Syriza!

GREECE ELECTIONS

“As he climbed on an elevated stage in central Athens to give his victory speech on Sunday night, Alexis Tsipras looked more like a rock star than Greece’s newly-elected prime minister.”

“Our people too have a right to joy and celebration. For five years, they had taken both away from us,” he told thousands of ecstatic supporters of his party Syriza gathered to celebrate a historic victory for the left.

The Greek left party Syriza crushed the center parties coming within 2 seats of an outright majority in parliament.   One need only observe the social reality of Greece: high unemployment rate, dissolution of both health and educational systems, a shrinking private sector, eradication of the middle class and complete absence of any kind of reform that would boost the economy to know why.

In abandoning the traditional parties, Greeks have turned a page – something which soon may be seen throughout Southern Europe.  Populist parties of both the left and right are surging across Europe, and could be boosted by a Syriza win.

Tsipras took a secular oath of office, the first Greek Prime Minister ever to do so and then, while stating he did not want to pick a fight with Germany, placed a rose on the memorial to communists murdered by the Nazis.

His platform called for an end to” austerity” and rejection of EU bailout plans which would continue austerity. All Greeks are expecting Syriza to deliver on their promise and demand debt-cancellation and growth policies from the EU.

Government spending in Greece has been cut by 20% in the last five years. According to the IMF and the EU bankers, the “privatisation” of the economy should have resulted in economic growth. It has not. Greece’s economy simply shrank, it’s external debt to GDP now running about 1.75 to 1. Such ratios close the international bond market to Greek borrowing.

Tsipras’ choice of finance minister is also telling.

Economics professor Yanis Varoufakis has been arguing for years in his classes and opinion pieces about the non-viability of austerity and the unsustainability of Greece’s debt burden.

Tsipras thinks he can win the argument by reason. He might win concessions by pressure. His threat is default and taking Greece out of the Euro zone and back to the Drachma.

Concessions must mainly come from the German bankers and it must be more than deferral of payments to some future date, rate reductions etc. It must include write-offs; a genuine reduction in debt and policies oriented toward growth.

Asking the Greek people to suffer through economic depression in order to pay bankers in Germany resulted in the election of the most leftist government seen in Europe for some time. Two seats short of a majority, Syriza chose a far right populist party as coalition partner – they have nothing in common save a rejection of the EU “bailout” / austerity program.

What is telling is the rejection by Greek voters and Syriza of the mainstream center-right and center-left parties. Mainstream parties lost ground everywhere indicating the majority of people were fed up with conditions. They were viewed as tweedle dum- tweedle-dee with little difference in their approach to the economic problems of everyday people.

Syriza was formed in 2004, a coalition of leftists from Maoists to Greens. Tsipas took control of the party in 2008 and by 2011 had transformed it into a major political force.

In an interview shortly before the election, he told the BBC that far from being destructive, Syriza’s political proposals offered a reasonable way out of austerity and a chance to replace existing bailout regulations with new ones.

“The first priority is renegotiating with creditors,” he said.

“Syriza needs to speak the language of truth about the continuing triple bankruptcy of the country – public debt, banks, private sector – something no Greek government has done so far.”

Then, he pointed out, the party had to put forward proposals that would be reasonable to the average German.

Five years of austerity have not improved the Greek economy – it has made it worse. There is currently no way to repay Greece’s nominal external debt at face value with interest – not without inflation – which strikes terror into the heart of every German banker.

Alternatively, writing down Greek debt would immediately put political pressure on Spain, Portugal and Italy – if it can be done for the Greeks, why not for us?  Their external debt would begin trading at lower levels putting pressure on bankers holding their paper.

The IMF and the EU will be facing a popularly elected leftist government across the negotiating table for the first time. It should be interesting to say the least.

The headline-grabbing Syriza policy that has shaken the eurozone is it wants a write off of most of Greece’s debt but the write off is only part of what Syriza wants:

Repayment of the remaining debt tied to economic growth, not the Greek budget
and a “significant moratorium” on debt payments

Syriza wants a European Debt Conference modeled on the London Debt Conference of 1953, when half of Germany’s post-World War II debt was written off, leading to a sharp increase in economic growth. Syriza wants stimulus rather than more austerity.

If it happened for Germany, it can happen for Greece, the party argues.

I’m sure Tsipas will remind Angela Merkel. Especially since Greece suffered more deaths per capita than any nation under Nazi occupation.

Syriza also sent warning bells across Europe by supporting Greece’s pullout from NATO and criticizing sanctions on Russia.  It has recently softened it’s stance internationally to concentrate on renegotiating Greek sovereign debt.

It could be a very interesting year in Europe.

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http://www.huffingtonpost.com/renadourou/the-greeks-have-taken-res_b_6546138.html

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About toritto

I was born during year four of the reign of Emperor Tiberius Claudius on the outskirts of the empire in Brooklyn. I married my high school sweetheart, the girl I took to the prom and we were together for forty years until her passing in 2004. We had four kids together and buried two together. I had a successful career in Corporate America (never got rich but made a living) and traveled the world. I am currently retired in the Tampa Bay metro area and live alone. One of my daughters is close by and one within a morning’s drive. They call their pops everyday. I try to write poetry (not very well), and about family. Occasionally I will try a historical piece relating to politics. :-)
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2 Responses to Syriza!

  1. The new Greek government is saying they won’t default on the debt and the troika is saying they won’t agree to bondholders taking a haircut. I guess it boils down to who will blink first.

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  2. toritto says:

    Hi doc – Yes the negotiating positions have been taken. 🙂

    Nobody wants a default; nobody wants Greece to leave the EU; nobody wants Greece to leave NATO – it is in everyone’s interest to come to a deal. Sounds like a haircut for the bankers to me!

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