Vol. 79/No. 25 July 20, 2015
The troika — the European Central Bank, the European Commission and the International Monetary Fund — is demanding steeper pension cuts, a faster rise in the retirement age, higher sales taxes, more cuts in military spending, and a smaller tax increase for the rich than what Tsipras has proposed, in exchange for more loans. The troika rejected even discussing Tsipras’ request to write off some of the country’s $360 billion debt.
The European Union — and the slightly smaller eurozone — was originally set up as a common market to bolster the ability of capitalists to compete against their rivals in the U.S., Japan and other parts of the world. In reality it works as a tool for the more powerful European imperialist countries, especially Germany, to advance their interests at the expense of the weaker capitalist nations.
Facing the troika’s intransigence, Tsipras called the referendum, arguing that a strong “no” vote would allow him to negotiate a deal with fewer concessions. EU leaders warned that voting “no” would mean the exit of Greece from the European Union and plunge the country into chaos.
After the referendum was called and Athens defaulted on a $1.8 billion payment owed to the IMF June 30, the troika tightened the screws, increasing turmoil throughout the country. The European Central Bank set a cap on how much it would loan Greek banks to cover deposits. With just $2.2 billion on hand to cover $161 billion in deposits Greek banks are dependent on these daily loans.
The government ordered the banks closed and imposed a maximum daily withdrawal from ATM machines of $66.
The cash shortage has made the economic crisis for workers even worse. Workers and farmers have difficulty getting paid, meeting their rent and other bills and buying necessities. Official unemployment stands at 26.5 percent, the highest in the EU; one-fifth of the population does not have enough money for food.
Ekathimerini reported July 7 that 520,000 olive growers, half of them small family farmers, have been refusing to accept checks or electronic transfers, paralyzing olive oil production. “They want it in cash or they prefer to keep their olive oil in their tanks,” Chris Dimizas, a supervisor at olive oil company Greekpol, told the paper.
‘National unity’ for negotiations
Three bourgeois opposition parties in the Greek parliament backed a “yes” vote in the referendum to accept the troika’s demands: New Democracy, To Potami, and Pasok — the Panhellenic Socialist Movement, which was defeated by Syriza in January. After the “no” vote won, they signed a unity statement with Syriza, backing further negotiations on the debt.The Communist Party of Greece, a Stalinist organization, called on voters to spoil their ballots, saying that “both the yes and the no mean the acceptance of a new memorandum of anti-people measures.” The party reports that 310,000 did so. But the party offered no alternative road for action.
Golden Dawn, an incipient fascist party, backed the “no” vote. One of its members, Ilias Panagiotaris, told Der Spiegel that the group’s “no” vote is different from Syriza’s, because after the vote Golden Dawn’s “people go into battle with a smile on their faces.” Tsipras and other politicians, he said, say “no” with their lips, “but deep inside they just want to go on shopping and have their cash machines.”
While EU officials considered the referendum a populist gimmick and Tsipras an untrustworthy negotiator, the vote bolstered his popularity and maneuvering room at home.
Tsipras promptly fired Finance Minister Yanis Varoufakis, viewed by the troika as too radical and an obstacle to a deal, and named Euclid Tsakalotos to take his place.
In a July 8 loan request, Tsakalotos affirmed that “Greece is committed to honor its financial obligations to all of its creditors in a full and timely manner.”
As a July 7 European summit to deal with the crisis got underway in Brussels, President Barack Obama called both German Chancellor Angela Merkel and Tsipras to push for “a mutually acceptable agreement.”
So far the German rulers have not moved an inch. “We have only a few days left to find a solution,” Merkel told reporters at the end of the summit, adding that she is “not especially optimistic.”
EU rulers fear things coming apart
The EU can’t accept “an unconditional haircut,” German Economy Minister Sigmar Gabriel said prior to the summit, touching on Berlin’s biggest fears. “How could we then refuse it to other member states?” Italy, Portugal and Spain all have even bigger foreign debts than Greece. And the possibility of their exit from the eurozone and the common currency worries them even more.Both the EU plan and proposals from Athens will require a new round of attacks on working people.
Another Greek payment of $3.9 billion is due to the European Central Bank July 20. If no deal is reached and Athens does not pay up, the country could be forced out of the eurozone and to bring back its own currency, the drachma.
While this would allow the propertied rulers in Greece the ability to devalue their currency, making it easier to boost exports, it would leave them with little access to financial markets, compounding the crisis for working people.
“We have a Grexit scenario, prepared in detail,” European Commission President Jean-Claude Juncker said at the summit, adding that he would prefer that Athens meet the EU demands.
The loans “given to Greece never went to the people,” Tsipras told the European Parliament the next day, receiving both boos and applause. “The money was given to save Greek and European banks.”
He pleaded with the EU representatives to back a “compromise” that would show there is “light at the end of the tunnel.” But under his plan, all new loans would go to pay the debt as well.
Related articles:
Puerto Rico gov’t targets workers to pay ‘unpayable’ debt of US colony
Front page (for this issue) | Home | Text-version home