Wednesday, 4 May 2011
Greece One Year of the IMF: Decay and Depression
Economic and Social Crisis
On the anniversary of the IMF-ECB takeover of Greece it would be good to make an assessment of the situation to see what has happened and how the situation might develop in the coming period.
In 2009 the debt was E300 billion and it became E330billion or 140% of GDP and by the end of 2011 it will equal around E350billion or around 150% of GDP. So two years of monetary austerity and widespread cuts in pensions, wages, etc has led to an increase in the debt and a massive increase in the percentage of debt in relation to GDP. The government has stated that public debt will drop to 60% of GDP within a decade and one would require an average growth rate of 6.5%. That isn’t occurring as in 2010 the actual economy declined by 6%. In 2011 it has been predicted to fall by 4.4%. Son in two years it will decline by 10% of GDP. So depression economics actually increased both debts and deficits and points to only one direction: restructuring of the debt or bankruptcy. Restructuring the debt is a form of bankruptcy as the creditors have to accept a haircut either in the interest rates they expect in return or in the actual amount they have allegedly loaned by buying up government bonds. At the same time due to the overheating of the German economy (rise in exports and inflationary pressures) the ECB has stated that interest rates have to rise. So specifically for the PIGS, when their economy have negative growth rates by increasing the interest rates you push them further into a debt/bankruptcy spiral and push the Euro further onto the path of disintegration. The issue of credit default swaps as well indicates that a section of foreign bankers want bankruptcy to gain from the bets they have made, on the economy tanking.
According now to other figures, Greek social security (IKA) has had a drop in payments from E2.2billion in 2009 to E1.6billion due to the massive rise in unemployment which hovers around 1,000 citizens a month, or 15.1%. Taking into account one is only paid for one full year then when one comes off the unemployment register that does not mean one is now ...employed. Around 800,000 people have lost their work as shopowners and their insurance known as TEVE does not pay any unemployment pay and if you owe more than E8,000 you cannot claim a pension until you have paid it off. Alongside that they have extended the pensionable age, so if someone is around 55 and his shop has gone bankrupt recently they would not be able to claim a pension or have any health cover for at least 5 years when they are pensioned off, as Greece has a US style health cover system, with payments mandatory on a monthly basis before any cover is granted.
The National Bank of Greece in a recent study stated that average losses for workers in the public sector are equal to 13.5% for the private sector are 14% and for the pensioners around 11.5%. With unofficial inflation running around 7% that equals on average a collapse in average spending power around 20% in one year. This by itself is crippling the private sector as without spending power the market starts to implode as it is doing daily as on average 1,000 are becoming unemployed. The IMF government assumes the whole issue is about public expenditure and the main focus of all government and media propaganda is regarding the high costs of the crippled Greek welfare state.
At the same time we are witnessing the mass de-industrialisation of Greece and the collapse of its agricultural sector whereby for example sugar imports now come from abroad alongside garlic all the way from China, unheard of imports three decades ago when Greece joined the EU under the guise that these sectors would be developed, but instead were destroyed.
The usurious interest rates by the EU are also an amazing feat of modern economics as the ECB loans with 1% interest rates but the payout of Greek bonds are 6%, thus allowing a difference of 5% which when calculated on a yearly basis is equal for what has been borrowed to E5billion equivalent to the annual wage budget of the public sector. The one which has been targeted to be cut to the bone, privatised, sub-contracted, deregulated and whatever other modern form of slavery collapsing capitalism comes up with.
The level of decay has reached US proportions with the police announcing that women shouldn’t travel at night anymore in Athens as they are liable to be robbed and daily we hear stories of bank lootings, supermarket robberies and robberies of pensioners in their homes, unheard of events in Greece. Three four star hotels have closed in the centre of Athens as well which were the pride and joy when the Olympic (Coca Cola) Games hit the town, as well as the recent bloody looting of the Lawyers Union offices in central Athens. But the police has been unable to fill up its cars and no longer turn up for crimes as they cannot/do not want to as even a few of them have fallen victim to shootings.
Media reports also speak about Greeks handing over young children to orphanages for the first time in decades trying to ensure a better life for them. Child benefits are under attack as the latest story is the social security benefits have collapsed due to the ageing population alongside the support provided to neighbouring Balkan states whereby their social security contributions could be added onto the Greek system if they worked in Greece for two years and were near pensionable age. Tens of young women mostly from African countries now ply their trade in central Athenian squares when the sun goes down for as little as 5Euros and there have even been shootouts between indigenous gypsies and Asian beggars in rubbish dumps with a few victims
IMF-ECB vs Welfare State
A massive programme of cuts in both schools and hospitals has been inaugurated recently by the IMF-ECB. 10% of schools are to be merged, what happens to the positions of staff is still not well explained but a new law is being implemented whereby staff can be made flexible and transferable across the whole of the public sector, including other cities, but if one is already married and they have commitments in one city, this will be an explosive issue alongside the fact that many parents who lived in villages can no longer travel 25km twice daily to take their children to schools. Thus for the first time since the civil war era many will no longer send their children to school. In almost every town square in Athens there are banners up by people announcing their opposition to these mergers. In one town in northern Greece students started a hunger strike in the town square with tents. The IMF-ECB targets primarily the welfare state as they are considered to be unproductive.
Hospital suppliers in medicine have had their payments frozen and they have gone on strike refusing to supply the hospitals. Twice in the last year there has been a non-payments strike and many thousands of Greek citizens relying on medicine have had their supplies cut and have tried to source medicine from abroad to survive. The IMF-ECB has obviously seen how much is being spent on health in general and they have cut the overall budget alongside the fact that they have sub-contracted many essential parts of health care to private companies such as scanning, etc. nutrition. There are 140 govt hospitals and 2 university hospitals. There is talk of merging around 40 of them and over the last two weeks two central university teaching hospitals closed overnight with issues for patients in their care who were advised just to up sticks and leave. Alongside this situation many A&E wards just close down in order to make savings without it being pre-announced. Just before Easter two university hospitals closed down overnight and hospital patients were carted off. The IMF induced measures aim to cripple health and weaken the standards one has been used to accept and return once more to a fully privatised health service, but this has been difficult to openly announce as PASOK is the party that created the Greek style NHS in the 1980’s.
Mass privatisation and strikes against the IMF
The governments announcement of the mass privatisation of almost every remaining state interest in transport, energy, land etc in order to raise E50billion Euros between 2012-2015 aims to destroy all working class gains and reduce the Greek working class into total and absolute penury replacing it as has already occurred in the private sector into a multi-national globalised footloose force which will have no roots, no unions and zero political representation. Under these conditions since the last big general strike various battles have occurred.
In the last 12 months there have been 8 general strikes and two solid truckers strikes one of which lasted almost one month and was sold out by its union misleaders. There have also been many strikes in the ports which have had only 24 hour duration.
Constant small, but significant battles have occurred by groups of workers in transport, bus and metro and by part-time council workers who have renewable contracts. Bus workers have been the most militant as they have a significant history being the only group of workers who brought down a government in the early 1990’s when a previous government tried to privatise them. They have had many mass meetings and have had many days of strike. But the government has been restrained from announcing that they be privatised as the bitter experience of that battle may trigger an indefinite walkout which may become a pole of attraction for other groups of workers. The union tops are obviously trying to let off steam and may end weakening their morale when everyone knows what is needed is joint indefinite strike action by all transport workers or uniting with the movement Cant Pay Wont Pay and calling for workers to travel for free.
Part-time council workers occupied the Athens Mayoral office for the best part of two months demanding full time contracts as some have done the same job for years but have been on part-time contracts so they lose out on other benefits. In the meantime a lawsuit went through the Greek high courts vindicating all part-time workers prior to 2001. This led to the part-time council workers mistakenly ending their occupation.
When the Health Minister Loverdos went to give a speech to an old peoples social centre in a working class district in North Athens Ag. Anargirous he was confronted by pensioners and unemployed youth and this became a national issue for the government as they cannot speak publically almost anywhere anymore without the presence of riot police and tear gas. They have lost almost total support.
Apart from token one day strikes the national railworkers who founded much of the early socialist tradition in Greece at the turn of the last century, there hasn’t been any dynamic action when at the same time due to the cuts, all international connections between Greece and the rest of Europe has been cut. No train services now go to Europe at all and taking into account in the summer months many neighbouring countries use them to go on holiday in northern Greece this is a massive collapse of transport relations. Alongside the almost total shutdown of Olympic Airways (despite the electoral announcements by Papandreou that he would support them) and the sell-off of its most profitable routes to the USA, Australia, S Africa where significant Greek communities live abroad, transport in Greece is heading into a transport meltdown for the crucial summer season which brings in tourist revenue.
Joining the Imperialist Armada against Libya
Greece despite its financial situation has had not one iota of apprehension in joining the imperialist armada against Libya with a frigate and the use of all Greek airspace as well as full rights for the US airbase in Suda in Crete. Recently they also held joint military exercises with Israel taking on the role of its best friend at the moment its relations with Turkey have cooled down.
Cant Pay Wont Pay-Social Movements
A movement based on not paying road tolls to the large private corporations which got government subsidies to build motorways has been centred on the main national roads and on roads which haven’t as yet been built and the cost of driving your car through them took on a national focus. This movement then spread to the metro, tram and bus system in Athens. Price rises of 40% in the last two months on public transport were the issue that provoked this anger giving growth to this movement. We have also had protestors raiding police stations and trying to cancel all the police prosecutions for those who have refused to pay. This is the single issue that has united all wings of the Left. It doesn’t have as yet practical public support as people who are working, still have to get to work and one cannot avoid paying tickets all the time, but when the protestors arrive and block the entrance ticket stamping machines, people cannot physically use tickets that they bought. Recently, it is alleged, the machines which issue tickets in one station have been smashed literally by using large hammers.
The PASOK government initially labelled all the protestors ‘cheapskates’ then as the movement grew into weekly events then daily events in various stations around Athens, they changed tone and started talking about reducing the road tolls by almost 50%. They have announced this to occur, but it hasn’t occurred as yet. No movement on reducing the price rises in other modes of transport has been announced.
Meltdown of the Left
The KKE recently held an evening rally which only a few months before would have had a minimum of 15,000 but now only had a couple of thousand and they couldn’t even block the roads around Sintagma Square. Soon their evening rallies may be held just on pavements. They offer no fighting programme for the unemployed, they have organised no right to work rallies, they do not campaign for anything more than what the Greek GSEE – TUC does which is 24hour token strikes, the next being 11th May (9th so far) and they continue to march separately, along different routes and disperse in an unheard of destination for all Greek demos, near the tourist area of the Akropolis, avoiding Parliament-Sindagma Sq incase protestors are emboldened as they were last May to storm it.
The May Day Demo this year had very few participants and it had three different demos, one for the KKE-PAME the other for the Greek TUC-Euros and another for the leftists/anarchists. The KKE’s block only had a few thousand and it marched to the French Embassy for the war in Libya. The disunity continues in stark contrast to the battle of Keratea which had zero influence from the Left and stood on its own and forced the government into retreat.
In a recent meeting on the issue of the Euro and the Debt where representatives of the pro-european wing of the Euros invited S Kouvelakis (from a London University who is allied with C Lapavitsas) to speak who argued that Greece should stop all payments to its creditors, withdraw from the Euro and restore the Drachma as a means of restoring monetary and fiscal policy and introducing controls in the economy as it is faced with a depression and ECB set interest rates which will cripple it further, he was rounded on as wanting to isolate Greece and become a modern version of Albania cut off from the outside world. Kouvelakis avoided calling for the departure of Greece from the EU as this would have been step too far for the Euros and one of their leaders, Lafazanis did ask the audience what would they do if they suddenly found themselves in power? He answered his own question by stating they would be obliged to propose cuts, meaning that once the electoral tap of state funds propping up the official Left runs dry, they may have to repeat 1989 once more (when they last joined coalition governments of both the Right and PASOK). The discussion was centred on managing capitalism as opposed to overthrowing it.
On the other hand there have been many high profile resignations from the Spitha movement due to the backdoor deals between Theodorakis and certain foreign centres of power which seek to promote a government of ‘personalities’ as opposed to a government of politicians who are so visibly detested in this present jucncture, that it appears they are trying to repeat the ‘liberalisation’ period of the last days of the Greek military junta when a General called Markezini was propelled to power, but they couldn.t avoid the occupation of the Polytechnic and the subsequent continuous demonstrations which led to the fall of the military in 1974. After the fall, Theodorakis having travelled to the US Pentagon proposed the option of ‘Karamanlis or Tanks’ with Karamanlis being a Presidential candidate from the Right, in order to block the possibility of a socialist solution to the fall of the junta. As if to underscore this tragedy the name of Markezini has popped up again, but not in the form of the father but the son, who is now a Sir and lives in London as a new interim Prime Minister in the post-Papandreou era, to continue to implement IMF policies, in other words buying time for the oligarchic ruling elites from workers anger. This has created many splits and divisions in this new found movement and it appears Theodorakis was only interested in using those that joined, to a pre-planned hidden agenda.
Committee Against ‘Odious Debt’
A group of academics and people from the wider Left has set up a campaign to classify the debt Greece owes to international bankers as being odious and that they should default like the 30odd other countries that have done since the 1970’s around the world. The media has presented some of their findings and some of the information regarding their investigations has reached the light of day, like some facts regarding Siemens bribery deals to secure big Greek public defence orders or infrastructure projects as well as the fact that a large percentage of overseas debt is just interest and that the original amounts borrowed have been paid many times over.
Post-Papandreou Era and Continuing the Same IMF Policies..
The PASOK government is a busted flush. Its writ no longer runs as evidenced in Keratea. It has lost almost all credibility. The massive abstention in the local elections when 4.5million Greeks around 85% if the electorate refused to take part in October’s 2010 elections indicates a massive swing against all politicians and parties. There are open rebellions in almost every layer of society. They are left with two options. Either to go for new elections or to suspend due process and go for a government of ‘personalities’ as has been stated has been offered to the Theodorakis movement of Spitha (which was set up officially to be a new force on the Left, not an old one which will collaborate with the IMF!)
The media which in Greece operates as a precursor to evenst by moulding ‘public opinion’ has been promoting all the close collaborators of the Spitha movement and all intellectuals both in constitutional affairs also in economics regarding the foreign debt and the agreements with the IMF, showing that they are both unconstitutional and odious and that they should be cancelled forthwith. Whether they are able to postpone the inevitable of Arab style continuous protests in central city squares when unemployment continues to rise inexorably and businesses go bust daily will be one of the modern wonders of our time. A spark will this time light a fire.