Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Tag: Grexit

What Does Syriza Have a Mandate to Do?

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On July 10, 2015

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Syriza’s mandate, given twice, is as follows:

End austerity without leaving the Euro.

This mandate cannot be executed. Without leaving the Euro they can cannot reduce their debt sufficiently, nor avoid imposed austerity from their creditors.

Does that mean they must accept any deal?

If they do, they have violated their mandate as well. They have not left the Euro, sure, but they also haven’t ended austerity.

So, they are forced to choose between two parts of a mandate. They may end austerity. Or they may leave the Euro.

I will suggest that since the austerity is what is killing and impoverishing Greeks that, given a choice between these two opposed goals, they should leave the Euro.

The counter-argument is that leaving the Euro will make things even worse.

This is true. But there is a very strong argument that it will do so only for two to three years and that after that Greece would be better off than it would be still in the Euro, and therefore, still in austerity.

It is insane to say, “This mandate has two parts, we cannot do both, and therefore we must choose the one which will lead to suffering for which we can see no end-date, rather than taking a chance will likely end the suffering sooner, and in the forseeable future.”

Greece did have its own currency, you know. And the economy was better then. It is not like no one still alive remembers a Greek economy outside of the Euro. Acting as if the world will end if it goes back to the Drachma is deranged.

That is all.

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Syriza and the EU Seem to Be in Completely Different Worlds

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On June 29, 2015

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Juncker, Hollande, and Merkel have all warned that a “no” vote in the Greek referendum will mean Greece will face leaving the Euro.

Meanwhile, Greek PM Tsipras argued today that a “no” vote gives the Greek government a stronger negotiating position.

So, yeah, who’s right?

Who knows.

Depends if the EU leaders are serious. I tend towards, “They are.” If so, Tsipras is misleading the Greeks. This is a vote on Grexit, not on getting a deal within the Euro.

Of course, European leaders could be just doing their best to get a “yes” vote: Greeks want a better deal, but don’t want to leave the Euro. To that end, they say: “There is no better deal, all you’re voting on is Grexit.”

Tsipras has said that in the case of a “yes” vote he will enact the legislation, then he will step down; he will not be a “humiliated Premier.”

I’d say to get out your popcorn, but the stakes here are very serious. Europe is prepared to lock one of its member states into a permanent depression for an amount of money that is less than one percent of the Euro’s GDP, for the forseeable future.  The Eurocrats and leaders seem to think they are protecting the EU’s legitimacy, but I suspect they are destroying it. If the EU does not include fair deals for all its members, all that is left is, “Well, we won’t allow WWII.” As the memory of WWII becomes purely historical, that will not be sufficient.

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Push Is Coming to Shove with Greece

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On June 15, 2015

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Greece is now close to default (and possible Grexit, though it can default without leaving the Euro):

The radical wing of Greece’s Syriza party is to table plans over coming days for an Icelandic-style default and a nationalisation of the Greek banking system, deeming it pointless to continue talks with Europe’s creditor powers.

Syriza sources say measures being drafted include capital controls and the establishment of a sovereign central bank able to stand behind a new financial system. While some form of dual currency might be possible in theory, such a structure would be incompatible with euro membership and would imply a rapid return to the drachma.

The confidential plans were circulating over the weekend and have the backing of 30 MPs from the Aristeri Platforma or ‘Left Platform’, as well as other hard-line groupings in Syriza’s spectrum. It is understood that the nationalist ANEL party in the ruling coalition is also willing to force a rupture with creditors, if need be.

“This goes well beyond the Left Platform. We are talking serious numbers,” said one Syriza MP involved in the draft.

The “creditors” believed and believe “there are no other options” but capitulation:

The creditors argue that ‘Grexit’ would be suicidal for Greece. They have been negotiating on the assumption that Syriza must be bluffing, and will ultimately capitulate. Little thought has gone into possibility that key figures in Athens may be thinking along entirely different lines.

I had been dismayed by Syriza’s apparent unwillingness to consider default and Grexit, while acknowledging that given their election campaign (premised on staying in the Euro) and Greek’s own preference for staying in the Euro, they might well be negotiating deliberately to make the case that Europe will offer an unacceptable deal. And if Europe did offer a good deal, well, excellent!

This is all coming to a head. The demands made by creditors are virtually all punitive, things like reducing pensions and decreasing pharmacy times and wages and so on. Austerity. The vast majority of Greece’s problems, other than its massive debt overhang, are not caused by ordinary citizens, they’re caused by Greece’s rich not paying their share.

But all our lords and masters can conceive of when money must be scrimped his hitting regular people harder, soaking them. They make mention of taxing Greece’s rich and ending corruption there, Syriza agrees, but they are never willing to acknowledge that that an unsustainable debt load is the real problem, let alone get serious about tracking down Greek money which has left the country.

That, of course, is the real problem. There is talk of capital controls, but most of the moveable money and assets left in 2010. It’s all gone. I’d still impose capital controls, but it has the taste of barn door slamming after the horses are gone.

Nonetheless, Greece still has its immovable capital, its land, and its people. While Greeks would have to eat quite a bit less meat and non-seasonal vegetables, if they’re willing to do that, they can certainly feed themselves. Deals can be made with Russia (whom Syriza is on good terms with) and, if necessary, Iran and Venezuela to get the oil they need.

Greece has options. They don’t need to be in the Euro for prosperity, in fact they need to be out of the Euro for it; and they definitely need to default. Now that the “institutions” have made the case for Syriza that no compromise, no deal, is possible, I hope they will do so now, then prosper (though it will take a few years.)

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Did Syriza get owned?

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On February 24, 2015

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The details of the Syriza request to the Troika are here, for those who want to read the actual list. The public statement is here.

The best analysis I’ve read of the deal, as compared to Syriza promises, is by Stathis Kouvelakis, in the Jacobin Magazine.

Kouvelakis makes the case, convincingly to me, that Syriza caved, and got virtually nothing of what it wanted.  Here is a summary of what Syriza wanted:

Not consenting to any supervisory or assessment procedures, it requested a four-month transitional “bridge program,” without austerity measures, to secure liquidity and implement at least part of its program within balanced budgets. It also asked that lenders recognize the non-viability of the debt and the need for an immediate new round of across-the-board negotiations.

But the final agreement amounts to a point-by-point rejection of all these demands.

…..

In the Eurogroup’s Friday statement, the existing program is referred to as an “arrangement,” but this changes absolutely nothing essential. The “extension” that the Greek side is now requesting (under the “Master Financial Assistance Facility Agreement”) is to be enacted “in the framework of the existing arrangement” and aims at “successful completion of the review on the basis of the conditions in the current arrangement.”

Kouvelakis goes through the agreement point by point, and backs up his argument.  You should read the entire piece.  More important than proving the obvious (that Syriza got virtually nothing) is why.

The question that emerges, of course, is how we landed in this quandary. How is it possible that, only a few weeks after the historic result of January 25, we have this countermanding of the popular mandate for the overthrow of the memorandum?

The answer is simple: what collapsed in the last two weeks is a specific strategic option that has underlaid the entire approach of SYRIZA, particularly after 2012: the strategy that excluded “unilateral moves” such as suspension of payments…

Kouvelakis calls part of this the “good euro” strategy—the supposition that anyone in power in the Euro area wanted Syriza and Greece to get real debt relief and exist austerity.  This, as I have argued in the past, is delusion:

The key here is psychological. Greeks need to admit that their fellow Europeans do not care how badly they suffer; need to acknowledge that they are not seen as Europeans by their fellow Europeans, and need to look East and South for their survival and future prosperity.

Until Greeks get through their heads, and hearts, that the other European countries are not their friends, they will continue to suffer.

Unilateral is the key word.  Greece cannot depend on any other nation in Europe to look after its interests, let alone Germany (the very idea that the German government cares one whit how much Greeks suffer is so laughable as to move beyond fantasy into insanity).

Greece must do what it can it unilaterally.  This doesn’t mean no negotiation, but that negotiation will not be with Europe or Germany or the ECB, it will be with other countries who need what Greece has to offer enough to make a deal.

Read the Jacobin article.  And understand what just happened, because as Kouvelakis notes the only thing worse than defeat is pretending it was victory.

None of this means that victory is not still possible.  But it is only possible if Syriza spends the next few months planning moves which do not require Europe’s approval.

I genuinely hope they do.  The sooner they do, the sooner Greeks will be better off (though yes, the transition will be painful), and the sooner the current European and World system, which is causing so much unnecessary suffering, will end.

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