EU as the war room of capital’s attack (Milan, 27.6.2012)

I wanted to highlight the importance of Vasapollo – Martufi and Arriola’s book “PIGS’ Awakening”. Comparing this contribution with many others that are circulating today in the European Left I distinguish two points which, in my opinion, are adding something new to our huge effort to overthrow capital’s attack in Europe and build a new alternative: Firstly, the uncovering of class character of EU, and the proposition for the next day of a program that surpasses national borders, without giving in to today’s balance of forces which is in favor of capital interests. I’m speaking about LIBERA and ALIAS. This is the second point. In my own speech I‘ll try to enrich your problematic with the Greek experience and, in parallel, to show some personal considerations or inconsistencies about your proposals.

  1. A.     Role of EU

In Greece, the sovereign debt crisis that unfolded in 2010 (and more exactly was caused in its present form) helped emerge a wave of deep criticism against the Eurozone and EU. In spite of this, even now with German’s behaving like an occupying force, Greeks are in favor of the euro and EU, by a percentage of 75%, having the illusion that euro guarantees a higher level of living while on the other side drachma means poverty. This is a perception that helped ruling class parties to win in the recent elections ofGreeceat June, 17 when they sent the following blackmail to the voters: “Rejection of austerity packages and Memorandum of Understanding will automatically mean exit from Eurozone. So your choices are: Acceptance of spending cuts and wages’ reductions or return to the drachma that means bigger poverty and unemployment”. In this way the dividing line of the elections of May, 6 in which prevailed the question “pro or against the austerity policies” was removed to a more favorable direction for the pro bail-out parties.

Only in this context we could explain SYRIZA’s defeat and the (temporary) win of the rightwing party (ND) which formed government with social democratic party (PASOK) with the help of the most rightwing party of the Left (DHMAR). But SYRIZA is not only a victim of this (successful as was proved) strategy. SYRIZA during the previous years separated EU from austerity policies (blaming only IMF, for example) and refused to build a movement against Eurozone and EU. Its analysis about EU remains trapped in a simplistic scheme, originated from the political tradition of euro communism, that EU is the “peoples’ home”. No class analysis about the social forces that imposed Rome or Maastricht Treaty or built European Economic Community and most recently European Union and Eurozone, neither even a simple eye to the Euro Plus Pact and Stability Pact which were signed during the last year.

According to the previous, EU and Eurozone have been proved the command center, the war room of the most recent capital’s attack. Overall aim of this attack is to close the parenthesis that opened in theWestern Europeat the immediate post-war period, with the welfare state, the high level of life among workers, etc.

At the epicenter of this attack are workers’ rights. I would remind you only 3 of the articles of Euro Plus Pact and Stability Pact which constitute an ad hoc conservative amendment of founding articles of EU: Commitment of European leaders to push wages and salaries in their countries at the direction of their biggest competitor (who is China), increase of pension age, criminalization of public deficits and many more.

The big winner of this war is the whole European capital, not only financial capital as it is said often in the European Left, underestimating the ties between them, but industrial too. For example manufacturers have gained the biggest profits from the reduction of salaries by 25% (and 35% for those under 25 years old) according to the most recent Memorandum of February.

The role of the weapon of mass destruction in this attack played sovereign debt crisis. This crisis was only an excuse as shown by the fact that Greek public debt in October of 2009 was 115% of GDP and now (after two rescue efforts) has climbed to 165%. There is something more that proves the failure of the policies of ECB: the fact that sovereign debt crisis, two years after its explosion, hasn’t stopped but keeps expanding. It’s easy to understand that the real aim of the bail-outs wasn’t to avert a public finance derailment but the attack to the working rights.

Examining the role that played Brussels and Frankfurt the last two years and much more during the last swap of Greek bonds (which called Private Sector Involvement because of the nonvoluntary participation of private bondholders in the restructuring of Greek public debt) they confirmed their role as provocateurs of the crisis and at the same time Most Valuable Players of international capital. I distinguish some features of the agreement, which give it a pioneering role for every new sovereign debt restructuring in other countries of the developed capitalist world that will follow sooner or later.

1)      Bloody austerity measures as a term for the agreement which include: spending cuts in health, education and every social expense, reductions in wages and salaries not only in the public sector but even in the private sector, massive lay-offs in the public sector, dismantling of collective bargaining system, etc.

2)      Prolonged recession which give to the therapy a punitive character and transform the country into a negative example for every other government that was thinking to follow its route.

3)      Issuance of the new bonds, which replaced the previous, under theUnited Kingdomand Luxemburg and not Greek law. This change is in favor of the creditors as the legal tradition of these countries is in favor of bondholders.

4)      Neocolonial loan agreements which accompanied the new loans giving the right of intervention to foreign debtors. Under these agreements Greek government has been resigned from its sovereign rights.

5)      Radical change of the profile of public debt which now is possessed by its biggest part (73%) from official debtors (IMF, ECB, governments) when, before PSI, official was only a small part (38%) of Greek public debt.

6)      Unequal division of the losses from the “haircut”. Greek banks for example having in their investments portfolios Greek bonds of 55 bn. of euros will be compensated in the form of recapitalization by an amount of 50 bn. euros approximately. The biased (towards the banks) character of Greek “rescue” could be seen from something more: Till now Greecehas received from bail out amounts 150 bn. euros. From these 105 have gone to foreign (official and unofficial) debtors, 25 have gone to Greek banks and only 20 have gone to the Greek budget. The unequal character of the swap could be seen if we take into the account that when Greek banks are compensated nearly by 100%, Greek pension schemes bear losses of 55%. At the same time Greek universities and other entities of public sector bear losses even 95%!

7)      Violation of Greek constitution. Loan agreements include many articles that violate Greek and EU laws, even Greek constitution leading prominent Greek constitutionalists to condemn them asking from members of Parliament no to vote it.

All the previous give us not only the moral advantage and right but even the legal arguments, according to the international law, to say that this debt not only could not be paid, but it should not be paid. Especially, Greek public debt should not be paid, using the following arguments:

  • Troika’s loans are illegal because they have not been voted by the Greek parliament, as was required by the Greek constitution. Especially, for the second loan of 130 bn. euros (March 2012) has not been followed the official process. The first loan has not voted by the Parliament not even by the simple majority of 151 votes!
  • Germanyowes to Greece (which is nearly the unique country that has resigned from the demand of compensations) from Second World War more than 700 bn. euros (twice the current Greek debt) in present value. So, every discussion about Greece’s international obligations should begin fromGermany’s recognition about the WWII obligations againstGreece.
  • International Law recognizes a country’s right to declare cessation of payments in case of emergency situation. In Greece we have the clearest implementation of this term with the closure of more than 1.000 schools, more than 50 hospitals, the doubling of unemployment in two years (from 11% to 23%) the formation of a migration wave like what was happening the first after war decades in our countries, etc.

This task, which could pave the way for a wider challenge of the debt burden from the European peoples, could be facilitated by the campaign of audit of public debt, by a very strict term: that this job would be independent from the state, would be accountable to the social and workers movements and could not be used as a means to legalize the debt burden. In this context civil Greek initiative for the formation of an audit committee of the public debt has declared that its aim is the cessation of payments of public debts and the abolition of the whole public debt or of its biggest share.

  1. B.      The next day

Last two years left economists, squares’ movement, Greek workers’ movement and especially its most radical (but not marginal) wing has formed a set of demands against the EU and IMF’s attack. They include: Exit from Eurozone (as a means for the implementation of independent monetary policy in the interest of domestic employment) and the EU (as a means to apply redistribution policies and industry policy), imminent cessation of payments of public debt, abolition of the whole or the largest share of public debt with the help of an independent audit committee, nationalization of banks and crucial enterprises, increases in capital taxes, control in capital flights, etc.

Your own proposed program answers with a very clear way to a difficult question which we confront: Could Greece bear alone in a monetary world which dominated by mega-currencies like euro? Till now, we answer that just in the same way that in the previous years not only Greece, but all the peripheral countries of Eurozone (Ireland, Portugal, Italy, Spain and Cyprus) had been proved “crisis resistant” with their own monetary units, just in the same way they could do it now too. In the long run of course the LIBERA currency (or, in essence, a common currency between countries with comparable productivity) is the solution. But, my opinion there is a very crucial distance between now (when our countries suffer from a currency with an interest rate which serves Germany) and then (when in our countries we will have anti-capitalist victories). In this period, which is defined by the different speed that crisis of euro strikes our countries I believe that the return to a national monetary unit is inevitable. It doesn’t means return to nationalism, as we are blamed by the cosmopolitan Left, but application of a monetary policy with the adequate interest rates and exchange rate (even fixed and not tradable rates) that will serve labor’s interests.

Closing, I wanted to share with you some reflections about ALIAS, the equivalent of ALBA, in our region. Regimes ofBolivia,Ecuador,Venezuelaof course have offered to their people a huge relief (redistribution of wealth, free education and health, public debt’s cancellation, etc) after two decades of the most brutal economic and political oppression byIMF,USA, etc. But at the same time private sector has been untouchable. Exploitation in working places has not been challenged, reminding to us the pure social democratic programs, which applied inEuropeduring 50’s and 60’s. But even now the prospects of these regimes remain open: Will they be proved transitional regimes paving the way to social change and socialism or they will be known in the history because they undertook the job of modernizing capitalist relations of production and bourgeois political system after its disintegration under the brutal IMF shock – therapies? I believe that we must have these questions in our minds because the militant Marxism and anti-capitalist Left will see just in the next period the emergence of parties of center-left which will be pole of attraction of wider masses, like what is happening now inGreece, as a result of the magnitude of our defeat.

In this context I believe that substance of new solidarity alliance, ALIAS, is a positive exit to the nowadays drama by the term that should challenge capital’s dominance. At the same time it’s a vivid proof of anti-capitalist forces’ internationalism. Knowing in any case that the final result will be decided under the balance of class relations in each country, ALIAS should have hostile relations with EU.Brusselswill not stop being the war room of capital and imperialism. So, if we believe that getting out of EMU (if this occurs under the pressure of social struggles and not after Bundesbank’s calculations) is politically convenient even for tactical reasons without exiting the EU, as it is written in the book, then we will be in front of unpleased surprises.

As a conclusion I believe that Luciano Vasapollo and others’ book and this exchange of opinions is a very big step towards that will help all of us to:

  • deepen our knowledge for the contemporary capitalism and the specific characteristics of the current crisis,
  • develop our critique against capitalism and
  • elaborate a common and reliable alternative against the existing capitalism, which will serve the interests of working class.

Greek sovereign debt crisis and Ecuador (Speech in Quito, 15/2/2012)

Firstly, I would like to thank you very much for the invitation to this very interesting congress. Your ambitious effort for the formation of a financial architecture different to the IMF’s shows that there are real alternatives to the nightmare without end that the peoples in the peripheral countries of Europeare currently living in. I’m speaking about Greece, Portugal and Ireland and as of late, Italy and Spain.

The common element in all these cases is a very big public debt and an equally big budget deficit which, in the aftermath of crisis of 2008, was characterized as unbearable and unviable. Under the threat of imminent derailment of public finance (something that actually was never proved to happen) during the last two years, Europe lives under the iron heel of the most severe, the most inhuman austerity measures that have been imposed in our region since the post war period.

I’m describing their common characteristics:

  • Cuts in social spendings and especially to health, education, social security and transportation
  • Cuts in wages, salaries and pensions
  • Privatizations of public utilities (water, energy, etc.) and a massive sell-off of public property, and
  • Increases in every kind taxes that are paid by the people.

These measures are deeply unjust because the roots of this current crisis aren’t in the generous welfare state of these countries which never had high wages or well-equipped hospitals.

The root of the current sovereign debt crisis must be trailed to the following causes. I’m speaking specifically forGreece, in the sense that these causes aren’t the same with other eurozone countries that suffer from bail-out mechanisms. In any case there are serious similarities between all these countries.

  • Tax cuts for the rich and the private sector, in the context of a neo-liberal agenda that has been imposed since 80’s throughout the world. But especially in continentalEuropeits implementation started in the 90’s under the Maastricht Treaty which laid the fundamentals for the eurozone.
  • Current payments for the servicing of the debt. For example Greece (with a GDP of 212 bn of euro, according the state budget) during 2012, which is the fifth consecutive year of recession, will pay 87 bn of euros for servicing of debt when tax revenues will be 53 bn and will give for education 5,7 bn and for public health 4,8 bn. Looking at the previous years, Greece during the last two decades has paid for the servicing of the debt twice the amount of the debt in its today level of 360 bn euros.
  • Increasing military spending through all the EU countries which serve the imperialistic plans ofGermany. EspeciallyGreeceas a result of the turkish enemity and demands of NATO gives a scandalous, totally disproportionate percentage of its budget for military spending.

It is obvious that if someone wanted to confront the sovereign debt crisis one should confront the previous reasons: i.e. increasing the taxes of rich and corporates, to stop servicing the debt and reduce the military spending.

In spite of these possible solutions, the European ruling classes imposed the most brutal austerity packages and, at the same time, gave huge amounts to the banks, leading to the explosion of the fiscal problems. For example in Greece the first bail-out loan was 110 bn of euros, but at the same time the Greek finance minister has made available for Greek banks 155 bn of euros, either in the form of cash or in the form of guarantees. As a result Greek debt which was 115% when government decided to call on the IMF is now 165%!!!

Just the same happened inIrelandwhen the government announced the bail-out of the private banks. In this way, nationalizing the private losses, the Irish government led a public debt of 30% of GDP to the sky: 130%. The hypocrisy of the European (centre-left and right-wing too) governments could be seen inSpainwhere the public debt (61% of GDP) is significantly lower, even to that ofGermany(83%) in the 2010.

And after of all this, the European Commission contests that the rescue programmes failed because they have not been implemented with the adequate strictness. So they ordered increased instalments of the same poisonous medicine. It is striking that this doesn’t happen only inGreece, which is characterised as a bad pupil due to the combating heritage of the labour movement and the Left. In Greece failure was observed before anyone else because Greece was the first to face the test of IMF and EU conditionality in May of 2010, in the northern hemisphere and specifically in Eurozone. But now the exact same failure can be seen inPortugalwhich entered the bail-out mechanism in May of 2011, where the interest rates have reached the record level of 14% and the government discusses withBerlina new bail out loan!

After of all this, there is a question: Can we speak about failure even inGreecewhere the last memorandum of understanding which accompanies the new loan of 130 bn of euros is the seventh from May of 2010 when the first one was signed?

By my opinion, no! The bail-out plans had no intention to save the Greek or Irish economy and even less to secure or improve the living standard of Portuguese or Spanish people. The aim was to close the parenthesis that opened in the first post war period, whenEuropecovered in the shame of colonialism, bought out the labour movement with the welfare state. In this struggle, (which embodies the response of capital to the current structural crisis) the ruling classes – governments and financial organisations, like IMF and ECB  – use debt as a very good opportunity for paralysing peoples’ reactions.

The response of the big majority, of the 99% to use a current political terminology, must be the following slogan that is said in every square of Greece: we don’t owe, we don’t pay we don’t sell.

In this struggle, the audit of public debt offers a huge help as it contributes to the de-ligimitation of the public-debt. By asking to open up the books of debt, as primarily a struggle from within the social movement, and not coming from the technocrats, we have cancelled the methods of shock and awe that are based on the ignorance of the people. In this struggle there is something else that is also very significant: The living example of countries like Ecuador which refused to accept the orders of the creditors. Respecting the very big political, economical and historical differences, we want to do just the same thing in Greece and all the other eurozone counties that are on the brink of collapse because of their indebtedness.

Nowadays Ecuador’s example is much more of a teaching than a year ago, when we were making the film Debtocracy and showed to Greeks and other people that TINA (there is not alternative) had died in the Andean heights. Now, the Greek drama has shown that every solution that is based in the compromise and the negotiations with the creditors and the international financial organisations leads to unemployment, poverty, neocolonial loan agreements, police brutality, constitutional coup d’etats and finally at default. At the other side cessation of payments and debtor-led defaults may be the first scene, our first success in this, long duration play to overthrow the attack of capital.

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