What is happening in Greece and why

Lina Christou, who lives in Athens, explains the background to the current crisis in Greece.

Greece has been chosen by the ‘graduates’ of the Chicago school as a country in which the ‘Shock Doctrine’ approach could be applied in the way this is described in Naomi Klein’s book^[1]Naomi Klein (2008) The Shock Doctrine: the Rise of Disaster Capitalism, Penguin Books. This is because Greece is the European Union’s weakest link and can serve as a point of entry for the IMF into the European Union. The weaknesses of the Greek state – evident since its creation in 1830 – were intensified after World War Two due to the interference of foreign powers, and were not even overcome after the end of the military Junta in 1974. The parties, which governed the country after 1974, succumbed to the temptation of clientelist politics with all the distortions and corruption that this generates. During this period, the Left was marginalised within the formal political system despite wide popular support, whilst the majority of the media were dependent upon the political establishment and their dirty money. In the end the country was brought to an unprecedented economic, political and social crisis.

2013 will be a year of social meltdown in Greece, the outcome of which is currently unknowable. There is no doubt that this will happen because the average citizen will not be able to meet their financial commitments, since prices of all goods and services have increased excessively due to disproportionately increased taxation. More than 50% of the population have insufficient income to pay the new taxes and duties. This is not about refusal or disobedience, it is simply about the impossibility to comply. Essentially people will just stop paying.

Since 2008, when the Greek economy entered the spiral of recession, Greece’s GNP has decreased by 25%, or by 45 billion euros (this is an estimate for the end of 2012). A further fall in GNP of 10% is by no means impossible. The official unemployment rate has increased from 10% in 2008 to 25% in 2012 and it might reach 30% before the end of 2012. Unemployment amongst young people is above 55%! In real terms, if we take into account people who work very few hours a week, the devastated self-employed sector, and precarious small merchants, artisans, and craftsmen, it would not be an exaggeration to say that 40% of the economically active population in Greece is now outside the market.

How did we reach such a crisis? From 1980 onwards, European manufacturing was shifted to cheap labour markets in Asia, due to globalisation. No Greek government took care of this problem, planned anything or came up with an appropriate strategy for the new era. It would have been possible to have built on the various assets that Greece had at the time and continues to have today, such as tourism, archaeological sites, real estate, the merchant fleet, and agriculture – which produces goods which could be very popular in the international market, such as olive oil and yogurt. The textile industry, for example, was a very strong sector, successful in export markets. The state and the big firms in this industry failed to re-organise production in order to exploit the market for high value-added products. As a result, the entire Greek textile industry disappeared. The same thing happened to the shoe industry, the timber industry, and the furniture industry, where the Swedish firm IKEA has become a monopoly.

It is clear today that the austerity measures implemented by ex-PASOK Prime Minister George Papandreou in 2010 – ironically against the advice of then-IMF director Dominique Strauss Kahn – was essentially a copy of the plan implemented by monetarist economist Milton Friedman and his ‘Chicago Boys’ in Chile when Pinochet came to power. The same is true of the current IMF interference in the financial policies of the Eurozone. The aim of the Greek experiment was to find out if such plan could be applied in a European country with parliamentary democracy. This experiment is now being exported elsewhere, especially in Southern Europe.

Massive resistance

There was massive resistance to this ‘experiment’ within Greek society, which the changing balance of political forces, leading to the collapse of the ruling parties (PASOK/ New Democracy) clearly demonstrates.

However, the formal political system, which is now subservient to Greece’s creditors, has abandoned any attempt to plan economic recovery on terms which would be respectful of national sovereignty and beneficial for the country. Rather, it simply follows orders. These are orders that would be impossible to impose on any Northern European country, such as the abolition of collective bargaining, and the reduction of the minimum wage to 580 euros per month, which means that the net salary is about 480 euros. The reduction in the minimum wage is all the more unsustainable, because, during these last five years of crisis, the purchasing power of households has decreased by 40%. Here we experience a new financial phenomenon. Violent reductions in salaries are combined with increases in taxation and continuous price increases! Is it possible for a country to live with Latvian salaries and a German cost of living? All social services and utilities (energy, water, health, education, transport etc) will eventually be privatised. This is the aim of the ‘Shock Doctrine’ experiment. However, the crisis is not only financial. It touches all aspects of social life. Education, culture, health and the media are completely dependent on the banking system and the corrupt Greek establishment. This was the purpose of the experiment for those who planned and directed it – to destroy social cohesion, and replace it with a mass of scared, atomized individuals, dependent on debt.

The two big parties are held hostage by the German ruling class – both the parties themselves and individual party leaders – as became clear when the Siemens corruption scandal became public.^[2]The ‘Siemens Scandal’ is a huge corruption scandal involving slush funds tied to a number of contracts between the German electronics firm and the Greek Government, implicating a number of leading Greek politicians. (dead link) http://economictimes.indiatimes.com/news/international-business/siemens-reaches-357-million-settlement-with-greece-over-bribery-scandal/articleshow/12191219.cms The German state knew perfectly well what was going on, and with the support of Samaras and Venizelos (leaders of the two main Greek establishment parties), they managed to settle the case with just a financial penalty, which does not even have clearly defined terms. The clientelist political system, which functioned for 30 years, is now collapsing spectacularly. The only realistic alternative political solution at this moment is the left alliance SYRIZA, which is at over 30% in opinion polls. This is a unique phenomenon in Europe, since the left, and most importantly the radical left, is very weak in other EU countries.

However, even if SYRIZA maintains its popular support, forming a government will be a difficult task without allies inside the country or outside. Boththe Communist Party of Greece (KKE), which currently gets approximately 6% of the vote, and ANTARSYA, which gets around 1%, refuse to cooperate with SYRIZA^[3]SYRIZA, the Coalition of the Radical Left, includes most of the major left parties – from left Social Democracy to Maoism, with the exception of KKE. Much of its leadership are either former members of KKE or come from the Eurocommunist tradition, which broke from the KKE in the late 1960s. The Communist Party of Greece (KKE) is the direct descendant of the historic Communist Party founded in 1918, although many of its former leadership and membership joined SYRIZA after a number of splits from the late 1990s. It is affiliated with the Communist Party of Britain (Morning Star). ANTARSYA, the ‘Front of the Greek Anticapitalist Left’, is an alliance of small Maoist, Trotskyist and eco-Socialist Parties, and ex-members of KKE.. At the same time, there are no other social democratic groups of any kind that could agree on a minimum plan for the recovery of the country.

The three ‘mainstream’ parties – New Democracy (Right), PASOK (ex-social democrats) and Democratic ‘Left’ (right social democrats) are planning to merge, to create a new political ‘firm’, which will manage the situation in the way the German ruling class wants it. At the same time, the foreign policy of the country is totally dependent on the U.S. State Department.

(Translated by Sophia Lycouris and Conrad Russell)

Footnotes