‘The child of the dead man inherited the empress’ hatred, just as he inherited everything else belonging to his father, and bequeathed it to the third generation’.
Procopius on the Byzantine Empress Theodora, Secret History, 15
In 1970, a medical doctor, Salvador Allende, was elected to the presidency in Chile; the first Marxist to come to power in such a way in a Latin American state. Allende and his administration immediately began an ambitious programme of social reform, including increases in social security payments, an expanded public works programme and free food to Chile’s neediest citizens. Both the working class and the middle class benefited from a reform of the tax code, and average real wages (i.e., after taking into account inflation) increased throughout the three years after the election.
But such a development was fiercely opposed by the Nixon administration as Washington fretted about the bad example it would set to its neighbours. When the Allende government nationalised the copper industry, the USA cut off its line of credits and increased its support for the opposition. Just as the United Fruit Company was displeased by the equitable land reforms in Guatemala, prompting a CIA-backed military coup to overthrow the democratic government in 1954, so prominent US multinationals also agitated for Allende’s removal.
On the 11th of September 1973, the Chilean Commander-in-Chief, General Pinochet, having forewarned the CIA, overthrew the administration and murdered Allende. Roughly the same number as those who died on the 11th of September 2001, in the terrorist attacks, ‘disappeared’ in Chile in the following years of military rule.
At the end of January this year, another collection of Marxists and left-wing academics in the form of the Syriza Party won a plurality in the Greek elections, falling two seats short of an outright majority in the Hellenic Parliament. It is often a charge that university intellectuals descending from their ivory towers stutter when it comes to wielding real power. A prime example being, the first democratic government in Iraq following the 2003 invasion – hopelessly divided despite possessing more members with PhDs than any other national administration. Syriza’s leader Alexis Tsipras has a postgraduate degree in urban and regional planning and the new finance minister, Yanis Varoufakis, is a Professor of Economic Theory.
Forming a coalition with a right-wing EU-sceptic party, however, the Syriza-dominated government wasted no time in laying out its domestic agenda and plans on how to charm its creditors within the Eurozone and the International Monetary Fund (IMF). The minimum wage was to be raised, certain privatisations and company closures were to be reversed and austerity as a policy was to be severely curtailed.
Syriza’s victory did not go down well in Germany’s halls of power. Berlin is the Eurozone’s paymaster and thus the single currency member with the most clout and arguably the final say on Eurozone matters. This is, of course, rather ironic given that abandoning the Deutschmark in favour of the Euro was the price exacted by France to permit German ‘unification’ (or rather the Federal Republic of Germany being allowed to expand into the lands of the defunct German Democratic Republic) and negate German strength.
Still haunted by the historical memory of the ravages of hyperinflation in the 1920s and 1930s, Angela Merkel and her government are insistent on pursuing the same destructive policies on Greece and others that international creditors inflicted on Germany before Hitler’s rise to power in 1933. Austerity is a self-defeating policy in the long-term (and seven years on from the financial crash of 2008 is pretty long) since when the economy of a country increases, the debts – so long as they remain stable – as a proportion of that country’s economy, inevitably decline. But if the gross national product of a country falls, the debts will rise as an overall percentage.
Already unnerved by Vladimir Putin’s casual contempt for the imprimatur Berlin and Paris gave to the Minsk II peace agreement, Germany’s actions towards Athens recall the description applied to the British conquest of Sindh shortly after being massacred in Afghanistan in the 1840s: ‘like a bully who has been kicked in the street and goes home to beat his wife in revenge’.
Merkel and her ministers were already unhappy at Mario Draghi, the head of the European Central Bank (ECB), implementing quantitative easing throughout the Eurozone to alleviate the economies of the slumped southern rim of the European Union (EU), having vigorously opposed it before on the grounds of the contagion of moral hazard – this being the view that it militates against financial prudence. Having forced Ireland, Spain, Portugal and Cyprus along with Greece to undertake draconian measures, it would set a bad example to the others should Greece renegotiate successfully the terms of the bailout.
Despite Varoufakis’ tour of European capitals and Syriza’s initial compromises to permit oversight of its new approaches to the economy by the ‘troika’ (the EU, the IMF and the ECB), this was not enough for Germany. No matter that an election had been held where the majority view in Greece was for a change in direction (not just for Syriza but for other parties too), Berlin insisted that the new government in Athens abide by the obligations agreed by its predecessor. The Empress Theodora would have recognised a kindred spirit.
Now, a rules-based society is essential for successful national development, Russia’s economic retardation and capital flight even before the Ukraine crisis is a case in point. But rules can be changed within frameworks, especially if they cause more harm than good. If the democratic will of the people is dismissed out of hand, while they themselves are ridiculed as fantasists, it can only aid anti-democratic forces who promise false panaceas.
Though Syriza topped the poll, the fascist Golden Dawn came third (albeit a distant third) in parliamentary representation. George Papandreou, the Greek Prime Minister between 2009 and 2011, proposed a referendum on the terms of the bailout deal in October 2011 to be held in December of that year, but the fury of the creditors forced him to drop the plan after a few days. They would have their pound of Greek flesh whatever the destructive effect on the victim – the elites deciding popular assent was unlikely to be forthcoming and therefore not in their interest. A week later, Papandreou resigned.
After marathon talks with the troika, resulting in a four-month extension to the Greek bailout, kicking the proverbial can down the road, Syriza had to significantly alter its agenda from its election manifesto.
Privatisations will not be reversed, sacked public-sector workers will not automatically be re-hired and rises in the minimum wage will be deferred. Instead, the Greek coalition will make the public sector more ‘efficient’, promote competition, reform labour markets and pension schemes and take care when selling its assets.
There was however some wriggle room in the determination to reduce legal tax avoidance and endemic corruption, with the fiscal target being less specific but essentially, it was a capitulation to the troika and Berlin, especially with no commitments from the northern Eurozone members to cut down on the massive trade surpluses with the southern rim, or to implement a common debt for all Eurozone states (measures that would improve the viability of the Euro). With the implacability of the creditors, Greek options were bad or worse, and so they succumbed to economic imperialism. Yet had the troika been more flexible, a fairer, not to mention more sensible, deal could have been struck.
Despite trouble caused by an economically illiterate Congress, Barack Obama has fostered a powerful turnaround in the American economy without imposing austerity. In Europe though, it has become a dogma that, like a good hausfrau, debts must be repaid, ignoring that Japan operates a far higher debt of 200 per cent of national output yet remains the third largest economy in the world with a generous social security system.
By putting Greece and others in a bind irrespective of democratic choices, the international creditors are the direct cause behind the flourishing of apathy and disengagement, with the consequence that there is a rise in extremism and the EU has become that little bit less free, less diverse and more authoritarian. All this now, possibly sowing the seeds of an eventual – and in my personal view, unwelcome – break-up.
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