KO in the EU

The troika scored a decisive victory over the Greek—and the global—left

Given Western civilization’s debt to Greek society, you might think haughty Berlin, itself not long removed from the days of marauding hordes descending on urbane Rome from the thicket of the Black Forest, might have it in them to declare a debt jubilee for the long-suffering Greeks. Sorry, say the neoliberal ideologues that peer down from the commanding heights of the world’s second largest economic zone. We forgave 100 billion euros in 2012 and look where it got us: nowhere. Instead, elite northerners sneer pitilessly at the southern Europeans, whose troubles, they say, are self-inflicted, induced by their apathy-infected culture, unlike the industrious ethic of northern neighbors. (Please strike from the record the fact that Greeks work 600 more hours a year on average than Germans.)

Syriza, winning the recent Greek election on an anti-austerity platform, was being heralded as the populist hero that Western populations were waiting for. It was the first government in Europe to hold an explicit mandate to challenge austerity. To publicly decry a program that has delivered a 25 percent drop in the GDP, 27 percent unemployment, and plunged nearly half the population into poverty. And don’t forget the declines in public health and rises in child hunger and suicides. As Syriza itself loudly proclaimed, if it was elected, it would guarantee that austerity rules would be lifted and debt rescheduled. It was heady stuff, the concept of self-determination finally rising from its long slumber.

But the Cerberus guarding the gates of European prosperity knew better. The troika, as the International Monetary Fund (IMF), the European Commission (EC) and the European Central Bank (ECB) are known, knew they would never submit to the Greek’s demotic pipe dream. To do so would be to invite every deadbeat government in the EU to line up at its door, hat in hand, begging for leniency—or worse, demanding it. That would set off a veritable debt jubilee across the Eurozone. Unthinkable, said the stiff backs in Berlin. Germany was not about to beggar its own reputation for intransigence for the sake of a few self-pitying Portuguese, Italians, and Greeks.

No Doubt, Syriza Folded

The foregoing was the backdrop of the February negotiations between Syriza and the troika. The liberal left people’s party would collide with Europe’s neoliberal elite. They would discuss whether or not the troika would continue to lend them money, and on what terms. The meeting didn’t live up to the hype. The troika scored a decisive knock out before negotiations were barely a week old. They insisted Greece agree to all the terms of their former agreement if they wanted their lending regime extended. And Syriza, for all its campaign trail hucksterism, backed down. Trembling, like a junkie in rehab, at the possible withdrawal of its European fix, they caved. It wasn’t compromise. It was capitulation. The troika gave nothing but got everything. Syriza got nothing but gave everything.

This outcome shouldn’t have been all that surprising. A lot happened before the negotiations even began that foreordained the outcome. Essentially, Syriza discarded all of its bargaining leverage in a foolish effort to moderate its campaign positions. This perhaps revealed that Syriza had never seriously considered leaving Europe. Consider: It conceded that the debts were legitimate. It sidelined the option of exiting the Eurozone. It refused to consider defaulting on their debt. It rejected the notion of unilaterally running a higher deficit. And it set aside the simplest of all measures, suspending payment on its debt as a means of forcing a reasonable restructuring of the debt. All of these were negotiating points they could’ve used as leverage. All voluntarily forfeited.

Left without leverage, Greek Prime Minister Alex Tsipras, Finance Minister Yanis Varoufakis and their Syriza cohorts, the radicals who had rallied their countrymen to a dream of Greek sovereignty, gave their imprimatur to the articles of austerity. Game. Set. Match.

Syriza has until April to produce reforms that the troika finds palatable; i.e., in line with the existing arrangement, agreed to at the Eurogroup meetings of 2012. Last Monday they submitted a tepid outline of the reforms, approved by the troika. As reported by the Wall Street Journal, the “list of proposals submitted by the Greek government on how to overhaul the country’s economy appears to be in line with the principles set out by Eurozone finance ministers.”

Among the concessions by the Greeks:

  • Oversight – Experts suggest that the budget minders from Brussels required to rubber stamp any budgetary ideas produced by the wayward Greeks aren’t going anywhere. Termed “Public Expenditure Review” in IMF parlance, these financial babysitters not only put paid to any notion of Greek sovereignty, but they are the very task force that Alex Tsipras made a fierce campaign threat to ship them back to Brussels (a threat now buried beneath the pile of forgotten election guarantees).
  • Access to Stability Fund Cash – Syriza had also announced during its campaign that it would use the Hellenic Financial Stability Fund (HFSF) as a source of cash for its populist reforms. In a gesture of delicious sadism, the troika included a clause that effectively seized all monies in the fund and guaranteed it be sent to banks, if sent anywhere. Greece conceded.
  • Privatization Proceeds – What about monies from the promised budget surplus? Most citizens might despise the privatization policies and the spending cuts, but many might reasonably want at least some cash from these privatization windfalls—or any surplus—might be used for social relief. Not a chance. The memorandum insists that surplus cash be put toward debt service. (Of the $172 billion delivered by the troika in the first bailout, some 89 percent was diverted to lending banks.)

So, no wage increase. No collective bargaining. Privatization rolls forward. Pensions will still be slashed. Not quite the picture Syriza painted for their voters. A few writers are squeezing some meager solace from the idea that the troika might relieve some the pressure on the Greeks by lowering its target budget surplus. This conclusion seems to be derived from one particular sentence in the memo: “The institutions (see troika) will, for the 2014 primary surplus target, take the economic circumstances in 2015 into account.” Seems a shaky statement to hang one’s hopes on.

One plausible scenario that would justify Syriza’s actions is that they are simply buying time. Temporizing until they can stage an orderly exit from the eurozone. Short of that hidden agenda, the new government’s behavior seems little more than a complete reversal of its campaign position.

But should any of this be a surprise? Did Syriza really think it was going to waltz into the room, dragging billions of euros in debt behind them, and walk out with stronger unions and higher wages? Austerity by definition excludes such measures. Labor flexibility means lower wages. Public sector reform means fewer jobs. At the heart of neoliberal austerity are three unwavering principals: privatization, deregulation, and downsizing. All three are at odds with populist measures of the kind Syriza proposed. Realistically, the only way they could have brought their promises to reality would have been to exit the EU and reboot its economy on a different set of premises, as noted by Syriza itself. But apparently, given their pre-negotiation capitulation, a “Grexit” was never considered as leverage, perhaps because a majority of Greeks hope to stay in the eurozone. But most seemed to favor remaining in the euro on the condition of a fair compromise with Brussels.

Leaving the euro would likely be tantamount to a massive devaluation of the currency (by substituting the drachma for the euro). Whispers of a possible “Grexit” have already caused billions in currency flight. What would happen to Greece in the event of a “Grexit”? Some forecast apocalypse, surging inflation, massive internal defaults by homeowners and the like. Others suggest that a devalued drachma would stimulate the export economy and push Greece into growth, but only with intense efforts to control inflation and a default on large chunks of its debt.

Larger Agendas

There are two largely unspoken objectives behind the troika’s inflexible stance. One is to enslave the periphery in permanent debt, then ensure that it is not able to pay more than the minimum on its debt, never really touching the principal. This is the old IMF model that banks love because it guarantees a long-term revenue stream on debts that can be perpetually rolled over, while the conditional terms of each lending facilities extract more wealth from the commons.

The second, and slightly more invidious objective is to kill off European socialism. As Naomi Klein outlines in her masterpiece on neoliberalism, The Shock Doctrine, the beauty of bailouts from the troika’s perspective is that, by enforcing austerity, it chops the legs out from beneath the European welfare state. It’s a glorious parlay for the troika: the bankers get paid and the parasitic state shrivels. Soon taxation will be naught, welfare will be a spent tactic of a forgotten morality, and the periphery will be the indentured servants of the core. They will be debt conscripts in an artificially constructed “free market” in which their role is to purchase whatever whimsical goods the core chooses to make, whether they need it or not. Self-sustaining domestic industry be damned.

But that is radical capitalism—new markets by any means necessary. And radical capitalism is exactly what neoliberalism is, and exactly what the troika practices. From a political standpoint, neoliberalism, if executed properly, is corporate fascism, nicely captured by none other than Benito Mussolini: “Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.”

The single caveat to the seeming inexorable march of  “the unelected dictatorship of money” is, as mentioned earlier, that Syriza may be buying time with the full intention of fulfilling its campaign pledges. Short of that, we’re witnessing the near total capitulation of democracy to capital. The lesson of the United States, as an experiment in mixing democracy and capitalism, is that capital always works to undermine democracy, and to finally exterminate it. Democracy is antithetical to extreme profiteering because it puts an implicit ceiling on profits, beyond which they are limited by taxation and regulation—necessary to protect the weak from the exploitive and the poor from destitution.

For the modern corporation, these limits are costly overhead. Their elimination is virtuous because that frees capital from its social fetters, ostensibly for more investment that will produce more work, more paychecks, and more prosperity. This is the freedom that modern governments protect—the freedom of capital—not freedom from want or exploitation. To guarantee the first freedom, one must deny the second. In Europe and elsewhere, corporations are using debt to do this. Instead of being an element of a mutually beneficial public interaction, debt is being used as a way to reduce democracy and take decision-making (sovereignty) out of the hands of the people. Then capital can eliminate the troublesome social overhead that inhibits the expansion of their profitability and power. On this model, democracy is replaced with indentured servitude. It’s the perfect system of exploitation. A colonialism of invisible occupation. A slavery of invisible chains. And for future generations, a future invisible of hope.

Perhaps the only U.S. example of how capitalism and democracy might live together is that of FDR’s New Deal. Capitalism was greatly regulated by a vigilant and determined populace, angered by the deprivations of the Great Depression. The people made non-negotiable demands of the state, and by wielding their natural power in numbers, directly reduced the power of capital over the state. Taxes were raised on the rich (largely by Hoover prior to Roosevelt’s election), some eight million jobs were created through the Works Progress Administration (WPA), a social safety net was implemented. FDR emphasized relief for the poor, economic recovery, and constraining finance to prevent future catastrophes. The general population prospered. Short of this scenario, capital seems certain to crush popular representation. The troika’s initial defeat of Syriza may be a dress rehearsal for corporate fascism.

Jason Hirthler is a writer, political commentator, and veteran of the communications industry. He has written for many political communities. He is the recent author of Imperial Fictions, a collection of essays from between 2015-2017. He lives in New York City and can be reached at jasonhirthler@gmail.com. Read other articles by Jason.