Working class steps up the fight against banks, government
By Walter Smolarek
November 20, 2011
This article was written before the installation of “technocrat” Mario Monti as prime minister replacing Silvio Berlusconi in Italy.
Former European Central Bank Vice President Lucas Papademos became the new prime minister of Greece Nov. 11, replacing the hated George Papandreou, who led the government for the last two years. Papademos’s ascent to power marks a new, more intense level of political crisis for the Greek and European capitalist class.
After the current economic crisis began, it soon became clear that the Greek government could not sustain the high level of public debt it held—which had hovered around 100 percent of gross domestic product for decades. Government revenues fell sharply as a result of the crisis, and the debt-to-GDP ratio eventually soared to around 160 percent. Interest payments became unbearable.
Bourgeois news outlets and politicians have callously attempted to blame the people of Greece for the debt crisis, slandering them as lazy and irresponsible. However, the guilt lies solely with the capitalist class and the profit system over which it rules.
The Greek working class had no hand in this crisis.
Other opponents of working people have pointed to the social services and pension benefits won over years of determined struggle as the cause of the unsustainable debt. This arrogant position ignores the fact that the vast majority of Greece’s wealth has been appropriated by the capitalist class, while it was the workers who produced it in the first place. Furthermore, massive tax evasion among the wealthy deprived social programs of desperately needed funds.
Workers deserve to live a dignified life with guaranteed social and economic rights.
However, Greek capitalists and their politicians have attempted to shift the full burden of the crisis onto the working class by imposing draconian austerity measures. These include but are not limited to wage reductions, budget cuts, layoffs and privatizations that are ostensibly aimed at reducing the national debt. As a result, Greek workers have seen their living standards rapidly deteriorate while the official unemployment rate has shot up to 18.4 percent.
The politician most associated with austerity is former Prime Minister Papandreou, who came into office in October 2009. Papandreou is the leader of PASOK, a social democratic party that claims to represent the interests of the working class but betrays them once in power—similar to the Democratic Party in the United States.
The Papandreou government facilitated a huge increase in foreign interference in Greek affairs, which some have gone so far as to call a new occupation—a reference to the occupation of Greece by fascist armies in World War II. Greece, along with 16 other European countries, is a member of the Eurozone, meaning that its official currency is the euro. The European Central Bank is the institution tasked with maintaining the stability of the common currency.
To be a member of the Eurozone, a country has to meet a number of requirements relating to fiscal policy, which Greece was and is clearly violating. As a result, the ECB has placed intense political pressure on the Greek government.
The Eurozone is a subset of the European Union, a political entity loosely linking 27 countries in Europe. Its legitimacy and efforts at further integration are bound up with the success of the euro, and so its leaders have also attempted to direct Greek policy.
Finally, the International Monetary Fund is an institution set up after World War II to maintain global economic stability. Instead of achieving this stated goal, an impossible task under capitalism, the IMF functions as a mechanism to impose “structural adjustment programs” on indebted countries that invariably involve austerity for the masses.
The EU, ECB and IMF are collectively referred to as “the troika.” They have lent massive sums of money to the Greek government to keep the Eurozone from falling into economic catastrophe. In return, they—with the full cooperation of the Greek bourgeoisie—have imposed conditions that strip Greece of its national sovereignty and mandate extreme austerity measures.
The working class fights back
The Greek working class, with a long history of militant and revolutionary struggle, has fiercely resisted the capitalist assaults on their rights and living standards. Massive demonstrations are commonplace, as are occupations of workplaces and government buildings.
Greece’s bailout money is distributed in multiple installments, each contingent on the country adopting even more austerity to meet debt reduction targets—enforced by debt inspectors from the troika. Nationwide general strikes are frequently called prior to parliamentary votes on implementing these measures and attract massive participation despite police repression and violence by agents provocateurs. In October alone, labor brought the country to a standstill on Oct. 5, 19 and 20.
The three main organizations of the labor movement are the GSEE private-sector workers’ union, the ADEDY public-sector union, and the All Workers Militant Front (PAME), the labor affiliate of the Communist Party of Greece (KKE). While all three generally agree on dates for general strikes, PAME pushes the two more conservative labor federations to wage the struggle more aggressively.
Alongside the militant labor movement, an “indignant citizens movement,” often referred to as the indignados, emerged from May through August. The indignados occupied public squares across Greece, using tactics that would later be replicated by the Occupy Wall Street movement. Although their lack of organization and clear political direction led to some friction with the more disciplined labor and communist movements, the indignant citizens exposed the depth of public anger and the capitalist state’s crisis of legitimacy.
The KKE plays a leading role in the peoples’ resistance to the troika and Greek bourgeoisie. As a party with deep historical roots among the working class, its disciplined organization and revolutionary politics propel the mass movement in a militant direction.
The Communist Party received roughly 8 percent of the vote in the 2009 parliamentary elections, but recent opinion polls show that it is now backed by almost 14 percent of the population. The KKE is the only major party that advocates disengagement from the EU and the overthrow of the capitalist class.
Eurozone leaders reach desperate agreement
Initially, the basic approach of the Eurozone leaders had been to provide just enough money to the Greek government to prevent it from going bankrupt. This, however, did nothing to advance a long-term solution to the debt crisis. As Greece’s debt continued to spiral out of control, a summit of Eurozone heads of state was held Oct. 26 to work out a permanent solution. Needless to say, representatives of the Greek working class were not invited.
Although they were united in their desire to protect the profits of the big banks and corporations—and the capitalist system itself— the European powers faced serious contradictions. French banks had invested heavily in Greek debt and would be hit the hardest by a Greek default. Germany, which experienced a hyperinflation in the 1920s and now has the EU’s strongest economy, has had to underwrite a large portion of the Greek bailouts. The German government, understandably, is not inclined to extend any more rescue funds. This has led to tension between French President Sarkozy and German Chancellor Angela Merkel.
Despite this inter-imperialist wrangling, the severity of the situation ultimately led to both sides softening their positions. With Spain, Portugal and most importantly Italy facing similar debt crises, the Eurozone faced complete collapse, a prospect that spurred its political leaders into action.
The deal approved by the summit included three major points. Most significantly, private banks now have to accept a 50 percent loss, or “haircut,” on their Greek bonds. Despite the fact that this write-down is advertised as “voluntary,” it effectively means that Greece is in a state of partial or controlled default.
In return for the haircut taken by the banks, the Greek government has to commit to reducing its deficit from where it currently stands at around 160 percent of GDP to 120 percent—still an astronomically high figure—by 2020. This condemns the Greek working class to another full decade of crippling austerity.
Second, the heads of state agreed to a large increase in the size of the European Financial Stability Facility, from 440 billion to 1 trillion euros. The EFSF is a Europe-wide bailout fund, set up to infuse massive funds into financial institutions and governments to prevent economic collapse.
Finally, private banks are required to raise 106 billion euros in capital to protect against possible defaults in the Eurozone. However, given the current economic situation, banks will almost surely ask for government assistance to do this, meaning that the working class will again foot the bill of the capitalist crisis.
Although stock markets and the value of the euro initially rose as a result of the deal, it simply buys the Eurozone more time before it has to face the inevitable. Even if Greece met the optimistic targets set by the deal, its debt would still be unsustainably high for at least the next 10 years. It is unlikely that even the enlarged EFSF could bail out the much larger economies of Spain or Italy, which also face enormous debt crises. No agreement or set of policies can address the fundamental contradictions of capitalism.
Papandreou government collapses
Facing a potentially revolutionary situation at home and increasing pressure from the troika, the government of George Papandreou was forced to make a desperate political maneuver. Five days after the Eurozone summit, he announced his intention to hold a referendum where the new agreement would be put to a popular vote.
In doing so, the then prime minister tried to frame the issue as a question between total submission to the troika or a complete economic collapse that would inevitably follow a “no” vote. Of course, this by no means represented the range of options available to the Greek people and simply served as a ploy to force the working class to lend legitimacy to the Oct. 26 agreement. A statement by the KKE referred to the referendum as “naked and open blackmail and ideological intimidation against the people.”
The proposed referendum was also largely rejected by the European and Greek capitalist class. Having worked so hard to reach a compromise between competing bourgeois interests, the Eurozone leaders summoned Papandreou to the ongoing G20 summit in France to express their disapproval. In addition, the Greek finance minister and Papandreou’s chief rival within PASOK, Evangelos Venizelos, switched positions and withdrew support for the planned vote, raising the specter of a split within the party.
Backed into a corner and facing a confidence vote in Parliament on Nov. 5, Papandreou called off the referendum and agreed to immediately begin negotiations to form an all-party “national unity” government. This implicit resignation was enough to win over enough of his own PASOK lawmakers to avoid a humiliating vote of no confidence.
After several days of negotiations, an agreement was reached between PASOK and the right-wing opposition party New Democracy to form an interim government led by the supposedly “non-political” technocrat Lucas Papademos. The semi-fascist Popular Orthodox Rally also joined the government, and so for the first time since the days of the 1967-74 military dictatorship, the far-right received a cabinet position.
The KKE and the Coalition of the Radical Left (SYRIZA) refused to participate in this government. SYRIZA is an eclectic mix of small communist tendencies and reformist organizations. Despite its principled position to remain outside of the government, SYRIZA has been unable to articulate a revolutionary political line or mobilize masses of working people because of its contradictory makeup.
Armed with the undivided political support of the Greek bourgeoisie, the Papademos government is tasked with implementing even more ruthless anti-worker measures. At the top of the new government’s agenda is approving the Oct. 26 agreement, passing an austerity budget for 2012 and securing the next batch of bailout money from the troika. New elections are expected in February, giving Papademos just enough time to complete these tasks.
The struggle in Greece continues despite the new political situation. The night before the Papademos government was sworn into office, thousands participated in a massive Communist Party-organized demonstration outside the parliament building. As the utter failure of capitalism becomes more and more apparent, the militancy and radicalism of the Greek working class serves as an example to be emulated around the world.