[D66] Greek prime minister calls for referendum on EU austerity demands

[J.N.]

http://www.wsws.org/en/articles/2015/06/27/gree-j27.html

Greek prime minister calls for referendum on EU austerity demands
By Robert Stevens and Alex Lantier
27 June 2015

Early this morning, Greek Prime Minister Alexis Tsipras called a July 5
referendum in Greece, on whether to approve a package of austerity
measures demanded by the European Union (EU) in exchange for extending
loans to avert Greek state bankruptcy.

Tsipras’s proposal came after talks in Brussels between EU and Greek
officials collapsed again amid bitter recriminations. Having already
agreed to impose billions of euros in social cuts, Greek officials
refused to agree to new austerity measures, including deep pension cuts,
demanded by the EU, the International Monetary Fund (IMF) and the
European Central Bank (ECB). Greek Labor Minister Dimitris Stratoulis
denounced the EU’s demands as “complete humiliation” for the Greek
government and the “enslavement and extermination” of the Greek people.

The EU’s demands amount to an order to Tsipras to completely and openly
repudiate the results of this January’s elections in Greece, which his
Syriza party won based on pledges to end EU austerity. German Chancellor
Angela Merkel and Dutch Prime Minister Mark Rutte reportedly told
Tsipras to “shut up” over dinner Thursday night, as he asked for more
time to resolve the debt crisis.

Upon returning to Athens, Tsipras held an emergency meeting with his
cabinet. He then appeared on national television after midnight to
announce the referendum, which he said he had discussed with Merkel,
French President François Hollande and ECB chief Mario Draghi.

“After five months of hard negotiations, our partners unfortunately
ended up making a proposal that was an ultimatum towards Greek democracy
and the Greek people,” Tsipras said. He said that the EU had subjected
Greece to “humiliation and blackmail,” adding that its proposals
“clearly violate European rules and the basic rights to work, equality
and dignity.”

Nonetheless, he proposed that the Greek people vote on whether to accept
these reactionary proposals, calling this a “democratic process.”

“I will respect the result, whatever it is,” he added.

Tsipras’s proposal is a reactionary fraud, designed to lend a veneer of
democratic legitimacy to the looting of Greek workers and middle-class
people by the banks.

According to Tsipras’s proposal, either they can vote to accept EU cuts
pushing them even deeper into penury, or vote no and face a cutoff of
credit from the EU and the ECB, the bankruptcy of the Greek state and
the collapse of Greece’s banking system. Indeed, it appears that, even
before the referendum, Greek’s banks are beginning to collapse.

On Thursday, Jens Weidmann, the head of Germany’s influential central
bank (Bundesbank), said that the ECB should prepare to cut off credit to
Greek banks. With depositors continuing to pull money from Greek banks,
at least one bank—Alpha Bank—reported that it had stopped processing
online transactions this morning.

If the Greek state and banks were totally cut off from access to credit
in euros, and Greece was thus forced to reintroduce a national currency
to bail out its banks and avert total financial collapse, the resulting
devaluation of the Greek currency would likely devastate the country.
One study, by the Swiss bank UBS in 2011, estimated that a country like
Greece could suffer a staggering 40 to 50 percent collapse of its Gross
Domestic Product in the year following such an event.

Sav Savouri, chief economist at the Tosca Fund, a London-based hedge
fund, bluntly predicted that a Greek exit from the euro would lead to a
“collapsing civil society” and the coming to power of a military
dictatorship. “In every instance where that’s happened, the military
will take over the role of government,” he said.

It is unclear how a referendum would turn out. A June 16 Mega TV poll
found 56.2 percent for staying with the euro and 35.4 percent support
for a euro exit. However, pollsters admitted that opinion is shifting
rapidly, with support for a euro exit rising 10 percent in the first
half of June.

The situation Greece confronts is a devastating indictment of the
bankruptcy of Syriza’s pro-capitalist perspective. Having refused to
appeal for a mobilization of deep opposition to austerity in the
European working class, hoping instead that other EU powers would
criticize and soften austerity policies demanded by Germany, it has
found itself isolated, and compelled to impose continued cuts. It is now
reduced to proposing a referendum that amounts to holding a loaded gun
to the head of the Greek people.

Beyond giving his reactionary maneuvers a pseudo-democratic veneer,
Tsipras’s referendum proposal is a tacit recognition that his party and
his government are deeply split and cannot agree on how to proceed.

Broad sections of the Syriza-led government and of the Greek ruling
class as a whole are pushing for capitulation to what Tsipras
acknowledged were humiliating demands. After Greece’s central bank came
out with a call to remain in the euro, Finance Minister Yanis Varoufakis
stressed yesterday that Greece was doing everything it could to satisfy
the “strange demands” of its creditors and was determined to remain
inside the euro zone.

The Financial Times recently reported on a pool party held in the
“leafy, affluent northern suburbs” of Athens and attended by a pro-EU
crowd of “well-heeled businessmen, politicians, academics, and
socialites.” For these layers, the FT noted, “life without the euro is
almost unimaginable. The single currency made it easier for them to send
children to study abroad and purchase property and luxury goods
elsewhere in Europe.”

Given that Syriza largely consists of similar affluent middle-class
academics, politicians, and socialites, divorced from and hostile to the
working class, similar moods are well represented inside Syriza itself.

Other sections of the government, including Syriza’s Left Platform
faction and the far-right Independent Greeks (Anel) party, are
considering a Greek exit from the euro. Greek Development Minister
Panagiotis Lafazanis, a member of the Left Platform, called on Greeks to
answer “with a resounding no” to the referendum’s proposal of a deal
with the EU.

Behind them stand other, powerful sections of the Greek financial
aristocracy, notably shipping magnates with close ties to Anel. Their
fortunes have until now been protected by provisions of the Greek
constitution stipulating that they pay zero tax on international
earnings. However, the EU’s latest plans include proposals to “phase out
special tax treatments for the shipping industry” and “implement an
effective taxation framework for commercial shipping.”

Such measures would undercut the wealth of the shipping magnates, who
still control the world’s largest merchant fleet. The holdings of the
wealthiest of them, Philip Niarchos, are valued at $2.5 billion, and
four other shipping tycoons have assets worth over one billion euros.

These bitter divisions inside the Greek ruling class mirror divisions
between the major imperialist powers in Europe. While European officials
have until now insisted that they aimed to keep Greece inside the euro
zone in talks led by Berlin, it emerged yesterday that British Prime
Minister David Cameron believes that the breakup of the euro zone via a
Greek exit may be the best strategy.

A diplomatic memo leaked to the Guardian said that Cameron “wondered if
it was wise for Angela Merkel to allow the discussion with Greece to
take place at the [Prime Minister] level and mused that it might be
better for Greece to leave the euro zone in order to sort its economy out.”

The only way forward for the working class is to set its policy
independently of all the factions of the capitalist class, whose social
order has utterly failed. The critical task is to prepare to mobilize
the working class in Greece and across Europe in revolutionary struggle
against the reactionary intrigues of Syriza and the EU.

The authors also recommend:

Political issues in the Greek debt crisis
[26 June 2015]