Syriza offers first challenge to European neoliberalism

February 4, 2015Greeceby David Smith

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Syriza's chance to offer a viable alternative for Greece may be fleeting.

The Greek coalition party has a chance to offer an alternative to neoliberal austerity, but it needs the support of left-wing parties throughout Europe to give it room for manoeuvre.

The victory of Syriza in the Greek elections marks a critical moment in the history of European politics. Since the 1980s, when Margaret Thatcher transformed the United Kingdom, European governments have gradually succumbed to dominant neo-liberal economic orthodoxy. The Syriza coalition includes communists, Maoists, ecologists and Trotskyites. But its largest constituent party is the social democratic Synaspismós, led by the new Prime Minister Alexis Tsipras. This left-leaning coalition is the first to challenge the doctrines of neo-liberalism in decades.

There is a lot at stake politically for all of Europe. If Syriza can rebuild the Greek economy, it would become an inspiration for left-wing European parties. In Spain, for example, the socialist party Podemos stands on the verge of power and supports Syriza’s victory. Its leaders will be watching anxiously to see how events unfold in Greece. However, if Syriza fails to turn things around and the electorate becomes rapidly disillusioned, there is a danger that Europe will lurch further to the right.

Leo Panitch, a professor of political science at Canada’s York University and the author of The Making of Global Capitalism, said:

“If Syriza is stymied by a coalition of its domestic ruling class and international capital and its political leaders, it would indicate to European voters who want to break with neo-liberal austerity that the only way open is to support the far right parties that have emerged all over Europe, including Golden Dawn in Greece. If the break from neoliberal globalization came from the extreme nationalist, ethno-centric right, it would be a tragedy of 1930s fascist proportions. That’s why so much is at stake.”

The task of putting Greece back on its feet, however, is daunting. Following the euro crisis in late 2009, Greece was the first country to receive a bailout, in May 2010. The IMF predicted at the time that Greece would grow as the result of its aid package, but instead the economy has shrunk by 25% and wages have fallen by the same amount. Youth unemployment stands at 60%, a figure that would be even worse if so many young Greeks had not fled abroad.

A humanitarian crisis has been unfolding which Syriza has promised to address. Around 300,000 Greek households are without electricity; due mainly to the fact that the Troika - the European Commission, IMF and European Central Bank - and the Greek centre-right new Democracy Party tied new property taxes to electric bills. An unprecedented spate of suicides and record levels of homelessness and poverty characterize the mood of despair. The newspapers are full of stories about former teachers and doctors eating out of rubbish bins. 

Syriza rose to power proclaiming that it would end the “economic torture” of the Greek people. Professor Panitch says the policies imposed by the European Central Bank, and above all by the German Federal Bank acting behind it, make the term “Great Depression” rather than “Great Recession” appropriate.  

Syriza argues that the conditions attached to the bailouts have made things worse. They point to the fact that Greek sovereign debt stood at 113% of GDP in 2009, but the austerity programme has increased it to 175% of GDP. Money from European loans services mountains of debt to private banks in France and Germany, rather than investing in the Greek state. Prime Minister Tsipras has pledged to halve the country’s €320 billion (US$366 billion) debt obligations and scrap a range of harsh budget measures imposed in exchange for the loans. Tsipras wants to meet with individual creditor nations to seek vital concessions. 

But the German chancellor, Angela Merkel, is resisting such unilateral measures. She says Athens private creditors forgave billions of euros and she does not condone a further “debt haircut”. Merkel, it is safe to say, is not a fan of Syriza. The party newspaper, Avgi, has published cartoons showing her taking orders from Adolf Hitler. It also described Finance Minister Wolfgang Schäuble as a “Gauleiter”, which is the term for a regional Nazi party leader. 

The opposition of Europe’s most powerful politician makes it imperative that Syriza cultivates left-wing allies throughout Europe. French president Francois Hollande congratulated Tsipras, as well as leftist leaders, including Pablo Iglesias Turrión of Podemos and Katja Kipping of Germany’s Die Linke. But in the UK, the Labour Party leader Ed Miliband shied away from endorsing Syriza’s politics, saying tamely: “It is up to each country to choose its own path.” Other British politicians further to the left than Miliband were more enthusiastic. For example, Shadow Welsh Secretary Peter Hain praised Syriza’s victory as “fantastic”. He said austerity had not worked for Greece, Britain, or the wider EU.  

“The great disappointment for me is that the Scandinavian governments have backed the German insistence on austerity,” said Panitch. “They are lauded as models of social democracy and if they have any true humanitarian or egalitarian sensibilities they should be arguing within Europe for the Greeks to have lot of room for manoeuvre.”

To revive the economy, Syriza will need to invest heavily, but this necessitates a relaxation of the debt burdens.

“This arguably depends more on pressure from the Americans than Syriza,” said Panitch. “Now, after five years of badgering from the American Treasury and the Federal Reserve, it appears the European Central Bank is developing a shock and awe quantitative easing programme designed to calm the markets by saying it will buy up sovereign bonds sitting on the European banks’ books to the tune of a trillion dollars over the next 18 months. If they can do that for Greece without the kind of IMF conditionality that was imposed on Britain in the mid-1960s and mid-1970s, and has been imposed on Greece for the past five years, it would be the first leg up for the new Government.”

It would also lift some crippling burdens if Syriza could negotiate a write off for some of the debt. Failing that, tying rescheduling payments to the rate of economic growth, or the rate of unemployment, would provide a breathing space. Other Syriza policy priorities include ending the humanitarian emergency, breaking up media monopolies, promoting workers’ cooperatives and renationalizing banks and privatized utilities. 

For the Greek electorate, the most symbolic policy will be to start collecting taxes from the super wealthy. Greek ship owners have not paid any taxes since before a group of right-wing army officers seized power in a coup d’ état in 1967. The issue of tax avoidance resonates hugely with the young in Greece.

“Syriza estimates that its immediate restorative policies would cost €11 billion, which is the equivalent of less than 20% of revenues lost through tax avoidance,” said Professor Panitch. “Its most popular proposed revenue measure involves requiring the big media barons to pay license fees for using the airwaves.”

To clamp down on the oligarchs, it is also necessary to fight the Greek culture of political corruption. The elites in politics and business have been hand in glove for decades. The Greek word for them is “the entangled”. So far, Syriza is untainted by government and pledged to fight this culture. But the electorate will be watching closely. Professor Panitch says Syriza could quickly lose credibility if it falls short of its lofty ideals.

“Honest government is vital for Syriza, otherwise there’s a great danger of disillusionment setting in fast. The first test will be when a businessman comes along with a bribe for a politician. Will the guy he attempts to bribe immediately call in the prosecutors?”