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Cracks in the system

The squeeze on public spending is reaching its political limits in Greece. Pavlos Klavdianos analyses what this could mean for the ruling party, Pasok, and whether new alliances might emerge, with difficulty, to give political direction and focus to the growing disaffection

April 16, 2010
6 min read

As the Greek government’s measures to deal with the country’s huge budget deficit become tougher and more specific, hitting collective agreements, jobs, pensions and basic services, and as the stance of the European Commission and Bank becomes more hard-line, popular resistance is growing and divisions within the government are opening up. Demonstrations and sit-down strikes are spreading, and polls show that public opinion has moved against the government’s plans. The cracks in the political and economic system have spread beyond the criticisms by government-affiliated trade unions to signs of opposition within the conservative New Democracy (ND) party, as well as among medium and small businesses. These cracks are new and not generally discussed in the international media.

The latest package of government measures includes a 2 per cent increase in VAT, major cuts in public sector pay, increased taxes on fuel, electricity, alcohol and cigarettes (for a second time in the past few months), a pensions and salaries freeze, a 5 per cent reduction in the public investment programme, a new tax on luxury goods and a clampdown on tax avoidance by offshore companies. These had been preceded by tax measures that mostly affected people on middle incomes, at the same time as lowering taxation on profits.

Failing to convince

The government’s efforts to persuade the public that it is standing up for Greece against external pressures and defending ‘national sovereignty’, that the measures are a necessary means of survival and avoiding bankruptcy, and that the country will soon be growing again, are simply failing to convince. According to a poll for the Kathimerini newspaper at the beginning of March, 68 per cent are against the planned rise in VAT, 74 per cent oppose the freeze on pensions and 78 per cent disagree with the hike in fuel tax. Only two measures enjoy widespread support: the new tax on luxury goods, which was backed by eight in ten respondents, and the increase in tax on cigarettes and alcohol, with 65 per cent support. Overall, 57 per cent of Pasok voters are against the government’s measures – a dramatic reversal, given that until a short while ago a majority of Greeks were supportive of what it is doing.

The Greek economy has specific problems that have exacerbated the impact of the international financial crisis. As well as a huge budget deficit of more than 12 per cent of GDP and a narrow productive base, tax evasion is massive and the government has done nothing to address it. The welfare state is also of limited scope, leaving the victims of the crisis totally exposed.

The political ramifications of all this are potentially immense. Pasok, the governing Greek Socialist Party, was originally born out of the resistance to the military dictatorship of 1967-1974, but now follows, with its own particular twist, the neoliberal trend of social democratic parties internationally. It ruled Greece for most of the 1980s and 1990s and was returned to power after a period in opposition between 2004 and 2009, largely because of public opposition towards the conservative ND rather than any positive enthusiasm for Pasok. The great majority of its supporters certainly did not vote for the policies they now face.

The prime minister, George Papandreou, has a Scandinavian social-democratic outlook, claiming to pursue growth through fairness, social cohesion and state co-ordination rather than the Blairite reliance on market-led growth with benefits trickling down. But he has sided with the pro Eurozone at all costs grouping in Pasok. The result has been neoliberal policies wrapped up in socialist-sounding ideology.

The party’s bonds with the unions are strong on the basis that they support it as the governing party. A sustained left-wing tendency has never emerged. There is certainly no figure of the stature of the German SPD’s Oscar Lafontaine or the French Socialists’ Jean-Luc Mélenchon prepared to leave the party and do battle with it on the left from outside. While there are undoubtedly disagreements at the top, there is no immediate threat of a split.

At the grassroots, however, Pasok is being strongly criticised and some of its supporters, driven by political beliefs rather than career ambitions, could create a political formation to its left, alongside some trade unionists and intellectuals. A similar left tendency has emerged on two occasions in the recent past with some success. When the previous Pasok leader, Costas Simitis, was prime minister in 1996-2004, it managed to block the introduction of a new social insurance bill. And more recently, working with Syriza, the electoral alliance of the radical left, which has 13 members of parliament, it prevented the privatisation of education, which Pasok, despite being the main opposition party, had supported. Can the same forces come together for a third time?

Vicious circle

There is a growing consensus that Greece is in a vicious circle. Since GDP is expected to continue to fall, where will the funds be found to reduce the deficit from 12.7 per cent in 2009 to under 3 per cent in 2011 be found? Soon further measures will be required, which will transform a fiscal crisis into a social one. No one knows how this is going to be received by the people and what their reactions are going to be.

The left – including both the Communist Party and Syriza – has backed the idea of a ‘social front’ of resistance. But the Communist Party’s unreconstructed desire to have control over any such movement, and its unwillingness to form alliances, is a major drawback, despite the party’s electoral strength (7.5 per cent of the vote in the last election) and its dominant position in the unions.

Syriza, which won 4.8 per cent of the vote in the last election, believes in a more open strategy of alliances, but it is not as yet adequately organised. Some steps have been taken, however, with the support of a network of grass-roots unions, that strengthen mobilisations when the trade union leadership is inert. And despite a leadership crisis that has not yet been fully overcome, Syriza, with its radicalism and open way of working, shows signs of providing a political space that could attract people from the social movements as well as from the radical wing of Pasok.

How public sector employees, and workers more generally, react is going to be decisive for future developments. Employers see the crisis as a golden opportunity to demand the removal of all obstacles to increased productivity and competitiveness: environmental protection, social insurance, welfare policies, collective labour agreements and so on.

As things stand in Greece, nothing can be excluded from what the future might have in store. It is the duty of the left to lead the debate on renegotiation – and partial moratorium – of the public debt and to participate in international initiatives to this end.

Pavlos Klavdianos is an economist, a journalist with the weekly Epochi and a member of Syriza. Red Pepper collaborates with Epochi as part of the Eurotopia network of radical left publications

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