Monday, 26 January 2015

What now for Greece? What now for Europe?

On January 25th 2015 Alexis Tsipras led the left-wing party Syriza to power in Greece. It is hardly surprising that the radical left were empowered to electoral victory on an anti-austerity platform in the European country that has suffered the most severe effects of ideological austerity. 

Greek defiance

After five long years of the troika of the IMF, the European Central Bank and the European Commission forcing Greece to borrow vast sums in order to bail out their creditors (mainly the French and German banks that recklessly lent them money in the first place), and enforcing a savage programme of cuts and privatisations, the people of Greece have had enough.
The IMF, the EC and the ECB are not the only organisations with strong incentives to make an example of Greece by further destabalising their economy and obstructing their new democratically elected government as much as possible. Other parties with interests in seeing Greece suffer in order to deter similar acts of defiance and ensure the continuation of ideological austerity include the governments of the UK and the US and multinational finance which has benefited enormously from the bailouts, and from the asset stripping of whole national economies under the guise of "there is no alternative" austerity.

The reason the Greeks are so brave is that they know that the EU and the economic right-wing simply cannot allow a left-wing government to be perceived to win the fightback against ideological austerity. 
The Greek people knew that their act of defiance in electing an anti-austerity government is likely to provoke severe retribution from the troika and other powerful pro-austerity forces, but they have chosen defiance instead of subservience anyway. The political landscape of Europe has been changed because enough Greeks have decided that it's better to risk dying on their feet than to continue living on their knees

European politics

Spain and Ireland have also suffered the appalling effects of ideological austerity more than most of their EU neighbours, and there too the parties with the biggest increases in popularity are anti-austerity left-wingers too (Podemos and Sinn Féin). The victory of an anti-austerity party in Greece is bound to act as an inspiration to Podemos and Sinn Féin, as well as many other smaller anti-austerity parties such as the various Green parties across Europe and the German radical left party Die Linke.

Even though the independence referendum was lost, Scotland is another country with a popular anti-austerity movement. The anti-austerity SNP hold majority control of the Scottish parliament, they're riding high in the polls and they look set to inflict an unprecedented electoral bloodbath on the Labour Party in the May 2015 general election.

While many people have reservations about the SNP, it is impossible to deny that they have formed an anti-austerity alliance with Plaid Cymru and the Green Party of England and Wales. It's also impossible to deny that they are part of the anti-austerity Green-European Free Alliance group in the European Parliament.

The SNP are nowhere near as radically left-wing as Syriza, but they are smart enough to see austerity as the dangerous and socially destructive economic ideology that it is, and to publicly oppose it.

The election of a left-wing anti-austerity government within the EU should act as a short-term inspiration to opponents of ideological austerity all over Europe because it's proof that countries can get rid of pro-austerity governments. Whether it acts as a long-term inspiration will depend heavily on how successful Syriza are percieved to be, and how far the powerful pro-austerity forces are prepared to go in punishing Greece in order to deter more acts of civic defiance elsewhere in Europe.

Problems for the pro-austerity forces

The defiance of the Greeks presents two significant problems to the right-wing pro-austerity forces that dominate in Europe.

Firstly the ideological austerity they have already imposed on Greece has caused years of appalling socio-economic chaos (ludicrously high unemployment figures, 
the degradation and destruction of public services, widespread poverty and vast flows of labour and capital out of the country). The terrible economic policies of the troika have already inflicted so much poverty and destruction in Greece that they would now have to push the levels of suffering beyond the extreme in order to make life under a left-wing government seem distinctively worse than life under troika imposed austerity. Causing even more suffering to an already beleaguered nation could tip Greece from rolling socio-economic chaos into a full scale humanitarian disaster.

The second major problem for the powerful pro-austerity forces is that there is a significant risk that by working to further destabilise Greece, they could force the nation to default on their debts and exit the single European currency experiment, potentially triggering a domino effect of other Eurozone states defaulting on their unpayable debts and quitting the single currency.

The pro-austerity forces may hold most of the levers of power in Europe, but the chaos they have already caused in Greece with their ideological austerity agenda has put them in a complicated bind, where they really need to punish Greece to make anti-austerity defiance look a really bad idea so as to deter more of it, but not so much that they end up bringing down their inherently unstable single currency experiment altogether.

The single currency

The fact that Greece is tied into the European single currency has exacerbated the ongoing economic crisis that has driven the rise of Syriza in just a few years from a minor coalition of tiny green and radical-left parties to a single unified party that controls the Greek parliament.

Membership of the single currency has prevented the Greek state from using monetary policies or capital controls to alleviate the suffering, and has facilitated the enormous scale of capital flight out of the Greek economy.

An economic system uniting such radically different economies as Greece and Germany, and which allows enormous flows of capital to move unhindered from the weaker economy to the stronger one is inherently unstable. The more developed European nations cannot continue to suck such enormous flows of wealth out of the poorer nations on an indefinite basis without causing severe instability. A more stable and balanced European economy would need capital to flow from the wealthier, more productive economies to the poorer less productive ones, not the other way around.

Either the European Union needs to be radically reformed so that the wealth of the more productive nations is used to improve productivity in the struggling nations via a structural feedback mechanism, or the system is going to become so unequal and inherently unstable that whole countries are left with no choice but to quit the single currency in order to rid themselves of the European economic straight jacket.

There is a third option, which is the development of an orderly exit strategy so that there is a procedure for countries to make orderly withdrawals from the single currency so that the risk of a catastrophic domino effect of disorderly and highly unpredictably exits is reduced.

This third option is very unlikely to be taken because although it would strongly reduce the probability of a chaotic sequence of disorderly exits, it would strongly increase the possibility that numerous countries would choose to abandon the Euro. It seems unlikely that the right-wing dominated institutions that devised the single currency experiment in the first place are suddenly going to decide to build in a legislative escape route so that nations can extricate themselves as painlessly as possible from their failing ideological experiment.


It could be easy to get carried away celebrating the electoral success of a left-wing anti-austerity party, but in order to do so it would be necessary to ignore the fact that much more powerful governments and institutions (IMF, EC, ECB, Germany, UK, US, numerous European banks) have vested interests in making sure that Syriza are perceived to fail.

Awareness of the wider perspective allows us to understand that the electoral success of Syriza is a small victory for the underdogs in the ongoing battle between powerful pro-austerity forces, and those who recognise austerity as the socially and economically destructive right-wing economic ideology that it is.

The success of Syriza has catapulted Greece back onto the centre-stage of European politics, and it will be very interesting to see how far their much more powerful pro-austerity opponents will go to punish the Greeks for their defiance, and whether this punishment has the effect of pushing Greece over the tipping point causing a full-scale Eurozone crisis.

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