Knife at its throat, Greece accepts brutal bailout

July 16, 2015

Public sector workers strike against the deal, July 15.

In the early hours of July 16, Greek parliament voted to accept the punitive July 12 funding deal put forward by eurozone lenders.

The deal included many harsh austerity measures, including large-scale privatisation, that the SYRIZA-led government of Prime Minister Alexis Tsipras had come to office pledging to oppose.

In a summing-up speech to the Greek parliament, Tsipras said this of the harsh deal: “I would like to put this question very honestly to each and every one of you who is going to vote today: ‘The blackmail [of the eurozone institutions] that you mentioned — was it real or fictional?’

“If you think it was fictional, then I am open to hearing different alternatives, and together we can work on them.

“If you think that it was real, however, then there is no other choice but for everyone to bear the burden of the responsibility [and vote to accept the deal].”

The threat confronting the Greek parliament was that if it voted down the July 12 agreement — which requires a raft of austerity measures to be adopted before discussion can even begin on a third €85 billion bailout for Greece — the government would not be able to meet looming debt repayments to the European Central Bank.

The ECB, which has been deliberately restricting the flow of cash to near-insolvent Greek banks, would then have a pretext to cut off all funding. This would bankrupt the already bleeding financial system and force the country out of the Eurozone.

Such a “Grexit” would take place on the worse possible terms — amid financial chaos leading to a further fall in consumption and investment. It would cause renewed recession in an economy that has already shrunk 25% since 2008.

Tsipras said that rejecting the blackmail of the European institutions, a position expressed with force by parliamentary speaker Zoe Constantopoulou, would simply open the road to such a Grexit.
Notwithstanding Tsipras’s appeal, 32 of SYRIZA’s 149 MPs opposed the legislative package implementing the austerity proposals. Six more abstained.

The package was approved with 229 MPs in the 300-seat chamber in favour. This was down from the 251 who had supported the original Greek negotiating proposal taken to the July 12 Eurogroup meeting.

Of those supporting the bill, 110 were from SYRIZA, 13 from SYRIZA's coalition party the nationalist Independent Greeks, 76 from the conservative New Democracy, 17 from The River and 13 from the social democratic Panhellenic Socialist Movement (PASOK).

Of the 64 MPs who voted against the package, 32 came from SYRIZA, 17 from the neo-Nazi Golden Dawn, and 15 from the Greek Communist Party (KKE).

SYRIZA MPs opposing the bill included Constantopoulou, former finance minister Yanis Varoufakis, energy minister and Left Platform spokesperson Panagiotis Lafazanis and deputy labour minister Dimitris Stratoulis.

Deputy finance minister Nadia Valavani, who stepped down on July 15, also opposed the bill.

Eurozone vengeance

This opposition to the demands of the Eurogroup, made up of 19 eurozone finance ministers, and the Euro summit of eurozone prime ministers comes as no surprise.

This sadistic document, which Alexis Tsipras and finance minister Euclid Tsakalotos felt they had no choice but to accept, forces the SYRIZA-led government to swallow measures that violate its long-held “red lines” on sales tax, pensions, privatisations and labour market “reform”.

It also takes cold revenge on SYRIZA for daring to call the July 5 referendum on the June 25 “final offer” of the Eurogroup. More than 61% of voters rejected the offer, which, in the end, was less punitive than the one now accepted.

That inspiring exercise in democracy was regarded by the European establishment as an unspeakable “betrayal of trust”. The opening paragraph of the July 12 document states: “The Euro summit stresses the crucial need to rebuild trust with the Greek authorities as a pre-requisite for a possible future agreement on a new European Stability Mechanism program.”

In a July 16 comment on the document, Varoufakis said the agreement requires the SYRIZA government to prove its bona fides with the Troika of the European Commission, ECB and International Monetary Fund (IMF) by enforcing the very austerity it was elected to oppose.

On austerity, Varoufakis said: “The Greek government must introduce new stringent austerity directed at the weakest Greeks that have already suffered grossly [and] Greece must subject itself to fiscal waterboarding, even before any financing is offered.”

On Troika strategy, he said: “The SYRIZA government must sign a declaration of having defected to the Troika’s ‘logic’ [and] the Greek government, which knows that the imposed fiscal targets will never be achieved under the imposed austerity, must commit to further, automated austerity…”

“The SYRIZA government must be humiliated to the extent that it is asked to impose harsh austerity upon itself as a first step towards requesting another toxic bailout loan, of the sort that SYRIZA became internationally famous for opposing.”

On blame for the crisis, the former minister said: “The SYRIZA government must accept the lie that it, and not the asphyxiation tactics of the creditors, caused the sharp economic deterioration of the past six months — the victim is being asked to take the blame by and on behalf of the villain.”

On the privatisation fund to be overseen by the creditors: “Public property will be sold off and the pitiful sums will go toward servicing an unserviceable debt — with precisely nothing left over for public or private investments.”

On the oversight role of its creditors: “The Greek parliament must, again, after five months of short-lived independence, become an appendage of the Troika — passing translated legislation mechanistically.”

On top of all this, “the Greek government will retrospectively annul all bills it passed over the past five months.”

In short, the document wipes out nearly every line of the election program on which SYRIZA was elected on January 25.

It also loads Greece up with yet more debt, taking it to as much as 200% of Gross Domestic Product. Even the IMF, in its latest report on Greek public debt sustainability, admits this debt must be restructured if the country is to have any chance of regaining growth.

Path to humiliation

In his July 15 speech in parliament, Varoufakis compared the Euro summit agreement to the 1919 Treaty of Versailles, whose vindictiveness towards Germany helped pave the way for Hitler’s rise. How did the SYRIZA-led government arrive in this dreadful situation only 10 days after the triumph of the July 5 referendum?

The referendum aimed to demonstrate the strength of Greece's rejection of austerity and to force concessions from Greece’s “partners” in negotiations.

However, the actual impact of July 5 was to harden the position of those, led by German finance minister Wolfgang Schäuble, who wanted Greece out of the eurozone.

France, committed to keeping Greece in the eurozone, moved to help the Greeks draft a document that might have some chance of winning support for a third bailout. When this was submitted for the approval of the July 12 Eurogroup meeting, Schäuble, backed by Eurogroup president and Dutch finance minister Jeroen Djisselbloem, seized the chance to make the final text as draconian and vindictive as possible.

Under these terms, Greece could only stay in the euro as a direct protectorate of the eurozone institutions. Also, only in this way would it be possible to convince the parliaments of northern Europe — whose electorates have been force-fed a diet of lies about Greece for six years — to vote for a third bailout.

Schäuble even proposed that Greece leave the euro for a period and not reapply for membership until it had got its house in order. The document from Schäuble and company also envisaged setting up the trust for privatising Greek public assets in Luxemburg. This was only dropped when Tsipras nearly walked out of negotiations.

In the words of a senior EU official, the meeting saw Tsipras “crucified”.


How were the German government and its Eurogroup allies able to get away with this brutally imperial operation?

An immediate reason is the still inadequate level of solidarity action with Greece. It is true that 200,000 have been out in the streets of Europe over the past month in support of the SYRIZA-led government. But the broad sympathy with Greece this reflects has not yet been organised enough to make those mugging the country pay a serious political price for their crimes.

The SYRIZA-led government remains a lone anti-austerity government in Europe. Support for Greece is growing in many European countries in “civil society” as well as in some institutions — such as the European parliament and newly elected progressive councils in the Spanish state. But this isolation won't be decisively altered until more national governments are won by the left.

Given this balance of forces, Tsipras clearly felt Greece had no choice but to cop the Euro summit’s brutal conditions as the lesser of two evils.

Given that reality, and faced with an ongoing struggle over implementing the third Troika memorandum indicated by the July 15 public sector strike, it seems certain SYRIZA will be looking at developing plans to give it more options when similar crises arise in future.

The draconian July 12 agreement is already leading long-standing supporters of its “staying in the eurozone and fighting” — including Varoufakis — to wonder whether the price of membership of a club designed to boost the profitability of German big capital is not far too high.

In the meantime, strengthening solidarity with Greece is more important than ever.

[Dick Nichols is Green Left Weekly’s European correspondent, based in Barcelona. A longer version of this article will appear at Links—International Journal of Socialist Renewal.]

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