Greece: From sovereign debt crisis to the default of political system, the alternative of a constitutional assembly

1 September 2014 by Leonidas Vatikiotis

As it is known, draconian austerity measures in Greece began 4 years ago, on May of 2010. Half a year before, on October of 2009, Greek Left tasted one of its worst surprises, when it saw Greek bipartisanship on the early elections to gain one of its biggest percentages of the last decades (77%, i.e. 44% social democratic PASOK and 33% the rightwing party of New Democracy). However, the height of their triumph coincided with the end.

During these 5 years their political influence has collapsed. On the recent European Parliament elections both of these parties gained 30% and now it’s a common secret that both of them are in a process to change leaders, even title for their parties. The only thing that no one knows is the form of this transformation. So, an initial conclusion is that Greece is under a double crisis: economic and political too.

Let me present some data, which describe the deep transformations in economy under the current crisis. During these years, with the help of Troika Troika Troika: IMF, European Commission and European Central Bank, which together impose austerity measures through the conditions tied to loans to countries in difficulty.

(the EU and the IMF IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
) and with the unanimously opinion of the elite of the Greek ruling class (mainly bankers and ship-owners):

- Unemployment has reached 27% surpassing even the Spanish record,

- Among the unemployed only a 10% receives any kind of benefit.

- Salaries have been reduced by an average by 40% as never again happened in a such short period.

- Among the “lucky people” who are working, 1 out of 3 is being paid with a delay of more than 6 months.

- Taxes among employees have skyrocketed. Real estate taxes since 2009 have increased by 700%.

Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
has reduced since 2008, when crisis appeared by 21% which is a global record for peaceful times.

- Tens of thousands of young scientists and university graduates have migrated to North Europe, especially to Germany, and to the Middle East.

- More than 250.000 small, medium and even big enterprises have closed and 200.000 more will close this year and the next one, changing radically the very typical south-European social structure from a ball-shaped which, dominated through all over the post-war period, to a pyramid-shaped one.

At the other side, Greek banks since 2008 have been subsidized with 211 bn. Euros, which equals to 115% of current GDP. In other words we became witnesses of an unprecedented transfer of social wealth from the vast majority of society to the bourgeois class and among them to the most parasitic part. In this process public debt has been proved the perfect alibi hiding the transfer of crisis cost to the working class. As a result, anything but accidentally, sovereign debt Sovereign debt Government debts or debts guaranteed by the government. , since crisis appeared, and despite the biggest default of last decades (of nominal worth of 105 bn. Euros on March of 2012) public debt has been increased since 2009 as a percentage (from 129% of GDP to 175%) and as an amount too (from 299 to 321 bn. Euros).

The aforementioned social cost wasn’t an unwanted development, an accident or a fault, as usually IMF says apologizing, neither a collateral Collateral Transferable assets or a guarantee serving as security against the repayment of a loan, should the borrower default. damage. It was the principal aim. It’s a measure of its success, the other, the dark side of the Troika’s aim to construct an “economy of supply” replacing the current “economy of demand”, which, by their own words, has reached its limits and is characterized as outdated. Economies of supply mean the abolition of working rights, social security, environmental protection, regional cohesion even the tax obligations of big capital and much more the multinational capital.

If we want to predict more thoroughly the next day, both in political and economic terms, we must describe the roots of this crisis. In brief, this crisis was a capitalist crisis. It was triggered off the financial crisis of 2008, was exacerbated by public finance derailment, deteriorated by the participation in the EU and the Eurozone, but its roots are traced in falling rate of profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. which caused the crisis of 70’s, ending the flourishing post-war period, the “thirty glorious” years. Having in mind the systemic character of the crisis and its persistence through so many decades should be obvious the violent receipt that ruling class should propose. In addition, we can agree that financial regulation (for example separation of investment from retail banking institutions or lowering of the leverage Leverage This is the ratio between funds borrowed for investment and the personal funds or equity that backs them up. A company may have borrowed much more than its capitalized value, in which case it is said to be ’highly leveraged’. The more highly a company is leveraged, the higher the risk associated with lending to the company; but higher also are the possible profits that it may realise as compared with its own value. ) can’t solve it.

Speaking about the Greek “political lab”, which looks like little or more with the whole periphery of EU, in political life too are promoted equally violent and radical receipts. In brief, I would characterize the plan for the next day as a more intensive turn to political reaction. (Like what is happening in economy, where the receipt is much more Reaganism, much more Thatcherism).

What is happening with the neo-Nazi party of Golden Dawn is very characteristic. Government’s efforts to get it out of law, since September of 2013 when the Golden Dawn killed an antifascist young singer, have failed because Golden Dawn increased its power in parallel with unemployment and poverty. To remind that GD on the elections of 2009 gained a marginal percentage of 0.29% (20.000 votes) and 3 years later on May of 2012 gained 6.97% (441.000 votes). At the recent EP elections gained 9.39% (537.000 votes). So, we can say that GD is an original creation of austerity policies, IMF and European Union. The obvious question, why we didn’t have a similar phenomenon in other crisis-hit countries, has a double response. Firstly, in no other country such a violent austerity program was imposed and, secondly, due to the Greek history. Greece was the sole country where the collaborators of Nazi have never been prosecuted. In Greece the resistance forces were prosecuted and communist Left remained out of law untill 1974… In other words Greek ruling class has an historical, intrinsic tendency to fascism and totalitarianism.

The developments in Greece, with the rise of racist Right, don’t differ a lot from other countries. In France, UK and Nordic countries too, we saw during the recent EP elections, racist parties to endorse public anger against austerity. Partially, due to hesitation of the Left to combat EU and social democracy’s total incorporation to EU mechanisms. This gap was filled by parties of extreme right which reflect bourgeoisie, nationalistic and not popular interests.

The turn to political reaction, which is a permanent tendency, isn’t created only by economic reality.

Political reasons as well, lead to the same direction. I highlight two of them: First, the downgrading of current bourgeoisie democracy by means of the continuous violations of constitution and the degradation of parliament or legislative branch in favor of executive branch, according to the classical division of powers. Only one example: The first loan agreement of 2010 (110 bn. euros) has never been ratified by Greek parliament, while the second one of 2012 (109 bn.) caused a rebellion among professors of public law who supported that it was a bomb on the foundations of constitutional order.

The second political reason that leads to political reaction is EU. To remind that on November of 2011 in Greece and Italy too, Merkel and Sarkozy caused a coup, overthrowing the elected Prime ministers (Papandreou and Berlusconi). On their place they appointed two technocrats from the banking industry (Papademos and Monti). To broaden parliamentarian base of Papademos, Fourth Reich in Greece imposed a coalition government with the participation, for first time, of a light far right party (LAOS). When EU was legitimizing far right pressing political establishment for its participation in the government, why a pure far right party (like the criminal gang of GD) not to enter into the Parliament? The last example that shows EU’s responsibility is the undermining of sovereignty by EU and concretely Commission. Transfer of powers from elected governments to EU, storm of incorporation of EU laws to national law and the appointment in Greece and in Cyprus too, bodies of foreign technocrats (Task Force) to reform public administration have transformed indebted countries to post modern debt colonies of Germany, reminding Nazi occupation.

Future EU’s agenda is a cause of worry, too. I stress the following obligations:

- the commitment for balanced budgets,

- the penalties for those countries that keep deficits,

- the monitoring for those countries that owe to other EU countries till pay off the 75% of their debt, and many more.

All these have been introduced by Fiscal Pact and Euro Plus Pact (2011), even by the form of constitutional amendments. This was a decision of European Council. To stress, that crucial parts of this reactionary arsenal (like package of reforms Two and Six Pack) have been voted by European Parliament, showing that even the elected European Parliament can’t be a counterweight to the appointed and apparently undemocratic European Commission. By my opinion, European Left should learn from Latin American Left which has rejected any kind of economic integration with United States as an imperialist project. European Left must reject totally European Union integration, as a German and big business project. The necessary economic integration, which will achieve economies of scale, should be built, before anything else, on different social and political foundations, excluding countries that are characterized by so big productivity records, like Germany. At the same time will embody the countries of North Africa or Middle East with which our own countries have common historical ties.

Bearing in mind, capital’s furiousness to ask for constitutional amendments as a means to secure the exclusion of any kind of redistribution policy, we must recognize that our demand for a constitutional reform, per se, doesn’t make the difference. In Greece, the most conservative political centers (the industrialists’ federation, for example) ask insistently a constitutional reform, as a means for the abolition of the articles that describe the full employment or the provision of public health and education to all the citizens as state’s duty. Their aim is to transform the exceptional state of emergency, which has emerged the last years under the shock therapy of Memoranda, as a constitutional order. Furthermore, they strive to penalize strikes and political struggles for social change.

The demand of a constituent assembly is obviously …something more than the amendments under discussion due to the deep diving line that draws, defining a restart of the political system. Even in this case, in my own opinion, constituent assembly as a turning point is a necessary but not sufficient condition to end the crisis and instability of current political system, from a popular point of view, allowing and ensuring a radical social and political change. The determinant conditions for ensuring that deepening social and class inequality, increasing poverty and permanent hungry will remain definitely to the past of modern societies are two: The first one is politics.

The second one is social struggles and the re-appearance of a new labor movement. Both of them are met on the demand of changes in the direction of improving the working and living conditions of social majority, at the expense of capital. A political demand and struggle is that one which aspires to changes at national level opposite to an economic demand which is limited to a region, a factory or industrial sector. Our ambition must be victories at universal level, which will be applied to everyone by law, and not a partial level. (It’s an aim opposite to John Holloway’s thesis “to change the world without taking power”).

In this frame we must look forward to a new generation of constitutions that will embody social and working rights and will be the response of social majority to the new aggressive agenda of European capital. I highlight the following crucial issues, among many others, which must be contained in a constitution like this:

1. Unilateral cancelation of public debt, starting from Troika’s (official) debt which represents the epitome of odious, illegal and illegitimate debt. Tool of citizen’s (and not generally public) audit can provide the necessary documentation, according to international law, for its abolition.

2. Nationalization of banks and companies of strategic importance

3. Reduction of working hours (with no reduction to salaries) as a means to reduce unemployment and facilitate people’s participation on common.

4. Abolition of indirect and any popular taxes (first residence for example), generous taxation of capital, especially on multinational companies.

5. Prohibition of any kind of privatizations, cancelling of previous ones, constitutional armoring of public property.

6. Exclusively public, free of charge and high quality education, health and social security.

7. Abolition of any kind of privileges to those who are dealt with public affairs. Their compensation shouldn’t surpass basic salary. (In Greece has been reduced to 480 euro).

8. Representative recall as a means to halt the current total absence of accountability, among two elections.

9. Punishment of those politicians who have voted at favor of banks’ rescue and austerity programs that caused current humanitarian crisis.

10. Exit from Eurozone, EU and NATO NATO
North Atlantic Treaty Organization
NATO ensures US military protection for the Europeans in case of aggression, but above all it gives the USA supremacy over the Western Bloc. Western European countries agreed to place their armed forces within a defence system under US command, and thus recognize the preponderance of the USA. NATO was founded in 1949 in Washington, but became less prominent after the end of the Cold War. In 2002, it had 19 members: Belgium, Canada, Denmark, France, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, the UK, the USA, to which were added Greece and Turkey in 1952, the Federal Republic of Germany in 1955 (replaced by Unified Germany in 1990), Spain in 1982, Hungary, Poland and the Czech Republic in 1999.
which must be characterized as imperialist organizations that represent capital interests, hostile to the people.

At the end, I want to point out that even the most progressive constitution (which reflects class balance Balance End of year statement of a company’s assets (what the company possesses) and liabilities (what it owes). In other words, the assets provide information about how the funds collected by the company have been used; and the liabilities, about the origins of those funds. of a period) can be marginalized from politics, having no impact in daily live. Only social struggles, combative strikes against capital and governments can guarantee that working people can appropriate the social wealth, building a society without exploitation, poverty and alienation.




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