“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx
Jan 12, 2012
This article was translated from the journal of comrades of Lutte Ouvrière (in Lutte de Classe # 141, February 2012).
After having been plunged into a storm of financial speculation for practically all of 2011, Greece knows for now a certain respite. For how long? No one can say. Certainly not the heads of state of the European Union, who during all this time showed their powerlessness in the face of the financial markets, which they were eager to “reassure.” Hardly had one European summit ended, laboriously giving birth to a plan or a draft plan, than it was necessary to start work on a new meeting and a new plan!
The Greek government, led by the Socialist George Papandreou, sank in the storm. In October 2009, the Socialist Party (PASOK), had won the legislative elections. The New Democracy, the right wing party in power, was discredited, bogged down in corrupt affairs, and confronting a worsening of the crisis. When Papandreou came to power, he promised important changes. “We’ve been elected to build a social state, not to destroy it,” he said, while making his first budget cuts right after forming his administration!
Two years later, completely discredited, Papandreou had to give up power two years before his term in office was over. His last maneuver, proposing a referendum letting the population vote on his austerity policy, went nowhere and it probably even sped up his fall. He had committed sacrilege in the eyes of French President Sarkozy and German Chancellor Merkel, by pretending that the policy they had dictated could depend, even a little, on the popular will!
In November 2011, Lukas Papademos succeeded Papandreou, forming a coalition government, which includes the majority-party Socialists as well as ministers from New Democracy, and four representatives of LAOS, an extreme-right nationalist party. So two years after their electoral victory, the Socialists’ failure opened the door for ministers from the extreme right, known for being openly racist and anti-Semitic. This is striking!
The new administration is simply a continuation of the previous one. The embodiment of this continuity is the Socialist Venizelos, who occupies the post of Minister of the Economy, as he did in the Papandreou administration.
Papademos is presented as a “technician”: he doesn’t belong to a political party and was the director of the National Bank when Greece adopted the euro. In this capacity, he was one of those who carried out the austerity policy that had been imposed on the Greek population under the pretext of making the necessary efforts to “be ready for the euro” in 2001. And his mission, like that of the previous administration, is to impose the austerity measures decreed by the European leaders.
Greece is paying first of all for the inability of the main European bourgeoisies to truly unify Europe. While they laboriously gave themselves a single currency, they refused to renounce their own states, which would defend their interests in the competition that opposes one to the other, and would be more likely to aid them financially.
With the aggravation of the crisis beginning in 2008, the capitalists of all the European states called on their own states for protection, leading to an increase in state deficits and indebtedness everywhere.
Speculators thus profited from this situation, playing on the differences in the financial situation of the different states of the European Union. While the German state paid an interest rate of 4% a year for a ten-year loan floated in financial markets, the Greek state watched its interest rate increase month by month for the same type of loan, reaching 20%. It is this rise in the interest rates that finally led the Greek state to the edge of bankruptcy, obliging other European states to intervene by lending it the money it can no longer borrow on the financial markets.
In fact, the speculators didn’t bet only on the fragility of Greece, but also on the fragility of the euro!
Greece’s difficulties are not unique. Greece may be one of the weakest links in Europe, but there were others before it, like Iceland and Ireland. And there will be others after Greece, like Spain and Italy, which have recently been the target of speculators.
More fundamentally, the “fragility” of Greece, which it shares with many other European states, comes from the fact that it belongs to a zone dominated since the 19th century by the big European imperialist powers, and its development has been shaped by their grip.
Recall that the modern Greek state was born in 1832, as a result of its struggle to gain independence from the Ottoman empire, a struggle which was victorious only due to the intervention of France and Britain. These two powers imposed a monarchy on the Greek population and decided who would reign, putting the obscure Otto of Bavaria on the Greek throne. They continued intervening in Greek political life, sometimes deposing a monarch who frustrated their interests, while imposing another ... then recalling the first one years later!
The Greek state was, from its birth, politically and economically subordinated to French and British imperialism. Twice before, in 1898 and 1935, it had to declare it could not pay back its debts, victim of a “structural deficit,” as the economists say. Greece, which was very weakly industrialized, always imported more than it exported.
In 1898, an international debt commission was set up with representatives of France and the United Kingdom deciding on Greece’s budget and running state monopolies. The European imperialist powers imposed this same form of domination over many regions of the world.
Since that time, the situation has changed little.
In fact, with the entry of Greece into the European Union in 1981, and above all since the adoption of the euro in 2001, the hold of imperialism over the Greek economy has increased.
Certainly, the Greek state has benefitted from subsidies for modernizing the infrastructure, so much so that these subsidies became the main source of foreign currency. But these investments were above all intended to improve the transportation, freight and international transit needed for the development in Greece on behalf of commercial and industrial businesses of the Western European powers.
Some economists and politicians today question whether the entry of Greece into the euro zone wasn’t an “error” due to its “economic backwardness.” They are nothing but hypocrites!
The Greek state presented accounts to the European Commission that were “fixed” in a way to meet the admission criteria defined by the Maastricht treaty, criteria which supposedly imposed precise constraints on the public finances of any state adopting the euro as its currency. This accounting legerdemain was only made public some years later. We know today that Goldman Sachs, the U.S. bank, was the main project manager for this doctoring of the Greek state’s finances. And the current Greek Prime Minister, Papademos, played an important role in this operation as director of the Bank of Greece.
But the European Commission at the time wasn’t very fussy, because Greece’s adoption of the euro was good business for the European capitalists, the German and French in particular. Greece offered them a market where their income wouldn’t be endangered by stormy variations in exchange rates. The capitalists were the big winners of this operation.
France today is one of Greece’s main trading partners and many French companies are present in Greece. Arms contracts, for example, are profitable to a large extent to the French and German companies, Thomson, Matra and Siemens. The Greek defense budget represents 4% of the Gross Domestic Product, making Greece the country that proportionally spends the most on arms. In 2010, in the midst of the crisis, Greece bought six submarines from Germany for 6.6 billion dollars, six warships from France at 3.3 billion dollars, along with combat helicopters for 527 million dollars. France is particularly well served. If we add the Mirage 2000 jet, armed vehicles, missiles of all sorts and drones, Greek purchases have made it the third best client of the French arms industry over the past decade. Notice that successive austerity plans never questioned these past contracts!
Banks, in particular, knew how to profit from the entry of Greece into the euro zone in 2001. They lent massively, to the private sector as well as the public sector. They reinforced their presence through their affiliates, often buying up Greek banks. Those most involved in Greece are three French banks: Crédit Agricole, Société Générale and BNP Paribas. The volume of loans to the Greek State increased by 50% between 2005 and 2007, going from less than 80 billion dollars to 120 billion.
The outbreak of the subprime crisis in 2007, far from stopping this development, gave it new momentum. The banks utilized the enormous amounts of cash that the central banks put at their disposal at a very low cost to increase their loans to Greece. The higher interest rates they demanded from Greece allowed them to pocket juicy profits.
The bankers figured that they didn’t have to worry about Greece’s ability to pay back its debts. Its membership in the euro zone guaranteed an intervention if needed by the big European powers.
Up till then, their calculations were correct!
When the aggravation of the crisis in 2009 led to a deterioration of Greek’s economic situation, the possibility of Greece defaulting on its payments became more of a threat.
The first alarm came in December 2009, when the credit rating agency, Fitch’s, lowered its credit rating for long term loans from Greece’s four main commercial banks. From then on, Greece watched its cost of credit soar. The bankers, using the pretext of the risk they ran, charged usurious rates. In so doing, they pushed the Greek state toward bankruptcy.
But, at the same time, they put pressure on the European states to intervene to guarantee the payment of the Greek debt ... and thus the profits that these usurers counted on grew by strangling the Greek state.
The French and German banks, the main holders of Greek debt securities (holding respectively 26% and 15% of Greek public debt), found themselves the most exposed to the risk of Greece defaulting on its payments.
That gave the French and German governments a supplementary reason to intervene. On top of “saving the euro,” Sarkozy and Merkel had to safeguard the interests of their own national banks!
On February 11, 2010, European leaders had their first extraordinary meeting to discuss Greece. On March 25th, an agreement was finally reached between the leaders of the European Union and the International Monetary Fund for an “aid plan” for Greece. In exchange for a 3-year loan of 145 billion dollars, these financial backers imposed certain demands on the Greek government.
This long text gave precise, detailed figures for all the expected measures aimed at making the Greek population pay the debt. Very clearly, the heads of the European states guaranteed the bankers that the Greek government would make its population pay.
The memorandum stated that some of these measures had to be put in place within the year, for example, the increase in the Value Added Tax (which, according to the authors, had to bring in “at least 2.5 billion dollars for the whole year”), and the cut in public workers’ vacation days and bonuses (measures from which it expected “net economies of two billion dollars”).
The same text also specified the basic contours of the Greek state budget for 2011 and imposed “structural reforms”: a reform of pensions that required workers to work more years to qualify and to start retirement later (“including for workers in hard and difficult work”), the development of a plan of privatizations, the closing of railroad lines running at a deficit, etc.
A “troika” was set up with the representatives from the European Union, from the European Central Bank (ECB) – supposedly independent of the European states – and from the IMF, which would ensure that the Greek government respected its commitments. Every three months, there had to be an evaluation “following detailed criteria,” as a condition for further financial aid. Afterwards, European experts sent to Athens were opposed several times to releasing part of the loan made to the Greek state, deciding that it hadn’t sufficiently satisfied its commitments.
In fact, the Greek state put itself under a kind of trusteeship.
Under the pressure from financial markets, the European leaders announced in July 2011 a second “rescue plan,” providing for a new payment of 130 billion dollars and the restructuring of Greek debt. The representatives of the banks holding Greek debt securities came to the meeting. They didn’t meet in the same hall as the heads of state, but Sarkozy and Merkel had to meet them in the middle of the night to get their agreement. Quite a symbol!
Contrary to what was said, no real sacrifice was demanded of the banks. It was proposed that they agree to erase 50% of the Greek debt; but on the financial markets, Greek securities were already exchanged at a discount that put their price even lower than half their value. In reality, the European states guaranteed the bonds held by the bankers at a value higher than the markets offered. Above all, the European states guaranteed that, whatever happened, the banks would get paid.
But up to the last minute, the bankers wanted to dictate their conditions to the European heads of state, who, nevertheless, frenetically bustled about finding a solution to the problems of these same bankers!
If the European governments often disagreed over how they should intervene, there was one thing on which they all agreed: the Greek population had to pay the bill for the crisis.
In this domain, the Greek government of the Socialist Papandreou truly did everything that it could to satisfy the European leaders.
The first austerity plan, adopted in May 2010, representing a sort of tax on the population worth an estimated 6.3 billion dollars, provided for a rise in the Value Added Tax – an indirect sales tax (with the general rate going from 19% to 23%, the reduced rates from 4.5% to 5.5% and 9 to 11%) – and several direct sales tax increases on consumption (40% more on gasoline, around 20% more on tobacco and alcohol).
The Greek government also decided on a retroactive cut in the Christmas and Easter bonuses and vacations that had already been paid to public employees. This meant a 7 to 8% wage cut for more than 600,000 national, regional and local government and government enterprise workers. Concretely, a public employee getting a wage of 1,000 euros a month ($1,370) had the pay reduced to 900 euros. Public worker wages and pensions were frozen (and wages above $32,000 a year were cut by 10%).
The attacks against the standard of living of the population have come one after another. In September 2011, wages and pensions of public sector workers were cut (pensions above $1,600 a month were cut by 20%).
Many prices went up in a brutal manner: electricity and transportation by 40%. This occurred when the average wage in Greece in 2009 was $9,500 a year, with prices already at the same level as in western capitals! Even before the worsening of the crisis, Greeks had been forced to have a second, even a third job.
The government imposed a “reform” of Social Security pensions. The length of time necessary to contribute in order to get the pension was increased to 40 years instead of 37, and the retirement age was raised from 58 to 60. Public and private pensions higher than $1,800 a month are to be taxed.
The right to health insurance has been cut back and the number of days necessary to work to get coverage have been increased.
The government announced that there will be only one worker hired for each five government workers retiring and those working for a fixed time under contracts won’t be kept on. This represents a vast layoff plan affecting about 35,000 people.
Then came the September 2011 austerity plan, which planned to put 30,000 government workers “on reserve” with 60% of their pay. In reality, that amounts to the first step in a layoff, since they have twelve months to find a new job in the public sector.
The government has launched a privatization plan, saying it would bring in 66 billion dollars. Summing up, anything that can be sold will be sold: government oil companies, airports, ports, the electric company, the postal system, road, rail and waterways, sewage systems, racetracks ... and even four Airbus jets that the government wants to sell on the secondhand market!
Budget cuts have led to a dramatic deterioration in all public services. In the schools, teachers and textbooks are lacking; in healthcare, the 40% cut in the hospital budget led to personnel shortages. In transportation, the government is closing “non-profitable” rail lines, defined as those more than 50% empty. Today, in Athens, no one knows when a bus will come, and in the provinces, no one knows where buses go. As a result of the reduction in service, drivers are led to improvise depending on the wishes of the passengers. School buses have often been eliminated in the provinces.
The government is also attacking labor legislation, reducing the time by half for advance notice of a layoff, and cutting unemployment compensation in the private sector. It is also attacking union contracts.
Finally, to complete this long list, it’s necessary to cite the creation in September 2011 of a particularly unpopular and unjust property tax, paid by the owner or the renter who occupies the place. Since there is no land registry in Greece, it’s put on the electric bills, with the tax applied to every building getting electric power. So those who don’t pay will be threatened with having the power cut off.
But this tax doesn’t apply to everyone: the Orthodox Church is exempt. In fact, the church pays no tax. It has enjoyed this privilege since 2000, when the Socialist administration decided that the taxes the church paid brought in too little, so it was useless to continue them.
Nevertheless, the Church has very important riches, with property amounting to some 320,000 acres and a large amount of financial capital. It owns nine million shares, equivalent to 180 million dollars, in the Greek National Bank, and the archbishop of Athens sits on its Board of Directors.
Moreover, in Greece, an important part of Church expenses are paid for by the state, because the state pays the priests’ salaries. Overall, the Church receives more than 260 million dollars a year from the public budget.
The shipowners also benefit from a total tax exemption written as an article in the Greek Constitution. They were given this privilege in the aftermath of World War II so they would rebuild the completely destroyed Greek fleet. Today, obviously, the situation is quite different. The Greek fleet, the largest fleet in Europe, is among the largest globally. Judging by the nationality of the owner, and not by the flag the ships fly under, the Greek shipowners are, in fact, first in the world. But the Greek government refuses to question their exemption.
The shipowners benefit from a particularly shocking privilege, since it is official and so particularly visible. But all the capitalists escape a great part of taxation.
The French media have rambled on about “fiscal fraud,” which is supposed to be a “national sport” in Greece. But it’s first and mainly a sport of the rich! Only the richest can send their fortune to foreign accounts in Switzerland, for example, where the sums deposited by Greeks amount to 370 billion dollars.
In March 2009, when the government considered a surtax on incomes above $200,000, they could find only a dozen taxpayers who declared that much income.
Nevertheless, these great fortunes aren’t difficult to find ... if you really look! There are rich families at the head of capitalist corporations in Greece, who prosper, often making alliances with big foreign multinationals, like the Marinopoulos family, owner of Carrefour stores in Greece, or the Veropoulos family, owner of Spar, a large retailer, to only cite the most visible brands in the country.
And it’s not a question of the Greek state’s lack of “efficiency” in “modernizing,” another argument often repeated. The explanation is not technical, but social: the Greek state doesn’t want to make the rich classes pay. It is at their service; it is tied to them by thousands of human and financial links. And everyone who has run the government during the past years, whether right wing or Socialist, whether they govern separately or together, have only one concern: make the working classes pay for the crisis and permit the Greek bourgeoisie to profitably carry on its business.
In two years, the austerity measures have caused a terrible impoverishment of a large part of the Greek population.
Even sections of the petty bourgeoisie, up to then rather protected, saw their standard of living drop due to the rise in prices and taxes. They were affected also by the fact that the cut in salaries was larger for the best paid government functionaries (teachers saw their salaries reduced by two-thirds in a short time) and the recession led to many bankruptcies. According to the Salonika Merchants Association, one out of every five store owners had to shut their doors between January and September 2011.
The number of the unemployed jumped strongly upward. According to official statistics, unemployment rose from 6% in 2008 to 14.5% in October 2010. At the beginning of 2012, it probably surpassed 20%, particularly affecting the youngest (almost half of 18-to-25-year-olds don’t have a job).
But these figures greatly underestimate the social catastrophe striking Greek workers. Officially, the number of active workers dropped in 2010 in all sectors except agriculture. That simply means that thousands of people, without a hope of finding a job, try to survive by “returning to the land.”
As a consequence of the increase in unemployment and the different “reforms” of medical insurance, the number of people who are no longer covered by the health insurance system has increased. In very little time, thousands of people have been thrown into poverty. According to official statistics, three million people out of a population of eleven million, that is, 28%, were considered poor.
But this poverty is above all measured by the number of homeless who live on the sidewalks of Athens and Salonika. Many immigrants who came from Afghanistan, Pakistan and the Balkans, who worked in construction or in cleaning, have been laid off, and due to the closing of centers that could give them shelter, can now be found on the streets.
Where the organization Doctors of the World opened a medical center in Athens, replacing the clinic, which had just closed due to the lack of financing,11,000 people came for treatment in the first few months.
This new poverty affects many young Greeks, even those whose studies allowed them to graduate from the university. The youth who demonstrated in 2008 during the student mobilizations said they belonged to the “generation of 600 euros” ($9,500 a year). Today, the press evokes the “generation of 400 euros,” those youth who consider themselves lucky to find low-paying job training or jobs paying $2.75 an hour.
The government’s attacks aroused mobilizations in the population. The union federations – Adedy in the public sector, GSEE in the private sector and Pame, the union connected to the Communist Party – called for general strike days almost every two months over the last two years. Each time, these appeals led to strikes, especially of public workers. Massive demonstrations of tens of thousands of people took place in Athens.
At certain times, in particular September-October 2011, mobilizations weren’t limited to these days of action. Strikes took place almost every day among public workers, in the government ministries, in transportation, among port workers, garbage collectors, fire fighters ... in general opposing cuts to wages and privatizations. Even the police and coast guard demonstrated against pay cuts.
High school and college students occupied many schools and thousands of students mobilized to denounce the reform calling for “privatization” of the universities. Professions less used to demonstrating went into the streets: lawyers, taxi drivers and even merchants.
On October 28th, the day of a Greek national holiday, demonstrators prevented the usual military parade from taking place and forced President Papoulias (President of the Greek republic, an honorific post) to leave the area. Almost all the politicians who attended the military parade that day were attacked verbally, or even physically, by demonstrators.
These mobilizations were big. The workers expressed their exasperation and their anger, but also their despair faced with a situation that seems unending. While many demonstrators demanded the resignation of the administration and “of any political power favorable to the economic measures imposed by the memorandum,” they didn’t formulate demands that could constitute objectives for struggle. Anyway, perhaps the combativeness of the Greek workers wasn’t enough to stop the on-going steamroller. But without the proper perspectives, no movement would have been able to stop the attack. If there had been proper perspectives, which could have been verified in the course of struggles, even defeats could prepare new struggles in the future.
What occurred in these past months in Greece concerns workers everywhere in many respects.
It shows how the crisis of capitalism can lead an entire country into a catastrophic regression, pulling it down almost to the level of a Third World country.
And also it shows the necessity for workers to prepare themselves for future struggles, by having their own program. This did not happen in Greece. Faced with the bourgeoisie and its representatives of all political stripes, whose program is an array of measures against the workers and all popular layers, the workers must also have a program, with measures capable of protecting them from the crisis by making the capitalists and the rich classes pay. Such a program can only be a program of struggle, imposed by mobilizations.