too, centered round the task of cancelling debt. Although not as massive as those in the 2011-2012 period, they show some real hope of a new rise of the movements and their possible intervention in the scene. Significantly, these demonstrations, which begun as acts of spontaneous support to the Greek government, seem likely to continue after the compromise made – a new one was announced for February 26th in various facebook pages.
Taken together these developments pose some serious questions. Does SYRIZA relinquish its promises of a substantial change with regard to the previous austerity ND-PASOK regime? Is such a change feasible within the EU through an acceptable compromise reached after a negotiation? Or is it impossible and Greece should head instead for a payment default and exit the EU – the prospect broadly known as “Grexit?”
In this article we will discuss these questions, with an eye to the coming solution of the Greek drama when the four month prolongation of the Memorandum ends.
The election of Pavlopoulos
The presidential election, to begin with, is the more straight and easy to assess issue. It should of course be said from the start that the post of the President of the Republic is rather “ornamental”, as the Greek constitution bestows the President only with few rights and responsibilities. However, it is not negligible, as the President does have an ethical role and ability to indirectly intervene in political developments. He can influence public opinion and exert some pressure from the backstage.
While some argue that the compromise reached in the Eurogroup was a forced move, it is difficult to say the same with the election of P. Pavlopoulos, which was not dictated by any pressing necessity, like the financing of the Greek economy. It is a move difficult to justify, for the additional reason that SYRIZA had used the renewal of the presidential term as an excuse to cause a premature election. This implied that it was impossible to agree with ND even with regard to an independent candidate. So it is quite a turn to come out after the election with a Right one coming from ND.
In his speech before the SYRIZA parliamentary group, at Tuesday 17th, SYRIZA’s President Alexis Tsipras, after announcing the candidacy of Pavlopoulos, tried to justify it. Yet what he said was not really convincing.
Tsipras conceded that electing a Left President of the Republic, as was suggested by SYRIZA’s Left wing, was a “reasonable proposal”. But he hastened to add that “the Left… was never arrogant in the face of History” and “it never claimed high offices for itself, but contested for inspiration and on the natural guidance of the people”. At the present moment, “we need a President with proven democratic sensitivity and high sense of national conscience”.
Of course, it should be granted that the election of a Left President, meaning practically a Party cadre from SYRIZA or some acknowledged Left personality, was not the only alternative. It may even be admitted that such a choice was not the best alternative, on the grounds of the wide recognition the President should enjoy. It was quite possible though to go forward with a broad democratic candidacy, someone who sided at least with the anti-Memorandum sentiment of the people during the last years. It would not be very difficult to find such a personality in the progressive intelligentsia, or between the center-Left cadres who abandoned PASOK and moved towards SYRIZA in the last few years.
SYRIZA’s support stems largely from the massive move of PASOK voters who were radicalized during the last four years, as a result of the austerity measures. These strata have turned to the Left but are still confused in their views. Their radicalization remains unstable and they do not completely trust SYRIZA. Yet, if they are stable at something is their anti-Memorandum stance, as they correctly feel that the Memorandums were the cause of their sufferings.
Electing a progressive President would help in this regard to positively express and direct public opinion to more radical channels. On the other hand, the election of a person from the Memorandum camp like Pavlopoulos, who stands more right even from the former President Papoulias, is a move that will definitely alienate these strata. It casts doubt on SYRIZA’s ability and willingness to fight for a real change of their condition. The impression they will get is that SYRIZA’s promises of breaking with the Memorandums were just rhetoric and that it readily and willingly compromises with their proponents. Needless to say, this conciliatory move will have a similar impact on the ruling EU circles, the German government, etc., who will intensify and already intensify their pressure and intransigence in order to force further concessions.
As against this, what has SYRIZA gained by making such a voluntary and unneeded retreat?
There is some talk here that this move will appease the moderate elements in the EU, like Jean-Claude Junker, etc., who show some understanding for Greek demands and consider making some concessions. The Eurogroup of February 16th showed however that these elements, and even countries like France, the second power in the EU, do not really count very much if Germany says “No”. This of course does not mean that one should not utilize such conflicts, but it definitely means one cannot be based on them, nor decide each step to be made measuring with their stick.
Similarly, it does not seem likely that electing Pavlopoulos will broaden the consent for the Greek government within Greece and enable it to be steadier during the debt negotiations. This view is expressed, e.g., by George Delastik, a well known Left commentator from NAR, who argues that electing Pavlopoulos intensifies the crisis in ND, because he belongs to the faction of its former leader K. Karamanlis, which is opposed to the present Samaras leadership. The agreement for Pavlopoulos is presented by Delastik as an alliance and a sign of mutual understanding between SYRIZA and the Karamanlis faction of ND.
All this however is highly irrelevant, since it concerns purely tactical and extremely doubtful gains. In the long run a President like Pavlopoulos will act as a defender of the ruling elites’ interests if SYRIZA proceeds to take some really radical measures. His role in the event of a social and political crisis, irrespective of intentions, will be similar to that of Azana in Spain, 1936, providing an internal institutional source of conservative pressure, in addition to those of coming from the EU. The same is true of all other factions of the ruling class, which will unite in that case irrespective of their secondary differences.
Looking at these minor movements in the top, Delastik not only entirely misses this point but underestimates grossly the impact of the choice made to SYRIZA’s social base and within its ranks as well. He refers to the inner rivalries within SYRIZA and ND, but says that “none of them was manifested during the vote”. He only points to the reaction of Kyriakos Mitsotakis, an ND former minister who preferred not to be present during the vote, as he would vote against Pavlopoulos. The implication is that electing Pavlopoulos already causes some problems to ND and in this sense may prove a clever step.
This is simply inexact. Apart from Mitsotakis, there was a SYRIZA MP too who abstained from the vote, Ioanna Gaitani. In a statement she issued she made clear she does not approve of Pavlopoulos’s candidacy. Moreover, some more SYRIZA MPs, including D. Kodelas, E. Sotiriou, K. C. Lapavitsas and M. Glezos, the well known resistance fighter, made strongly critical statements, although they followed party discipline.
Lapavitsas, though recognizing that Pavlopoulos is a decent public personality and an eminent representative of the conservative camp, stressed: “The new President of the Republic should represent the shift to the Left, the rejection of Memoranda and detestation to the old ruling circles, in accordance with the will of the people as expressed in the elections of January 25. Such a President could effectively support the SYRIZA-ANEL government in its mammoth task of negotiating with lenders and the recovery of the country. It could even give a new model of democracy and expand the great popular acceptance that the government already enjoys”. Similar statements, reflecting the general mood within the SYRIZA ranks, were made by the other MPs and expressed even more clearly in various pro-SYRIZA blogs and sites.
It is evident from the above that the decision to elect Pavlopoulos already creates and is likely to create in the future more problems to SYRIZA than to ND. To that, one should add that SYRIZA’s leadership has made a number of similar movements at lower levels, appointing well known representatives of the former administration in responsible positions. These include notably Elena Panariti of the IMF, an advisor of Varoufakis who had formerly implemented the IMF’s policy in Peru? Louka Katseli, a former PASOK minister, who is to become head of the national bank of Greece? Takis Roumeliotis, a banker and PASOK minister who will take charge of the Financial Stability Fund? Nikos Christodoulakis, a former PASOK minister who was appointed Vice President of another big bank and others.
Clearly one should not oppose to all such appointments beforehand, and there are a number of arguments in favor at least of some of them: SYRIZA does not have many technocrats to take over positions in the state, etc. Taken as a whole, however, they make clear that a progressive President was needed to hold the balance.
There is a last annoying aspect of the presidential election which cannot pass unnoticed: the deficit of inner party democracy within SYRIZA. This does not mean different views are silenced; until now at least there is a real freedom of expression and discussion. Decisions however are taken within a narrow leadership circle, without the party and its central organs participating sufficiently in them. In this case, the decision to support Pavlopoulos was announced by Tsipras, without a previous discussion on the subject in SYRIZA’s Central Committee.
One should not view that as a manifestation of a “great leader” mentality. The problem is more complex. It has to do with the fact that SYRIZA’s factions have not developed and matured enough from the time SYRIZA was a party of 4%. As a result, it has not been possible to develop a really democratic culture within the party, since true democracy demands not only freedom but responsibility as well. It should be the work and the concern of the leadership however to develop such a mentality, by avoiding the creation of unnecessary tensions. This meant proposing a President acceptable to all major SYRIZA components, which the Pavlopoulos candidacy failed to accomplish.
The Eurogroup agreement
The Eurogroup agreement of February 20th was a further step of compromise taken by the Greek government. As was generally acknowledged it is definitely a troublesome and heavy compromise involving many concessions from the Greek side. The following three are the most important: 1. The recognition of the “successful completion of the review on the basis of the conditions in the current arrangement” as the aim of the agreement; 2. The commitment to “refrain from any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets, economic recovery or financial stability, as assessed by the institutions”; 3. The statement that “The Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and timely”.
As compared with these, the concessions made by the EU are minimal and even partly verbal. The Troika and existing program remain for the next four months, but will be called from now on “institutions” and “arrangements” instead of “Troika” and “Memoranda”. The one real concession is that there is a mention on “flexibility” and the Greek government is going to propose the measures to be applied during the coming months. They will need acceptance from the EU, but surely this is better than being decided beforehand by the Troika, as was the case until now. The proposals of the Greek government will be presented on Monday, and it is significant to see what they will be.
We shall refrain from a detailed analysis of the agreement and comment instead on some views already expressed chiefly within the Greek Left.
Alexis Tsipras hailed the deal as a success: “Greece achieved an important negotiating success in Europe”, he said on Saturday. On the other hand, there is embarrassment within the SYRIZA Left wing which does not share this view. Iskra, the site of SYRIZA’s Left Current headed by Panayiotis Lafazanis, has avoided taking a clear position, talking about an “Agreement «riddle» in the Eurogroup”. However, there have already been highly critical responses by distinguished SYRIZA Left representatives, like M. Glezos, S. Sakorafa and C. Lapavitsas, and also some serious analyses to which we shall concentrate.
Stathis Kouvelakis, a well known university professor and representative of the SYRIZA Left, summing up the already mentioned main conditions of the agreement, justly calls it a “defeat” of the Greek government. He points especially to the fact that developments showed “the Greek government being afraid more from a Grexit than from its «partners»… showed itself totally unprepared as regards the possibility of a destabilization of the banking system… depriving itself of any bargaining tool… Deposits outflows… mounted rampantly, without the Greek authorities, fearful that this could be the beginning of a Grexit, be willing to take any unilateral measure to check capital flows”. Developments also showed that counting at a support of other countries like France and Italy was an illusion, there were no “appreciable allies at the governments’ or institutions’ level”.
Andreas Zafiris, another analyst from the SYRIZA Left Current, also calls it “a grey agreement” and “a step back”. He makes a valuable point noting that the only real gain for the Greek government is time: “The gains from this agreement are few. The most important gain is the time earned by the government. The question is if, how and towards which direction this time will be utilized”. It is also important, he notes, that by the end of the agreement elections in Spain will be approaching, creating a more favorable international situation for Greece.
Zafiris quotes further a question put by the well known US economist Paul Krugman: “What freedom of movement does a Greek government have if it is not prepared to leave the Eurozone?” This is indeed the central term of the equation, also underscored by the fact that Krugman himself also gave in his blog a similar appraisal of the agreement: “This looks like a defeat for Greece, but since nothing substantive was resolved, it’s only a defeat if the Greeks accept it as one; which means that nothing at all is clearly resolved. And that’s arguably a good outcome – time for Greece to get its act together”.
All this is quite true. And it is also true that the present agreement binds the Greek government for the coming four months, but not necessarily at the end and after the end of that period, when the real deal on the debt will have to be concluded. The crucial question however is if the Greek government is resolved to utilize the time gained in the direction indicated by Krugman and Zafiris.
In practice this means putting a red line in the coming negotiation, which should be no less than an agreement allowing for the implementation of a major part of SYRIZA’s Thessaloniki program and being decided to go forward for a payment default if this condition is not met. For this to be a serious decision and not a bluff, one should prepare however the Greek people on the coming dilemma. The retreats made thus far, like the election of Pavlopoulos, the unilateral relinquishment of debt cancellation by Varoufakis, etc, do not permit too much optimism on that point. Yet it should be stressed that nothing is decided as yet.
As we had pointed in our previous article, Petros Papakonstantinou, a Left journalist of NAR, an ANTARSYA component, had already warned some days ago about the consequences of such a course. He anticipated that it would “lead the SYRIZA government into a fatal trap of a very painful compromise which, even though saving some pretexts, will undermine from the outset the new Greek government. A compromise that would repeal the Troika to install another, more «legitimized» oversight mechanism; will remove the Memorandum to validate another one, more pleasant sounding «structural change program» and will be satisfied with a marginal improvement of debt payment, not very different from that lenders had anyway promised Samaras”. Papakonstantinou pointed to the fact that the statements made by Varoufakis that “Greece does not aim at debt cancellation but an exchange with permanent bonds” made that bad compromise inevitable, as they meant surrendering the one weapon of the Greek side.
Some other commentators of the Left, while justly criticizing the agreement, go much further. They call it a treachery “betrayal” and compare it with the Varkiza Treaty, with which the KKE leadership surrendered the EAM-ELAS resistance movement in 1945.
Stavros Mavroudeas, a university teacher of ANTARSYA, for example, characterizes the agreement as “shameful”. He talks of a “new Varkiza” which “opens the way to a still greater prostration”. The lesson to be learnt, he says, “is that there is no room for a pro-people way within the EU. The latter is the slaughterhouse of popular rights and needs. It does not change, neither can be reformed. Those who preach to the people, «neither break nor allegiance» with the EU just cultivate only dangerous illusions. The only pro-people way out of the crisis passes through a clash, rupture and getting out from the EU”.
A similar analysis is given by George Rousis, a university professor and former KKE member, who joined ANTARSYA a few years ago. Rousis is of the opinion that the present dilemma consists of the following choice: “Either we are led to a shameful new Varkiza, which the government in order to save itself politically attempts to impose in a quisling way to our people, or the people together with the Left forces that really resist, come into conflict with their oppressors and the logic of class collaboration, which came to ratify the selection of the purely neoliberal Pavlopoulos for the post of President of the Republic”. Rousis calls for an immediate denunciation of SYRIZA and “the most direct organization of frontal fight against this attempted new Varkiza in order to save once again the lost honor of our Left and the people”.
Similar accusations are leveled against SYRIZA by the Stalinist KKE. D. Koutsoumbas, its General Secretary, in a speech at Friday night in Leivadia, stressed: “The new agreement shows that the coalition government took over the baton [from the ND-PASOK government], continuing the anti-popular strategy of the EU and the monopolies”. Numerous articles in Rizospastis play the same refrain, which is also echoed by some Trotskyist groups in Greece and elsewhere. To quote one example, Robert Stevens of the WSWS writes: “The abject capitulation of the Syriza government exposes the utter political bankruptcy of the myriad petty-bourgeois pseudo-left organizations throughout the world that just a few weeks ago hailed the electoral victory of Tsipras as an earth-shaking event. Far from denouncing Syriza’s betrayal, these groups will work overtime conjuring up excuses and justifications”.
As a matter of fact, there can be no talk of “betrayal” and a “new Varkiza” made by SYRIZA. The Varkiza agreement was made by KKE at a time it was all powerful in Greece. The bourgeois state had collapsed and the EAM-ELAS movement had the support of the big majority, perhaps an 80%, of the people. There was in effect a popular power all over Greece and KKE leadership had the means to beat the Greek reaction and foreign intervention. Instead they chose to disarm the movement and denounce its leader Aris Velouhiotis, which was definitely a betrayal.
In comparison, the SYRIZA leadership is not based on any kind of popular power. It simply runs the bourgeois state after an electoral victory. The immediate tasks ahead are not making a socialist revolution, but of another, more modest kind, to alleviate the burden of the Greek people and introduce radical change. Nor there is any revolutionary situation presently in Greece or in the rest of Europe; on the contrary, movements have subsided in comparison with 2011-12 and while there are signs of a new rise, clearly this will take some time. Moreover, the agreement made, however severely one may judge it, is not a final agreement but one that will last for the next 4 months. The chief thing one can and should do now is therefore to explain and criticize the mistakes made by the Greek government.
Those who shout “betrayal”, “down with the agents of capital” and “down with the new Varkiza”, like Rousis, KKE or the WSWS commentators, are unable and unwilling to follow such a line of argument. Yet by this very act they betray their own petty-bourgeois impatience and their inability to analyze the situation seriously. They act in accordance with the proverb “to the mouse there is no beast stronger than the cat” – the cat being represented in this case by SYRIZA. Their expectation is that they will increase their support, by attracting those dissatisfied with SYRIZA. This is very doubtful and they should at least account why they have failed to do so until now, remaining mostly small and disorganized groups.
Finally, one should also counter attempts made by sectarian ultra-Left tendencies to “prove”, on the basis of the compromises made, that SYRIZA is a bourgeois party. Such views are again put forward by Stevens. He argues that statements made by Varoufakis about the Greek government renouncing the debt write off prove “the regime’s bourgeois character and capitalist programme… Syriza represents the interests not of the working class, but of a section of the Greek bourgeoisie”. Needless to say, exactly the same view is proclaimed daily by Rizospastis, the organ of the Stalinist KKE.
As a matter of fact, the truth is that SYRIZA is a Centrist party. It is a party like Kautsky’s Independent Party and the Italian Socialist Party in the 1920ies. Inside it coexist Right reformists, Left reformists and Marxists. Presently the Center-Right of the party, under Tsipras, has the upper hand. The fear of the SYRIZA leadership to base itself on the people results in vacillations in its policies, which lead and will inevitably lead to unsatisfactory compromises. However, this is not a finalized situation and, with the turns of the class struggle and the international situation, positive shifts may occur.
Compromise or “Grexit”?
What we have said suggests that the compromises made by the Greek government will have and are already having a negative impact on the coming negotiation. Does this signify that a favorable or satisfactory compromise with the EU is completely impossible and the government should head for a break and payment default, as the Greek Leftist groups propose?
In our view, this is a one sided conclusion. Of course, one can issue slogans like “no compromise” or “not a step back” in propagandistic manifestos and declarations. But it is an un-Marxist position to argue that way in a serious context or debate. Just to mention one relevant historical example, the Bolsheviks conducted a painful compromise like the Brest Litovsk peace even after they had established their revolutionary power and overthrown the bourgeoisie.
Compromises are part of revolutionary politics too, and even if SYRIZA cannot perhaps be called a revolutionary party, one cannot forbid it beforehand the right to compromises and condemn it simply for the reason it orients itself towards one or the other conciliatory move. An analysis of the specific conditions and possibilities should also be included, so as to be able to assess the acceptability of the specific compromise.
Compromises become necessary against a stronger opponent when the situation is still not favorable enough for direct action and as long as the opponent has a superiority of forces. As Lenin said in his Left Wing Communism, “in politics, where it is sometimes a matter of extremely complex relation –national and international– between classes and parties, very many cases will arise that will be much more difficult than the question of a legitimate «compromise» in a strike or a treacherous «compromise» by a strike-breaker, treacherous leader”. Lenin warned on the same occasion that accepting “battle at a time when it is obviously advantageous to the enemy, but not to us, is criminal; political leaders of the revolutionary class are absolutely useless if they are incapable of «changing tack, or offering conciliation and compromise» in order to take evasive action in a patently disadvantageous battle”. It should be noted that Lenin’s remarks were made with respect to the German communists’ proclamation that once in power they would immediately denounce the Versailles Treaty, a position which Lenin criticized as unrealistic, on the grounds that “the possibility of its [the Versailles Treaty] successful repudiation will depend, not only on the German, but also on the international successes of the Soviet movement”. This adds to their topicality, as the possibility of successfully denouncing debt and the EU integration treaties today manifestly depends on the progresses made by the movements not only in Greece but in other suffering European countries too.
Forgetting these elementary Marxist truths and arguing against all compromises in general condemns one to political impotency a politically weak and faulty position. This, in our opinion, is the case with Manolis Glezos, the distinguished resistance fighter, who made a very harsh statement on the agreement. Glezos asked for forgiveness by the Greek people for “having contributed to that illusion [of breaking with the Memoranda]” calling the SYRIZA base to intervene. He justified his position saying that “between oppressor and oppressed there can be no compromise, just as there cannot be between a slave and a conqueror”.
While there is a valuable ethical and fighting aspect in his stance, this we feel is the wrong way to argue. It results to an inability to assess what would be a legitimate compromise in the specific case and criticize concretely the unacceptable aspects of the compromise made. While there cannot be the slightest doubt about the sincerity of Glezos, this opens the way for all kinds of demagogic criticisms, like the ones made by the WSWS, Rousis, KKE, etc, about “new Varkizas”.
All this brings us to the really important question: which compromise to make and when?
As compromises are made in the face of danger from a stronger opponent, they usually involve some disagreeable and annoying aspects. There may exist occasions, like the Brest Listovsk Treaty, where the compromise is extremely painful and unbearable but has to be made in order to avoid being crushed by the enemy. More often however the weaker side also has some advantages which it should exploit in order to attain the best possible result.
The present case of the Greek-EU negotiations belongs to the latter category. The strong asset of the Greek side, which only a Left or progressive government like the SYRIZA-ANEL one is objectively in a position to utilize, is the fearful consequences a “Grexit” will have to the stability of the Eurozone.
There is a lot of discussion on this subject, but we will focus to some systemic sources who analyze the problem chiefly from its technical aspects.
A recent report by IFO, a well known German economic research institute, calculates the costs of a Grexit as marginally lower from those of effecting a debt “haircut”. According to its calculations, a Greek default inside the euro-area would cost Germany €77.1 billion, while a default combined with an exit from the euro would cost €75.8 billion.
This calculation would seem to imply that although both a debt reduction with Greece remaining within the EU and a Grexit have a heavy cost, there is no reason why Germany would prefer the first outcome from the second. However, the findings of the IFO Institute are strongly challenged by two independent researchers, Zsolt Darvas and Pia Hüttl.
These researchers point to a number of false assumptions and misrepresentations in the IFO report. Firstly, they stress that “the publication of such numbers falsely suggests that direct losses can be calculated precisely”. It is their opinion on the contrary that a Grexit will have unforeseen consequences which will significantly raise its cost. Secondly, and more importantly, they note three important omissions in the report in its failure to consider “the different haircuts likely under the two scenarios; private claims; other second round losses”. Moreover, as they point, the exposure of Germany’s private sector to Greek debt, although significantly reduced in comparison to 2010, is still significant, amounting to some 20 billion €. Their conclusion is that “All three factors suggest that direct losses for Germany would be much larger if Greece was to exit the euro”.
The conclusion reached by Darvas and Hüttl is supported by practical experience, which shows that a payment default on the initiative of the debtor leads to significantly bigger debt cancellation than payment defaults or restructuring on the initiative of the lenders. This vital point has also been argued at length by Greek Marxist economists like Lapavitsas and Tolios, who point that the default of Argentina and Ecuador resulted in a debt cut of the order of 50-60% while in comparison debt restructuring in agreement with the lenders usually amounts to a 20% debt relief .
However, all this is still centered on the technical aspects of the problem. It does not take account of the fragility of the present “economic recovery” in the EU, on which a Grexit is certain to have major unforeseen effects.
A number of analysts have compared a possible Grexit in this respect with the notorious Lehman Brothers bankruptcy. The Lehman Brothers debt (600 billion $) was comparable with the Greek one (320 billion €) and, although not very large with regard to the size of USA economy, leaving it go bankrupt triggered the world financial crisis. According to B. Eichengreen, a researcher of the University of California-Berkeley, “the fallout from Greece leaving the euro would still be a Lehman Brothers squared”. The point is that, apart from serious consequences on Greek banks, a Grexit “would also spill into other countries as investors speculate about which might be next to leave the currency union”.
Systemic business media like Bloomberg also have exposed the Merkel administration boasts that Germany could easily cope with a Grexit as a bluff, since they ignore “contagion”. According to Megan McArdle, a Bloomberg analyst, e.g., “the contagion may well spread beyond Greece; Ireland seems to have escaped the trap, but Italy, Portugal, and Spain all remain vulnerable”. The same view is shared by Simon Kennedy, who considers that “after Greece, speculators would immediately size up the next potential victim – from Cyprus to Spain and on to Italy”. Last, but not least, Wolfgang Minchau of Der Spiegel has also expressed the same view: “The Greek exit from the euro is likely to cause an even bigger financial shock than the Lehman Brothers”.
One should only add that the EU is in no way ready to cope even at an elementary level with these “contagion” effects. The very fact that Cameron ordered as late as February 9th the British banks to prepare for a possible Grexit, which he characterized as “the biggest threat to the global economy”, is an undeniable sign of this. And even if the EU utilizes, as it will definitely do, the coming four months in that direction, it is extremely doubtful how effective such a preparation can be.
A Grexit would not be without some dire consequences for Greece too. Greek banks in particular would suffer in the short run and there would be a possible contraction of the economy. However, most analysts tend to agree that, as a result of the balanced Greek state budgets, these would be more easily manageable than four years before and that there would be significant long term benefits.
All this points to the peculiarity of the present moment, when a break is not desirable for both the EU and Greece. As a result an acceptable compromise for the Greek side may prove possible and even preferable, at least for some time. However, two remarks should be made.
Firstly, such an acceptable compromise can be reached only if the SYRIZA-ANEL government determines strictly what can be accepted and makes full use of its trumps. It is here precisely that the Greek government, by making unnecessary and voluntary retreats heads for a more or less disadvantageous compromise.
Secondly, even if it is achieved, such a compromise will not be sustainable for long. It will just provide a respite, based on mutual concessions and dubious adjustments. In the long run, the Greek debt, as well as that of Spain and Portugal, are not viable and are going one way or the other to explode.
The last ten days witnessed an enormous pressure from the EU reaction to the new government and their unwillingness to cede the slightest ground voluntarily. The blackmail on cutting the financing of the Greek banks was at work since Draghi’s announcement of a bar on Greek bonds in the beginning of February. It will continue and intensify during the next months. It would be erroneous to underestimate the power of these forces and the harm they can afflict to the Greek economy in the case of a premature crash with them. Arguing against all concessions, maneuvers and compromises clearly overlooks this danger.
SYRIZA’s mistake in this respect is not that it entered in negotiations with the EU instead of making a break from the very first moment. To make such a break one should have the support of the people, which will come only if and when practical experience shows there is no other way.
Its mistake lies in the assumption that there can be a solution beneficial to all and turning what can be just a temporary arrangement until the movements mature to a strategic aim. As a result it proceeds by making smaller or bigger steps to the Right, thinking these will appease the lenders, while they in fact only increase their appetite. The correct tactics would be instead to make small, moderate steps to the Left, like electing a progressive President, and threaten to go further if there is no acceptable compromise. This is the only language people like Schäuble might understand.
However, despite the faulty moves made, the outcome of the negotiation is still open. The task of the Greek Left in the immediate next period will be to strengthen the radical Left inside and outside SYRIZA, press the SYRIZA leadership and prepare for the coming developments.
These developments may pass from a series of stages and take some time to evolve. Even if a dubious compromise is reached after four months, they may well end up by a payment default and Greek exit from the EU. That could open the way for radical change in the European South on a vital condition: that movements are revived and develop during the coming months in Greece and the other suffering EU countries. To respond to the duties ahead, the radical Left should strengthen its ties with the people and organize, not shout “betrayal”.
Christos Kefalis is editor of the Greek journal Marxist Thought.
 “A. Tsipras proposed P. Pavlopoulos for President of the Democracy”, http://iskra.gr/index.php?option=com_content&view=article&id=19586:pavlopoulos&catid=81:kivernisi&Itemid=198.
 “Electing Pavlopoulos weakens Samaras within ND”, http://iskra.gr/index.php?option=com_content&view=article&id=19599:delastik-samaras&catid=81:kivernisi&Itemid=198.
 K. Lapavitsas, “The election of the President if the Republic”, http://costaslapavitsas.blogspot.gr/2015/02/blog-post_18.html.
 “Eurogroup statement of Greece”, http://www.consilium.europa.eu/en/press/press-releases/2015/02/150220-eurogroup-statement-greece/.
 For the statements made by Glezos, Sakorafa and Lapavitsas, see “Greek left-wingers unhappy about bailout deal”, http://www.theguardian.com/business/live/2015/feb/23/greek-bailout-markeks-rally-ftse-100-reforms-live#block-54eb2c1be4b0a2680a9a3634.
 St. Kouvelakis, “What was defeated in the Eurogroup and how this will not become a final defeat”, http://www.antifonies.gr. Lapavitsas has given an assessment of the deal along the same lines in his blog. See “Five questions demand an answer”, http://costaslapavitsas.blogspot.gr/2015/02/blog-post_23.html.
 A. Zafiris, “The 50 shades of a grey agreement”, http://iskra.gr/index.php?option=com_content&view=article&id=19633:-50—-&catid=71:dr-kinitopoiisis&Itemid=278. One cannot agree with Zafiris, however, when he says that “Germany is a roaring mouse”, invoking the difficulties a Grexit would create to it. We shall refer to them later, but Germany is clearly a stronger beast.
 P. Krugman, “Delphic Demarche”, http://krugman.blogs.nytimes.com/2015/02/20/delphic-demarche/?_r=0.
 P. Papakonstantinou, “The cheese and the mousetrap”, http://iskra.gr/index.php?option=com_content&view=article&id=19414:papakon-tyri-faka&catid=58:oikonomiki-politiki&Itemid=182.
 St. Mavroudeas, “On the shameful agreement in the 20.2.2015 Eurogroup”, http://iskra.gr/index.php?option=com_content&view=article&id=19628:-eurogroup-2022015&catid=54:anpolitiki&Itemid=284. ANTARSYA itself made a strong but more measured statement, it can be found at http://www.antarsya.gr/node/2945.
 G. Rousis, “No to a new Varkiza”, http://iskra.gr/index.php?option=com_content&view=article&id=19625:barkiza-roushs&catid=72:dr-ekdilosis&Itemid=279.
 See Rizospastis, 21-22.2.2015, http://www.rizospastis.gr/page.do?publDate=21/2/2015&id=15593&pageNo=3.
 R. Stevens, “SYRIZA capitulates to the EU”, http://www.wsws.org/en/articles/2015/02/21/gree-f21.html. All this is crowned in the wsws site with the modest declaration: “The WSWS is the only authentic voice of the international working class and socialism” – a declaration also voiced in countless tones by KKE in Greece, and by many other equally modest “revolutionary” groups worldwide. Poor working class! – is the only thing one can say when listening to such claims.
 R. Stevens, “Financial markets celebrate as Syriza repudiates pledge to write off Greek debt”, http://www.wsws.org/en/articles/2015/02/04/syri-f04.html. Stevens also confuses things when he argues that renouncing debt cancellation proves SYRIZA’s bourgeois character. This would seem to imply that, had SYRIZA taken the opposite course, it would prove itself to be “socialist”. However, numerous bourgeois governments, like those of Argentina, Ecuador, Peru, Russia, etc, have proceeded to payment default without turning “socialist” as a result.
No lesser Marxist than Karl Marx himself had explained countless times during the 1848 revolutions that the refusal to pay taxes, the national debt, etc, are bourgeois demands, with nothing socialist in themselves. However, as all bourgeois demands, they can be pursued in a reformist or in a revolutionary manner. SYRIZA’s government should be criticized not for proving itself bourgeois in the face of a bourgeois demand, but for preferring the reformist and not the radical-revolutionary way to deal with it.
 The later daily abounds of comments like “circles of capital declare «We trust our government»”, i.e. the SYRIZA-ANEL government, etc. See e.g., “The new government blessed by capital”, Rizospastis, http://www.rizospastis.gr/adjacent.do?publDate=27/1/2015&id=15565&direction=1, and “An absolute zero”, Rizospastis, http://www.rizospastis.gr/adjacent.do?publDate=21/2/2015&id=15593&direction=-1.
 Lenin, “Left-Wing” Communism: an Infantile Disorder,
 M. Glezos, “Before it is too late”, http://iskra.gr/index.php?option=com_content&view=article&id=19643:glezos&catid=83:aristera&Itemid=200. Commenting on that, Kouvelakis refers to the Brest Litovsk treaty signed by the Bolsheviks, and makes the valuable point that they did not call that defeat “a victory”.
 Ifo-Institut berechnet Grexit kostet Deutschland weniger als Griechenlands Verbleib im Euro, http://www.focus.de/finanzen/news/staatsverschuldung/ifo-institut-berechnet-grexit-kostet-deutschland-weniger-als-griechenlands-verbleib-im-euro_id_4386519.html.
 Zsolt Darvas and Pia Hüttl, “Why a Grexit is more costly for Germany than a default inside the euro area”, http://www.bruegel.org/nc/blog/detail/article/1542-why-a-grexit-is-more-costly-for-germany-than-a-default-inside-the-euro-area/.
 See K. C. Lapavitsas, “The structural crisis of the Eurozone periphery”, in The Charter of the Crisis, Topos editions, p.p. 69ff and Y. Tolios, Crisis, “Odious” Debt and Payment Default, Topos editions, p.p. 86-91.
 The USA had a 15 trillion $ GDP in 2008, significantly larger than the 13,5 trillion $ GDP of the euro area today.
 “Greek Euro exit would be a Lehman Brothers squared”, http://onusnewsgr.blogspot.com/2015/01/greek-euro-exit-would-be-lehman.html
 Megan McArdle, “Fear the Grexit”, http://www.bloombergview.com/articles/2015-01-05/fear-the-grexit.
 Simon Kennedy, “Greek Euro Exit Risk Revived as Merkel Bluff Overlooks Contagion”, http://www.bloomberg.com/news/articles/2015-01-05/greek-euro-exit-risk-revived-as-merkel-bluff-overlooks-contagion
 Wolfgang Münchau, “Die Spur des Geldes: Ein Grexit wäre noch immer gefährlich”, http://www.spiegel.de/wirtschaft/wolfgang-muenchau-a-1016271.html.
 “David Cameron holds Grexit meeting as George Osborne”, http://www.thisismoney.co.uk/money/markets/article-2945986/David-Cameron-holds-Grexit-meeting-George-Osborne-warns-stand-Greece-eurozone-hinder-UK-economy.html.
 Mike Shedlock, summing up the discussion on a Grexit in an article written before the Greek elections, aptly points to that: “Actually, no matter what happens with Greece, the entire eurozone setup is unstable. Greece, Spain, Italy, and Portugal all are in impossible payback setups… The «limited contagion» view is complete nonsense. The eurozone debt problem is going to explode, and whether or not it becomes «Lehman Squared» depends on the response. My view is the longer the ECB and EU attempt to hold this mess together with no debt writedowns, the bigger the catastrophe. Greece will not cause a catastrophe, but the EU/ECB handling of a Greece exit is highly likely to do just that» (M. Shedlock, “Competing Views: Grexit Would Be “Lehman Squared” vs. No Problem”, http://globaleconomicanalysis.blogspot.gr/2015/01/competing-views-greece-exit-would-be.html.
Latest posts by Christos Kefalis (see all)
- Einstein’s Socialism - September 9, 2015
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- Grexit or Compromise: Which Way for the Greek Left? - February 25, 2015
- Syriza’s Historic Victory and the Prospects of the Left - February 4, 2015
- Greek EU Elections: A Clear, Historical, But Still Not Decisive SYRIZA Victory - May 28, 2014