Flickr: Ben Folley

Five things you should know about what’s happening in Greece

While the Greek crisis can appear confusing, it boils down to a few fundamental points which suggest both great possibility and danger, writes Roderick C.

It has been five years since the Greek banking system was bailed out by international financial institutions after the outbreak of the sovereign debt crisis. During that time, Greece has laboured under the “Memorandum of Understanding” that was imposed by the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – known as the ‘Troika’. This demanded massive spending cuts, with huge social consequences, including dramatic increases in infant mortality and disease, a shattered education system and massive unemployment.

As Greece’s creditors, the ‘Troika’ has from the start been determined to use the country’s plight to enact an experiment in radical neoliberalism – one highly reminiscent of the ‘debt crisis’ imposed on many countries in the global south in the 1980s.

This January, the Greek people rebelled via the ballot box, electing the radical left Syriza. They stood on a promise both to remain within the Eurozone and scrap the austerity measures – a combination many argued from the beginning was impossible. Since then, the Syriza government has been engaged in a tortuous and prolonged process of negotiations, during which Athens and its creditors have moved ever further apart. The fear on both sides is that Greece will be forced out of the Eurozone – a so-called ‘Grexit’ – with unknowable consequences for the whole of Europe.

The casual observer may be forgiven for feeling that this process is an impenetrable one. However, in reality the situation can be boiled down to a handful of key features. They show both the historic opportunities it presents, and also the grave dangers.

1. Syriza has compromised hugely, but not sold out

In February, the Syriza government signed a short team deal with its creditors. This was a huge climb-down, and many on the left rightly opposed it. However, it was worded in such a way as to leave much “creative ambiguity”, as Greek Finance Minister Yanis Varoufakis put it at the time. Furthermore, it did not give the creditors all they wanted .

Syriza clearly believed they had won a breathing space, but subsequent events show that the troika saw this agreement as equivalent to capitulation. During subsequent discussions, Syriza have shown a willingness to compromise further, but have retained their ‘red lines‘ of opposing any further pension cuts or increased VAT on basic goods. They have even unilaterally delayed payments due to the IMF as a protest against continued demands for austerity. At the time of writing, Syriza’s leadership appears prepared to risk a forced ‘Grexit’ from the Eurozone rather than capitulate entirely.

2. The Troika is not interested in any compromise

Despite Syriza having moderated its position, the EU are rejecting everything that falls short of full scale austerity. Varoufakis’ proposals to a meeting of the Eurogroup on 18 June promised extensive privatisation and market liberalisation. Despite this, they were summarily dismissed because they did not include specific measures on pensions and VAT and because of Athens’ plans to restore collective bargaining rights.

3. The Syriza left are resisting and gaining ground

Since February, voices in Syriza urging a halt to compromise have got louder. Many of the party’s members and supporters have begun to question whether it is worth staying in the Euro if this makes more austerity inevitable. At a recent meeting of Syriza’s central committee, the Left Platform proposed an alternative programme calling for ‘Grexit’ and wholesale bank nationalisation. This managed 44% of the vote, a sharp increase on previous levels of support for the Left.

Last Wednesday saw thousands protesting in central Athens, calling for the government to stand firm against the creditors . This, plus ongoing strikes and protests such as the recent action by pharmacists, shows the social movement is still on the streets.

4. Grexit could have huge consequences

Many economists think that the economic fallout of a Grexit would be perfectly manageable , as European banks are now more financially secure and have much less Greek debt on their books than before.

This is entirely possible – but it should be recalled that most economists did not predict the financial crisis in 2008. Furthermore, other seasoned voices believe the effects would be profound, including new economic crises, the potential unravelling of the whole European project and serious geopolitical implications.

5. This is an historic moment

It is scarcely possible to overstate the potential importance of current developments. If Syriza forces the issue to Grexit and then embarks on a radical left programme that was is to work, Greece could become a beacon for the radical left. Across Europe, activists could be inspired to set up Syrizas of their own, and could gain dramatic votes if people saw the Greece example as a success story to emulate. And the ripples could spread to other states in the south of the continent, particularly Spain and Portugal, very quickly. On the other hand, a Grexit that led to economic disaster either for Greece or Europe could lead to a new ‘discrediting’ of the left, with commentators on the right pointing to Greece as a perfect example of why the left’s ideas can never work. And a Syriza surrender to the creditors could open up all sorts of new possibilities, for struggle or defeat, inside Greece and internationally.

The stakes are massive, and solidarity with Greece is vital at this point. The next stage in that process in the UK is this coming Wednesday, when activists will gather in Trafalgar Square as part of a Europe-wide show of solidarity . I hope to see you there.