GEOPOLITICS, AUSTERITY AND NEO-LIBERALISM: GREECE, the EU and the US

 Until very recently, the media throughout the world called the Greek SYRIZA party everything from “far left” to “radical far leftwing”.  Once the center-left party with a mass base made up of middle class and workers took power in Greece in late January 2015, it was very clear that the leftist rhetoric was indeed critical of austerity and neoliberal policies. Euphoria abounded within Greece and throughout the world among anti-austerity and anti-neoliberals who believed that growth and development were sacrificed for the sake of capital concentration at home and abroad. Very quickly, however, SYRIZA fell in line under pressure from the international media, domestic and foreign businesses, and of course from governments especially Germany, but also the US and even China that demanded conformity.    

The mass media as well as independent blogs around the world have analyzed the political, social and economic consequences of the Greek public debt crisis more than they have other countries, including Spain and Ireland that are far more significant in terms of economic impact to the EU than Greece. One reason for this obsession is that Greece has been technically bankrupt since May 2010.  The possibility of an unmanaged and uncoordinated bankruptcy could possibly throw the EU economy off by at several hundred billion to as much as a trillion euro, assuming it leaves the euro zone. This would then open the road for the neo-Fascist French National Front to demand that France exist the EU, thus threatening the integrity of the European Union with the inevitable consequence of a cheap reserve currency that would result in disequilibrium in European balance of payments and disequilibrium in world trade.

The theme of the mass media representing big business has been very simple: Greece must accept austerity and neoliberal policies regardless of the cost to the vast majority of its people because it has no choice for the greater good of the markets. The alternative (economic nationalism with a mix of mild social-democratic measures) to EU integration is much worse and it sets a terrible precedent for other EU members and non-members. Trying to drive fear into the politicians, military, business community and ordinary citizens of Greece has actually succeeded. This despite the very obvious result of austerity making the economy much weaker, finances becoming even more strenuous, and the social fabric disintegrating as Greece has a much higher percentage of poverty rate than Argentina; a country that the Western media and governments have targeted for derision and isolation.

The burden for all of this would fall not just on Greece but actually on Germany that has in fact driven the country into a corner either to accept austerity and neoliberal policies no matter the degree to which the workers, middle class and social security recipients become impoverished. The propagandistic rhetoric on the part of the Western media that it really means nothing to the EU in case of a Grexit is very hollow and economists know this as well as politicians. Grexit will set off another global recession amid a GDP slowdown in Asia and stagnation in Europe and Australia impacted by the slowdown in China.

Complicating matters, the reality is that Greece is financially dependent on Germany but militarily dependent on the US with which it had a long-standing alliance from the Truman Doctrine to the present. This dual dependence is the reason for the intrusive role of the US in this matter, much to the dismay of the German government that resents Washington playing its military protector card. The debt crisis was the result of Western banks and the European Central Bank cutting off Greece from liquidity it needed to continue functioning, making borrowing very expensive after rating agencies downgraded it bands and the private market because too expensive. 

Between 2015 and 2022, servicing the public debt amounting to about $365 billion is simply not possible under existing conditions, that is, in the absence of some kind of a new arrangement that would permit the government to meet its domestic obligations and public debt. In 2015 alone, debt service is about $30 billion, in country with GDP of about 175 billion euro. In other words, debt service for 2015 alone represents approximately 13% of GDP. The IMF and European Central Bank are due to receive half of the payments and the other half for holders of treasury bills, which include entities from Greek banks to the Chinese government. Prime Minister Alexis Tsipras delivered the following speech on the debt, explaining why the EU and IMF must reconsider their position on austerity and loan conditionality that impacts all levels of policy in Greece.

In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity. In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the ‘extend and pretend’ tactic would lead my country to a tragic state. That instead of Greece’s stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself.

From the birth of the Bretton Woods system that created the International Monetary Fund (IMF) and the World Bank, debtor nations unable to service their debt because borrowing becomes too expensive must follow a regime of fiscal austerity, higher indirect taxes falling on the workers and middle class, and drop in living standards owing to slashing of wages, social programs and rise in both cost of goods and taxes.

Presumably, this monetarist model would be the panacea for the debtor nation. However, in the last fifty years countries under austerity winds up in transferring massive wealth by servicing the public debt and capitalists taking money overseas, thus leaving the debtor nation poorer, its asset values – everything from real estate and businesses to wage rates – much lower thus permitting massive domestic and foreign capital to take over and concentrate wealth even more than before. The end result is greater external dependence. In the case of Greece, however, we have a country financially dependent on North-West Europe, especially Germany, but militarily dependent on the US.

This contradiction of split dependence has cause some friction between Germany and the US, because the former was strict compliance with austerity and neoliberal policies that would ensure Greece as a neocolonial dependency, while the US is concerned that the geopolitical value of Greece is more significant than its economic amounting about 2% of the EU GDP. The objective of Washington has been to keep Greece militarily integrated into the West, to make sure it continues to keep up with military budget as NATO prescribes, and not deviate at all by trying to explore the Russia and Chinese cards as symbolic counter-weights to the West.

The US naval bases in Crete and US intelligence operations in the country are more valuable to Washington than Germany trying to prevail over Greece to the point of driving it away from the West and to the point of endangering its internal political and social stability. In November 2012, the conservative government of Antonis Samaras hired the notorious Blackwater security services (mercenaries) now known as Academi infamous for its clandestine operations in Iraq, Afghanistan, Syria, Abu Dhabi, Libya, Ukraine, and a number of African countries. This is a security company with deep links both to the US government (Central Intelligence Agency) and the corporate world, but it also has ties with governments around the world.

Under contract to work with the police to make sure the regime is protected, Blackwater acted from behind the scenes, indicative of how fearful both the pro-austerity conservative regime and the US were about the country lapsing into revolutionary chaos. This is the same Blackwater that has four of its operatives recently sentenced to prison because in 2007 they killed 14 Iraqi civilians, albeit operating under contract with the US government that has used their services for “contract work” in many countries. What the company describes as “logistical support services” are in essence privately contracted counter-insurgency operations, including assassinations according to the New York Times (C.I.A. Sought Blackwater’s Help to Kill Jihadists” Mark Mazzetti, 19 August 2009) on behalf of governments and multinational corporations that fear popular opposition to policies that result in exploitation of labor, natural resources, and environmental degradation.

For obvious reasons, the contract between Greece and Blackwater was kept secret until the Greek Ambassador to Canada let it slip out in one of his public appearances. The conservative government of Antonis Samaras never admitted that Blackwater was operating in Greece. SYRIZA as opposition knew that this mercenary company operated in a number of trouble spots around the world on behalf of the US and other governments. SYRIZA was concerned that Blackwater had a key role in preparing the Greek police and military for the possibility of suppressing the popular expression of democracy through grassroots organizing.

While Tsipras was willing to accept Greek military dependency and US strategic interests, he hoped in exchange Washington would help the government dealing with Germany and the IMF. The center-left government of SYRIZA, essentially a collection of leftist academics, former PASOK party members and some former euro-Communists, found the hard way that as long as Greece remains in the EU, Germany determines the terms of the integration model, which means Germany determines austerity and neoliberal policies for the member nations. It is not clear if SYRIZA expected the IMF, EU and the media to make compromises just because there was a tacit understanding Athens would retain its strategic loyalty to the US-NATO. In reality, SYRIZA found out the hard way that dealing with hard-core “political and economic criminals”, as some of its officials called them when in opposition, means the latter have vast experience imposing their will over periphery debtor countries.

Cornered by the immense pressure of the German-led coalition, by the wealthy Greek elites, the conservative political parties and the military, SYRIZA simply accepted austerity and neoliberal policies, asking for terms that could be met in servicing the debt and domestic policies that would not further entail higher unemployment currently at 26% and more wage, benefit and social security cuts. Trying to use the Russian card with a visit and a natural gas deal meant very little, although Athens has asked both Beijing and Moscow to purchase treasury bills. The faint attempt to use the US as the country’s military patron as a counterweight to Germany has not worked well either. Alexis Tsipras is not Josip Broz Tito and Greece is not Yugoslavia that could play East against West, and the leverage he has is limited to geopolitical issues in a tumultuous part of the world.

On 15 April 15, 2015, the Reuters Moscow office reported that Greece is negotiating to purchase S-300 missiles. Although this may be a shock to the Western anti-Russian media, Athens has used as part of its air defense system in the last two decades. The irony here is that Vladimir Putin promised better terms on natural gas sales to Greece, but the quid pro-quo was weapons purchases from Russia must be part of the deal. This is exactly what France and Germany have been doing with Greece from 2010 until the present when Greece has been under austerity. The Western media is critical of this deal asking “where is Greece finding the money to buy S-300 missiles”, the same ones that Moscow recently decided to sell to Iran amid the final stages of the US-Iran deal on nuclear weapons development.

The larger question is why is Greece under a supposedly leftist SYRIZA government continuing to spend on defense at rates about the same as before austerity (about 3% of GDP, or one of the highest in the world, while the EU average is under 2%)? Once again, there has been immense pressure on Athens by Germany and the US not to cut defense, just wages, social security benefits, social programs, especially health care and education. Tsipras decided to cut a deal with Putin that essentially is not much different than the quid pro quo deals Greece has with the West, hoping Russia increases trade with Greece and purchases T-Bills while discounting natural gas sales.  

The US wants Greece in the EU for strategic reasons, and it would not mind if Germany makes a few symbolic concessions to show that it is not a heartless neo-colonial power in Europe as its critics have portrayed it. However, Greek politicians and analysts are deluding themselves if they assume that the US would sacrifice its relationship with Germany to support Greece on austerity and neoliberal policies. The most likely scenario is that SYRIZA will cave into German-US pressure to conform on austerity and neoliberal policies. A more distant possibility is everything from referendum to new elections that would not really solve anything, to Greece leaving the EU eventually.

The lesson of Greece to the rest of the world is that the so called “leftist” SYRIZA party that had promised to end austerity and neoliberal policies was unrealistic. The result was following in the footsteps of the conservatives and PASOK socialists that alternated ruling the country in the last forty years and followed policy dictates of the EU (Germany) and IMF. The disillusioned voters of SYRIZA that has blatantly lied about what policies it would pursue once in power have nowhere to go. SYRIZA lacks ideological cohesion as there are elected officials and ministers that range from the traditional liberal center within the Greek context to the Socialist – Euro-Communist wing of the Greek Communist Party after it split. The cacophony of disparate voices accounts for confusion among voters. The political and ideological heterogeneity has been deliberate so the party can reach a wide voter base. As PM and head of the party, Tsipras has opted to isolate the left when it comes to financial and economic policy, but engage it only on certain social issues such as illegal immigration, and to deliver a leftist message to the people desperate for radical solutions. Andreas Papandreou in the 1980s was a master at this political game, and it seems that young Tsipas is following in the footsteps of the former PASOK leader who at least managed to create a middle class through inflationary policies and foreign borrowing when Greece enjoyed monetary sovereignty.

The message that SYRIZA’s volte face sends to Europe is that no EU member can possibly challenge German hegemony, largely because the entire capitalist world support austerity and neo-liberalism. In other words, beyond the small confines of Greece, it was important for Germany to demonstrate its economic and political power so that its integration model based on patron (Germany) client (periphery EU members) relationship will continue and make Germany even stronger while enriching European banks and multinational corporations that support austerity and neoliberal policies.

The Greek Communist Party (KKE), the only Stalinist remnant of the Cold War in Europe with a mere 5% popular voter support, had warned the voters that the SYRIZA option to remain integrated into the EU meant there would be no solution much different than what Greece had under PASOK and New Democracy (both neoliberal) governments in the past. Greece under SYRIZA learned reformism does not work any more today than it did in the 19^th or 20^th century because leverage rests with the counter-reformist political and economic powers. Reformism works only when it starts with the core capitalist countries, not the periphery. This does not mean that SYRIZA did not have options to exercise or that it is now too late to take bold steps. It only means that it is just another conventional bourgeois political party opting for more “enlightened capitalist” solutions within the system in a world made up of predatory capitalists and their neoliberal political representatives.

One scenario that the foreign creditors, domestic wealthy elite and the neo-liberal politicians have in mind involves a simple co-optation strategy of SYRIZA by the neoliberal elements. This means that eventually a new SYRIZA emerges without the left-wing minority that would go off to fom its own party perhaps with other smaller parties. The neoliberal PASOK, the "cloned PASOK" known as POTAMI (River) join forces with the rump pro-EU SYRIZA and government togetgher with a neoliberal agenda that IMF, ECB and Germany prescribe in order to maintain the domestic elites in solid control of the economy and keep the nation tightly dependent on northwest Europe. This may or may not take place, but co-optation of SYRIZA's moderate wing has been on the agenda even of the conservative New Democracy Party (led by right winger Samaras) for the last three years. 

At the other end of possibilities, very remote indeed, is a mass uprising that invites the role of the armed forces as it will most likely fail owing to absence of grassroots leadership and organization. In the last analysis, nationalism is a much stronger sentiment in the political culture and the media as well as the neoliberal supporters have been using it to manipulate public opinion to support austerity and neoliberal policies, no matter hoe detrimental to the middle class, workers, and social security recipients. SYRIZA has also used this issue directly by making the IMF-EU austerity-neoliberal agenda a problem between Greece and Germany, instead of one that places international and domestic capital against workers regardless of whether they are Greeks or Germans. As legitimate as it is, the German war repparations issue that SYRIZA has raised is really to co-opt the nationalist agenda and make the masses feel a sense of patriotic identification with their government. The old strategy of using nationalism to kill class solidarity and refuse any concessions for social justice still works.