Robert Stevens
The Syriza-Independent Greeks government is set to request a six-month loan extension Thursday, reversing its previous pledges and accepting the debt-repayment scheme and austerity program dictated by the European Union.
Greece’s current loan agreement with the so-called “troika” (European Commission, European Central Bank and the International Monetary Fund) expires at the end of this month. Without further loans, it will rapidly default on its foreign debt of €320 billion.
According to press reports, the request was scheduled to be submitted on Wednesday, but was held back by Athens in order to ensure that it was worded in a manner acceptable to the Eurogroup. Led by Germany, the euro zone governments have thus far rejected Syriza’s concessionary offers and insisted on an explicit acceptance of the current debt repayment plan.
The new government will reportedly agree not to roll back the austerity measures already implemented or take any action not approved by the troika, while asking for a loan extension of up to six months that is not formally attached to completion of the austerity programme agreed by the previous Greek government.
On Tuesday, a senior Greek cabinet minister, speaking anonymously, said, “We will ask for an extension of the current bailout agreement within the framework of the Moscovici plan.”
This is a reference to a document authored by Pierre Moscovici, economic chief of the European Commission, which Greek Finance Minister Yanis Varoufakis on Monday said he was prepared to sign. At Monday’s meeting of euro zone finance ministers in Brussels, the Moscovici document was withdrawn and replaced with another from Eurogroup head Jeroen Dijsselbloem demanding that Greece remain within the previous austerity agreement and impose further cuts.
German Finance Minister Wolfgang Schäuble denounced the new Greek proposal, stating, “It’s not about an extension of the loan programme, it’s about whether this program is fulfilled, yes or no.”
A further indication of German opposition came Wednesday evening with the decision of the European Central Bank (ECB) to grant a further extension of just €3.3 billion to Greek banks accessing the ECB’s Emergency Liquidity Assistance fund. At the current rate of deposit outflows from Greek banks, this sum is estimated to cover just one week of funding. The ECB board was split on the issue, with the Bundesbank’s Jens Weidmann opposing even this token increase.
In preparing to submit the new Greek proposal, Varoufakis met with Moscovici on Tuesday. On Wednesday he spoke by telephone with US Treasury Secretary Jack Lew, who called on Greece to "find a constructive path forward in partnership" with its creditors. A US Treasury statement warned that “failure to reach an agreement would lead to immediate hardship in Greece, that the uncertainty is not good for Europe, and that time is of the essence.”
On Wednesday evening, Varoufakis tweeted that a Eurogroup teleconference would be held Friday to discuss Greece’s proposal.
Syriza has been desperately seeking to come to an agreement with the troika and the Eurogroup since its election last month on an anti-austerity platform. But the eurozone governments, led by Germany, have to date rejected the supposedly “left” government’s pleas for some form of verbal camouflage for what amounts to capitulation to the demands of EU and the banks.
German Finance Minister Wolfgang Schäuble, in particular, has gone out of his way to crack the whip and display contempt for Syriza, exhibiting the arrogance and indifference of the bourgeoisie for the suffering of the Greek masses. The evident aim is to make Greece an object lesson on the futility of challenging the power of capital.
Syriza, a party that speaks for sections of the bourgeoisie and privileged upper-middle class layers in Greece, is incapable of mounting any real opposition to the dictates of the EU and the banks. It is part of the bourgeois political order and explicitly defends the capitalist economic system and its organizational and political framework in Europe, the EU.
It is being forced, before the eyes of the world, to systematically discard its “radical” pretences in something akin to a political striptease.
On Wednesday, the Greek government released documents outlining its negotiating positions and citing statements made by Varoufakis at the last two Eurogroup meetings. The documents are an extraordinary testament to the lengths Syriza has gone in repudiating its anti-austerity rhetoric in an effort to satisfy the rapacious demands of the European ruling elite.
In his presentation to the February 11 Eurogroup meeting, Varoufakis started by stressing that Syriza understood the austerity measures already in place in Greece would be permanent. “Greece has made a vast adjustment over the past five years at immense social cost” he said. “The new government takes this adjustment as its point of departure.”
He continued, “Our government will be the most reform-oriented government in Greek modern history, and among the most enthusiastic reformers in Europe.”
Addressing concerns that Syriza might implement a few reforms partially reversing austerity measures in place regarding privatisations, the firing of public sector workers, the slashing of pensions and cuts in the minimum wage, Varoufakis explained that Syriza’s proposals were so watered down as to be inconsequential. It was untrue “that we have rolled back previous reforms and added to our state budget,” he declared.
Regarding privatizations, he said “we are ready and willing to evaluate each and every one project on its merits alone. Media reports that the Piraeus port privatisation was reversed could not be further from the truth.” He went on to insist that “foreign direct investment will be encouraged.”
On the promised reinstatement of laid-off state employees Varoufakis had already said this policy would apply to “just one tiny little miserable percent of those who lost their jobs.” He told the Eurogroup meeting that just 2,013 workers would be rehired, and promised that this “tiny number” would “have no adverse effect on competitiveness and no fiscal bearing as [the reinstatements] will be paid for entirely by other savings in the state budget.”
Syriza’s “reform” of pensions was barely a change in the existing policy and would cost almost nothing, pleaded Varoufakis. He said the “restoration of the pension cuts we announced concern pensioners living at or below the poverty line and comes up to less than 2 euros per day per eligible pensioner—a grand total of around 9.5 million.” [Emphasis added].
On the minimum wage, Syriza is proposing merely a return to the level that prevailed before the austerity measures were launched. On this issue as well, big business had nothing to fear, Varoufakis assured the assembled finance ministers. The “government will phase in its restoration to the 2012 level gradually, from September onward,” he said, and only “after consultation with employers and trades unions.” It would apply, moreover, “only to the private sector.”
Posing the question, “Will it reduce the competitiveness of the private sector?” he answered, “The government commits to reforms, e.g., in social security. Reducing the tax on wages will ensure it does not.”
Varoufakis was addressing finance ministers who in 2010 alone imposed €487 billion in austerity cuts, with hundreds of billions in further cuts since then. Varoufakis concluded, “Some of you... were displeased by the victory of a left-wing, a radical left-wing party. To them I have this to say: It would be a lost opportunity to see us as adversaries. We are dedicated Europeanists. We care about our people deeply but we are not populists promising all things to all people.” [Emphasis added.]
The Eurogroup listened to Varoufakis, but did not even bother to look at his latest paper outlining Syriza’s proposals.
The fact that the Eurogroup has rejected such miserable proposals out of hand shows that the European Union will not allow anything to be legislated in Greece, or anywhere else, that impinges on the ongoing transfer of wealth from the poor to the rich.
The Daily Telegraph summed up the position of the ruling elite when it lauded Lithuania, calling it “the euro zone’s newest member… where the minimum wage is €300 per month and which is now asked to cave so Syriza can increase the Greek minimum wage to €751 per month.”
If any agreement is reached between the Eurogroup and Greece it will be based on a continuation of austerity enforced by Syriza. Even then, the growing scale of Greece’s foreign debt is such that it cannot be paid off. More and more commentators are concluding that Greece is edging toward default and exit from the euro zone.
The Guardian warned in its editorial Wednesday that Greece’s application for an extension “would be only a temporary, if welcome, respite to the underlying problem.” The editorial continued: “It would be foolish to assume that it represents a conclusive step back from the brink.”
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