Last Years of Neoliberalism

The Last Years of Neoliberalism: 

Greece rejects Austerity

by James Meadway

No has won in Greece. Austerity has been decisively rejected, with 61% of voters backing the Syriza-led government against the Troika.

It is difficult to overstate the scale of the victory. The odds looked impossible; indeed, bookmakers Paddy Power had paid out on a Yes victory earlier in the week. Ranged against Syriza were Europe’s entire political leadership, from Angela Merkel to Matteo Renzi to Jean-Claude Juncker. Washington opposed them. Every single private Greek television channel, and every newspaper bar Syriza’s own, was for Yes. The rich, the Gucci Greeks, were for Yes. The ruling class were for Yes.

The ECB forced Greek banks to close for a week, ramping up the pressure. Ordinary Greeks were bullied and terrorized with bloodcurdling threats of more pain to follow.

Syriza and its supporters took on all this, and won – not just handsomely, but spectacularly. Every single region in Greece reported a clear majority for No, even the most conservative. Syriza were able to win because they campaigned, hard, on the ground. This culminated in the immense pre-vote rallies of Friday night, with some estimates suggesting up to 1m people attending in Athens.

The intention of the EU, European Central Bank and IMF “Troika” was to split Syriza. Martin Schulz, centre-left head of the European Parliament, made this much clear, just prior to the vote, in calling for Syriza to step down. The plan then, as it has been since the Syriza-led government was created in January, was to apply sufficient pressure as to break Syriza from its left and form a (Schulz’s words) “technocratic” government of national unity.

This morning, far from splitting Syriza, the party and its support are more united than ever. And it is the Troika itself that is split. The IMF, which inveigled itself (under former head Dominique Strauss-Kahn) in the Eurozone debacle in 2010 as means to buff up its tarnished reputation, is now desperate to extricate itself, pressured by the State Department and, critically, by the larger developing countries. (Christine Lagarde’s post is up for election next year. It is likely now that a developing country candidate will be proposed to break the Euro-Atlantic monopoly.) The Fund, despite ECB pressure, released a report mid-week that entirely confirmed the Syriza leadership’s argument: that Greece could not continue without a heavy write-down of its government debt, now standing at around 180% of GDP.

There will be claims made today that Greeks are an exception: the polite will claim their history, and the prejudiced will claim their Balkan temperament, make them different to the rest of Europe. It is, of course, true that Greece has suffered uniquely badly at the hands of the Troika. Austerity there is on a scale presently hard to imagine in Britain. The economy has shrunk 25%, average wages are down 30%. Today’s Syriza is the product of a long period of gestation, with roots that tie back to Greece’s bloody civil war, the struggle against dictatorship – and political arguments on the left once the Junta had been deposed.

But the result fits a European pattern. The tide is turning against austerity, certainly in the debtor countries of the periphery. And the structures of the European institutions are questioned from one end of the continent to the other. France rejected the neoliberal European Constitution by referendum in 2005, bringing the whole process to a halt. Ten years later, in conditions of great social crisis, Greece has thrown a still bigger spanner in the works.

There are three issues now. The first, in Greece, is to prevent backsliding by the Syriza-led government. The IMF debt announcement has offered the Syriza right a clear line of march to follow, should they successfully reopen negotiations. It is possible to see a relatively weak deal emerging in which some debt relief is granted in exchange for some weakening of austerity. The Syriza right would seize this with alacrity. Already, the pressure to reopen negotiations has led to the loss of Yanis Varoufakis as finance minister, citing the concerns of the Eurogroup and its “partners”. His replacement is, as things stand, unlikely to be as combative. Pressure from below, via Syriza’s left, must be now maintained on this government – to recognize the vote for what it is, a clear and decisive rejection of austerity, not an appeal for compromise.

The challenges should not be understated. Greek banks remain shut, with the ECB refusing – defying its role as guardian of the euro’s banking system – to provide additional support. Private currency, so-called “scrip”, is being issued by some employers to deal with the money shortage. Greece is already more than halfway out of the euro door; the whole movement must be prepared to take the final step out, if Troika austerity blackmail continues.

The second applies to Europe as a whole. This vote is an immense boost to all those forces now ranged against austerity, most particularly in the so-called “periphery”. Podemos in Spain, on the back of exceptional local election results last month, can use this for a clear run at election victory in December. Unity across the continent matters, but it is a unity against, not with, the European institutions. This is unity from below, of workers and their allies, not the sham unity of gold stars and Brussels expense accounts. For the UK, that means a clear-eyed rejection of EU membership in our own referendum: after showing its teeth last week, no-one on the left can now plausibly argue that these are institutions to be supported. They are neoliberal to the very core of their existence, and they will seek (and are seeking) to crush any serious challenge to that. That road to a “social Europe” has now closed. Another Europe is possible.

Third, it means redoubling efforts to build the anti-austerity movement here in the UK. June’s demonstration showed that the People’s Assembly is establishing itself as the united, national campaign against further spending cuts. There are demonstrations planned for later in this week and then, at the end of the summer, days of protests at the Conservative Party conference. The government’s momentum, such as it is, can be broken. In parallel to the People’s Assembly, Jeremy Corbyn’s campaign to become Labour leader is vital. With Britain’s largest trade union, Unite, now offering its support, it is entirely possible he can win. At the very least, a decent vote will break the back of the Blairite argument on the need for Labour austerity. All those on the left will gain from this.

What Greece says, above all else, is that it is possible to fight - and to win. The broader lessons will be discussed for a while yet. There is much for all of us to learn. But the left need no longer accept an attitude of permanent and inescapable defeat. These are the last few years of neoliberalism in Europe. We can win this time.

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