The Greek government must refuse to recognise the Troika debt and implement far reaching economic reforms.
A FEW DAYS AGO THE GREEK GOVERNMENT submitted a list of proposals it hoped it would meet the demands of 'the Troika', the European Commission, the International Monetary Fund and the European Central Bank.
These proposals included a rise in VAT (valued added tax) on a range of consumer goods as well as imposing several new taxes on business and families on high income. It also proposed cuts to state pensions. The measures added up to roughly 8bn euros of savings over 2015-16, and would of been immediately implemented.
The proposals were rejected outright by the Troika. It demanded an even bigger increase in VAT, a lessening of the tax burden on business and an even greater cut to pensions.
The representatives of the European ruling class left the government of Alexis Tsipras with nowhere to go because, if it had accepted the Troika's new conditions, it meant that it could not even claim it had shifted some of the tax burden away from the Greek working class -which had voted it into power on the expectation that Syriza would end the austerity policies of neoliberalism. The Troika were basically asking Tsipras to commit political suicide.
Which is what the Troika would like.
They want to break Syriza and snuff out a government that pledged to fight austerity and neoliberalism. It wants to prevent the 'Syriza phenomenon' spreading to other parts of Europe. Conservative governments in Portugal, Ireland and Spain are facing growing anti-austerity movements and in Spain Podemos is posed to take power in the general election later this year.
The current bailout program expires on June 30, with the Greek government due to stump up a payment of $1.8bn euros to the IMF. Without a new agreement the Greek government can't pay and will default.
Running out of options, Tsipras has called for a national referendum on July 5. The Greek people will be asked if they accept the Troika's new proposal, despite the fact there isn't actually a new proposal on the table.
The critics of Tsipras say that he is trying to hide behind the electorate and pass the responsibility for the debacle on to the shoulders of the Greek people. There is some truth in this but it is not the entire story since Syriza is campaigning for a no vote - which is the likely outcome.
So where does the Greek government go from there? I agree withe economist Michael Roberts who has commented:
"It must refuse to recognise the ‘odious’ Troika debt. It must impose capital controls; it must nationalise the Greek banks; and bring the commanding heights of the economy under the control of labour. The Greek people can start to turn round this depressed economy. But the Greeks cannot do this alone; it requires the combined efforts of European labour to break the grip of capitalist forces on economic policy and investment."
Left Platform, the socialist current within Syriza led by the Minister of Productive Reconstruction, Environment and Energy, Panagiotis Lafazanis, has consistently campaigned for Greece to break with the Troika.
Just a few weeks ago it said in a formal document to the central Committee of Syriza:
The “institutions” are not pursuing what some call an “honest compromise,” since an “honest” compromise cannot occur with privatizations and new weights over the working classes and, of course, cannot occur without a real removal of austerity, [and] without the write-off of (the biggest part of) the debt, and without ample liquidity for the rejuvenation of the economy.
What the dominant circles of the EU, the ECB, and the IMF are aiming at, ruthlessly and with consistency, for about four months now, is to strangle the economy, to drain even the last euro from the reserves of the country, and to force the government, “unprotected,” to complete submission and paradigmatic vilification.
Left Platform urged Tsipras to go on the counterattack. It outlined its alternative program:
* The immediate nationalization of banks, with all relevant measures that are necessary in order to be secure and operate with clear productive, developmental and social criteria.
* The establishment of democratic legitimacy and transparency in the dominant media, together with the substantive control of their debt and other obligations.
* The immediate termination of each protection grid for the corrupt oligarchy of the country.
* The removal of privileges, preferential arrangements, and immunity of major economic interests.
* The effective taxation of great wealth, large property, very high incomes, and high profitability of large companies.
* The immediate and complete restoration, assurance and actual abidance to labour and trade union rights of the working people.
But rather than provide leadership, Tsipras has fudged and ordered a national referendum.