After days of fraught negotiations, a temporary agreement was finally reached on February 20 between the Greek government and its Eurozone creditors to extend Greece's loan agreement.
It came a day after the German government scuttled a Greece proposal for a six-month extension to its loans program, which was set to run out at the end of the month.
Much of the detail of the deal is still to be clarified. On his Channel 4 blog, Paul Mason wrote that it involves Greece agreeing that all economic measures must be run past its Eurozone creditors and the International Monetary Fund ― and must not threaten “fiscal stability”.
However, the Center for Economic and Policy Research said: “[T]he agreement gives Greece fiscal flexibility, lowering previous fiscal surplus constraints. Bloomberg cited a Greek official as saying that tax increases and cuts to pensions were not part of the agreement.”
Exactly what this means for Greece's plans to break with austerity remains to be seen. Greece is set to present its list of proposed economic measures to a second round of talks on February 23.
One thing that is clear is that, although it pulls Greece back from the brink of a eurozone exit, it resolves nothing fundamental.
The Guardian reported on February 21 that Greek finance minister Yanis Varoufakis, sounded a note of caution, saying: “This is not a moment for jubilation, this agreement is a small step in the right direction.”
Throughout the talks, it has become clear that European elites — in particular the German government that speaks for powerful economic interests — are determined to impose a total surrender on Greece's anti-austerity government.
The new Greek government, elected on January 25 and headed by the radical left SYRIZA party, is seeking to renegotiate its debt and tie debt repayments to economic growth.
It rejects the crippling austerity measures forced on Greece in return for “bail-out” programs by the “Troika” of the International Monetary Fund, European Union and the European Central Bank. Troika-imposed measures include savage spending cuts, privatisations and restrictions on workers' rights.
Powerful financial institutions want a total surrender by SYRIZA, in part to send a clear message that “there is no alternative” to the austerity measures that impoverished millions in Greece and across Europe.
It is no surprise that the governments of Spain and Ireland — who also have bail-out agreements with the Troika imposing austerity — are unwilling to back compromises to alleviate Greece's suffering. The ruling parties of both countries are threatened by rising support for anti-austerity political forces that would get a boost if SYRIZA was able to make gains.
SYRIZA was elected on January 25 on a platform of breaking with the austerity measures that have created a humanitarian crisis.
But despite repeated attempts by SYRIZA representatives to compromise in order to strike a deal, key European powers, especially Germany, are insisting on enforcing the existing terms of Greece’s bail-out agreement.
These terms include the brutal austerity measures that SYRIZA was elected to reverse. Germany’s stance therefore amounts to a demand that SYRIZA dump the program Greek people just voted for — essentially rendering Greek democracy meaningless.
Accepting demands to entirely abandon its anti-austerity policies would likely mean political death for SYRIZA. But more importantly, it would mean actual death for many Greeks.
After the austerity measures introduced in the first “memorandum” to bail-out the Greece economy signed with the Troika in 2010, the male suicide rate rose dramatically that year.
A 2014 study by University of Portsmouth reported a clear correlation between spending cuts and suicides in Greece.
The study found that every 1% fall in government spending in Greece led to a 0.43% rise in suicides among men.
After taking into account other factors that might lead to suicide, the report found 551 men killed themselves “solely because of fiscal austerity” between 2009 and 2010 — or 50% of all male suicides in that time.
It is crucial to grasp what is actually at stake. This is not a question of Greece's people seeking to dodge their responsibilities.
Greece's national debt was largely run-up by corrupt, unrepresentative governments in a context where the rich pay little-to-no taxes. For instance, Greece's shipping oligarchs, who control about 16% of the global shipping industry, infamously pay no tax at all.
Greece's debt became an issue in 2009 in the context of the global financial crisis caused by the greed of large banks and financial institutions, leading to the collapse of major US banks and causing global panic.
Fears that Greece would be unable to pay its debts should be seen in the context of this global crisis, for which ordinary Greek people cannot, in any serious analysis, be held responsible.
To shore up Greece's ability to pay its creditors, the Troika offered Greece’s government hundreds of billions in bail-out programs — but at the cost of extreme austerity measures to make Greece’s poor and working people bear the brunt of cost-saving measures.
Greek oligarchs continued paying no tax, but huge numbers of Greeks lost jobs and pensions, or were forced to accept significant pay cuts.
Unsurprisingly, extreme spending cuts drove Greece’s economy further into recession, while creating mass suffering on a scale not seen in a First World nation since the Great Depression.
The unemployment rate now exceeds 30% (50% for youth) and 20% of those with jobs live under the poverty line. The Australia-Greece Solidarity Campaign pointed out that child malnutrition rates reached levels not seen since World War II.
The University of Portland research found HIV infection rose by more than 200% from 2011 after prevention budgets were cut and intravenous drug use rose with growing youth unemployment.
Greece’s first malaria outbreak in decades occurred after budget cuts to mosquito-spraying programs.
The Troika’s bail-out program, which Germany wants to keep imposing, has not benefited Greece’s people. The Jubilee Debt Campaign reported in January that of the US$284 billion in bailout funds Greece has received since 2010, 92% of these funds went to Greek and European financial institutions.
In other words, the Greek people are being made to bleed to shore up the interests of the big banks. Worse still, after all the pain, Greece’s public debt has actually grown.
The Economist said on February 14: “At the end of 2009, Greece owed €301 billion, then around 127% of GDP, mainly to the private sector. Today it owes around €315 billion (175% of GDP).”
No wonder Greece’s people have had enough. Many thousands have taken to the streets this month to rally in support of SYRIZA’s stance in negotiations.
A February 17 statement by the Party of the European Left (EL) said polls showed 78% of Greeks have supported their government and how it is dealing with Brussels against austerity policies.
It said if elections were held now, SYRIZA, which won 36.3% of the vote in January, would win 45.4% of the votes and a majority of seats. What impact the new deal will have on support for the new government is so far unknown.
But the struggle is also against the austerity measures European and financial institutions are imposing on people across Europe.
The EL said that, under the banner of “Let Greece Breathe”, tens of thousands of people had taken to the streets in Europe in solidarity with the Greek people and the SYRIZA government — and to demand a Europe for people, not the bankers.
[You can sign your name to the Australia-Greece Solidarity Campaign's "Let Greece Breathe" statement here. Also, see details of the national Greece eyewitness speaking tour in February and March by Green Left correspondent Dick Nichols