Prospects for Syriza

by Leo Panitch, Tom Mills

It would be a disaster if Syriza fail – the European left must mobilise behind them to strengthen their position in Europe.

First published: 29 January, 2015 | Category: Activism, Europe, Greece, Politics, Vision/Strategy

Leo Panitch is Canada Research Chair in Comparative Political Economy and Distinguished Research Professor of Political Science at York University.  A leading left-wing political economist, he is a long-standing editor of The Socialist Register and the author, with Sam Gindin, of The Making of Global Capitalism (Verso, 2012).  He spoke with NLP's Tom Mills about the prospects for the new radical left Syriza government and what the left elsewhere can do to strengthen their position in Europe.

How significant is the victory of Syriza?  Are you excited about it?  And what are the historical precedents?

I'm very excited about it.  I think it's enormously significant.  One needs to remember how creative and successful they have been just to get where they are.  This is the only left party since the crisis began in 2007/8 that has won governmental power in an election – the European social democrats are obviously not left parties – and that's astonishing.

The precedents one might point to are largely in Latin America, and they took place before the crisis and so were not an outcome of it.  Before that, the precedents are the 'Triple Alliance' in South Africa, between the ANC, the Communist Party and the Congress of South African Trade Unions (COSATU), and before that the Brazilian Workers' Party's winning of municipal elections in Brazil before coming to power nationally, although by that point, after the experience of municipal governments, they were not really very different from social democrats in Europe or the UK.  But for this to happen in Europe, close to the centre of world capitalism, has very, very different implications.  The thing people should look to, which perhaps is a bit over the top, is the Spanish Republican government of the 1930s.  That was a time when the Great Depression had taken hold, but global capitalism had not yet broken down.  So the Gold Standard was still in operation and you saw the emergence of radical left and radical right parties.  The right parties then were fascist parties – one forgets that Hitler was elected.  In the Spanish case you had a radical left government and it was a big test for the international left whether that government, that movement, could do what needed to be done from a left perspective in the context of the Great Depression.  That government was brought down, in very different ways from how Syriza would be.  Nevertheless, I think that the failure of Syriza, whether through its own miscalculations or incapacities, or due to international pressure, would be disastrous in terms of the likelihood that people would then opt for a radical right solution.

Which brings us to the question of what Syriza will be able to do now they are in office.  What challenges do they face and how much room for manoeuvre will they have, especially given the international forces that are going to want to constrain them?

What they can do immediately, and I think they will do, are things which they have promised which don't cost that much.  They will reconnect people to the electricity.  They will restore the rule of law in labour relations – all collective agreements were thrown out of the window as were all protections from layoffs.  They will restore those.  And that could set up problems for them because they then may find that unions demand immediate wage increases which they don't have enough fiscal capacity to grant.  But they will do that.  They will restore pensions, they will restore a significant amount of welfare benefits, and they will restore the minimum wage.  Those are the minimal things that they will do.

Another immediate thing that the government needs to do is to bring people into the state; not only to appoint the Cabinet, but to bring competent people into the civil service who will not be patronage appointments and who will not engage in clientelism.  One of the Guardian reports quoted a seventy year old working class man who said “If Syriza doesn’t send the first person who tries to bribe them, even for a single euro, straight to the prosecutor, we’re finished.”  This will indeed be the test the first time a civil servant is offered a bribe by a businessman. And in a sense that's more important than anything in terms of what they will do compared with the PASOK governments.  PASOK in 1980 had a similar radical programme, but on their election to government immediately reproduced the old clientelist, patronage system, just making it work in their favour.  But in Syriza’s case, there are very real progressive things which they can do, and which there's every reason to think they will do.

In terms of the longer term questions, the far left's position represented by Antarsya, which got less than 1% of the vote and which is supported by the SWP in the UK, is that on the morning of the electoral victory Syriza should have introduced capital controls and set up controls over the banking system to prevent an outflow of capital.  And we can see from the run on the banks already why they argue this is needed.  Yet this is not the position of the majority of the leadership of Syriza, even if it would find support from about 40% of the party membership that supports the Left Platform wing inside the party.  The leadership’s position, and they would not have been elected on the Antarsya or Left Platform one, is to try and negotiate – within the framework of not only the EU, but also the European Monetary Union, the Euro system – the room for manoeuvre for them to successfully break with the domestic austerity policies.  It is important one understands that.  What they are going to be doing in policy terms involves finding some sort of space that will allow them to stay within the European Monetary Union, but not operate according to what the IMF calls conditionalities in terms of loans they have received in the past, or might need in the future so as to not default on their debt and lose access to international bond markets.  Britain first felt this in the mid-1960s, under the Harold Wilson government, when the IMF lent money, and all the more so under the Callaghan government during what was called the 1976 IMF crisis, when conditionality involved not only cut backs on welfare expenditure and public employment, but the explicit abandonment even of the goal of full employment.  This type of conditionality was applied with a vengeance during the debt crisis to many Third World countries in the 1980s, and it has been applied again with double vengeance to the peripheral countries of Europe by the IMF/ECB/EU Troika in the Euro crisis.  Syriza is saying that they will not honour the 'conditionalties' on which previous Greek governments were given loans in the past – loans which were used to pay off the debts they owed to French and German banks and which they still owe to the European Central Bank.  But they are not saying they will not honour the loans, default on the bonds.

The new Greek finance minister, Yanis Varoufakis, is a well respected economist who a few years ago wrote a book about the global economic system under American dominance called The Global Minotaur.  Your readers might look at pages 209-211 of that book where Varoufakis makes a number of proposals, some of which have already been partly realised insofar as Greek debts have been moved from private banks to pan-European public agencies, and insofar as the European Central Bank has recently announced that it will undertake quantitative easing, whereby they will buy government debt in the secondary market from private banks.  But his main proposal, which is what really matters in the long run, is that the European Investment Bank should issue bonds and allow the governments of Europe to use the funds raised to invest massively in job creation.  What he doesn't say, although this obviously has to be built into this, is that no conditionalities be attached to any of this.

The alternative to this, is that Greece immediately leaves the European Monetary Union, introduce capital controls and reintroduce the drachma.  Those who advance the case for this argue that this doesn't involve leaving the EU, since there's no requirement that you be part of the European currency system.  And they want to do this immediately, and to nationalise the banks.  That is in the Syriza programme, it's what they ran on.  No one talked about it that much either in 2012 or in 2014, but it is in their party programme.  Now most Greeks don't want the drachma back and even though the price of oil has fallen, it would be a devalued drachma and the Greeks do need to purchase imports. 

So the new Syriza government are going to have to find some room to negotiate between these two positions and I don't think the international left should be telling Greece what to do.  It's a very difficult situation they are in.  But whatever they do, especially to win support for the more radical path, will require education, capacity building and the building of support in Greece.  The 35% of people who voted for them did not vote for them to pull out of the Euro, and if they are pushed into that position they will have to be very clear in explaining what exactly is entailed in that and what the costs would be.

I should say that one of the things Syriza could do, and which both sides inside the party would support, and would be some indication of how serious they are, is to introduce a onetime massive wealth tax on the very rich.  The danger of course is that without capital controls these guys would pull their money out.  But that seems to be a very basic thing they could do in light of the national emergency and in terms of strengthening their legitimacy.  There would be massive support for that in the country.  They will introduce a licence fee for those magnates who own the television networks and pay nothing for the use of the public airwaves.  And that is actually the most popular of Syriza's proposals, not only in the party but amongst the public.

Do you get a sense of how receptive the powers that be in Europe and America will be to these different options, of how much push they are going to have to apply to Europe to get what they want?

Well this is the sixty-four-dollar question, and they don't normally consult people like me!  It's very hard to say.  The European Central Bank has room to manoeuvre with Greece, and in a sense Greece has more room for manoeuvre since the introduction of quantitative easing.  The trouble is though that the Germans introduced a condition that each of the central banks in the countries in Europe should be responsible if the loans their banks get from the ECB is defaulted on, and that would be impossible for the Greeks.

I think the ECB can kick the ball down the road and on that basis I expect that there will be a protracted period where we won't know how much room for manoeuvre the Greeks have now.  I expect that they will at least be given the breathing space until the middle of the year without having to pay back any interests on their bonds, and we may even see, because of the quantitative easing, that they had more room for manoeuvre than we expected.  On the other hand, if they prove to be the popular, left, socialist government we hope they are, then the oligarchs who own the Greek economy – the ship owners, the merchant bankers, the traders, the bondholders – will want not only to pull money out of their bank accounts but pull capital out of Greece, and that will close down options not only for the Greek government, but also for the European institutions.  The European institutions represent the economic ruling classes of each of the countries of the Euro, that's who they are the real leaders of.  They may do things that the narrow minded members of the ruling classes wouldn't do, but we need to be aware that they are above all acting on behalf of capital, even if not at the behest of capital.

Are there no conflicts between the Greek ruling class and those that dominate the European institutions, like German capital, say?

Unfortunately we've seen very, very little.  Until last year the shipping magnates paid no taxes.  Until tax on them was finally introduced last year, they hadn't paid any since the junta took power in Greece in 1967.  The first thing that the junta did was to remove taxes on the ship builders and ship owners.  You would have expected that with all the pressure on Greece in terms of conditionalites, that they would have been pressurised into taxing those bastards years ago.  And that's an indicator that German capital and the institutions that represent it, was not breaking with the Greek ruling class, on the contrary.  And of course by insisting on the free movement of capital, you are leaving those who have enormous wealth, enormous power. 

And do you get a sense of the American position?  What are the major strategic implications of your analysis in The Making of Global Capitalism, and how in light of that do you view Syriza's position?

That was more a book about the capitalist state and above all the informal American empire than it was about what the Left does.  But class struggles were part of the history we were uncovering in terms of how it came to be that the American Empire assumed such overwhelming responsibility for the managing of global capitalism.  And that's where I want to begin in answering this question.  The US Treasury and Federal Reserve were pressing the Europeans since 2010 to do what they've only finally now done, which is to engage in massive quantitative easing – which involves essentially printing money and giving it to the banks.  In the face of the Tea Party and the Republican majority in Congress preventing a US fiscal stimulus after 2009, QE was the only thing that stopped the United States and the world economy going into a Great Depression rather than a Great Recession.  Of course if there had been socialists in power they might have turned the banks into public utilities and found a route out of this capitalist crisis through democratic economic planning.  But there were hardly the political conditions for that.  So it's very important to note that, with QE, the empire, the American state, took a more 'progressive' position than Europe did in this crisis, at least in terms of containing the worst effects of the crisis.  The reason that Europe didn't take it was because of the anti-QE Germany, and above all its central bank, supported in this by the Scandinavian central banks.  The Bundesbank has always needed to be dragged kicking and screaming by the US Treasury and Federal Reserve – the financial institutions of the empire – into taking responsibility for managing global capitalism in general rather than being concerned above all with protecting German exporters and bondholders above everybody else.

The US Treasury and Fed could not easily give orders to the German central bank to change course. That is the nature of the informal empire. But to a certain extent, even before the outcome of the Greek election, we could see that the balance of forces had shifted enough inside Europe that it started more closely following the position of the US Federal Reserve – and the Bank of England for that matter – in terms of throwing money at the banks.  And that does relieve the pressure.  But what's gone with that is fiscal austerity.  Not because the US Treasury wanted it, but because of the balance of forces inside the American state.  And in Britain because of the balance of forces inside the British state where you had a Tory government that wanted to reduce the progressive functions of the state and a Labour Party leadership which although not Blairite any longer, is afraid to be painted as taxation oriented. 

Now that balance of forces would need to change further to give the new Greek government even more breathing room.  What one has to hope is that should Ed Miliband's Labour Party get elected in May, there would be enough pressure from inside and outside the party to ensure that their strong commitment to fiscal austerity proves to be a matter of electoral rhetoric rather than a policy conviction.  We saw Peter Hain, who was after all a minister in a previous Labour government, come out and praise the Syriza victory.  Miliband was more tepid, he said that each government has a right to do what it wants.  What he should have said is not only that they have a right to do what they want, but that we want the EU to give them the space to do what they need to do.  And that should be what the left tries to get, at a minimum, in each European country.

Those of us who are outside of the mainstream should be engaging in mobilisation and protest to ensure that governments feel the heat in terms of public opinion over removing fiscal austerity, conditionalities, etc.  I was on a platform with a French Socialist Member of the European Parliament who took this position at a Syriza conference I was asked to speak at last March, along with the former finance minister of Iceland from the Green party, who had refused to pay off the Dutch and the British when Iceland’s banks tanked.  We should expect that left in the Socialist Party in France, such as it is, put pressure on Hollande to create space for the Greeks.  We should expect that above all from the bloody social democrats in Scandinavia, who are usually held up as the epitome of a strong labour left in Europe – you know in North America and Britain this is the model for Christ's sake!  But these bastards have put more pressure on the Greeks than have the Germans.  There should be a mobilisation in the Scandinavian countries to force their governments, where social democrats are in government, and where they are not to at least take a very strong position in parliament, to insist that the European Investment Bank issues bonds which the Greeks can access without conditionalities.  This would allow the Greek government to engage in massive public investment, in addition to whatever it can raise from its wealth tax.

More than that, right now, I don't know that we can do much else.  It’s a bare minimum but it would matter a lot to the Greeks to see that kind of support.  But if Podemos were to continue to rise in Spain, and if you and I and others who follow New Left Project were to get to work putting in place the kind of party that the people who created Syriza built over the last couple of decades, then we would certainly be contributing to concentrating the minds of the powers that be in Europe.

Tom Mills is a researcher and PhD candidate at the University of Bath and a co-editor of New Left Project.

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