Costas Lapavitsas - Scathing letter addressed to his party Syriza

 

Five questions that demand an answer (by Costas Lapavitsas)

The Eurogroup agreement has not been concluded, in part because we do not yet know what ‘reforms’ will be proposed by the Greek government today (Monday 23 February) and which ones of those will eventually be accepted. However, those of us that have been elected based on the program of Syriza, and see the announcements made at Thessaloniki [i.e. the ‘Thessaloniki Program’] as pledges that we have promised to the Greek people, we have deep concerns. It is our duty to write them down.

The general program of the agreement has as follows:

1. Greece asks for the extension of the current loan support agreement, which is based on a series of commitments.
2. The goal of this extension is to allow for the conclusion of the assessment of the current agreement and to give time for a possible new agreement.
3. Greece will immediately submit a list of ‘reforms,’ which will be assessed by the ‘institutions’ and which will eventually be agreed on April. If the assessment is positive, then money that have not yet been given by the current agreement will be released, together with the returns from the earnings of the ECB.
4. The current funds of the HFSF will be used exclusively for the needs of the banks and will be out of Greek control.
5. Greece commits to fulfill fully and swiftly all of its financial obligations towards its partners.
6. Greece commits to ensure ‘adequate’ primary surpluses in order to guarantee the sustainability of the debt on the basis of the Eurogroup decisions in November 2012. The surplus for 2015 will take into consideration the economic circumstances of 2015.
7. Greece will not withdraw measures, will not commit any unilateral changes that may have a negative effect on the fiscal targets, the economic recovery, or the financial stability, as they will be assessed by the ‘institutions.’

On this basis, Eurogroup will begin the national procedures for the 4-month extension of the current agreement and it asks from the Greek government to begin quickly the procedure for the successful completion of its evaluation. 

It is difficult for anyone to see how the announcements made in Thessaloniki – which include the write-off of the biggest part of the debt and the direct replacement of the Memoranda of Understanding (MoUs) – can be implemented through this agreement. Those of us who got elected with Syriza pledged that we would continue with the implementation of the National Plan regardless of the negotiations for the debt, because we deem it necessary for the restart of the economy and the relief of the society. It is necessary, therefore, to explain how these will be implemented and how the new government will be able to change the tragic situation that it inherited.

In order to be more specific, the National Plan included four pillars with the following costs for the first year:

1. Addressing the humanitarian crisis (1.9bn euros)
2. Restarting of the economy with tax breaks, adjustment of “red loans,” creation of a Growth Bank, increase of the minimum wage to 751 euros (total of 6.5bn euros).
3. Program of Public Employment for 300,000 new jobs (3bn euros for the first year, and 2bn euros for the second).
4. Transformation of the political system with interventions in the local government and in the parliament.

 The sources of funding, again, for the first year had been calculated as follows:

1. Clearing outstanding debts towards the tax authority (3bn euros)
2. Combatting tax-evasion and smuggling (3bn euros)
3. HFSF (3bn euros)
4. ESPA and other European programs (3bn euros)

Given now the Eurogroup announcement, I ask: 

National Plan for Reconstruction

How will the National Plan for Reconstruction be funded, when the 3bn euros of the HFSF are now out of the control of the Greek government? Taking away these funds makes the collection of large sums of money from tax evasion and debt-clearing even more necessary, in a very short period of time. How realistic is such a prospect?

Debt Write-off

How will the debt cut-off proceed, when Greece pledges to complete fully and swiftly all of its financial obligations towards its partners?

End of Austerity

How will the end of austerity come about, when Greece pledges to succeed in achieving ‘appropriate’ primary surpluses in order for the current humongous debt to be made ‘sustainable’? The ‘sustainability’ of the debt – as it used to be estimated by the TROIKA – was exactly the cause for this unreasonable hunt of primary surpluses. Since the debt will not be lowered substantially how will there stop being primary surpluses that are catastrophic for the Greek economy and constitute the essence of austerity? 

Monitoring and fiscal cost

How will any progressive change proceed in the country, when the ‘institutions’ will be exercising a harsh monitoring and will forbid unilateral moves? Will the ‘institutions’ allow for the implementation of the ‘Thessaloniki’ pillars, given that they have an direct, or indirect budgetary cost? 

The future negotiation

What exactly will change in the next four months of this ‘extension,’ such that the new negotiation with our partners will happen under a better position? What will put a stop in the worsening of the political, economic, and social situation in our country?

These moments are absolutely crucial for the society, the nation, and of course the Left. The democratic legitimization of the government is based on Syriza’s program. The least that is needed is for us to have an open discussion within the party and in the Parliamentary Group.

It is necessary to give substantial answers immediately to these questions, in order to retain the large support and the dynamism given to us by the Greek people. The answers that will be given in the upcoming time period will decide the future of the country and of the society.

Syriza Will Have to Choose between Scylla and Charybdis by Jerome Roos

 

Greece’s leftist government will soon have to confront a critical question: will it accept its creditors’ demands, or will it take unilateral action?

In Homer’s epic Odyssey, the Greek King Odysseus of Ithaca was forced to navigate a narrow strait between the mythical sea monsters Scylla and Charybdis. As it was impossible to steer a clear course between the two, avoiding the one inevitably meant confronting the other. Eventually, Homer’s hero opted to avoid the whirlpool of Charybdis — which could easily have swallowed his ship — and pass by the six-headed monster Scylla instead. After putting up a strong fight, Odysseus and his men lost a number of sailors but saved their ship.

                                                                       Today, Greece’s young leftist government finds itself on the horns of a similar dilemma. On the one hand, it stares into the whirlpool of a deflationary debt trap that risks swallowing Greek society whole, confining its impoverished and exasperated citizens to decades of debt servitude. On the other, it faces the eighteen-headed monster of the Eurogroup — with the German finance minister Wolfgang Schäuble at its center — which insists on smashing Syriza’s radical experiment and making an example of the leftists by ejecting them from the eurozone if they refuse to stay the disastrous course of austerity.

                                                                     This epic standoff between tiny Greece and its mighty creditors has left the Syriza-led government stuck between a rock and a hard place. While its defiant rhetoric has energized Greek society and raised popular expectations to unprecedented highs, this same defiance has angered the country's creditors and united Europe’s “extreme center” in a desperate bid to contain the fallout of the Syriza phenomenon. Rapidly closing ranks to prevent the leftists from setting a positive precedent, the creditors' message is clear: inside the eurozone, there can be no alternative to austerity and repayment.

                                                                       And so the “frenzy of reasonableness” that Greece’s oracular finance minister Yanis Varoufakis had pledged to unleash now appears to be hitting the wall of German intransigence. Reality is dawning: either Syriza faces down the Eurogroup to defend its radical project, or it capitulates and drifts back into the debt-deflationary spiral.

                                                                      After Monday’s emergency talks collapsed in acrimony, Eurogroup Chairman Jeroen Dijsselbloem added an ultimatum to make Syriza’s options even more explicit: either the government accepts an extension of the existing bailout program by Wednesday evening, or Greece will simply be cut off from further credit by February 28.

                                                                      Since Greece remains dependent on foreign financing to service its outstanding obligations and fight the deep humanitarian crisis at home, this would put the leftists in the awkward position of having to choose between honoring their obligations to foreign creditors, who expect the debt to be repaid in full and who continue to insist on strict fiscal discipline, or honoring their obligations to Greek pensioners and civil servants, who have collectively pinned their hopes on Syriza’s pledges to defy the creditors and put an end to austerity. In a word, repaying one will require defaulting on the other.   

                                                                  This Homeric dilemma is in turn forcing Syriza to confront a long-standing internal rift among party cadres over the merits of continued eurozone membership. Syriza’s moderate leadership, which according to central committee member Stathis Kouvelakis has steadily distanced itself from the party base in recent years, remains committed to the euro and aims to reform its fiscal and monetary architecture. Inspired by Keynesian visions of demand management and public investment, Tsipras and Varoufakis hope to wield the failure of austerity in Greece as a wedge to transform Europe as a whole.

                                                                     But not everyone inside Syriza shares this “good euro” vision. The party’s rank-and-file, and especially its radical internal opposition — the so-called Left Platform — holds a very different view, insisting that Greece should keep all its weapons on the table, including the threat of unilateral default and a “progressive exit” from the eurozone. The Left Platform, in other words, would like to see Syriza face down Scylla to avoid Charybdis, defying the Eurogroup to save the ship and evade a lethal debt-deflationary spiral inside the monetary union — even if this comes at a high cost.     

                                                             Inspired in part by the analyses of SOAS economist Costas Lapavitsas, who is now a Syriza MP, the Left Platform has a more pessimistic analysis of power relations within the monetary union. Unlike the party leadership and Finance Minister Varoufakis, Lapavitsas believes that continued eurozone membership will sink Syriza’s radical project before the leftists even get a chance to hoist their sails or raise their weapons. The internal opposition therefore intends to wield what they consider to be the inevitable failure of the debt negotiations as a wedge to progressively pull Greece out of the euro. It is safe to say, then, that the fault-lines of the eurozone power struggle extend into the top ranks of the Greek government, with the Left Platform constantly exerting pressure on the party leadership to abide by its radical project.  This explains the tricky balancing act that Tsipras has been engaging in this week. The prime minister knows that he cannot be seen to capitulate to his creditors and backtrack on his campaign pledges. Domestically, he has to appease the Left Platform and stick to his defiant anti-creditor stance, which has sent the leftists soaring to an absolute majority in the polls.          

                                                           At the same time, however, it is becoming increasingly clear that the political economic analyses of Lapavitsas and the Left Platform are turning out to be disturbingly accurate: it is simply proving impossible to steer a clear course between meaningful debt cancellation, on the one hand, and multilateral negotiations on the other. To put it bluntly, Germany and its allies are just not interested in negotiating a debt restructuring or a meaningful easing of Greece’s repayment terms. Their entire strategy is based on being as unreasonable as possible and not granting Syriza a single inch of leeway.        


                                                             This tough creditor stance appears to be intended purely to torpedo Syriza's progressive program, which is based on the notion that both Scylla and Charybdis can be avoided and Greece and its foreign creditors will arrive at a common solution that benefits all. Yet even if this win-win scenario would indeed be the optimal outcome from a game theoretical point of view, it is proving to be unacceptable to the Germans from a political point of view. For this reason, Syriza's leadership will soon find itself forced to choose between the demands of its creditors and the demands of its internal opposition.

                                                                      The bottom-line is that Germany and its allies do not seem intent to let Greece off the hook. The reasons for this are clear. If the country’s anti-austerity government were to set a successful precedent of debt restructuring, Podemos in Spain would certainly be next — and who knows what other claimants would step forward if Greece successfully canceled its debts? It is now becoming clear that there are only two possible outcomes: either Greece faces down the eighteen-headed monster of the Eurogroup by unilaterally defaulting, or it will stick to the rules of the eurozone and continue to service its debts.

                                                                      Needless to say, both options will come at a very high cost. Yet it now seems increasingly obvious that a costly standoff with Scylla is the only way to avoid a deadly dance with Charybdis and save the ship. Without default and exit, Greece will be sucked into the whirlpool of a deflationary debt trap for decades to come. Sooner or later the left-led government will be compelled to choose between a radical experiment outside the euro or a painful defeat within it. As the heroes of Greek antiquity knew well, there can be no glory without struggle — and no victory without sacrifice.

                                                                    Jerome Roos is a PhD researcher in International Political Economy at the European University Institute and founding editor of ROAR Magazine. Follow him on Twitter @JeromeRoos.

Money : The Great Corrupter - David Harvey

FOR FULL TEXT OF INTERVIEW VISIT HERE: http://www.truth-out.org/news/item/28879-looking-toward-a-moneyless-economy-and-sleeping-well-at-night?tsk=adminpreview

Heiner Flassbeck : Syriza Needs Alliance Against German "Beggar Thy Neighbour " Policies

Yanis Varoufakis : Confessions of an Erratic Marxist

Political Economy Research says Yanis Varoufakis is a classic reformist believing that revolution today will bring Fascism when in reality it is the failure of Reformism and lack of a revolutionary path to Socialist Transformation in Greece will boost the Greek Nazis of the Golden Dawn. Their echoes of history from the 1920's and 1930's resonate when the reformists prepared the way for Fascism and opposed revolutionary communism.

 

Yanis Varoufakis castigates Marx for his 19th Century mechanism but does not understand the dialectic of 20th century history where reformism by failing to transform capitalism into socialism paved the way for Fascism and saw the transformation of  "Social Democratic Erratic Marxists" like Rudlf Hilferding into apologists for "organised"capitalism.

 

The failure of the German Revolution and the Crisis of 1929 brought forth the erratic Marxist Rudolph Hilferding and the Crisis of 2008 has now brought forth the erratic Marxist Yanis Varoufakis.