Greece: A Whisper of Battles Past
Dispatches From the Edge
March 5, 2015
The recent negotiations between Greece and the European Union (EU) bring to mind Themistocles, a man who knew when to retreat and when to fight. The year was 480 BC and Xerxes I—“the king with half the east at heel”—was marching on Greece with a massive army accompanied by an enormous fleet. Against the invasion stood a small Greek army, led by Leonidas of Sparta, and an equally outnumbered navy, commanded by the Athenian, Themistocles.
It didn’t look good for the Greeks in August 480 BC. The Persian army was at least 10 times the size of the Greek force, and Themistocles was outnumbered almost three to one. It didn’t look good for Syriza in 2015: not a single EU member supported the Greek call for easing the debt crisis and ending the punishing austerity regime that has shattered the country’s economy and impoverished many of its people.
The Greek army and Leonidas were destroyed at Thermopylae, but the wily Themistocles first bloodied the Persians at Artemisium, then retreated, buying time to lay a trap at Salamis. With a little deception and a wind at his back—always a plus when you are ramming other people’s ships—the Greeks annihilated the Persian fleet and defeated the invasion.
Can Greek Prime Minister Alexis Tsipras and his finance minister Yanis Varoufakis pull off a Salamis and best what looks like another unbeatable foe? It is too soon to tell, but the deal they cut in Brussels bears a resemblance to that long ago battle in the Straits of Artemisium: both sides took losses, but the Greeks bought themselves valuable time.
And as Varoufakis recently remarked, “Time is our most precious commodity.”
There are a couple of things to keep in mind about the Feb. 20 agreement approved by the 19 European finance ministers.
First, Syriza did not have a mandate from the electorate to play one of its most powerful cards: “give us a deal or we leave the Eurozone and maybe tank the Euro.”
Second, Greece had a gun to its head: a Feb. 28 deadline, after which its banks would have lost support from the European Central Bank (ECB), one of the “Troika” members that include the International Monetary Fund (IMF) and the European Commission. Without ECB support, Greek banks might have gone under, forcing Athens to default on the debt and force it to exit from the Eurozone.
In the long run the Greeks may decide to default or drop the Euro, but that is not a decision that a freshly elected government that relies on a coalition to stay in power can make in a few weeks.
Third, as attractive as it is to think of scrappy little Greece defeating the mighty Troika and the EU, let’s be serious. Greece represents about 2 percent of the EU’s GDP. Its foes would have made Xerxes’ tremble: Germany, France, Italy, Finland, and the Netherlands, and even the debt-strapped governments of Spain, Portugal, and Ireland.
Syriza’s critics charge that the Party folded in Brussels, getting little more than a few cosmetic word changes in the Memorandum of Understanding that the Troika forced on Greece back in 2010. But language, as economist James Galbraith points out, has power. In “Reading the Greek Deal Correctly,” the University of Texas professor argues that substituting words like “the current programme” with “Master Financial Assistance Facility Agreement” means the agreement is extended “but the commitments are to be reviewed.”
Analyzing the centerpiece of the agreement, Galbraith concludes that there is no “unwavering commitment to the exact terms and conditions” of the 2010 Memorandum. “So,” he writes, “No, the Troika cannot come to Athens and complain about the rehiring of cleaning ladies.”
Georgos Katroughalos, a Syrizan minister, called the Feb. 20 agreement a study in “constructive ambiguity” that “allows different readings. Our reading is that we are not applying the Memorandum program. We are applying our agenda.”
What Syriza accepted were those sections of the Memorandum that mirrored its own program: running down tax evaders—unpaid taxes are estimated at 76 billion Euros—ending corruption, targeting fuel and tobacco smuggling, modernizing public administration, and tackling the “humanitarian crisis” with programs for food stamps, free medical care, and electricity for the poor. There will also be a pilot program for a minimum income for those under the poverty line—Brazil has had much success with this—and mortgage relief.
Which is not to say there were no casualties.
Syriza backed away from its pledge to end privatizations, although it added a caveat that the sale of public property must actually bring in significant amounts of cash. To date, many privatizations have been inside deals at fire sales prices. The privatization part of the agreement could be a retreat, or a loophole to put the brakes on the process. People will just have to wait and see what Syriza does.
“Labor reform” is another area around where sparks are certain to fly. By “reform” the Troika means cutting back minimum wages, abolishing collective bargaining, increasing the retirement age, and laying off workers. In theory this is supposed to make Greek workers more “productive” and more like German workers. In fact, Greeks work longer hours than German workers, but Greece does not possess Germany’s modernized infrastructure, including computers, high-speed rail, and autobahns.
Much of the German “modernization” was paid for by the U.S. to serve as a bulwark against the Soviet Union and the Eastern bloc countries. The 1953 London Agreement that canceled much of Germany’s World War II debts and stretched out payments—Syriza is asking for something very similar— was not done out of kindness, but as a critical ingredient in the Cold War. Germany would be part of the “west wall” against the Russians.
Syriza has agreed to “phase in” raising the minimum wage but is vague about implementing the rest of the “reform” package. Again, this could be seen as capitulation or as a temporary retreat. The measure of that will be what the Greek government actually does.
Greece is facing some deadlines this summer, and there is pressure from the EU for yet another bailout deal. But if Athens gets its anti-corruption program up and running, throttles gas and tobacco smuggling, and successfully collects taxes, Greece will have cash on hand to fulfill some of its election promises to restore jobs and pensions, and fund health care. The agreement recognizes that Greece is facing a “humanitarian crisis,” wording that might give Syriza more space to maneuver.
Greece is not alone in this fight. While it received no support from other Eurozone countries, most of those countries have growing anti-austerity movements that back Syriza. The Greek party’s close ally in the European Parliament, Podemos, is now the second largest party in Spain. And while governments in Portugal and Ireland have demanded that Greece stick with its austerity program, those governments are under siege at home for their own austerity regimes.
Portuguese Prime Minister Pedro Passos Coelhois is one of Syriza’s sharpest critics, dismissing the Greek Party’s position as a “children’s fairytale,” but his center-right Social Democrats are running behind the Socialist Party (SP). While the Socialists negotiated the original austerity agreement with the Troika, they have since turned against it. Antonio Costa, the recently elected major of Lisbon and leader of the SP, says austerity has brought nothing to Portugal but poverty and unemployment. On Feb. 12 a multi-party group of 32 leading politicians, economists and scientists urged Coelho to end his “punitive” approach to Greece and instead declare “solidarity” with Athens.
Even the Germans are not all on the same page. While Finance Minister Wolfgang Schauble—sounding more like a Wehrmacht commander than a European politician— snarled that Syriza “would have a difficult time to explain the deal to their voters,” Vice Chancellor Sigmar Gabriel was far more conciliatory.
What about just dumping in the Euro and declaring bankruptcy? Argentina did that and its economy grew for several years straight. But Argentina still cannot borrow money without paying onerous interest rates, and the IMF’s blockade of international finances has hurt Buenos Aires. In any case, Argentina has a much bigger economy than Greece and close ties with other South American countries through the trade bloc, Mercosur. In short, it has far greater resources than Athens.
The Euro has not been good for Greece, or for most of Southern European members of the Eurozone. A common currency doesn’t work when some economies are big, industrial and strong, while others are smaller and, like Greece, rely on business like tourism. Indeed, Greece has lost some of its industrial base since joining the Eurozone. When the playing field is uneven, the big dogs take over, which is why Germany dominates the EU.
The consequences of withdrawing from the Euro are uncertain, and not something a newly elected government can responsibly take. In any case, the vast majority of Greeks have yet to have that conversation.
In the coming months it will be obvious whether the latest agreement was a defeat or a tactical maneuver by Syriza. If the new government is to successfully resist the Troika, however, it will need support, not only within Greece, but from Europe and beyond. As UK political activist and journalist Tom Walker put it, “This battle is a long way from over,” and “the future of austerity across Europe now rests on what happens in Greece. If we give up on them we are giving up on our own struggles too.”
In 480 BC the Spartans held the Persians for three days, and poems were written about their courage, but they all died. It was Themistocles, who knew when to retreat and when to fight, who saved Greece.