What Next in the Greek Crisis?
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- Published on Sunday, 19 July 2015 22:45
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A Socialist Project e-bulletin .... No. 1147 .... July 20, 2015
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What Next in the Greek Crisis?
Barry Finger
If the ongoing standoff between the Syriza government and the Troika of the European Union (EU), European Central Bank (ECB), and International Monetary Fund (IMF) could be boiled down to its essentials, it would be this: The “institutions” will only equip the Greek economy with enough operating funds to manage a bare-bones operation. And they will begrudgingly accede to this only if Syriza maintains a primary surplus and the neoliberal labour market reforms that the Troika judges necessary to keep the Greek economy, and other eurozone economies, competitive in the global market. The left-wing government must, in essence, demonstrate that its loyalty to the European bankers’ project takes precedence over its obligations to democracy.
If accepted,... this means, for Syriza, that it will not be able to implement its anti-austerity measures – the massive public works projects needed to revive the country's economy, expand its tax base, or drive down its public debt through growth. Bailout of the private and national central banks, which had or still hold sovereign Greek debt on their balance sheets, is, in any case, now being internalized by the ECB by means of quantitative easing. These toxic assets have been swapped out for euros at terms far in excess of their actual market values. This is not a complete bailout of the banking system. It will not restore that sector to its previous level of profitability. But quantitative easing is sufficient to guarantee eurozone-banking-system liquidity should the Greeks refuse to listen to “reason” and renege on their “commitments,” thereby triggering a run on the banks.
This dispute is no longer about maintaining the structural integrity of European capitalism, which has been shored up in advance, but about fashioning an unmistakable demonstration for would-be movements to challenge the status quo. And this has already had the intended dampening effect, as evidenced by Podemos’ disappointing results in the Andalusian elections.
