Why Syriza Failed, by Yves Smith

This is a wonderfully written piece that accurately captures the Greek situation. Thank you to Pepe’s Corner for bringing it to our attention.

We would also encourage for readers to explore the other brief material that we have selected to publish on the unfolding Greek ‘situation’ (read: Banker led destruction of a whole country).

You can read that here.

While reading on the ongoing obituary of Syriza, one cannot help but notice how much of an amazing airbag function the party has performed. As Dagmar Henn has previously said, the party was successful in stopping the mobilization of the Greek people.

AE

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Yves here. While the path for the ruling Greek government to make a deal with its creditors is fraught, it is pressing forward to try to come to an agreement by the next Eurogroup meeting, May 11. Greece has an IMF payment due May 12 that it will find difficult to meet. With the new urgency and the, um, realignment of the negotiating team, the odds now look to favor Greece capitulating even in the event of a default even if the ruling coalition tries holding ground on some of its red lines like pensions. If a default were to occur, it’s not hard to imagine that the IMF and the ECB would make Greece an offer it can’t refuse: the IMF would reverse itself on giving Greece a grace period for its payment if it relented on the disputed issues, otherwise the ECB would have no choice in light of the default to remove or limit its support under the ELA That would force Greece to impose capital controls, nationalize its banks, and issue drachma to recapitlaize them. Both the Greek public and most Syriza members are opposed to a Grexit.

Tsipras continues to send mixed signals on its intentions. He has veered time and time again from making cooperative noises when he encounters resistance from the creditors to making defiant statements to appeal to voters. Consider this section from the Financial Times yesterday that we flagged in Links:

The moves come as senior Greek ministers have publicly acknowledged in recent days that they may be forced to accept economic measures they have been attempting to avoid, a sign they are preparing Greek voters for concessions.

Today, the Financial Times has Tsipras again taking up a defiant posture and saying he might be forced to call a referendum. We’ve said that the likely lead time makes that impossible (as in Greece will almost certainly default before a referendum can take place) and the Eurogroup chief Jeroen Djisselbloem cleared his throat and said pretty much the same thing (which may amount to calling the Tsipras idea a bluff). From today’s Financial Times:

Greece’s leftwing prime minister has warned that he would hold a referendum if international creditors insisted on a “vicious circle of austerity” as the key to unlocking urgently needed bailout money.
Hours after making a conciliatory gesture to Greece’s eurozone partners with a reshuffle of his negotiating team on Monday, Alexis Tsipras struck a more defiant note….

A referendum could lead to weeks of continued uncertainty about Greece’s solvency. A plan by Athens to hold a plebiscite in 2011 was effectively scuppered by eurozone leaders. But some officials also believe it could be a way for Mr Tsipras to win public support for an eventual reform programme.

Jeroen Dijsselbloem, the Dutch finance minister who leads the Greek negotiations as head of the eurogroup, said he did not think a referendum was a feasible option for Mr Tsipras given the urgent need for a deal so that bailout cash can be disbursed soon.

“It would cost money, it would create great political uncertainty, and I don’t think we have the time,” Mr Dijsselbloem told Dutch radio. “And I don’t think the Greeks have the time for it.”

[Please click below to continue reading]

Moreover, as Ned Ludd pointed out in comments today, Greece has retreated from another one of its defiant gestures, that of cultivating ties with Russia:

An offer from Gazprom was “ready for signatures”, and Greece walked away.

[T]he Greek government in the end balked at the Gazprom offer (which was ready for signature on 23rd April 2015) following warnings from the EU Commission that its terms were contrary to European law – i.e., to the Third Energy Package.

I was told by my source that the Greek government could not in the end bring itself to defy the EU Commission on this issue because of its fears that this would jeopardise its negotiations with the EU finance ministers at the Eurogroup meeting on the following day.

Alexander Mercouris’s “source in Athens” may be a Russian diplomat or official at their embassy in Athens, who is aggravated by Greece’s incomprehensible negotiating strategy.

There was no point in making overtures to Moscow if Greece was not prepared to follow them through. It was totally predictable that the EU authorities would object to whatever deal Greece made with Russia or with Gazprom. If Greece was not prepared to defy the EU authorities on this question, it should not have proceeded at all. As it is the Russians must be annoyed at being led up the garden path, while the European leaders have been antagonised and persuaded that Greece’s anti-austerity posture is ultimately a bluff.

And as Ludd noted later:

I think the majority of Syriza was always amendable to being the new PASOK. The path to power, of course, required pretending that a Syriza-led government would be fundamentally different (and to the left of) PASOK.

Since the end goal was always a deal with the Troika, though, PASOK would have gotten a better deal than Varoufakis ever could. “If you can’t bite, better not show your teeth.” ~ Yiddish Proverb.

According to the Financial Times article, it looks like Syriza is now prostrating itself before its Eurozone masters, hoping for a more amicable path to cutting a deal with the Troika.

A well-connected DC reader had submitted this post at the end of March. We’d held off publishing it because we’d wanted him to amplify his central charge, that Syriza does not want to govern. In context, you can infer what that means but we had wanted him to unpack that idea more.

Notice that this critique, which I can separately say with confidence would have gotten blistering attacks from the NC commentariat had I run it then, has proven to be prescient and accurate. The big part I quibble with is calling the Syriza negotiating position “Keynesian”. While Yanis Varoufakis’ Modest Proposal was indeed Keynesian, the Greek government retreated from that in the face of creditor opposition, leaving themselves only with an “austerity lite” plan of volunteering to maintain a primary surplus (which in the absence of fiscal transfers like European Investment Bank infrastructure spending, assures a continued worsening of the contraction). Thus from an economic perspective, what Syriza is fighting over is the right to decide who in Greek society will bear the pain of continued austerity, and the government is working to shift that burden more to the wealthy. A thin gruel indeed.

From a Washington DC insider

Syriza Has Created a Beg-ocracy Based on Fear

It’s been two months since Syiza took power, which is enough time to do some sort of evaluation of their governing philosophy. Here’s what we know. When Alexis Tsipras was elected to head the new Greek state, his government promised two mutually exclusive objectives. The first was to stay in the Euro. The second was to repudiate the policies of austerity and the colonial arrangement of the institutions that manage the Euro. Both policies represented different wings of the Syriza coalition, and Tsipras believes both must be placated.

Tsipras’s strategy was not to pick one of these objectives and stick with it to the exclusion of the other, but to attempt to mesh the two of them in an audacious attempt to transform the entire Eurozone.

Tsipras decided to make Greece a demonstration project. When he was elected, he spoke early on of a “European New Deal”, in a nod to Franklin Delano Roosevelt’s new governing arrangements. And indeed, his early legislative attempts included things like ‘food stamps’ and electricity for the poor. His finance minister, Yanis Varoufakis, talked of European-wide investment in infrastructure to boost overall European aggregate demand.

By governing Greece reasonably well and reducing corruption, along with taking money from those who didn’t need it and giving it to those who do need it, they were hoping to show European elites and voters that another way was possible. With the added boost from more European economic activity, Greece could prosper. Certainly it would grow since its base state is so depressed.

In other words, Tsipras and Varoufakis sought to ‘save Europe from itself’ by demonstrating that the austerity policies peddled by European banking elites were tearing Europe apart. They believe that Merkel gets this, they believe that certain key individuals within the IMF get this, and they think that they can organize enough support within the institutions to muddle through the first few months so they can actually govern. That’s the plan.

And one should have sympathy for this viewpoint. The European project is one of the great achievements of humanity. From the fall of the Roman empire until 1945, European has basically been one giant warzone, with varying degrees of violence. The EU was essentially an American-brokered marriage between France and Germany. This union was then expanded outwards, with a strong social welfare state undergirding peace and prosperity. This is the EU that they want to save, though Varoufakis has basically said that American has no role in the current Euro and that Germany is the hegemon. This misses the critical ingredient that made the EU work, which was a balance of power.

Obviously the specter of Communism provided additional critical context, and it’s no accident that the end of the USSR as a competitive system removed the pressure that tamped down on both nationalism and banker greed. Nothing is inevitable, though, and that turn towards oligarch rule in Europe wasn’t either.

Nevertheless, the EU has been inverted. It is now a set of actors going through a set of austerity policies that in geopolitical terms reflect the Saw horror films, sadistic conditions imposed by bankers and Eurocrats who just enjoy the torture. America is absent. Germany is dominant and malevolent, both corrupt and self-pitying. Nationalism and greed are increasingly rampant, with fewer and fewer institutional controls. It is in this environment that Syriza leaders are trying to negotiate what are essentially fiscal transfers in a structurally deficient currency union that has been organized to suck wealth from the periphery and transfer it to German banks.

The reason there’s so much acrimony in these negotiations is because Tsipras and Varoufakis are operating in good faith and asking for basic Keynesian policies under a technocratic (not democratic) framework. Most of the European institutional actors think that Tsipras and Varoufakis are trying to outsmart and outmaneuver them with leftist cunning, along with their leftist populist allies across Europe. This isn’t really true. Tsipras and Varoufakis have no plan B, they will rely on the sadistic European institutions because they believe the choice is between being part of the Euro with a colonized economy and a thousand years of darkness. They are, in other words, deeply afraid. The irony, of course, is that when Tsipras called for a European New Deal, he missed what made FDR successful. And that was repudiating ‘Fear Itself’ and eventually taking on the bankers directly.

What this means is that Tsipras and Varoufakis are now effectively working for bankers. They do not want to govern with an independent power base, they do not believe in governing along the lines of what they promised unless it is easy to do so, and they are organizing their governing apparatus as a beg-ocracy. They simply do not believe in Greek self-government. It’s been two months straight of negotiations, which looks more and more like begging, and they have had no time to take control of the bureaucracies or to pay attention to what is going on in any area except the immediate political situation. The Greek economy is not improving, because the uncertainty has impeded what little commerce there was.

Governing is not easy, and it’s especially difficult in these situations. And Syriza leaders don’t have experience at it. They are not bad people, and in ordinary situations, they might even be good leaders. But the strategy being pursued is bad and their attitude based on being afraid of the Europeans is worse. This is a fight over power, and Greek leaders simply aren’t willing to advocate for their own people in any serious way. They are deluding themselves about who they are up against. The Greeks will feel dignified for a time with this new government, but that won’t last forever. And then the results will start to matter.

Syriza leadership is now more problematic than the earlier political Greek parties that cut the bailout deals over the past five years, because those parties never promised anything different than catastrophe. Syriza however promised democracy, solidarity, dignity, and the Euro. Now Syriza is in the process of proving that democracy doesn’t work, that the brand of standing up in solidarity against bankers is a fraud. Tsipras’s role is similar in effect to Barack Obama’s role of tamping down populist energy against the national security state and Wall Street in 2008. As Obama did before him, Tsipras is now standing between the people with pitchforks and the banks. The likely fallout of course is worse for the Greeks than it was for Americans, because Greece has so little leverage and it does not have its own currency. But on a very basic level, Tsipras and Varoufakis, just like Obama, are simply unwilling to govern. And that makes them opponents of any real left-wing populist movement.

Greece may still yet exit the Euro, or they may be pushed out of the Eurozone. But by refusing to pick between the two objectives of remaining in the Euro and repudiating austerity, they have lost critical time, bank deposits, much of their primary surplus and even more essential credibility. From the perspective of populists, the behavior of Syriza has been catastrophic. And it’s time to disavow what they have done and let them slink into the long neoliberal twilight from which they draw their inspiration. They had their fifteen minutes. Time’s about up.

Source: Naked Capitalism

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of Oceania Saker.

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