Syriza has won nothing; austerity has not been cancelled. The agreement signed by Syriza is in every respect except one unfavourable to Syriza’s voters. The troika (now “the institutions”) still exists; if anything it will have greater powers, including an express veto over every aspect of Greek domestic policy which would “rollback … structural reforms” (ie potentially any policy involving any state spending). Moreover, control is not just to be exercised negatively. The document envisages the imposition on the Greek state of large numbers of foreign advisers (“technical assistance”) to administer tax collection, state spending, etc, in other words a cadre of privatisers present at every level of the Greek state imposing their advice on the elected politicians and reporting back to the Eurozone on any non-cooperation with policies of intensified austerity.
This wretched agreement did not come about because Syriza are “reformists”. There is a strange and unconvincing mode of analysis – to be found both in Britain and Greece – which insists that the only “revolutionary” option would have involved Syriza, immediately following the election, announcing Greece’s decision to leave the European Union, as if by so doing Greece would have been liberated from the sordid risk of compromise which threatened on any other path.
The risks of devaluation; the necessity of it
Grexit is still the most likely outcome of austerity. Indeed, one plausible reading of the last fortnight is that enough politicians (outside Greece) have decided on the inevitability of exit, so that the present compromise represents no more than intensified pressure from Germany, Spain, etc, to force Greece quickly out of the eurozone. If that is right, and Grexit does indeed happen within the year, its present champions may yet see the enormous risk that exit involves.
An independent Greece would be able to devalue its currency and in that way potentially reduce its debt significantly. But it would face many of the same problems that Syriza faces now. First, there would be the same run on the banks that Greece is already suffering with individual Greek citizens removing their savings from the bank system out of fear of its eventual collapse. Greek banks would need to be secured, in the short term, by finances from some patron (ie by the state incurring further debts). And the price of the new debtors would be – as with the Eurozone this week – increasingly detailed plans for prompt debt repayment.
Second, in the short term Grexit would be inflationary (indeed that would be its very point: to convert the debts from Euros to drachmas, whose value would then be reduced by deliberate state policies of tolerating inflation – ie the cheaper the drachma, the less Greece would owe to its creditor). The more effective it was at reducing the debt, the higher inflation would be.
Third, in so far as Greece still intended to have economic relationships with its neighbours they would be dictated by the terms of post-Grexit negotiations. And the same cadre of politicians in Germany and Holland, Spain and Portugal who are so evidently enjoying the dismantling of the Greek economy would be the ones to whom a post-independence Varoufakis would be sent on no doubt grim-faced and ineffective trade missions. The terms of the neighbours would be clear enough, we will trade with you only if you honour your full (ie pre-devaluation) debt.
A run on the banks, higher inflation, decreased opportunities for trade, all of these processes would have negative consequences for workers in Greece.
Over a period of years, devaluation might work as well for Greece as it worked (for example) in Argentina in 2002-2003; but devaluation in Europe after a five year prelude of sustained economic crisis would be a risk on a much grander scale (involving a new currency rather than simply the removal of a fixed exchange rate), success would not be guaranteed, and still less would devaluation by itself liberate Greek politicians in one stroke from the risk of class compromise.
Where however the left within Syriza is correct, against Tsipras and Varoufakis, is that the latter have been wrong to approach negotiations from the perspective that because Grexit is so risky, therefore it has to be excluded altogether.
No doubt Syriza’s leaders have been surprised to discover that they have not a single ally but seemingly 18 bitter enemies within the Eurozone. Simple politics dictates that Syriza faces the unconditional hostility of not only Germany (Greece’s largest creditor), Spain, Ireland and Portugal (smaller states which have signed up to austerity, bitter at the “unfairness” of the possibility that Greece, unlike them, might be allowed any concessions), Holland (central to the troika), etc. But their seeming innocence might have caused Syriza’s leaders to expect a little more from France or Italy, states with social democrat governments (i.e. neo-liberals of a different origin). Instead, they have received no meaningful support at all.
For all the hopes that Syriza places in Spanish elections in November or December, even with the present four months’ pause earned, those elections will still be 6 months away. Moreover, even if Podemos do win, the conversion of a minority of one to a minority of two will not “change the game”, unless a way is found to sponsor vastly greater German challengers to the CDU than exist presently.
At this point, the left in Syriza (and indeed the left Keynesians) are probably right, that simply in order to negotiate a less punishing deal Syriza might have done better not to write off from the outset any possibility of Grexit. For while leaving the Euro has enormous risks for Greece, it has risks even for Germany, and for Syriza’s other creditors, since exit by itself would show that the Euro is a temporary arrangement and that other states might in time also leave.
Prominent supporters of Syriza’s Left Platform have been warning for weeks that a compromise with the Eurozone would be disastrous. It would be hard now to disagree with them.
A breathing space
To speak of the left in Syriza is to come to that group of people who have most to gain from the end of this two weeks of diplomacy and the return to politics as usual. A month ago, Stathis Kouvelakis claimed that “the Left Platform plus the left wings of the majority bloc are actually the majority inside [Syriza]”; if so, then this majority has not yet made itself felt.
Inevitably, the left was likely to get isolated by the negotiations; after all, they were neither in the room nor on the phone calls where the decisions were made. But for two weeks the Syriza leadership has been able to exclude the left even from the local decisions where its weight might have been felt, eg over the Presidency. While the Greek President has few powers, and so the decision was seemingly a minor one, the Left Platform had expressed itself in favour of a left-wing candidate, and Tsipras felt able to ignore the left and indeed all the formal institutions (eg the Central Committee) in which inner-party democracy is supposed to be expressed.
There is a link evidently between the Syriza leadership’s contact with European powers, and its drift towards compromises with Greek capital.
Domestic politics needs to reassert itself; the leaders of Syriza need to find themselves justifying to their own MPs the deals they have breached, need to rely on their votes, and need to have certain red lines reinforced. This is the one advantage of the pause – the opportunity it allows for the left to control their leaders.
They need to be chastened, not praised. Pressure needs to come from below: because an alternative furniture is now only too readily apparent, in which Syriza becomes the domestic police for a global project of austerity.
If Tsipras and Varoufakis are like combative trade union officials, then just like their union counterparts, they still require to be watched, and for the workers to develop mechanisms so that they be held to account. Of course, this is the sort of thing that is easier to imagine in a large workplace (the report-back meeting, the vote afterwards), and harder to do when talking about people who have been thrust onto the national scale. But the difficulty of controlling a left leadership does not limit its necessity – unless the left somewhere learns ways of doing this then we will face endless cycles of defeat.
The best that can be said about Greece is that the government is not yet exhausted, its leaders have not yet settled into the roles prepared for them. The moralists who would enjoy better than anything to complain about the inevitable betrayals of other socialists have not been proved right (yet).