Greek election: defeat for the Troika

 “Do not open the door. The milkman migrated to Australia yesterday”. The alien monster at the other side of the door bears the name “Troika” on its head and the word “Government” on its tail with the head of the Greek Prime minister at the tip of the tail. Source

by michael roberts

The two collaborationist parties in Greece have lost the election.  Together they have polled only 32% of the vote with the leading party, the conservative New Democracy, getting under 19% and the Blairite PASOK just 13%.  So, even with the boost of 50 extra seats in parliament, the two parties will have only 149 seats, two short of a majority.

The anti-austerity parties that managed to cross the threshold of 3% for seats in parliament did well, polling over 46% of the vote.  But the anti-austerity vote is hopelessly divided between the outright fascists and nationalists on the right, polling about 17% between them; and the left including SYRIZA (which finished second), the stalinist Communists and pro-Euro moderate left, polling just under 29% combined.

The collaborationist parties' votes were mainly from the better-off and middle-class professionals in the private sector.  The anti-austerity parties were backed by the pensioners, the poor, the unemployed and the youth, but their alternative to austerity was confused by nationalists and fascists who want to blame the Eurozone leaders and immigrants from Turkey and Eastern Europe for unemployment.  On the left, the Communists' main demand was to leave the Eurozone and a refusal to join any anti-austerity coalition.

The result is a bad defeat for the Troika and the policies of austerity.  The argument of the collaborationist parties was that there is no alternative to the bailout agreement and austerity.  Of course, there is an alternative.  I have outlined this in previous posts (An alternative programme for Europe, 11 September 2011) and it has been presented to some extent by the leaders of SYRIZA.  It would mean reversing the austerity measures without leaving the euro.  How?  The first measure of an anti-austerity government would be to write off the debt burden with the banks and the Eurozone governments.  The now defeated collaborationist government already agreed to a version of debt restructuring imposed by the Troika.  But this  restructuring was a joke.  The Greek government and its people are still left with a huge debt burden through the rest of this decade that will mean its debt ratio will still be larger than that of Italy now even if all goes well on austerity, which it won't.

The Troika's restructuring just replaced part of the government debt owed to foreign banks with new debt backed by European governments and imposed a full recapitalisation of Greek banks without any allowing move towards public ownership.  Now Greek government debt will owed not to banks, but mainly to other European governments.  The IMF leaders were desperate to ensure that this package was sustained by the new government.  They secretly invited Greek pro-austerity leaders to meetings to discuss policy just before the election.  In these private discussions, the IMF argued in favor of those parties that accept the necessity of the austerity package. The ultra neo-liberal Drasi candidate Miranda Xafa, a former Greek representative to the IMF, attended the IMF’s spring session of the fund.  Fortunately, the IMF and the Troika have failed - for now.

Look at how the IMF and the Troika doled out their money.  Less than 10% of the new funding is going to help the Greek government fund its deficit or get the economy going.  Over 90% has gone to fund foreign and Greek banks. Instead, if Greek government debt had been written off and new money lent directly to the Greek government to recapitalise the banks through public ownership and launch a programme of public works to revive the Greek economy, there would have been no need to condemn millions of Greeks to a generation of austerity.  But of course that cannot be allowed to happen because it would mean the curbing of the failed and corrupt Greek capitalist business sector and would pose a real threat to Europe's banking sector and multinationals.

It may be that the New Democracy can find one of the opposition parties to agree to join a coalition.  But to do so, would probably mean having to try and renegotiate the bailout deal with the Troika anyway.  Alternatively, the Greek president may call another election in June.  If the Greek people have not reached the right decision this time, then they must do it again until they do!

Any attempt to meet Troika demands is hopeless, anyway.  The Greeks cannot deliver what the Troika wants.  With the Greek economy contracting by 6% this year, the fiscal targets cannot be met.  Indeed, next month the new government must find another €11bn in austerity measures to keep to Troika targets for 2012 and 2013.  How are such measures going to be greeted by the Greek people and the new parliament?  At some point, either later this year or early next, the Troika will have to announce that the Greek government is failing in its commitments.  Then the Euro leaders will have to decide whether to provide yet more funding with yet more austerity measures to tide Greece over, or not.  That will be a decision for German Chancellor Merkel and new French socialist President Hollande.