[D66] After Syriza’s concessions, EU demands more austerity at Greek debt summit

[J.N.]

http://www.wsws.org/en/articles/2015/06/23/gree-j23.html

After Syriza’s concessions, EU demands more austerity at Greek debt summit
By Alex Lantier
23 June 2015

At an emergency European Union summit in Brussels yesterday, EU
government heads endorsed a new raft of social cuts proposed by the
Syriza-led Greek government, but indicated that still more austerity
measures would be needed before a deal could be reached on Greece’s €300
billion debt.

Similar emergency talks had broken down a week ago. EU officials at that
time insisted that Syriza’s cuts were not sufficiently deep to justify
releasing the €7.2 billion Greece needs to pay off its creditors later
this month. In the face of EU threats of Greek state bankruptcy and
escalating criticism from Greek banks, Syriza once again abjectly
capitulated to the EU, acceding to its demands for regressive tax
increases and steep pension and health care cuts.

In a letter Monday to European Commission President Jean-Claude Juncker,
Greek Prime Minister Alexis Tsipras said that his proposal, in fact,
went beyond the cuts demanded by Greece’s institutional creditors—the
EU, the European Central Bank (ECB) and the International Monetary Fund
(IMF).

“I would like to inform you that the response of the Greek government to
the requirements of the institutions for covering the fiscal gaps for
2015-2016 has been absolute and complete,” he wrote.

The EU had demanded cuts totaling 1.5 percent of Greek gross domestic
product (GDP) in 2015 and 2.5 percent in 2016, Tsipras wrote, but
Syriza’s cuts amounted to 1.51 and 2.87 percent of GDP. Therefore, he
concluded, “it is clear that there are no fiscal slippages and that the
prescribed objectives have been exceeded.”

The biggest cuts fall on pensions. Syriza had previously called pension
cuts a “red line” it would refuse to cross. Now, however, it is
proposing over several years to raise the retirement age from 62 to 67
and eliminate early retirement, slashing pension spending by €30 million
in 2015 and €300 million in 2016.

While current pensions are nominally not being cut, the Greek state is,
in fact, taking billions of euros from pensions. Retirees will
collectively be forced to pay €135 million more in 2015 and €490 million
more in 2016 for health care, and employee contributions to the state
pension system will surge by €350 million this year and €800 million the
next.

An unpopular hike in regressive VAT (value-added, or sales) taxes is
projected to raise €680 million this year and €1.36 billion in 2016.

The vast bulk of the cuts will hit the working class, but Syriza is also
proposing to impose a one-time 12 percent tax on corporate profits above
€500,000 per year, which would raise €945 million in 2015 and €405
million in 2016.

While indicating that they intended to endorse the cuts Syriza had
agreed, EU officials refused to seal a final agreement with Greece.
Rather, they made clear that they intended to demand even more cuts
before disbursing aid to Greece.

At a press conference after the talks, Juncker and European Council
President Donald Tusk said that they were confident that these proposals
would produce results. Tusk called Syriza’s proposals “a positive step,”
adding that they “will be assessed in the coming hours.” Juncker
predicted that a Greece-EU deal could be finalized this week, after a
meeting Wednesday of the Eurogroup finance ministers. The agreement
could then be formally adopted at an EU summit on Thursday.

In a separate press conference, however, German Chancellor Angela Merkel
said that “intensive work” was still needed to reach an agreement to
avert Greek state bankruptcy.

Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup,
made clear that further cuts would be required to satisfy the EU.
Claiming that financial officials could not analyze the Greek proposal
in a satisfactory way in one day, he said that Syriza’s new plan was
only “a basis to really restart the talks again and really get a result.”

Asked to explain why EU government leaders even bothered to attend the
summit if no decision could be taken there, one EU official told the
Guardian, “The idea is to remove from Tsipras the illusion he can get a
better deal at the summit, or that a decision can be taken at the summit
level. The point is to have Tsipras learn the position of the other
leaders.”

The summit’s outcome is not only a new humiliating surrender by
Tsipras’s Syriza party, but a bitter lesson on the bankruptcy of its
pro-capitalist perspective of opposing austerity through deals
negotiated with the EU.

Workers overwhelmingly reject EU austerity in Greece and throughout
Europe. This was the driving force behind the election of Syriza in
Greece. It is reflected in mass protests against austerity held last
weekend in Britain, bitter opposition to the Hartz IV social cuts in
Germany, and the discrediting of the Socialist Party (PS) in France.
Nonetheless, the EU has succeeded in forcing Syriza to impose ever more
draconian austerity measures and cross all its own “red lines,”
accepting all of the cuts demanded by the banks, and more.

This is not an expression of great strength on the part of the EU, a
widely reviled organization that speaks for a financial aristocracy
comprised of a tiny minority of the European population. Rather, it is
an expression of the class character of Syriza and its hostility to
socialist revolution and the working class.

As a party speaking for sections of the Greek capitalist class and
affluent layers of the middle class, it accepts the entire free-market
economic and social framework of the EU. From the outset it pledged not
to repudiate the Greek debt or impose capital controls to halt the
outflow of cash from Greek banks.

Facing a cutoff of credit from the EU, it raided billions of euros of
cash reserves from Greek public institutions to pay off its creditors.
Among these creditors is Greece’s own not insubstantial banking sector,
where Syriza officials and their financial bankers store much of their
wealth.

Tsipras and other Syriza officials have spent untold hours cajoling and
pleading with the representatives of finance capital in one country
after another. They have never made an appeal to the working class,
either in Greece or the rest of Europe, to mobilize in opposition to the
attacks by the various governments or the EU.

The leaders of the EU, for their part, had already taken the measure of
Syriza before it came to power. They saw it as the representative not of
the insurgent Greek masses, but of bankrupt Greek capitalism. That is
why, even as Europe teetered on the brink of a financial crisis provoked
by the EU’s reckless cuts and its threats to expel Greece from the euro
zone, EU officials ruthlessly pressed their advantage