By Paul Murphy
After yesterday’s sombre reflections on a possible defeat, what would a victory look like?
It starts with a No later today. The bigger the margin of victory the better. There is no new memorandum, no new austerity agreed to. Then what?
The tyranny of the Troika will intensify. This will find its main expression through the weapon of the European Central Bank and the gun it has pointed at the Greek banking system. It will do one of two things. Either it will leave the limit for Emergency Liquidity Assistance at just under €90 billion, where it currently is, or it will withdraw ELA entirely. Either way, it points to a collapse of the Greek banking system, which is rapidly running out of money, mid next-week in the best case scenario, unless drastic action is taken.
This will pose starkly and immediately the central dilemma that has faced Syriza since its election. In general terms, two roads have been open – one of compromise, of concessions and ultimately of defeat, the other of confrontation, of rupture and opportunities. These two roads are expressed by the conflict between those forces which, in practice, favour staying in the euro at any cost, and those who are open to, or favourable towards euro-exit as part of a socialist programme.
With the ATMs running out of money, there will be two ways to resolve this situation. The choice of staying within the euro at all costs means signing whatever humiliating deal is offered in order to get euros from the ECB to re-open the banks and fill the ATMs. The road of confrontation means printing some form of national currency instead.
The exact form of that national currency is open. Variations are discussed. A sudden exchange of all euros into a new national currency is practically ruled and would probably be unwise – enraging those who even had small savings. Instead, some measure involving a dual currency situation is likely – perhaps with a national currency for internal usage and euros for international trade. Or alternatively a form of ‘scrip’ (effectively an IOU) could be introduced as payment by the government. Overtime, the scrip or national currency would achieve general circulation and would become the dominant currency internally. The choice of going down this road is now only days away for the government.
Euro-exit has been the main scare tactic of the establishment here in Greece, with the impression given that it would automatically mean disaster. Is that the case? Not necessarily. It depends on whether it is combined with radical and socialist measures or simply done while maintaining power and control in the hands of the oligarchs and rich.
In the first place, there is no rule saying that an economy like Greece cannot have its own currency. The strength of a currency is related to its economy’s ability to produce goods and services that people want. Plenty of countries in Europe have independent currencies, for example, Sweden, a country of slightly smaller population that Greece, which has the Krona. Of course the situation there is different, but it illustrates the point that it should not be simply a received truth that an independent currency is impossible.
A decline in the value of the currency after it is immediately introduced would be likely – but it need not be the kind of hyper-inflationary a dramatic and ongoing decline that is often suggested. There are two important factors here. Greece currently has both a balance of payments surplus and a primary balance. A balance of payments surplus means that it exports more than it imports, while a primary balance means that the total tax revenue exceeds total public spending. This gives a potential stability and basis to the currency, if its introduction is combined with policies to prevent further economic dislocation and decline.
In order to counteract the financial terrorism of the ECB, the full nationalisation of the banking system and a process of burning bondholders and rich depositors is necessary. The banks can be made solvent, saving workers’ savings and pensions, by a process whereby the ECB does not get a penny back and other bondholders in the Greek banks are burnt.
The other decisive measure, taking advantage of the primary surplus, is imposing a moratorium on repayments on the det. Why throw good money after bad by giving any more to the Troika? The Greek Debt Truth Committee set up by the Greek parliament after the election of Syriza has issued a preliminary report, which “came to the conclusion that Greece should not pay this debt [to the Troika] because it is illegal, illegitimate, and odious”. With a halting of all repayments, it could be allowed to finish its work, after which a process of debt repudiation could be initiated.
With a renewal of investment in the economy, it could be developed and the currency, which would likely suffer an initially relatively steep decline, could stabilise. That redevelopment of the economy will simply not be driven by the private sector. In fact, big capital has already effectively gone on strike – withdrawing their money from Greek banks, with many businesses even closing for the last week and telling their employees that they won’t re-open if Greece votes No.
With taxation of the wealthy and corporations, money could be found for major projects of public investment. It also points to the need for public ownership, under the control and management of workers, of the key sectors of the economy – ending the economic domination of the oligarchs. This would allow the creation of a plan for a redevelopment of the economy, democratically involving large sections of the population.
The cry of the right-wing to scare the Greek people away from the prospect of rupture is that Greece would quickly run out of food, oil and pharmaceuticals. This is a warning designed to scare people into voting Yes to more austerity. We know that the result of that will be more misery, more humanitarian crisis. But setting aside their motivations, and their alternative, what is the truth of it?
It is true that Greece does have a trade deficit in these goods. However, the crisis that would result is overstated in order to create panic. Greece grows around 95% of the food that is necessary for the people of Greece. So some food would have to be imported, but not a large amount. More fuel and pharmaceuticals would have to be imported. Varoufakis has claimed that Greece has oil reserves for six months and pharmaceutical reserves for four months.
In any case, pharmaceuticals and oil can be imported. In the last year, €59 billion worth of goods and services were exported from Greece. Although that may decline, there would still be euros coming in, with which to buy imported goods. Together with that, a policy of development and public investment in the local pharmaceutical industry (which is threatened under the terms of the proposed deal) could assist moving towards more self-reliance in pharmaceutical goods.
So certainly, the road of rupture is not without challenges, but it represents a preferable road to retracing the same downward spiral of austerity. Of course, it would not be possible to maintain a position of an isolated state in Europe breaking with the rules of capitalism and striving towards socialist change indefinitely. But that would not be the likely perspective.
The reaction of workers and young people in Europe to the events of the last week demonstrate how events quickly spread from one country to another. Just as a defeat would be a setback, a rupture here in Greece, at the weakest link in the chain of the European capitalism, would be a potential opportunity for the left elsewhere. Of course, it would not be without complications, and any difficulties would be utilised without hesitation by the right-wing media and politicians to scare people. But just as Syriza’s election inspired people, an open rupture with this system, with the mass involvement of people, would inspire once more.
It would raise the possibility of similar fundamental change in other countries in the periphery, which would end Greece’s isolation, assisting it economically and most importantly, drive forward the process throughout Europe to building a different Europe, a socialist Europe democratically organised for the millions, not the millionaires.
These measures amount to a radical restructuring of society along democratic and socialist lines. Will the Syriza leadership take them? Not on their own initiative. However, the immense mobilisations for a No that we have seen can be an active factor intervening to push for rupture. As, ironically, can be the extremity of Merkel, Juncker and co. on the other side who now seem to just want rid of Tsipras and can block any possible ‘compromise’.
Those who are straining every muscle for a No are not for a marginally less bad deal, they are for an end to austerity. With a No, they will then be actively pushing for confrontation with the Troika. The principled left inside Syriza and the non-sectarian left outside Syriza, including Xekinima, the sister party of the Socialist Party in Ireland which has taken initiatives to bring many of these forces together, can play a vital role as a clear left pole. Political as well as economic preparation is necessary to successfully enter the road of confrontation, rupture and socialist change.