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Europe, Germany, Greece, Italy, Politics, Spain, Uncategorized

Greece’s new government, Tsipras and the issue of sovereignty

Why did Syriza choose the Independent Greeks as coalition partner? And how will the other Eurozone countries react to the new Government in Athens? Jacques Sapir explains

Syriza has won and secured 149 seats in the Greek parliament. Alexis Tsipras, its charismatic leader, is the big winner of the elections this Sunday, January 25th. Many people rejoiced, including some with outrageous shamelessness. Like leaders of the French Socialist Party that for more than two more years established a veritable blockade against SYRIZA. The defeat of the Greek “socialist” PASOK was exemplary (less than 5% of the vote), as was the clear slap given the neo-liberal right New Democracy (two lies in one name). But this victory opens up a path for new policies above all for the Euro zone.

What will Syriza do?

Syriza’s programme is by no means revolutionary. But in the context of Greece today it marks a real break. In the social field, it calls for an increase in the minimum wage to 750 euros (against 600 now), an additional month’s pension for those on less than 700 euros and an increase in the annual threshold of taxable income for individuals, lowered 5000 euros to 12,000 euros. The cost of this package is estimated by Syriza at just under 12 billion euros. But the essential point is that Syriza is opposed to paying about two-thirds of the Greek public debt. This is where the potential conflict with European institutions will focus. For the European authorities are actually more sensitive to the issue of Greek debt than of macroeconomic measures, which appear to be largely unavoidable.

It is clear that Greece cannot cuts its public debt, which continues to grow not because of the budget deficit (excluding debt), but due to the burden of interest payments. This has been known to economists since the end of 2009. It is therefore necessary to cancel a large portion of this debt, many economists say. But this cancellation will cause problems by European institutions that  de facto hold (via the ECB, the European Financial Stability Fund or EFSF and the European Stability Mechanism, or ESM) a large part of this debt. If Greece defaults (or repudiates all or part of its debt) this would have to be shouldered by taxpayers of the euro zone, unless the ECB agreed to take on the worthless debt, and become a “bad bank”. However, such a solution would seriously jeopardize the existence of the euro zone. We now understand why a number of Eurozone governments, including the German and French governments, are against such a solution. They will probably propose that the Greek government suspend payments, both principal and interest, for a period ranging from 5 years to 20 years. But the Greek government has no interest in accepting a “moratorium” for a period of less than thirty years.

The conflict between Greece and the countries of the euro zone is inevitable. The determination of the Greek government to reject the “aid” (which is a misnomer since much of money – 77% – goes to European banks) and the supervision of the “Troika” (the ECB, the International Monetary Fund and the European Commission) is hence a principled stand for Athens. It is difficult to imagine Alexis Tsipras compromising on this issue.

Of discord within the enemy ranks

In this conflict, it is clear that the enemy (the countries of the euro zone) is divided. The French want to avoid a budgetary shock (that is, the use of the EFSF and ESM European ‘rescue’ funds ) and would back the ECB becoming a bad bank. Germany is dead against this. France and Italy may support an expansion in Greek spending which is another bone of contention with Germany. In short, Germany, and it is often forgotten, Finland and Austria, will stick to the position that an agreement can not be renegotiated, although arrangements are possible on the terms of this agreement. In reality, the problem goes beyond Greece. If Greece gets new conditions, this will validate the strategy in Spain of Podemos, the newly created party that is on the rise, but also Beppe Grillo’s Five Star movement in Italy. This is what most frightens the German leaders.

The policy that will be adopted in end will depend  more on the effects induced by the success of SYRIZA (on Spain and Italy) that concrete steps that may be taken in Athens. If Germany (and its allies) want to stop the contagion, it must be firm. But this firmness may simply accelerate the crisis between Greece and the Eurozone.

Tsipras’s choices

All this really comes down to the choice of Alexis Tsipras. On the strength of his democratic mandate,he can decide to go hard into confrontation with European institutions,  or he may decide to start to compromise now. This second hypothesis will condemn him to death, politically-speaking. Therefore, despite the hopes of many pro-Europeans, it does not appear very realistic. One more betrayal would be a betrayal too far, as I have remarked before. Alexis Tsipras knows that. He has chosen to ally with the “Independent Greeks” and not with “To Potami”, a small centrist party born out of the decomposition of PASOK. The “Independent Greeks” are a right-wing pro-sovereignty party. This has allowed him to secure a majority in the Greek Parliament, but above all he has made a very clear choice to take a hard line in his future relations with the European institutions.

This is an important choice. By agreeing to compromise on societal reforms in order to bring to the forefront the issue of confrontation with European institutions, Alexis Tsipras shows what his priorities are, proves his lack of sectarianism and sends a clear message to the European people. The fundamental question is therefore that of sovereignty and this determines the alliances that are made.

This message is a message of hope.

A message worthy of emulation.

RussEurope blog

Translation/edit by Revolting Europe

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope

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