Syriza of two minds about belonging to EU – WSJ

  • Wall Street Journal’s Simon Nixon writes about Syriza’s Marxist roots being in conflict with its European identity:

Few prime ministers have had a more disastrous first five months than Alexis Tsipras.

Greece was the second fastest-growing economy in the eurozone in the third quarter of last year, unemployment was falling and investors were snapping up government bonds and bank shares again.

Today, the country is back in recession, the banks are closed, the public finances have deteriorated and bad debts are rising.

Mr. Tsipras has until Sunday to convince eurozone leaders to provide a new bailout program or the government and banks will go bust and Greece will likely have to abandon the euro, and the terms are now certain to be even tougher than those he urged voters to reject in a referendum last weekend.

No one is under any illusions about what this will mean for Greece: The country faces economic and social chaos.

Nothing in the past five months suggests that Mr. Tsipras and his colleagues have the technical competence to undertake something so complex as the introduction of a new currency. Economic activity will grind to a halt, raising the risk of shortages of necessities.

Senior Greek and eurozone officials worry about the possibility of civil disorder and a humanitarian crisis. “Grexit” would also be a psychological hammer for the eurozone: even if the immediate financial contagion is limited, as many investors and policy makers now suspect, there is a risk of long-term damage to confidence in the currency.

Still, a majority of member states are ready to take this risk. Too much is at stake for them to capitulate to Greek demands for unconditional funding.

The principle that a country can receive aid only on condition that it undertakes reforms to make its economy competitive and put its public finances on a sustainable footing is vital to the stability of the currency. Eurozone taxpayers cannot be expected to fund policies that are sure to result in the need for permanent fiscal transfers.

Politics also dictates that Mr. Tsipras cannot be allowed to claim victory from his brinkmanship. That would pull the rug from under all those governments that have pushed through tough economic measures and would boost support for populists peddling supposedly painless solutions. Tearing up the eurozone’s rule book would soon lead to financial chaos.

Meanwhile Mr. Tsipras and many in his Syriza party have their own ideological reasons to stand their ground.

Contrary to the impression given by some of its international supporters, Syriza is not a conventional political party fighting the Keynesian good fight for looser fiscal policy; nor is it a party of euroskeptic freedom fighters.

Instead it is a loose coalition of leftist groups, some with Marxist roots, many of which share an objective: to build a socialist state based on an expansion of state power and radically redistributive taxation.

These groups have long been split between those who always believed that socialism was only possible outside the eurozone and those who argued that Grexit was too risky and that the path to socialism in Greece was via a European, anticapitalist revolution.

But now it is clear that there isn’t going to be a European anticapitalist revolution, at least not before Sunday. The proletariats of Europe have not risen up to demand that their governments raise taxes to subsidize a dysfunctional Greek public sector and unsustainable pension system.

Instead, it is the governments of the eurozone’s poorest countries that have taken the hardest line against policies that have brought only misery wherever they have been tried, particularly those in Europe’s recently communist eastern states.

That has left Mr. Tsipras facing a binary choice: If he insists on clinging to his terms, then Greece’s future lies outside the eurozone—and perhaps even the EU. But if he wants to keep Greece in the euro, then he needs to commit to turning the country into a dynamic, open, flexible, free-market democracy.

Some eurozone officials—particularly in France and Italy—believe Mr. Tsipras is now ready to climb down, having been spooked by the unexpected willingness of other countries to contemplate Grexit.

These officials were relieved by the decision to replace the politically toxic finance minister Yiannis Varoufakis with the better-mannered Euclid Tsakalotos, even if the new one is the more hardline leftist, according to former colleagues.

Mr. Tsipras has also secured cross-party support for his request to start talks on a third bailout program, said that he is ready to implement reforms, and has dropped his demand for immediate debt relief.

But some Greek opposition politicians and many eurozone finance ministers are skeptical, having heard it all before. They suspect Mr. Tsipras wants a Grexit and is looking for ways to spread the blame.

But even if Mr. Tsipras is sincere about wanting to keep the euro, his challenge now is swiftly to convince the rest of the eurozone to trust him.

The German parliament, for example, will need to give its blessing even to get talks on a new bailout started. The bill for rescuing Greece is now enormous and the measures likely to be required to put the economy back on a long-term sustainable footing have become even more demanding.

Is Mr. Tsipras willing to split his party, defying colleagues who always believed that the path to socialism required a Grexit? Is he willing to postpone the revolution and work with pro-European parties to turn Greece into a modern European state?

Ordinary Greeks have already paid a very high price waiting for Mr. Tsipras to make up his mind.

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