The prospects for Greece

Submitted by AWL on 20 January, 2015 - 5:39

If a left, or left-led, government takes office in Greece after 25 January, then what are the prospects for it winning concessions on debt from the EU leaders?

French finance minister Michel Sapin says “it is absolutely fair and legitimate that discussions should take place between the EU and the new Greek government”, trying to secure “the stability of the eurozone”.

Yet Germany's finance minister, Wolfgang Schäuble, says “there is no alternative” to the current programme. Finland's prime minister, Alexander Stubb, promises “a resounding no” to concessions.

Franceso Saraceno, an economist who used to advise the Italian government, writes that “with the European economy back into deflation the costs, for creditor countries as well as for debtors, of a long stagnation, seem far bigger than the loss associated with [a] debt restructuring for Greece...”

Syriza, he reckons, is only asking the EU leaders “to address the problem of unsustainable debt, so far hidden under the rug, and to finally acknowledge the need for a comprehensive plan to restart the European economy”.

So, Saraceno thinks, “debt restructuring in some form will probably happen”.

Greek journalist Nick Malkoutsis, however, reckons that the new government will face rapid problems. The failure, probably the deliberate failure, of the outgoing Samaras government, to conclude the “review” with the EU/ECB/IMF Troika that began in September 2014 has led to Greece not getting some €7.2 billion credits previously promised.

The Samaras administration agreed a two-month extension to the bailout process, and those two months expire before the end of February.

On top of that, rich Greeks worried in advance about the election result took €3 billion out of Greek banks in December alone, to stash somewhere else. A year ago LSE professor LSE Gabriel Zucman calculated that wealthy Greeks already had €60 billion in Swiss banks.

There are two reasons for pessimism, even with the narrow range of options sketched by these different reckonings.

One, that, because of the way the EU is set up, concessions require a lot of people to agree. If all the other eurozone governments favour concessions, still Germany and Finland can block them. There is a bias towards inertia.

Secondly, the EU leaders will be reluctant to agree concessions precisely because the case for them is so strong. The EU could easily afford concessions to Greece: but then what if every other country wants similar concessions?

Alexis Tsipras and the other Syriza leaders have gradually diluted their programme until now it really comes down to negotiating the best deal they can get from the EU, then redistributing the proceeds to workers and worse-off people in Greece. This “moderate” stance paradoxically makes it less likely they will get concessions — for the same reason that a trade union asking the bosses for the best pay rise available by negotiations will get less than a union demanding a pay rise and planning a strike if it doesn't get that.

If, however, the left inside Syriza and outside can create a real threat that Alexis Tsipras and his friends will be pushed aside, and replaced by more radical people, then concessions can be won.

Socialists should seek the widest possible workers' unity across Europe to defend Greece against EU and IMF impositions.

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