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Drawing Blood from a Stone: How Hope Died in Greece ...

Drawing Blood from a Stone: How Hope Died in Greece by Professor Robert Zaller

Hellenic News
Hellenic News
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“Death is a Master from Germany,” Paul Celan wrote in “Death Fugue,” his great poem about the Holocaust. It certainly seems that way in Greece today. The hope briefly aroused by the election of a supposedly anti-austerity government in January, and cruelly revived in the now-infamous referendum of July 5, has been crushed by the imposition of a yet more brutal economic regime that piles a new mountain of debt on the country and mandates further extractions from an economy already bled dry. If it is a scenario familiar from scores of Third World countries pillaged by finance capital, it is something a bit newer in an association of states purportedly representing political democracy and economic justice. If any further evidence were needed, it exposes the European Union for the naked fraud it is.

It will help to retrace the course of this debacle over the past seven months. On January 25, Greek voters, having previously relegated George Papandreou’s Panhellenic Socialist Party to the political dustbin, turned Andonis Samaras’ New Democracy out of office as well. These were the two parties that had signed on to the deal that imposed so-called austerity on Greece in the wake of the international banking collapse of 2008, plunging the country into an economic devastation not seen since World War II. The rout of the established political parties, which between them had dominated Greek public life since the overthrow of the Junta in 1974, marked, as it appeared, the end of an era. For years, PASOK had posed as the ‘left’ alternative to the conservative New Democracy. In reality, both parties continued the clientelist tradition in which the party in power rewarded its supporters with patronage while the country as a whole, seduced by cheap credit and the illusion of a broad-based prosperity, enserfed itself to international creditors and the corporate interests they represented. Neither party, institutionally corrupted and lavishly bribed, dared assert the national interest when the reckoning came with the worldwide financial crisis. Greece was not unique in this respect. Spain, Italy, and Portugal were subjected to a similar extraction regime in which the banks recapitalized themselves at the expense of severe economic contraction. For that matter, the same thing occurred in the United States, Britain, Canada, and elsewhere, with the cooperation of Wall Street (or Barclay)-friendly governments. In that sense, what has happened in Greece since 2009 is a small chapter in a general saga from which only one major country, Germany, has been largely exempt. But it is also a special case, because in no other Western state has austerity been applied more unremittingly and with more devastating consequences.

The official statistics used to measure the pain imposed by austerity have been deliberately understated in every country, but a single one may suffice. The average food consumption in Greek families has declined by 15% since 2010. When Greek voters chose Alexis Tsipras and his Syriza Party to govern them at the beginning of this year on the basis of a pledge to reject further austerity measures, they weren’t simply expressing their political preference. They were voting their hunger.

Now, they face more hunger. What happened?

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There was no doubting the significance of Tsipras’ election, not only for Greece but for Europe. For the first time anywhere on the Continent, a government committed to challenging the austerity regime had been installed in power. Syriza’s promises, to be sure, were modest. It did not propose to roll back the austerity measures agreed to by previous governments. It accepted the interest payment schedules on the national debt that would come due in June, July, and August, which constituted a sword of Damocles hanging over its head. Since it was clear that even the most modest of those payments could not be made without further infusions of credit, and since such credit would almost certainly be tied to demands for still steeper rises in taxes, cuts in pensions and services, and selloffs of public assets, the question immediately posed was how Syriza could keep its promises without triggering bankruptcy, and with it the potential for an economic freefall.

This would, or should, have been clear both to Tsipras and his free-wheeling, bike-riding finance minister, Yanis Varoufakis. It would also have been clear that the reaction of Greece’s paymasters to Syriza, particularly Germany, was one of fixed hostility: from day one, their objective was either to break Syriza or bring it down, lest electorates in other countries get the idea that austerity could be challenged at the ballot box or anywhere else.

The Tsipras government was operating, in short, on an extremely short time fuse. If it were not to collapse or capitulate, it needed a strategy to cope with an impending default, and a longer-range plan for recovery without recourse to Western credit sources.

It had neither.

As far as can be reconstructed, Tsipras and Varoufakis worked out a good-cop, bad-cop routine for dealing with Germany, the European Commission, and the International Monetary Fund. Varoufakis would strut about, denouncing austerity, while Tsipras tried to broker a deal that would bring fresh credit—sufficient, at least, to meet the most pressing debt payments—without accepting further austerity. Even before those payments came due, however, Greece had a significant new obligation. The Samaras government had agreed that, after achieving a primary budget surplus of 1.5%, it would present its own new plan for a 4.5% surplus based on further tax hikes and service cuts. This plan was due by early spring. Tsipras announced that he would not meet it. This meant a breach of prior commitments, however unreasonable or even absurd (Paul Krugman calculated that the net effect of meeting such a goal, given Greece’s crippled economy, was effectively the equivalent of running an 8% surplus—economically, an act of hara-kiri, and morally, a formula for humanitarian crisis), and it hardened the determination in Berlin for swift regime change in Athens.

Apparently, Tsipras was pursuing three lines of policy. While Varoufakis was doing his best to alienate his EU counterparts (a job he did very successfully), Tsipras was exploring terms for a further bailout that would not compromise his political position or split his party. At the same time, he was publicly courting outside parties, notably Russia. His hole card—the only one he had to play—was the threat to leave the Eurozone and split the hitherto unified European front against Moscow. There was double jeopardy in this for the EU. An economic defection from the Eurozone (and the debt default it almost certainly portended) could have an unpredictable effect on the EU, eleven of whose twenty-eight members were not or not yet converted to the euro. The perception of an EU juggernaut marching irresistibly eastwards was critical to the cordon sanitaire that Washington and Berlin had been building against Russia since the collapse of the Soviet Union; for a geopolitically significant member of this alliance to break ranks could jeopardize a comprehensive economic, diplomatic, and military policy pursued for nearly a quarter of a century.

Tsipras had signaled at the end of January that he might be willing to take such a step, when he protested vigorously against an extension of economic sanctions against Russia announced in Brussels but not, apparently, cleared with Greece as an EU member state. Strong pressure compelled him to yield and accept the sanctions, an early harbinger that his politics of bluff would not succeed. In April, nonetheless, he went to Moscow for a face-to-face meeting with Vladimir Putin. Russia, itself hurting economically from the sanctions and from a dramatic fall in energy prices, was in no position to replace Western financial markets as a major creditor; still, it had three considerable inducements to offer: a bridge loan of, say, $15-20 billion, which might help Greece cushion a withdrawal from the euro; the promise of discounted energy; and an alternative to NATO in restraining Turkish encroachments on the Aegean Sea. In return, of course, Moscow would seek substantial advantages: support for oil and natural gas pipelines to reach new markets, and possibly basing privileges for its navy.

Whether negotiations on any of these points actually proceeded, they represented a very high stakes poker game. A base in the Mediterranean, a major goal of Russian policy since Tsarist times, would clearly be a challenge to America’s naval hegemony in the region, and thus to NATO as well as the EU. This in turn might trigger sanctions against Greece itself, not to mention a new colonels’ coup on the order of that of 1967. No doubt any such rapprochement would have involved a slow and cautious approach on both the Greek and Russian sides, but Tsipras came home empty-handed, bearing nothing from Putin but expressions of friendship and cultural solidarity. The Russian avenue, if there was one, was closed; nor did any other member of the BRICS consortium—Brazil, Russia, India, China, and South Africa—come forward as a potential credit source. Meanwhile, the clock to June was running.

On the other side, there was no inconsiderable sentiment for a Grexit—Greece’s exit, whether orderly or not, from the Eurozone. EU hardliners believed that a default on the Greek debt, now mostly in the hands of sovereign creditors, could be borne without undue hardship, while the lesson of beggaring Greece would be salutary for any other debtor nation inclined to challenge the austerity regime. In Germany, Chancellor Angela Merkel and Finance Minister Wolfgang Schaúble played the equivalent of the Tsipras-Varoufakis tag team, with Merkel expressing the pious hope that Greece would remain in the Eurozone while Schaúble urged that it be shown the nearest door.

By June, Tsipras had replaced Varoufakis with a colorless accountant, Euclid Tsakolotos, who said nothing in public at all. This won him no points, however, and the first debt deadline in June was missed. In this crisis atmosphere, serious negotiations began in Brussels. Tsipras had emptied his hand; if he were not readyfor an exit from the Eurozone for which he and his countrymen were entirely unprepared, he would have to accept whatever terms were demanded from him.

One of the negotiating conditions Tsipras had tried to establish was that he would deal only with sovereign counterparts, not bankers. This had resulted only in his having to talk to both sets of parties, neither of which had shown the slightest inclination to give him the face-saving terms he sought. In late June, however, he believed he had reached a deal with Merkel and President Francois Hollande of France, representing the two major Eurozone powers. By this time, he had long abandoned his refusal to accept new austerity measures, and was trying to put the best possible face on capitulation. Merkel and Hollande both publicly indicated that his proposals appeared viable, and that they were confident of an agreement. “Victory” was at hand.

That was on a Monday. Two days later, Tspiras received his proposal back, not from his fellow heads of state but from one of his creditors, the International Monetary Fund. The IMF’s response wasn’t typed and addressed; it was Tsipras’ own draft, marked up in red like a schoolboy’s failing exam. Tsipras’ calculations, supposedly agreed to by Merkel and Hollande, had been peremptorily replaced by the anonymous grader’s own. It was more than a rebuke, more than a humiliation. It was an act of deliberate, summary contempt.

As for Merkel and Hollande, they were nowhere to be found.

Tsipras then did exactly what his tormentors wanted him to do. He left Brussels, returned to Athens, and called for a snap popular referendum on the terms demanded by the IMF. Considerable confusion followed this, especially when Tsipras abruptly offered a new counter-proposal. If a new plan was on the table—or was it? and submitted to whom?—then a referendum on the IMF’s demands seemed moot. If, indeed, negotiations had been restarted, there was nothing on the table to ratify or reject.

Tsipras nonetheless proceeded with the referendum, calling for the public to vote No on its text even before he furnished one. When it came, it was lengthy, confused, and, in the view of international observers, inapt. Merkel suggested that the Greeks should regard themselves as deciding whether or not they wished to stay in the Eurozone. But Tsipras had invoked the great word of modern Greek history, the “Oxi!” that had been thrown in the face of Mussolini’s demands on the nation’s sovereignty by its then-leader, Ioannis Metaxas, and which is still celebrated in Greece each October 28 as a public holiday. The electorate interpreted its vote as one of support for Tsipras personally, and of the anti-austerity platform he had been elected on: this despite the fact that he had already accepted new austerity measures in Brussels.

The week that led up to the referendum was the most chaotic since the fall of the military dictatorship. The EU had been steadily tightening the noose around Greece’s cash-strapped banks, and, as fearful depositors began a run, Tsipras closed them but for emergency disbursements. These were limited to sixty euros a day, twice a week, although in practice only fifty euros were handed out, as a mysterious shortage of ten-euro notes cropped up. ATMs soon ran dry in any case. The Greek stock exchange was shut. The country was in a state of economic lockdown, with complete paralysis looming as money disappeared and credit was suspended. Many observers thought that the government would be compelled to issue scrip—a step that could lead to a forced exit from the Eurozone.

Though Tsipras had offered a new proposal to the EU, negotiations remained in suspension pending the referendum. Much of Greece’s media, meanwhile, including its privately owned television stations, kept up a drumbeat of opposition to a No vote, and Yes demonstrators paraded outside Parliament. The Yes party, which had seemingly materialized overnight, consisted disproportionately of still well-to-do Greeks who, having sequestered as much cash as possible overseas, feared for their portfolios in the event of a Grexit. Though Tsipras inveighed bitterly against them and their media lackeys, they would nonetheless prove useful to him in the end. At the time, however, it began to seem likely that fear of impending calamity might panic the electorate, and that, even if the Noes prevailed, it might be by so slight a margin as to reveal only a nation hopelessly divided.

While these events unfolded, a bombshell exploded in the form of a ‘leaked’ IMF report that, sharply critical of the failure of austerity policies, ridiculed the 5-7 billion euro bailout that had been on the table, and suggested upwards of 86 billion ($95 million) as the minimum necessary to reflate the Greek economy and restore it to viability—conditional, of course, on the adoption of austerity-based reforms and a massive privatization of public assets. This report, described merely as internal and bearing no signature, would completely restructure the bailout debate and provide the terms for the deal ultimately reached, for fresh loans of 86 billion euros.

It is difficult to say what impact the report had on the referendum itself, or what effect its leak was designed to have on the immediate situation. Certainly, the IMF’s red-pencil response to Tsipras the week before had made no mention of the radical inadequacy of the deal then on the table, and had offered no critique of the austerity program but merely proposed tightening it still further. Once again, however, Merkel and Hollande were silent, as was the IMF’s head, the quite sublimely arrogant Christine Lagarde.

“No” supporters unsurprisingly took up the report as a rallying cry: if even the IMF was pouring cold water over the negotiations in Brussels, what significance could a Yes vote have? Quite possibly, even probably, the report turned or firmed up wavering voters in favor of a No ballot. It was in any case clear that to reject Tsipras at this point would be to leave the country without any voice at all at a moment of utmost confusion and crisis. When the vote came the following Sunday, it was clear at once that the Noes would prevail. In the end, they won nearly 62% of the vote.

Greece experienced a moment of euphoria. The Greeks had, finally, interpreted the referendum according to their own sentiments. They had rejected austerity in the January elections. They were doing it again, even in the absence of any practical recourse. No one in the country at the time, as I was, could doubt what message the vote was intended to convey: once again, Greece had stood up alone among its peers and shouted its message of defiance to brutal, would-be conquerors: “Oxi!”

Of all the moments of betrayal in modern Greek history, this was surely the cruelest. Unlike Ioannis Metaxas, Alexis Tsipras was not prepared to fight. Within the week, he was back in Brussels, confronted stonily by austerity demands far more draconian than the ones in red pencil had been. Greece would be punished for its defiance of its financial dictators. Tsipras himself was keelhauled in the European Parliament, seated meekly while speaker after speaker poured abuse over him—not, of course, his fellow heads of state, but their lackeys, the Jean-Claude Junckers and Donald Tusks. Why does he just sit there? I wondered, following the live proceedings on Greek television. Why doesn’t he just get up and leave? Doesn’t he have anyplace better to be? Any business he’d better be transacting? But, of course, Tsipras’ public humiliation, and that of his country, was now also part of the deal.

This leaves us with the present. Greece will receive its 86 billion euros, in tranches as the destruction of what remains of its workforce and the spoliation of its assets proceeds. This sum will of course be added to its unpayable, unsustainable debt, now nearly twice as large as when the financial crisis of 2008 began. Its reduction to a Third World debt colony will be complete. Its future, already compromised almost beyond retrieval, has under present circumstances disappeared for good. The mood of the country as I left it in mid-August was bewildered and despairing. Meanwhile, as if to mock the situation further, thousands of refugees from Afghanistan, Iraq, Syria, and Libya—countries that now exist only as battlefields—pour into Greece weekly.   The distinction between their desperation and that of their hosts narrows weekly, too. And, in a final fillip, the IMF has now declined to share in the bailout it provided the blueprint for. If, as Karl Marx once said, history repeats itself, first as tragedy and then as farce, then tragedy and farce appear to be running together this time. To laugh or to weep: it seems impossible to choose either, so we must do both.

Greece’s masters—its masters, above all, from Germany—were determined to break or destroy Alexis Tsipras. They were indifferent as to which it would be. They have broken him, and turned him into as compliant a puppet as any of his predecessors. Now, his parliamentary majority gone with the defection of his party’s left wing, he has called for snap elections. In the absence of a competitor—for prime minister of Greece appears to be a job no one else wants—the betting is that he will be reelected. It is also expected that, although formally outlawed, the fascist Golden Dawn Party will continue its steady rise in the polls.

There was, and is, another course, vastly more difficult and costly than it would have been several years ago: a voluntary exit from the euro, debt deferment or repudiation, and an economy rebuilt on the basis of autarchy as far as possible. The goal would be a renewed labor force, producing the country’s own goods and services on the basis of shared sacrifice and equity. In the midst even of the present crisis, there have been examples of how such a system might work, including labor cooperatives based on local scrip in exchange for services. This is no substitute, to be sure, for a national policy, and for a national currency. The latter is essential, for the euro, more than ever, means only slavery for Greece, and the bailout has forged massive new chains.

As for Alexis Tsipras, there isn’t a tree high enough in Greece to hang him. He needed to tell the truth to the country from the beginning: that breaking the ruinous cycle of austerity would require fundamental change, including the readoption of a national currency. Tsipras’ excuse for not doing this was that, while Greeks wanted an end to austerity, they wanted to remain in the Eurozone as well. In support of this, he pointed to public opinion polls and, ironically enough, to the strength of the Yes vote in the referendum.

Perhaps this is true; Greeks voted their pain last January, as immiserated people tend to do, and electorates often send political leaders contradictory signals. It is precisely the job of leadership to sort conflicting imperatives out, and chart a course based on their best reading of the popular will and the nation’s interests. Tsipras never attempted to do this. He made empty populist gestures without a policy behind him, and encouraged Varoufakis to play the clown, like a small boy kicking adults in the shins to express frustration. His promises could not be kept or even attempted without steps he was unprepared to take. This made him either a liar or a fool, and it doesn’t much matter which he was. That he comes back to ask for a fresh mandate—to do what?—is his personal moral bankruptcy. It is also the country’s tragedy.

It doesn’t matter at this point from where on the political spectrum the will for patriotic renewal comes; Ioannis Metaxas was a military dictator who admired Hitler and Mussolini before, pushed too far, he defied them. The depth and calamity of the crisis is apparent to all, left and right: as the conservative columnist and editor Nikos Konstandaras wrote on the eve of the referendum:


Our country is at peace, but the stakes are as high as if we were at war—a war waged not with battleships, guns and planes but with words and money. Its foot soldiers, in a sense, are the lines of the unemployed, the pensioners crowding outside banks; cars queuing at gas stations are a crippled cavalry; generals are the finance ministers who lob proposals at one another with the aggressions of those who will not suffer the consequences. (The New York Times, July 4)


Konstandaras is a writer with whom I have frequently disagreed, and with whom I disagreed here: he was writing to urge a Yes vote in the referendum. There is no doubt however that he spoke too as an anguished patriot, and I would differ with the words I have quoted only in saying that Greece is in fact at war, fighting a class war that takes its toll of victims daily around the world. It is a war all the more insidious for being, for the moment at least, a bloodless one in Europe. The suffering and despair it inflicts is no less real, however, and the frustration is all the greater in that the enemy is not physically present to resist, but secure and seemingly invulnerable behind high and distant walls.

Konstandaras ended his article by saying: “Throughout their history, the Greeks have fought hardest when all seemed lost. . . . With so much at stake, we will soon see whether today’s Greeks are worthy of their ancestors.”

With that, too, one can agree.











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