European Central Bank Mario Draghi’s “OMT” programme (6 September) has been hailed as the “bazooka” which will save the eurozone, but it is likely to sharpen the crisis in Greece.
Under the OMT the ECB will buy unlimited quantities of eurozone governments’ bonds, not new-issued bonds, but bonds already trading in the global markets. The ECB has run such policies before (the SMP), but more limitedly. The claim is that ECB buying-power will keep up the prices of Spanish, Italian, Greek etc. bonds in the markets, and thus help those governments sell new bonds and so finance themselves.
Draghi stressed that the “bazooka” will be fired — the ECB will set out to buy — only for the bonds of governments which have officially requested it and agreed to submit to a programme of cuts and economic restructuring shaped by the European Union and the ECB.
Even with that proviso, German representative Jens Weidmann voted against Draghi’s plan on the ECB board. The German press has denounced the plan as a subsidy to the feckless. The German government is backing Draghi, but one result is increased pressure for harsh economic conditions on debt-troubled governments.
The Troika of the European Union, the European Central Bank and the IMF is likely to be even more rigid with the Greek government. A collision is looming.
The right-wing Athens government headed by Antonis Samaras is asking for delays and concessions, and even in that framework cannot reach agreement on detailed plans.
Talks between the leaders of the parties in the government coalition on finalising cuts ended in deadlock on 9 September.
Pressure on the government from below is increasing. After lull in the summer holiday months, demonstrations are filling the streets again. State schools in Greece are due to start their new year on 12 September, but will be on strike that day.
Yet the Troika is sharpening its tone. It says that the Greek government is lagging on cuts, and must speed up, not ease off. On 4 September a letter from the “Troika” was leaked, demanding that Greece increase the legal working week to 6 days for all sectors and cut workers’ minimum daily rest to 11 hours.
Economist Megan Greene, an expert on the eurozone crisis, writes: “If the Troika does not grant the Greek government any concessions on its bailout programme, it is highly likely that the two junior parties — the Democratic Left and Pasok — will drop out of government. This would precipitate fresh elections, the third for this year alone”.
Syriza, the left coalition that came close to victory in the 17 June election with a programme of reversing the cuts and nationalising the banks under workers’ and social control, has gained support slightly since June.
According to the latest poll, published on 6 September, Syriza would win new elections held today.
However, the biggest poll shift since June is that the fascist Golden Dawn party has risen to 12%, outstripping Pasok and the Democratic Left. Brutal police operations in August, rounding and deporting thousands of migrant workers, have led to a surge of the far right rather than horrified rejection. Unless the left in Greece is bold enough to seize the initiative, the far right will feed off social frustration.
According to DEA, one of the revolutionary socialist groups within Syriza, the programme of local “popular assemblies” planned by Syriza in order to build itself a mass membership base on the back of its electoral success is now underway after the summer lull.
DEA comments: “People’s participation of people in the process of changing Syriza will not come by itself. It takes a great effort to make the poll percentage into combat a force... Regular meetings of the Local Committees, continued efforts for membership, and large participation in the processes, must be a continuous effort”.
DEA reports that Syriza is calling a national conference, probably in early November.
The perspective is for Syriza to convert itself from a coalition into a single party with wide democratic rights for minority currents.