Kevin Ovenden makes a foray into the economic labyrinth in his ninth dispatch from Greece
All the polls today continue to put Syriza ahead. The scope for speculation over the result next Sunday has narrowed. Immediate expectation is defined by two questions.
Can Syriza win an absolute majority? And what will be the precise distribution of votes outside the two poles of the Left and Right, Syriza and New Democracy, determining which other parties might be potential coalition partners.
It’s worth noting now that the even if Syriza can pass the threshold of 150 seats out of 300 it still matters who else is in the parliament.
There will be pressure of all kinds for Alexis Tsipras to include other parties in government to broaden the base of his administration. Why not lock in others to strengthen your hand in the negotiations with the troika, runs an argument?
And the distribution of Syriza’s seats between different wings of the party is also unknown.
You can sense the panic of big business foreign and domestic every time a correspondent reminds the readers of serious papers what Syriza is, in broad brushstroke.
The bulk of Syriza comes from a party, Synaspismos, which though hailing from the Communist tradition was once a junior partner in government in Greece. The only damage it did in doing so 25 years ago was to itself and to the Left.
Circumstances are different now. And – at this point mainstream papers issue a trigger warning to more delicate readers – a yet to be determined minority of Syriza MPs next Sunday will be Trotskyists and Maoists. Scare quotes are wholly redundant.
The bigger the presence of the Left of Syriza in parliament next week, the greater the calls from “friends” for Tsipras to “show leadership” by counterbalancing the outcome through alliances with forces to his right.
Broad and bigger are seemingly two eternal virtues in politics. If only life were so easy. Calls to be broader and bigger the week after next may in reality be demands for the Left to be diluted and smaller. It’s not just what is said, but by whom – and why.
What can safely be said as we enter the last week of campaigning is that the bigger the vote for Syriza and the anti-memorandum Left, the better for ending austerity and delivering on people’s hopes.
Avgi, Syriza’s daily paper, has the party 5 percentage points above New Democracy today. Last week the same polling company reported an 8 percent lead.
No trend may be read into the differing figures. Professional pollsters tend to agree that if previous elections are to be any guide then the final week of the campaign is likely to see in increased gap between Syriza and New Democracy as undecided voters disproportionately swing behind the front-runner.
The centre-left To Vima some weeks ago predicted a narrowing of the gap. Now it is obliged to say that the gap is widening. It all adds up to a renewed incentive for the young activists of the Left to fight for every vote in the next few days.
The party’s elder statesmen and shadow ministerial teams of course want to win big too. But ineluctably their minds are forced also to turn to the matter of how they may govern.
In particular, timing is everything. No one expects – and no one is demanding – an overnight reversal of the years of austerity. The benchmarks and milestones by which the next government will be measured by those who voted for it will be set by those working class voters themselves.
But there are other timelines, set by the markets and the institutional arrangements which, through the euro and other mechanisms, have bound Greece to rhythms and demands of corporate capital.
A jog on the banks?
The big news over the last 48 hours is that now all the four of the major High Street banks in Greece have asked for cash from an emergency mechanism set up to prevent the collapse of banks through panic runs on deposits.
The request for cash under what is called the Emergency Liquidity Assistance programme set up within the eurozone (belatedly, like everything else in response to the post Lehman Brothers crisis) is, on one reading, a shot across the bows of the incoming government.
In doing so, the Greek banks are saying they anticipate a possible run or credit squeeze. They may be saying so genuinely in response to their own confidential analyses of market and depositor movements in the last week. In which case they are the messenger for the warning issued to the incoming government.
Or they may be directly part of an orchestrated attempt to induce a crisis atmosphere.
No one knows. That in itself is a pretty strong case for placing the lot of them under a more responsible and transparent management which could be relied upon to put the public interest above that of the oligarchs who have been squirreling money out of Greece and splashing out on the London property market.
That – in rather prosaic language – is what is meant by the call from the anti-capitalist Left in Greece (within and without Syriza) for “nationalisation of the banks under workers control”.
Before dismissing such calls as outdated dogmatism, it would be as well to ask what alternative policy could deal with the reality described above: a week before the people make a democratic choice we don’t know whether the Greek banks are cautiously avoiding a financial shock, or conspiring to produce one.
The request for ELA assistance, however, also opens up a different scenario. It points to rather convoluted mechanism whereby the incoming government may be able to buy some time.
Yannis Varoufakis, a leading Syriza economist, sketched out how it might work in response to a media frenzy which opened up at the end of this week in response to comments by a Syriza candidate, Rachel Makri, who defected to the party from the right wing Independent Greeks.
Makri had claimed that it was perfectly possible for the Syriza government to print money (100 billion euros) and use it for investment and to service its debts.
There were howls of derision from New Democracy. There were somewhat patronising putdowns also from Syriza leaders too, including the economics advisor Yannis Milios.
Varoufakis made a more measured intervention. He explained how Makri was wrong (for many on the Left Makri’s innumerate economics is the least of her problems – her chauvinism is much more problematic).
But he pointed to one way the incoming government may seek to defer a moment of decision in the hope of extracting some deal in protracted negotiations with the troika.
It may seem like a highly technical matter. But it is on precisely these questions that the immediate fate of a Left government is going to turn. If the wider anti-austerity Left in Europe wants to help the movement in Greece, we need to be aware where and when the actual confrontations are likely to take place.
The ELA is part of the alphabet soup of funds, mechanisms, and arrangements cobbled together over the last six years to cope with the ongoing crisis in Europe, of its banking system above all.
The Byzantine arrangements are a result of one of the fundamental contradictions hardwired into the single European currency, the euro.
Unlike any other major currency the euro is backed not by a state, but by a collection of states. So there is a single monetary policy across the eurozone, but not a single fiscal (tax and spend) policy.
The result is an additional source of instability and crisis over and above the casino finance economy and declining profits which were a problem the world over in 2008.
German big business and the government in Berlin have been particularly adamant that there will be no Europeanisation of national debts in the eurozone.
One result is a series of Heath Robinsons, such as the ELA, thrown together to try to prevent the collapse of the European banking system through European action, while putting the burden national governments.
Here’s what the ELA does allow, as Varoufakis explained to voters this week.
The Greek banks can go to the Greek Central Bank and ask for money. The Greek Central Bank can give it to them (subject to approval by the European Central Bank) in return for collateral or taking over assets.
The collateral the banks can offer is of junk status. That’s the underlying problem. Not just the Greek but Europe’s banks as a whole have vast amounts of bad debt and worthless assets.
The Greek central bank needs in turn to access funds from the ECB, which won’t touch the junk collateral with a bargepole. So the national bank offers up good collateral. That, ultimately, is a call on the wages and pensions of Greek working people, the remaining public assets and… well just about anything else. Whole islands in the Aegean have seriously been suggested as collateral.
Varoufakis points out that in this way in the coming weeks the incoming government can pump money into the Greek banks and get them in turn to buy short term Greek government bonds. It was Greek banks which stepped in to buy such bonds in the last two weeks when European investors refused.
In this way, the ban (Berlin enforced) on ECB money being used cover the shortfalls of governments in the eurozone may be, in effect, temporarily circumvented.
According to Yannis Dragasakis, likely to be finance minister in Syriza-led governemtn, this is a way for the incoming Greek government to find the cash to cover the payments on the mountain of national debt required in March. It would not be enough to cover the larger payments due in June.
Above the intricacies of financial policy, this is the political significance emerging from the row triggered by the accident-prone Makri this week.
The sketch of a timeline emerges in which the government buys some time for negotiation with the troika. The time limit on talks, crunch point, is deferred until early summer.
It is, through a different mechanism, similar in effect to the call from the outgoing finance minister for a six-month extension of the memorandum agreement which expires in two months.
This use of the ELA has been tried before, by the Irish government.
But here’s the rub. It depended then – and will do now – on the ECB and Berlin turning a blind eye, just as they turned a blind eye to the technocratic government in Italy, which broke several “absolutely-binding” rules.
The Irish and Italian governments hailed from the Right, not the Left.
So we are left, after this disquisition on economics, with politics. And that’s what it is all about.
The Left cannot avoid the political question by presenting itself as responsible and credible. It may be both. But it is the clash of political forces which will determine not just the broad fate of the people of Greece.
It will determine whether confrontation is weeks or months away. That there will be confrontations, no one doubts.
Kevin Ovenden is a progressive journalist who has followed politics and social movements for 25 years. He is a leading activist in solidarity with the Palestinian struggle, led five successful aid convoys to break the siege on Gaza, and was aboard the Mavi Marmara aid ship when Israeli commandoes boarded it killing 10 people in May 2010. He is author of Syriza: Inside the Labyrinth.
More articles from this author
- Greece: 100,000 teachers take on the government in national strike
- Germany’s election: shattering the illusion of stability
- Greece is on fire: capitalism, crisis and climate chaos
- Witchfinder Starmer must be stopped: this is a fight for all the left
- The struggles are fusing: Greece protests rage against authoritarianism
- Starmer's flag fetish: win the middle ground, don’t chase it
- Vaccine nationalism: a plague on all our houses