"One must know how to employ the kairos [right or opportune moment] of one's forces at the
right moment. ---- It is easy to only lose a little, if one always keeps foremost in the
mind the idea that unity is never the trick, but the game." ---- -- Guy Gebord, "Notes on
poker." ---- 1. Introduction ---- The transitional "bridge Agreement" of the 20th of
February is a truce intended by the Greek government and welcomed by the other side (the
European "institutions"). Within the truce period (the next four months), the conditions
for negotiating the next agreement will be shaped. This could mean that everything is
still open. However, that is not true for two reasons. First, the very transitional
agreement changes the balance of power. Second, the "hostilities" will continue in the
course of the next four months (i.e. the review of the commitments and the
re-interpretation of the terms by each party).
2. The Agreement of February 20:
A First Step on Slippery Ground...
2.1 Negotiation targets
In the first substantive phase of negotiations at the Eurogroup of the 12th February, the
Greek government sought an agreement on a new "bridge program" stating that it would be
impossible to extend the existing program on the grounds that it has been rejected by the
Greek people:
The "bridge program" would not involve conditions, reviews and so on, but should be an
official manifestation of the willingness of all parties to negotiate without pressure and
blackmail and without any unilateral action.
In the above context, Greece would forgo the remaining installments of the previous
program, with the exception of the return of the EUR1.9-billion that the ECB and the rest
of Eurozone's national central banks gained from the holding of Greek bonds (programs SMP
and ANFA). Greek authorities could issue treasury bills beyond the limit of EUR15-billion
to cover any liquidity emergencies.
At the end of this transitional period: (a) Greece would submit its final proposals, which
according to the program of the government would include a new fiscal framework for the
next 3-4 years and a new national plan for reforms; (b) the issue of a sovereign debt
restructuring-reduction would come to the negotiating table.
The German government and the "institutions" (EU, ECB, IMF) came to the negotiations with
the position that Greece had to request a six-month "technical extension" of the existing
program - renamed as the "existing arrangement" - to enable its successful completion.
2.2 The outcome of the negotiation
The agreement of the 20th of February includes a four-month extension of the "Master
Financial Assistance Facility Agreement (MFFA), which is underpinned by a set of
commitments." The extension of the Agreement ("which is underpinned by a set of
commitments") means: (a) evaluations by the three "institutions," (b) commitments and
conditions, (c) scheduled installments as they appear in the previous Program, subject to
a positive evaluation, (d) return of the profits from holding Greek bonds by the ECB and
national CBs, but subject to a positive evaluation by the "institutions" (even given the
"independence" of the ECB).
In short there is a rejection-withdrawal of the Greek government's negotiation targets (1)
and (2). In addition, there is no explicit reference to how the government will cover its
short term financing needs (e.g. issuing treasury bills to cover bond redemptions,
interest payments and other possible emergencies) until the completion of the assessment.
In this regard, the reference to the independence of the ECB may imply its "discretion" in
assessing the extent to which the Greek government responds positively to the
"commitments" that accompany the extension of the agreement (something which undoubtedly
will complicate any "interpretative" attempts in relation to the agreement on the part of
Greek government).
At the same time, the February 20 Agreement includes the statement: "The Greek authorities
have also committed to ensure the appropriate primary fiscal surpluses or financing
proceeds required to guarantee debt sustainability in line with the November 2012
Eurogroup statement." This means that the Greek government refrains from the target of
debt restructuring-reduction and adopts the sustainability plan based on debt repayment
mostly through primary surpluses. This implies the rollback from point (3b) of its initial
negotiating package.
What the Greek government has won (aside from the mere change in terminology, about which
there was intense debate) is:
Part (a) of section (3) of its initial suggestions, namely the right to propose reforms to
the "institutions" for approval with regard to fiscal consolidation and growth. The policy
measures agreed by the previous government (reduction of pensions and increase of VAT in
the islands) were thus taken out. Both sides agreed to give particular emphasis to the
"overdue" fight against corruption and tax evasion, public sector efficiency, improving
the tax system, etc.[1]
Further negotiations on the size of the primary surplus for 2015. Instead of the
previously agreed 3% of GDP, the new agreement leaves open the issue of a lower primary
surplus for 2015: "The institutions will, for the 2015 primary surplus target, take the
economic circumstances in 2015 into account."
It is clear that the new agreement is a truce, but truce is by no means a tie. The
agreement is a first step on slippery ground. The Greek government may have gained time,
but the political landscape seems quite tough, having minor similarities with the initial
minimum negotiation targets set by the Greek side on February 12th.
3. Is There Still Room to Challenge Neoliberalism?
3.1 The supervision as balance between "political risk" and "moral hazard"
The political strategy of Syriza and the European Left is to overthrow neoliberalism, that
is the economic and social regime that seeks to subordinate all social practices (from
education and social security to the public finances) to the jurisdiction and regulatory
role of markets. The European Left thus seeks to leave to governments the freedom to
curtail the power of markets, thereby bringing to the fore the priority of social needs.
Neoliberalism constantly promotes the interests of capital against the interests of the
workers, professionals, pensioners, young people and other vulnerable groups. The extreme
version of neoliberalism, as expressed, for example, by [German Finance Minister Wolfgang]
Schäuble, is not devoid of rational objectives and strategy. It attempts to resolve, and
so far it does, two fundamental issues:
First, the social legitimacy of a model of labour without rights and social protection,
with low and flexible wages and the absence of any meaningful bargaining power. Such a
development is to be pursued in order to create favorable conditions for profitability and
capital accumulation.
Second, the organization of the Eurozone (the coordination of fiscal policies, banking
union, rescue packages, etc.) on the basis that member states should not succumb to "moral
hazard" with the support of social (and other) expenditures that rely on public borrowing.
Member States are faced with the dilemma: austerity-cuts-privatizations or the risk of
default. By and large, these are commensurate choices. Even in the latter scenario, member
states would accept a rescue package, the content of which is again
austerity-cuts-privatizations.
This conservative perspective favors debt repayment by way of privatizations and primary
surpluses, while it is not opposed to reforms such as those proposed by the Greek
government (and possibly needed by Greek society) - such as more efficient organization of
tax collections, modernization of the public administration,[2] and the fight against
corruption. They may even welcome a new political personnel, as they realize that the
traditional political staff is in decline, having lost its social legitimacy. A political
scene dominated by the traditional political personnel, which has been discredited in the
eyes of the social majority, is clearly considered by the neoliberal establishment as a
"political risk" since it can easily trigger uncontrolled social outbreaks.
At the same time, neoliberalism recognizes as "moral hazard" any policy that supports the
interests of the working-class, expands the public space, supports the welfare state, and
organizes the reproduction of society beyond and outside the scope of markets.
In other words, the strategic question for neoliberalism is to define the level of
austerity that targets an "optimal" balance between "political risk" and "moral hazard."
Generally speaking, these two risks, the "moral" and the "political" one, move in opposite
directions due to their consequences in the current political conjuncture. When moral
hazard increases, political risk declines and vice versa. Therefore, the tension (when
they encounter each other) results in an appropriate balance between them. The
"independent authorities," being immunized against any democratic control, especially on
issues related to the economy (the main example here is the "independence" of the ECB),
create a mechanism for detecting the balance between these two "risks." Nevertheless, this
mechanism remains incomplete.
In the European Union the key role to austerity has now been undertaken by the "evaluation
of the agreements." If we closely inspect the agreement of the 20th of February, we will
see that it is not entirely closed to demands that increase "moral hazard," i.e. to
promoting arrangements to the benefit of the welfare state and labour interests. However,
the key point of the agreement is that "institutions" will assess, supervise and indicate
which particular reforms do not create problems to public finances and do not jeopardize
future economic growth and the stability and smooth functioning of the financial
system.[3] This assessment-surveillance sets a serious impediment to the implementation of
the political program and the social transformations sought by Syriza in the first place.
While the question of how the government will be able to meet its financing needs remains
open, statements by the ECB and the IMF are eloquent proofs of the continuous assessment
stemming from the nature of the agreement: new pledged reforms are interpreted as
substitutes for the commitments of the previous agreement. In particular the IMF does not
accept any rollback from the completion of reforms mentioned in the previous "Program"
with regard to market flexibility, privatizations, and social security reforms. It is
worth noting that the non-quantification of objectives, the non-specified deficit, the
absence of any explicit estimation of the fiscal gap, leaves widely open the
interpretation of the actions with regard to the new agreement as equivalent to those
contained in the previous one.[4]
3.2 How did we get there: On the tactics and strategy of the negotiation
The main question about the importance of the agreement of the 20th of February is what
room it leaves to the government to implement its program. To answer this question we need
first to analyze the "difficulties" that led the government to the compromise of the 20th
of February.
The agreement was apparently determined by external factors - the given and known
neoliberal context of the "institutions" - and internal factors, which played finally the
most important role.
It was only of secondary importance the weak preparation of the government, along with the
contradictory tactics of the Ministry of Finance:
The absence of any reliable plan based on numbers and analysis. The superficial level is
obvious in the technical Annex of the "non-paper" prepared by the Greek government for the
Eurogroup meeting of February 16. More importantly, in the same Annex the crucial
assumption is made that debt sustainability can be associated with long-term primary
surpluses. This argument is an important strategic retreat.
The release of some general principles of the proposal for debt reduction from London.
This was a tactical mistake: Without any prior meeting with the ECB, a proposal is
announced from a non Eurozone country that involves a swap of bonds held by the ECB. This
proposal requires a change in the ECB rules and invokes, without any second thought, a
negative response by the ECB. The negative response by the ECB is related not only to its
policy and the existing delicate balance on the board, but also to the criticisms it
received for rules violation after the recent decision to embark on quantitative easing.
It is also obvious that the ECB does not need to be directly involved in such an
agreement. The same result could be reached by alternative ways that are not incompatible
with current political balances. The other part of the proposal concerning the loans of
the EFSF linked to growth rates is too abstract and vague and definitely concerns the next
round of the negotiations.
It seemed that the government gave too much emphasis to communications management of the
negotiation as opposed to other important aspects of it. This was a negative signal, both
domestically and abroad. For instance, the incident with [Eurozone finance chief Jeroen]
Dijsselbloem apparently stimulated "national sentiment," but also took away considerable
bargaining power: the Greek government spent the whole weekend calming down the markets
before Monday's critical opening. This fact widely signaled that the Greek government
might not not have any stable negotiation strategy.
We can easily see that this weakly planned negotiation by the Greek side, despite the time
spent by the protagonists, was practically a blind jump. Several mishandlings and shifts
showed the partners that the Greek side is susceptible to manipulation.
Nevertheless, what finally determined the outcome of the negotiation was neither the
tactical moves nor the "external" front, but the front within the Greek society. What
determined the retreat of the Greek side was the strategic decision to represent on the
political level the social strata which perceive as unthinkable any disruption of market
stability - even though everyone was aware of the actual historical stake of the
confrontation. The much discussed scenario of a bank-run should be defined and examined
(despite the technical mechanisms available to prevent it) always within the context of
the social relations of power. At the same time, it is a fatal mistake to adopt the
argument that a Grexit necessarily follows from a supposed "collapse" of banks. This is a
zero-probability scenario, which simply was the argument used by the previous conservative
Papandreou-Papademos-Samaras governments to present memoranda as the only choice to the
Greek society. This argument always remains a "weapon" of extreme neoliberals like
Schäuble.[5]
3.3 The challenge: Nothing can change or another world is possible?
The above analysis leads us to the conclusion that we have an agreement which
significantly restricts freedom of action on public finances but also in other areas.
Therefore, the economic landscape, which sets the ground not only for the final assessment
of the new program in June but also for the new round of negotiations, is slippery.
The fact that the Greek government chooses to present the apparent retreat and forced
change of its program as a "victory" is a bad sign for the future. It shows that the
government is more interested in communication than in substance. This attitude could
gradually become the political ground for a real defeat, especially as long as the message
transmitted and received by the society reinforces the belief: "Do not believe the
politicians in what they say, their only intention is to stay in the government."
Let us consider the following simple fact: The Minister of Finance publicly accepted that
70% of the existing Memorandum is good for the Greek society. Nevertheless, this
government did not come to power supporting the 70% of the Memorandum - if Syriza had
pledged so, it would probably not be included in the parliamentary map today, playing the
key role. The attempt to redefine the mandate so as to encompass the 70% of the Memorandum
is practically an attempt to change the social alliances which has supported so far the
historical experiment of a left government. Obviously 70% in itself is just an arbitrary
number (why not 68% or 72%?; is it based on pages, sub-chapters, or measures?). Its
adoption invokes a new political symbolism and paves the way for new social alliances. The
question, which remains open even for the government, is whether the government will
insist on superficially presenting the result of the negotiation as a "victory,"
disregarding all the critical issues that emerged, or will it attempt to analyze in depth
the conditions and the consequences of the retreat as long as there is still time (very
little, indeed, since the next round of negotiations will soon start)?
In fact the agreement of February 20th leaves the government and Syriza with only one way
out of the impasse of neoliberal European corset: storming forward!
Storming forward with truth as vehicle: to start from the assumption of a retreat in order
to seek out ways to avoid any long term damage. The government should instead bring back
on the agenda our programmatic commitments to redistribute income and power in favor of
labour, to re-found the welfare state, democracy and participation in decision making.
Storming forward with the vehicle of radical reform of the tax system (so that capital and
the wealthy strata of the society finally bear their appropriate burden) and the fight
against corruption of part of the Greek economic elites.
A new wave of radical domestic institutional changes is urgently needed in order to build
on a new basis the social alliances with the subordinate classes. Metaphorically, what is
missing and seems to disappear after the agreement of the 20th of February is any domestic
"memorandum against the wealth" which will improve the living conditions of the working
people. The goal that "capital should pay for the crisis" has never been more to the point.
In a society where the loss of 25% of GDP and the impoverishment of large part of the
population is just the visible aspect of the rapid intensification of social inequalities,
in a society where mass unemployment is the numerical complement of a severe deterioration
in working conditions, in a society of multiple contradictions and high expectations, the
popularity of the government will not be maintained at 80 per cent for a long time.
The policy of the government can only remain hegemonic if it supports the interests of the
working majority in a struggle against neoliberal strategy. There is no room for
"ethnarch" policy generally and loosely defending everything "Greek" or "European": such
an approach never has, and never will represent the perspective of the Left. o
Spyros Lapatsioras is Assistant Professor of Political Economy, University of Crete,
Member of the Central Committee of Syriza.
John Milios is Professor of Political Economy, National Technical University of Athens,
Member of the Central Committee of Syriza.
Dimitris P. Sotiropoulos is Senior Lecturer at the Open University Business School in the
UK and member of Syriza.
Endnotes:
1. Of course, every decision still requires approval by the "institutions": "The Greek
authorities commit to refrain from any rollback of measures and unilateral changes to the
policies and structural reforms that would negatively impact fiscal targets, economic
recovery or financial stability, as assessed by the institutions." ["Eurogroup statement
on Greece" Feb. 20, 2015.]
2. The devil always hides in the details, in the form that this modernization will take.
3. For instance, we should not forget that economic growth in the current program relies
on exports and that every wage increase is automatically considered as being against
competitiveness and the target increase in exports. No matter how empirically erroneous is
this perspective, it still reflects the viewpoint of the "institutions." Another example
is the solution to the non-performing loans because it affects the financial systems and
thus every policy proposal should secure the OK by the "institutions."
4. In his official letter to Jeroen Dijsselbloem on Feb. 24, 2015, Mario Draghi says: "We
note that the commitments outlined by the authorities differ from existing programme
commitments in a number of areas. In such cases, we will have to assess during the review
whether measures which are not accepted by the authorities are replaced with measures of
equal or better quality in terms of achieving the objectives of the programme."
5. James Galbraith also refers to "grexit" as an adequate reason to seek an immediate
compromise: "No agreement would have meant capital controls, or else bank failures, debt
default, and early exit from the Euro." ["Reading The Greek Deal Correctly" Feb. 23, 2015.]
By Spyros Lapatsioras, John Milios and Dimitris P. Sotiropoulos - The Bullet
Related Link: http://www.socialistproject.ca/bullet/1089.php#continue
http://www.anarkismo.net/article/27996
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