Greece: it’s time to chose

Note kindly translated by Anne-Marie de Grazia

Alexis Tsipras wrote an op-ed in the newspaper Le Monde[1] ; this text must be added to the declarations he has made these past days before the leaders of his SYRIZA party. The measured, yet firm tone of the article, calling public opinion to witness, could well announce a political decision taken by the Greek government to default on its debt. The text, which presents itself as a “program,” arrives too late to be such. If Tsipras had believed in the possibility of an agreement with the Eurogroup and the EU governments, he should have published this text in February or March. In reality, one can think that the function of this text is to point out precisely the responsibilities in the looming rupture between Greece and its creditors. This feeling is substantiated by the last Tsipras’ speech at the Greek Parliament (the Vouli) on June 5th evening.

The « last chance » negotiation?

In reaction to this text, the leaders of Germany, France and Italy, together with M. Mario Draghi for the ECB and Mme Christine Lagarde for the IMF, convened on Monday evening in Berlin. The only thing that came out of this was a declaration about continuing “to negotiate even more intensely ». But, in fact, the negotiations are political and not technical. This Alexis Tsipras has clearly pointed out in his text. The latter must be read attentively. Tsipras describes the will of Greece to reach a global understanding of the situation which has resulted from the implementation of the austerity measures imposed by the « Troïka, » that is, the European Union, the IMF and the ECB: “On 25th of last January, the Greek people made a courageous decision. They dared to challenge the one-way street of the Memorandum’s tough austerity, and to seek a new agreement. A new agreement that will keep the country in the Euro, with a viable economic program, without the mistakes of the past. The Greek people paid a high price for these mistakes; over the past five years the unemployment rate climbed to 28% (60% for young people), average income decreased by 40%, while according to Eurostat’s data, Greece became the EU country with the highest index of social inequality. And the worst result: Despite badly damaging the social fabric, this Program failed to invigorate the competitiveness of the Greek economy. Public debt soared from 124% to 180% of GDP, and despite the heavy sacrifices of the people, the Greek economy remains trapped in continuous uncertainty caused by unattainable fiscal balance targets that further the vicious cycle of austerity and recession.”

His analysis is clear. Greece wishes to remain in the Euro but it cannot bear the austerity measures which have been imposed on it and which have shown themselves to be widely inefficient. He stresses the fact that the Greek government has taken measures and advanced proposals for a change in policy since January 25th. Another economic policy must be implemented and many economists, from Paul Krugman to Joseph Stiglitz, winners of the Nobel Prize, are saying exactly that. A paper published by these economists, with Massimo d’Alena and Thomas Piketty in the Friday 5th of the Financial Times is just ramming home these truths.  Tsipras recalls the responsibility of the Troïka in the fiscal chaos which has reigned in Greece down to the present: Another equally fundamental aspect of our proposals is the commitment to increase public revenues through a redistribution of the burden from lower and middle classes to the higher ones that have effectively avoided paying their fair share to help tackle the crisis, since they were for all accounts protected by both the political elite and the Troika who turned “a blind eye”.”

Here the warning is quite clear. The Troïka has given cover to reprehensible going-on in Greece; the German government, which likes to drape itself in the mantle of a paragon of virtue, refuses to extradite to Greece one of the leaders of the SIEMENS company who is at the heart of an enormous corruption scandal.

Reminding of the efforts already made by the Greek people, but also of the engagements taken by the new government, he gets to the essential point. Two strategies are dividing Europe, he writes: « The first strategy aims to deepen European unification in the context of equality and solidarity between its people and citizens. (…). The second strategy seeks precisely this: The split and the division of the Eurozone, and consequently of the EU. The first step to accomplishing this is to create a two-speed Eurozone where the “core” will set tough rules regarding austerity and adaptation and will appoint a “super” Finance Minister of the EZ with unlimited power, and with the ability to even reject budgets of sovereign states that are not aligned with the doctrines of extreme neoliberalism.” Well said.

One often forgets, out of ignorance or malice, that SYRIZA is a deeply European party. We explained in a note published last February the reasons of this attachment to Europe. But one also forgets that SYRIZA is a party which is deeply attached to the sovereignty of the Greek people and to democracy. It cannot accept a Europe which tramples on sovereignty and democracy, this having been the logic of European institutions for a decade now.

It ensues that what SYRIZA is asking for is indeed a return of Europe to its democratic project respecting the sovereignty of the peoples. Should this prove impossible, Europe would no longer be Europe and SYRIZA would no longer feel itself bound to respecting the rules of an anti-democratic Europe. This means that the negotiation bear in reality on political principles and not on technical data such as the supposed amount of the primary budget surplus or the amount of pensions. Not that these technical data is not important; they are so indubitably for a large part of the Greek population. But negotiations bear only indirectly upon these points. Is Europe ready to apply to Greece an identical treatment to that which it granted Germany in 1953, or will it prefer to stiffen itself in its stance on austerity and in its antidemocratic procedures?

The blindness of the European powers

The nature of the problem at hand was clear since January 25th. When SYRIZA preferred to ally itself with the « Independent Greeks » rather than with the Europeist pseudopod « The River » (To Potami) it became evident for any reasonable observer that the question put to Europe would be political and not technical. But the Eurogroup and the EU preferred not to see this reality, most certainly because it questioned the very architecture which had been constructed by Germany in complicity with the French, but also the Italian and Spanish governments. One will never stress enough the considerable responsibility of a Nicolas Sarkozy and a François Hollande when they chose to align themselves on the proposals of Mrs Merkel rather than provoking a helpful crisis which would have put an end to these antidemocratic slide of Europe. If the debate on rules of governance and the logic of austerity had taken place between 2010 and 2013, it is possible that lasting solutions could have been found to the economic as well as political crisis the Eurozone was going through. But the refusal to open such a crisis, in the name of the « preservation of the Euro», runs a strong risk to end up in its opposite: a crisis, originating in Greece and progressively spreading to all of the countries, which will end up sweeping away not only the Euro, which would not be a big loss, but also the whole of the European construction. The political blindness of the European leaders, their obstinacy in pushing ahead with policies the principles of which were nefarious from all evidence and the results gruesome, will have considerable consequences on Europe. History will tell that the true grave diggers of the European project will have been named Angela Merkel, Nicolas Sarkozy and François Hollande, with the help of MM Rajoy and Renzi.

Caught in their blindness, these leaders wanted to believe that Greece only wanted to renegotiate the straightjacket of servitude in which it was restrained. But what Greece wanted and still wants is an end to this straightjacket and not a replacement of some of the shackles. So that we have witnessed a fundamental misapprehension developing between Athens and the other countries. Where the creditors were proposing pure formal concessions in exchange for new loans, the Greek leaders proposed important concessions, which one might even find excessive, such as on privatisations and the suspension of some social measures, but in exchange of a global treatment of the debt question, passing evidently through an annulation of part of this debt and the restructuration of another, transforming it into a 50 years debt.

The incomprehension of the fat Eurocrats confronted with the demands of Greece is rooted in the blindness which I have evoked. But, in the case of Germany, it is also rooted in the understanding that the question of the debt cannot be confined to Greece. If Germany gives in, which is not totally excluded in the coming days taking into account the strong American pressures put on Berlin, the whole politics of austerity will go in shambles. Already, the Spanish Prime Minister, who had advanced to be Berlin’s best ally in February and March, is signalling an important change in attitude. He is now calling for the creation of euro-bonds in order to feed growth in the Southern European countries. The message to Mrs Merkel could not be clearer: if she gives in on Greece, she must get ready to see all the countries of Southern Europe put the dogma of austerity into question and try to step into the breach opened by Athens.

We can see here that the policies implemented between Mrs Merkel and Nicolas Sarkozy in the spring of 2010 have shut in the Europeist leaders in a situation out of which they can get out only through decisions which will turn out disastrous for them. Intransigence will provoke the default of Greece and its exit from the Eurozone in the short term, starting the unravelling of the latter. But accepting Athens demands will provoke the implosion of austerity politics, repeated demands concentrated on Germany which will end up creating an insufferable situation for the latter country. By refusing to look at the reality of the problems, these leaders have put themselves into a situation from which they will be able to extricate themselves only at a considerable political and economic cost.

A frightful end or an endless fright ?

So that, as Europe is unable to reform itself – that’s where we diverge from Tsipras’ hopes – there are no other choices than to accept a frightful end (the default) or an endless fright from the standpoint of the logic of austerity, which means a rapid calling into question of all the treaties signed since 1999.

One may ask if Germany hasn’t already chosen the frightful end. The answer to this question is not far away.

[1] Tsipras A., « L’Europe est à la croisée des chemins », in Le Monde, 31/05/2015,

Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

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