During the past few days the PASOK government in Greece and “world market pundits” have attempted to create an artificial picture of “euphoria”, regarding the perspectives for the Greek economy. In reality Greek capitalism is on the verge of an even deeper crisis which will unleash class war on a scale reminiscent of the events in the 1960s and 1970s.
The government and bourgeois economists are stressing the narrowing of the Greek-German 10-year bond yield spread (the difference between the interest rate for Greek and German bonds) from 771 to 671 basic points, the trade agreements signed with China, accompanied by China's commitment to buy Greek bonds and the informal negotiations concerning the extension of Greek loan repayments to the “EU-ECB-IMF troika”, as it is known locally. In the meantime, due to a fall in workers’ mobilisations since the summer and the tendency for the deficit to decrease, they claim that Greece is now back on track.
On the domestic front, this campaign is aimed clearly at deceiving the masses in preparation for the critical municipal elections on November 7, which the Papandreou government has raised to the level of a public referendum on its policies.
However, as usual, the most serious bourgeois speak the truth about their real analysis, hidden away on the inside pages of the capitalist press. Alexis Papahelas, the director of the bourgeois paper Kathimerini, commented on October 13:
“Every serious foreign analyst and academic asks us the same question: ‘Tell us how will growth be created and we will tell you if you can manage it.’ The Minister of Finances, Mr. Papakonstantinou has heard the same old advice in English: ‘tell us your growth story’. The reality of numbers is harsh and irreversible, even if the terms of repayment of the troika loan are extended. If the ratio of the deficit to GDP does not change, Greece will have a hard time recovering.”
This comment really shows the root of the problem. The fundamental problem which Greek capitalism has to face is not the 10-year bond yield spread – especially while Greece is under the “protection” of the IMF “support mechanism” and doesn’t borrow money directly from the international markets – but the deep recession, which increases the ratio of the deficit to GDP and as long as this cannot be overcome, the Greek state will have to pay dearly for its credit, despite the possible fluctuations.
In contrast to the growth rates of the rest of the euro-zone, the recession in Greece is deepening and is pushing the country towards the verge of an uncontrollable default.
The Economist estimates that GDP will fall by 4.8% by the end of the year and by 3.8% during 2011. According to the Greek Statistics Agency, industrial production has been fallen by 8% during 2010 while the rate of capacity utilization for industry is merely 68.6%. Capital investment during the second quarter fell by 18.6%, while, during the same time, investment in housing fell by 19.3% and total consumer spending fell by 5.1%. The recession leads to more job losses, too, and the Statistics Institute of the GSEE trade union federation estimates that one million people will suffer from unemployment, 400,000 more than in the first semester of 2010.
Despite the formal fanfare about the deficit, the figures are rather controversial. If we take into account cuts in wages and pensions by an average of 20% to 30%, the decrease in state investment by 40%, the informal suspension of payments to suppliers and the freeze on all recruitment programmes in the public sector, the cut in the deficit is still insufficient to fulfil the government’s goals. Income was 1.8 billion Euros less than estimated up to September. Moreover, Eurostat exerted pressure on the government to amend the 2009 deficit from 13.7% to 15% of GDP. Thus, this year’s goal of an 8.1% deficit is almost unattainable, despite the huge sacrifices made by the Greek masses.
Under the current circumstances of deep recession in Greece and economic stagnation and insecurity in the rest of the world, the public debt cannot be tamed, but on the contrary it will expand. Even if the budget deficit falls under 3% of GDP by 2013, as the agreement with the creditors demands, the public debt will rise from 127% to 147% of GDP. This huge debt cannot be paid back even if Greece had a 5% growth rate for the next twenty years! At the same time, according to figures from the (Central) Bank of Greece, the gross foreign debt (state and private debt to foreigners), rose by 21.3 billion euros during the second quarter of 2010, to 434.3 billion euros (187% of GDP).
While Greece is on the verge of bankruptcy, capitalist tax evasion is on the rise. According to the government, out of a total of 17,000 people who have a swimming pool in the upper class districts of Athens only 324 paid taxes on them, despite the dominant bourgeois hysteria for the formation of a so-called “tax consciousness”.
At the same time, the state’s creditors continue robbing the state. This year, the state will pay 65% of estimated income just on interest payments, while, according to the state budget of 2011, the cost for interest will increase by 5.5% and the cost for interest payments by 41.6%!
In parallel, after last summer’s state subsidy of 25 billion euros to the banks in order for them to continue to borrow money from the European Central Bank (ECB) at a mere 1% interest rate, state subsidies to the banks reached the huge amount of 78 billion euros only for the last two years. Furthermore, in the same provocative manner, the government reduced corporation tax to 20%, excused the bosses from their social security contributions and abolished the minimum wage in the name of safeguarding jobs.
The government’s actual plan is to cut the living standards of the working class and the petty bourgeois, hoping that the recession won’t be that deep and that in the worst case scenario it may be forced into a new agreement with its creditors or guided towards a kind of controlled default, with the EU-ECB-IMF troika’s consent. Thus, it continues announcing harsh measures against the working class, such as raising VAT, a massive increase in the price of heating oil and electricity, mass lay-offs in the public sector and a drastic cut in public health and education spending, with the closure of universities and hospitals.
In the meantime, the government is trying to create illusions about its ability to attract foreign investment. The “investment” agreements with China and Qatar, in reality are on the level of a semi-colonial relationship instituting foreign economic domination over many assets of the country (seaports, resorts, etc.), which will produce huge profits that will be siphoned off abroad. This kind of growth is clearly a banana republic type of growth.
From their point of view, the Arab oil magnates have gained a new field for profit-making, also thanks to the rise of the price of oil , while the Chinese “Graecophile investors” have expanded their shipbuilding industry by occupying Greek seaports. China also, by announcing its intention to buy Greek bonds, is trying to make a common front with the EU against the US attempts to force it to revalue the yuan, a prospect that would harm its exports.
The discussion over extension of debt repayments and the possibility of a default
Internationally, the representatives of capital continue to express their lack of confidence in Greek capitalism. Thus, although the European “support mechanism” would help lower the interest rate on Greek bonds, the yield spread is still high. The countries, which agreed to the formation of this mechanism, are now having secdon thoughts, as they doubt they will get their money back and the best example that proves this is Slovakia’s refusal to pay what is due.
Furthermore, many international capitalist study centres are predicting a Greek default and an increase in the class struggle. Recently, the US based Stratfor commented that: “it is possible that we will see an exit from the euro zone and a total collapse of political control, which will lead to social violence not seen since the military junta of the 1970s.” The Wall Street Journal commented last August: “The amount of Greece’s debt is so big that even with the current austerity program, it is rather improbable to evade a kind of default in the next years, despite the EU’s efforts against this. Either as a bankruptcy or as a new agreement with the creditors, this situation appears unavoidable.”
The Greek government informally is trying to negotiate with the troika for an extension of the repayments of the 110 billion loan. The Greek economy will be burdened by a huge loan budget, especially during the 2014-2015 period, when, more than 70 billion euros annually will be needed to pay back the loan from the troika (55.2 billion in 2011, 57.9 in 2012, 53.2 in 2013, 70.8 in 2014 and 76.7 billion euros in 2015).
Although the IMF has leaked the information that “it considers that possibly”, Germany, the real boss, clarified its disagreement over an extension. Thus, German capitalists are sending a message to the rest of the countries with fiscal problems that, in conjunction with the penalties announced, any deviation from fiscal discipline will not be tolerated. They are trying to secure their position against a possible demand for reduction of the loan in the next months. Nonetheless, the conditions of the loan are really irrelevant, because Greece simply cannot pay it back, especially in conditions of a deep recession and international economic stagnation.
The perspectives of the Greek problem do not depend on Greece at all. If strong growth internationally were possible, European capitalists would tolerate some concessions in order to avoid a Greek default, which could in turn endanger the euro. But there are no signs of such growth yet. So long as the spectre of a second worldwide recession haunts the bourgeois, together with the current Greek recession, it is possible that Greece will be left on its own, after having squeezed out of it every possibility to repay its current loans. In such a scenario, given that many other “patients”, such as Ireland, Spain, Portugal and Italy (even Britain), will soon be in need of European “aid”, the next instalments of the 110 billion loan are far from guaranteed, while an exit from the euro is also possible.
“Flammable material” for the class struggle
So far, what we have seen is a mix of deep recession and a drift towards default, which are flammable materials for the class struggle.
The Spring strike movement with seven general strikes against the implementation of the IMF Memorandum was unsuccessful because the current union leadership, once again, proved to be a fetter on the labour movement. The massive participation in the general strike on May 5 and the rallies of some 150,000 protesters in Athens, terrorised the representatives of capital and began to create divisions within the government's parliamentary majority, demonstrating that not only did the working class want to fight, but also that it was capable of winning.
At this point, the absence of the most decisive factor in the first round of the fight between the workers’ movement and the government and the bosses was evident; the existence of a determined leadership. The trade union bureaucracy seemed more scared than the government of the massive general strikes and the rally of 150,000 in Athens, a mobilisation that reflected the desire to escalate the struggle. Instead of building on this widespread militant mood by organising a new 48-hour general strike and issuing a warning that the struggle would escalate into a general indefinite all-out strike, while organizing at the same a central fund to help the strikers, they called yet another 24-hour strike after 15 days, sending out a message that they were doing it for the sake of it. With such an approach, the heavy weaponry of a general strike turned into a "water pistol", both in the eyes of the class enemy, and in the eyes of the working class.
Today, the workers are frustrated and angry, but they are also drawing conclusions. It is true that in a series of workplaces, such as the Railways, the Ministry of Culture and Public Transport, the workers have been on strike in the last few days. But the general mood among the workers at this point in time would not favour widespread and major strike movements, at least not until the municipal elections as their attention is focused on the electoral field where they are looking to express their rejection of the austerity policies.
This lifting of the pressure by the ranks on the trade union leadership for strike action has led the president of the GSEE to remove the mask of the militant fighter and in a recent statement to Reuters he shamelessly made it clear that the GSEE has no intention of calling a new general strike next year and that “there is no alternative to the policies of the Memorandum”.
However, the constant blows dealt against the workers by the government, under pressure from the deadlock of Greek capitalism, can result at any time in militant movements or even new generalised strike movements with the advent of the new year.
For a while, we can expect the focus of resistance against the all-out assault of capitalism to rest on the shoulders of the youth in the universities and schools, who are already preparing school occupations against the planned cuts in public education.
The crisis and the widespread dissatisfaction of the working class are creating conditions for rapid changes on the political front, in the run up to the municipal and regional elections on November 7. Especially the huge constituency of Attica with it s 2.5 million voters is a fully representative sample of the political trends that are emerging nationally.
Inside the PASOK, we are beginning to see the first significant internal opposition on the left emerging, in reference to the candidacy of the lawyer Alexis Mitropoulos in the region of Attica who is also supported by the Synaspismos. In the most recent polls it appears he could win 11.5% of the votes, whereas the official candidate of the PASOK would only win 20%. A possible electoral success of Mitropoulos would strengthen the opposition inside PASOK and could then lead to a possible split away of the left of PASOK which would ally with the Synaspismos, following the example of the German “Die Linke”.
The leadership of the ND [New Democracy, right-wing conservative party] is facing the prospect of a disastrous result of the party in the elections where its candidate in Attica stands presently at only 17.5% in the opinion polls and a de facto split which is developing after the expulsion of Dora Bakoyannis. They are using rhetorical trickery, with demagogic denunciations of the IMF Memorandum, hoping against hope to recover lost ground in the elections and rebuild their forces.
The far right LAOS party, on the other hand, is attempting to regain strength after it was weakened because of its backing of the IMF Memorandum, trying to take advantage of the prolonged crisis of the ND by returning to the forefront with its proposals for a centre-right coalition government that would bring them close to power.
Finally, the increasingly pro-government stance of the new "Democratic Left" which was created out of the former right wing of the Synaspismos is leading rapidly to its withering away as it is completely incapable of playing any independent political role from that of the right-wing leadership of the PASOK. They are supporting the official candidate of the PASOK in all the municipalities, while their own electoral support of 1% or 2% indicates that this petty-bourgeois social-democratic party is fading away.
Unfortunately, despite the crisis of the bourgeois parties, the leaders of the so-called “traditional Left” [KKE and Synaspismos] continue with a position that does not inspire confidence and does not offer a political solution to the workers.
The leadership of the KKE (Communist Party) is taking advantage of what is a small upward trend in the popularity of the party (from 7.65 in the 2009 elections to 10% in present opinion polls). Considering the serious crisis of capitalism, they should be growing by much more. This growth has made them even more arrogant in defending their sectarian approach towards the rest of the labour movement, with its general secretary Aleka Papariga stating that historically "…leftist co-operation and joint activities on minimum programmes and goals have led to disappointment and dissolution of the popular movement" (August 29). With an attitude like this, the leadership of the Communist Party distorts the legacy of genuine Leninism of the united workers’ front and disappoints the ranks of the party.
On the other hand, the two dominant leading groups within the SYRIZA electoral alliance (a coalition of Synaspismos with small left-wing organisations) have split the alliance with the tactics they have developed, without the involvement of the rank and file, in the first critical electoral battle after “the age of the IMF Memorandum", i.e. the elections in the region of Attica, proving that they are not capable of promoting the vital question of building a more united, militant, class and socialist Left. The leadership of the Synaspismos, adopting tactics lacking any political thought or joint agreement, was dragged behind Alexis Mitropoulos, an individual that has no real track record of opposition on the left in PASOK in recent years. He talks abstractly against the austerity measures, when his only asset is his overexposure to the mass media as a permanent panellist on morning TV chat programmes.
On the other hand, the forces near the leadership of SYRIZA that support Alekos Alavanos, the former president of Synaspismos and who recently departed from the party because of his personal conflicts with the current president Alexis Tsipras, have made it impossible for any consensus candidate to be proposed by the forces of SYRIZA and, without proposing a qualitatively different programme, moved on to split the coalition, led by Alavanos. This is in fact the end of SYRIZA, and if the opinion polls are confirmed and Alavanos wins 4-5% of the votes, he will go on to establish a new party, hoping to rally together some Maoist or "Trotskyist" sects and a section of the supporters of Panagiotis Lafazanis, the left wing in Synaspismos.
The most important development in the recent period is the fall in the number of people who say they will abstain in the elections and now over 70% of people say they will go to vote. The polls also suggest that the candidates to the left of PASOK collectively should receive 46%, including Yiannis Dimaras, the independent 'rebel' from PASOK, and the former leader of the old DIKKI party Dimitris Tsovolas, who stands to win 15% and could go through to the second round against the official candidate of the PASOK.
Everything indicates that Greece has entered into a new historical era. The last 30 years of relative peace are over and we have entered once again a period of political and social turmoil which resembles the years just before and immediately after the 1967-74 dictatorship.
But the working class of today compared with that period is much stronger. It is the overwhelming majority of the population, nearly 70% of the economically active population, and its mass organisations have deeper roots than ever. The youth, as shown by the revolt of December 2008, are radicalised and the middle classes, as shown by the militant and mass demonstrations of the farmers at the beginning of this year and the small truck owners a month ago ,are reaching their "boiling point".
The failure of Greek capitalism lays the groundwork for the emergence sooner or later of a revolutionary movement that will shake Greek society from top to bottom and bring the working class close to power. It will bring to the surface the real, traditionally violent and reactionary face of the Greek ruling class, which at a later stage will have no choice but to move towards some kind of Bonapartism.
The conditions which will help the Greek workers and youth to avoid such an open reactionary system from establishing itself is, ultimately, the strengthening of the forces of Marxism within the labour movement and the Left and success in the struggle for a left Socialist government that will put an end to the economic and political domination of the bourgeoisie in solidarity with the other Balkan and European workers.
Website of the Greek Marxists: Μαρξιστική Φωνή