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The Greek Debt Crisis: A Misnomer for the European

Imperialist Crisis
theredphoenixapl.org /2015/08/22/the-greek-debt-crisis-a-misnomer-for-the-european-imperialist-crisis/

By The Red Phoenix

Anti-austerity demonstration before the Greek Parliament, July 3, 2015

August 2015
Hari Kumar

1. An Introduction to Greece
2. The Truman Doctrine Greece becomes dependent upon the USA after the Second World War
3. The Greek Junta Greece by now fully a client state of the USA
4. Capitalist Class of Greece Moves to Democracy and Europe
5. The USA Makes Its Move to Become the World Imperialist Leader The Character of the European Union
from pro-USA states to anti-USA coalition
6. The Greek Economic Crisis 2009-2015
7. The Marxist View of National Debt under capitalism
8. The Debt Crisis leads to increasing struggle of the growing Greek working class and gives rise to The
United Front of Syriza the political parties of the left
9. What was the elected programme of Syriza?
10. Elections of 2015 and Negotiations with the Troika
11. Conclusion
APPENDIX: Select Chronology 1975 to 2015

After the Second World War, Greece was a client state in the Mediterranean of the USA. The revisionist collapse of
the Yugoslav communists in the neighbouring state of Yugoslavia was key in this development. Titos degeneration
into revisionism deprived the minority of the Marxist-Leninist forces in the Communist Party of Greece (KKE) of
crucial support. We describe this in a subsequent more detailed article.

This article is restricted to the post Second World War development of Greece, up to the present-day debt crisis. It
argues that the entire post-war history of Greece was effectively that of a neo-colonial state serving initially the
interests of USA imperialism and British imperialism. The Greek people did not have a non-revisionist proletarian
leadership that could develop an independent democratic path. The Junta and the imperialist machinations in
Cyprus of the island further retarded the people of Greece. Both Greece and Cyprus endured military oligarchic
dictatorships sponsored by the USA.

The later history of Greece became inextricably entwined with the slow but sure evolution of the European
imperialist bloc. This bloc took multiple only slowly coalesced, and eventually it later became the European
Community. However during its coming into being, it took several class forms. The post-Marshall Plan in Europe
had ushered in a dominant USA which fostered the first steps towards a federal Europe. In its hopes to control the
European content as a market, the USA was at first successful. During this period the elements of a united Europe
adopted a pro-USA comprador position.

This is also characterised the initial European Economic Union (EEC). But the Euronationlists finally, and haltingly,
moved to release Europe to some extent, from the USA embrace. Following the fall of the former Comecon
countries, Germany was able to move into a new market itself. This began a new phase. Now the rising German
imperialists used their industrial superiority and new market share to re-vitalise their hegemonic ambitions.

Such events were milestones on the road to todays debacle in Greece. They were the pre-history of the chronic
indebtedness of the Greek state.

After the Junta democratised itself, Greece swopped the USA master for that of the EU. The EU progressed to be
firmly dominated by the unified single unitary state of Germany, where German capitalists became the dominant
faction. German capital exported both capital and industrial exports, including to Greece. Over-riding the total
market share of Greece accruing to Germany, are the huge debts of Italy and France to Germany both at risk of
potential default. This underlies the harshness of the German ruling class towards the Greek capitalist
representatives in Greece today. Finally, current differences between the International Monetary Fund leader
Christine Lagard (representing the USA interests) and the German leaders Angela Merkel and Schauble, show the
continuing inter-imperial contradictions. This has engulfed Greece today.

1. An Introduction to Greece

Greece is set in the Eastern corner of the Mediterranean Sea and surrounded by the Aegean Sea:

Greece has more than 2,000 islands, of which about 170 are inhabited; some of the easternmost
Aegean islands lie just a few miles off the Turkish coast. The countrys capital is Athens, which
expanded rapidly in the second half of the 20th century. Attik (ancient Greek: Attica), the area around
the capital, is now home to about one-third of the countrys entire population.


In the modern era industrialisation has been slow, leaving Greece dependent upon agriculture, fishing and tourism.
The only segment of industry that could be considered substantial is shipbuilding and related industries:

The manufacturing sector in Greece is weak. . In the 1960s and 70s Greek shipowners took
advantage of an investment regime that benefited from foreign capital by investing in such sectors as
oil refining and shipbuilding. Shipping continues to be a key industrial sectorthe merchant fleet
being one of the largest in the world(but) are extremely vulnerable to downturns in international
economic activity, as they are principally engaged in carrying cargoes between developing


As far as agriculture is concerned, produce is hampered by small peasant holdings, resulting from an early
restriction on large land holdings:

large landowners appeared relatively late (with the annexation of Thessaly in 1881) and only lasted
till the agrarian reforms of 1917, which abolished big landed property in Greece irreversibly.

(Mouzelis, Nicols. Capitalism and Dictatorship in Post-war Greece; New Left Review; I/96, March-
April 1976).

In addition dry conditions and poor soil make agriculture at times tenuous.
In recent years the European Community has helped with various grant subsidies. Overfishing has hampered that
other resource:

Greeces agricultural potential is hampered by poor soil, inadequate levels of precipitation, a

landholding system that has served to increase the number of unproductive smallholdings, and
population migration from the countryside to cities and towns. Less than one-third of the land area is
cultivable, with the remainder consisting of pasture, scrub, and forest. Only in the plains of Thessala,
Makedona, and Thrki is cultivation possible on a reasonably large scale. There corn (maize),
wheat, barley, sugar beets, peaches, tomatoes, cotton (of which Greece is the only EU producer),
and tobacco are grown. Other crops grown in considerable quantities are olives (for olive oil), grapes,
melons, potatoes, and oranges, all of which are exported to other EU countries. Although
inefficient, Greek agriculture has benefited substantially from EU subsidies In general, however, the
importance of the agricultural sector to the economy is diminishing
Greeces extensive coastline and numerous islands have always supported intensive fishing activity.
However, overfishing and the failure to conserve fish stocks properly, a problem throughout the
Mediterranean, have reduced the contribution of fishing to the economy.
Greece has few natural resources. Its only substantial mineral deposits are of nonferrous metals,
notably bauxite.


The early development of modern-day Greek capitalism was that of a merchant capital that weaved itself into the
matrix of the Ottoman Empire. Both these traders and arising shipping magnates, were based outside of Greece.
Being non-resident they could not transfer easily all their capital resources for later industrialisation needed to keep
pace with the rest of the European economies:

The development of the Greek bourgeoisie must be traced back to the sixteenth century when
Greece was under Ottoman rule. Greek merchants accumulated vast fortunes and control (over)
Balkan trade and most of the Ottoman empires commercial transactions with the industrialising
West. ..
With the decline of the Ottoman empire in the eighteenth and nineteenth centuries, the Greek
bourgeoisie.contributed to the development of Balkan nationalism. It thus played a crucial role in
the Greek war of independence against the Turks (1821). For while the Greek peasantry constituted
the main revolutionary force in the war, the bourgeoisie and the intellectuals managed to direct this
force towards nationalist goals. .
The first Greek constitutions, for instance, were inspired by the French experience; and although
Capo dIstria and later King Otto tried to implement an absolutist model of government, their efforts
were ultimately frustrated.
Of course, it is true that in the nineteenth century the autochthonous merchant class was rather
weak. But its counterpart living abroad, the Greek diaspora merchants and ship-owners, with their
formidable financial power, greatly influenced the shaping of most institutions in nineteenth-century
Greece itself .. these (Greek) merchant communities.. were flourishing both in colonial centres
(Alexandria, Cairo, Khartoum, etc.), in the major capitals of ninteenth- century Europe and in
Constantinople and Asia Minor.

(Mouzelis, Nicols. Capitalism and Dictatorship in Post-war Greece; New Left Review; I/96, March-
April 1976).

This large overseas Greek bourgeoisie was already prone to comprador positions. Although it helped transfer some
capital to Greece itself, this was largely in the mercantile and finance sectors:

Although relatively small by international standards, the Greek diaspora bourgeoisie, by exploiting
inter-imperialist rivalries and playing the role of intermediary between metropolitan and colonial
centres, managed to master formidable financial resources, some of which were channelled into
mainland Greece. However, given its cosmopolitan and mercantile character, as well as the
weakness of the indigenous bourgeoisie, these resources contributed to the development of a top-
heavy state and a parasitic tertiary sector, geared to support a mercantile and finance capital, rather
than to the development of industry and agriculture.

(Mouzelis, Nicols. Capitalism and Dictatorship in Post-war Greece; New Left Review; I/96, March-
April 1976).

By the end of the Second World War, the population of Greece can be characterised in the following break-down:

A very small working class, of whom the most militant were in the tobacco industry; also some in shipping
(often overseas for long periods) and fishing;
A substantial number of small to medium petit-bourgeoisie in the urban areas (artisans, small businesses)
and an even larger number of small peasants in the rural areas
A small but dominant comprador bourgeoisie with significant financial overseas capital based in the
shipping industry and in bank capital with many connections to foreign traders
A much smaller but ambitious section of industrial capital anxious to develop their home base of Greek

The first two sections of society in particular, had suffered enormous losses and hardships under the Italian-German
fascist occupation; and then in the ravages of the Civil War. A good summary of the position of the Greek people
following the Second World War can be taken from Enver Hoxha:

When our people are rebuilding their country which was devastated during the war, when our
country is working with all its might to strengthen the peoples democracy and advance on its
peaceful and progressive course, Greek monarcho-fascism is employing a thousand and one of the
basest methods to inflict harm on our people. You know what a terrible tragedy is occurring in
Greece. The unfortunate but heroic Greek people are fighting against monarcho- fascists and the
foreign intervention. The progressive and democratic world is profoundly indignant when it sees the
great tragedy of that people who deserve to live free and sovereign, but who, unfortunately, are being
mercilessly oppressed and killed by collaborators of Italo-German fascism who are now under the
direct orders of Anglo-American reaction.

(Hoxha, Enver; We Sympathize With the Efforts of the Greek People for Freedom and Democracy.
Speech 3 October 1947; In: Two Friendly Peoples
Excerpts from the political diary and other documents on AlbanianGreek relations
1941 1984. Marx, Engels, Lenin, Stalin Institute Toronto, 1985; pp. 47-48.

2. The Truman Doctrine Greece becomes dependent upon the USA after the Second World War

The USA implemented an overall strategy known as The Truman Doctrine to counter the ideological threat of the
USSR after the victories led by the Marxist-Leninists had inspired the world proletariat. In the Aegean the Truman
Doctrine aimed to:

Prevent Greece and Turkey from passing under Soviet Control.

(Woodhouse C.M. Modern Greece, A Short History; London 3rd Edition

1984; p. 258).

Both the USA Marshall Plan and the creation of NATO, were tactical instruments of the Truman Doctrine. They were
used in Greece to build and develop a modern capitalist state structure. But before they were deployed, first the
potential proletarian victory of the Greek Civil War had to be stopped.

While the British General Scopus and his forces had defeated the combined forces of the Greek Communist Party
(KKE) and their military wing (ELAS), significant distrust remained in the population against British imperialism. So,
after the battle of Athens (Dec 3rd 1949) was won by the British, a democratic faade was placed onto the
imperialist proceedings. By this stage all leftist opposition had been essentially neutralized and no longer posed any
threat to the Greek capitalist class.

When the British imperial chief Winston Churchill understood the degree of Greek popular distrust he reversed
his prior opposition to a plebiscite. The plebiscite following the defeat of left forces enabled the return. The ensuing
Plebiscite supported the return of King George II to Greece. (Woodhouse C.M. Modern Greece Ibid; p. 254).

The Americans also dropped their previous support of the King, and become ostentatiously neutral (Woodhouse
C.M Ibid; p. 254) they tacitly supported the British crushing of the communist forces. Archibishop Damaskinos
was appointed a Regent in the Kings stead and General Plasitiras (head of EDS) was appointed Prime Minister
and head of government in lieu of George Papandreuou. Papandreuou had previously approved the British
suppression of the mutiny of 1944 (Woodhouse C.M Ibid; p. 252).

Both the American covert support, and the British repudiation of the Kings intent enabled the predominantly
capitulationist ELAS some pretext to accede to British overlordship. Accordingly ELAS now agreed to the infamous
Varizka Agreement of February 1945. Only Aris Veloukhiotis and the Political Committee of National
Liberation (PEEA) had resisted Varizka and these forces were simply hunted down and eliminated.

A succession of shaky governments was capped by the first post-war General Election of March 1946. The
Communist Party of Greece (KKE) abstained and the Populist party of Constantine Taldaris, formed a
government. This election:

Marked a watershed in Greeces foreign relations. For the first time the Government of the USA was
directly involved in Greek affairs alongside Britain, though occupation in the Allied Mission for
observing the Greek elections. It was a first step towards the Truman Doctrine. (Woodhouse C.M
Ibid; p. 257).

The defeat of left and communist forces at Athens had decimated left resistance.
Behind both the King and the Parliament lay the Army, and the most right-wing section of the army the group
known as IDEA (Sacred Bond of Greek Officers) :

After 1949, the ruling class was no longer threatened. their enemies had been effectively
destroyed for a generation...
After its victory, the Right imposed a quasi-parliamentary rgime on the country: a rgime with open
franchise, but systematic class exclusions. The Communist Party was outlawed and an intricate set
of legal and illegal mechanisms of repression institutionalized to exclude left-wing forces from political
activity. The job of guaranteeing this rgime fell to the agency which created it: the army. The state
was nominally headed by the monarchy and political power was supposedly vested in parliament. In
reality, however, the army, and more specifically a powerful group of anti-communist officers within it,
played the key role in maintaining the whole structurally repressive apparatus in particular IDEA
(Sacred Bond of Greek Officers), which was to play a key role in post-war politics.

(Mouzelis, Nicols. Capitalism and Dictatorship in Post-war Greece; New Left Review; I/96, March-
April 1976).

The Tsildardis government gave way to the more right wing Demetrios Maiximos with General Zervas (Formerly of
EEDS) as Minister of Public Order. Brutal repressions of left forces continued despite both international protests and
the presence of a United Nations observership. We will examine the Civil war and the Varzika Agreement in detail in
a subsequent article.

By October 1948, martial law was imposed. Under this direct attack by the right-wing forces, and the simultaneous
Yugoslav revisionist turn and exposure by the Marxist-Leninist Cominform of 1948:

The rebel leaders admitted defeat by proclaiming a temporary cessation of hostilities a caretaker
government.. lifting of martial law, .. withdrawal of the British service missions and the renewal of
friendly relations with Yugoslavia.

(Woodhouse C.M Ibid p. 260)

The Greek government joined NATO in 1951, as well as the Council of Europe; and the Security Council of the UN.

Although throughout this period numerous governments based on varying participation of right-wing forces were
only able to hold power for brief periods. The National Progressive Union of the Center (EPEK) led by General
Plastiras and Emmanuel Tsouderous held power until displaced by the virulently anti-communist General Papagos
leading the Greek Rally:

The days of Plastiras government were clearly numbered when not only the Greek public but also
the US authorities became impatient Under pressure from the US Embassy the government
resigned in 1952 (leading) to electoral overwhelming victory for the Greek Rally.

(Woodhouse C.M Ibid pp.261-263).

Army vicious actions purged all state structures which was key to the state through the immediate post-War

Military reaction established firm control over the whole of Greek territory and consolidated a system
of repressive parliamentarism or guided democracy. This was controlled by a triarchy of throne,
army and bourgeois parliament. Within this power bloc it was the army, the victor of the civil war,
which played the dominant role.

(Mouzelis, Nicols. Ibid; New Left Review; 1976)

Industrial Policy of the Greek Capitalists in this Period

For the next 11 years, both the Army (Marshall Papagos) representatives, or parliamentary figures (George
Papandreou before the coup and later Constantine Karamanlis) wanted to consolidate the neo-colonial status to the
USA. This started with an economy based on agriculture, tourism and a small manufacturing base.

the country was far from self-sufficient. .. the chief market for tobacco was revived (West Germany)..
expenditure of tourists which came to take second place only to agricultural products as a source of
foreign exchange. The development of manufacturing industry and mining with indigenous capital, in
place of foreign concessions, (was) a healthy trend. But the lack of home produced source of energy
was a severe handicap. It remained true that Greece was still dependent upon foreign aid and there
was no end to this condition in sight.

(Woodhouse C.M Ibid p. 267)

Five special features of the Greek states path to modernisation, can be seen:

1. The political and organisational strength of the working class and peasantry was weak, having been decimated
during the second world war and after by the brutality of the state. The KKE was almost devoid of leadership, with
key leaders in exile.
2. The small native capitalist class was out-numbered by the many Greek capitalist who were based overseas
(shipping) and did not have the necessary local capital to invest. Hence the small resident Greek capitalists used
the State machinery to develop. This state machinery swelled the size of the bureaucracy who became a large state
dependent stratum. They aspired to middle-class status but were objectively privileged sections of a growing
working class.
3. The state still needed the heavy investment of the overseas imperialists. They first aligned themselves to the
USA, and then by the 1970s to Europe.
4. These strategies effectively left Greece a dependent state with the beginnings of large overseas debt.
5. An immiseration poverty and desperation of the working peoples, led to increasing emigrations to both the
USA, Canada and Europe

After the devastation of the Second World War there had been an impressive return to Greek per-war levels of

The Second World War and the civil war had devastating effects on the Greek economy. For
instance, at the end of the Second World War, 9,000 villages and 23 per cent of all buildings had been
destroyed. It was partially a sign of the vitality of Greek capitalism that by the middle fifties, pre-war
levels of output had been reached again and the economy was growing at a fast rate (the average
rate of growth in the fifties was 6 per cent).

(Mouzelis, Nicols. Capitalism and Dictatorship in Post-war Greece; New Left Review; I/96, March-
April 1976).

However, despite this growth, manufacturing industry remained undeveloped. Nor did the rise of the shipping
industry enable Greek capitalists to retain revenues within Greece to more easily enable a home manufacturing
base to be built up:

the Greek economy of the fifties did not manage to overcome a major feature of its
underdevelopment: its weak manufacturing sector. Greek capital, whether in its mercantile, industrial
or finance form, was unable to orient itself towards the manufacturing sectorespecially in those key
branches (chemicals, metallurgy) which, through their multiplying effects and their great
transformative powers, can contribute most to a rapid growth of the industrial sector

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

shipping assumed colossal proportions in the post-war period. ..Greek seamen helped the
economy by reducing unemployment and by providing valuable foreign currency through their
remittances home. On the other hand, since shipping capital lies outside the effective control of the
Greek state (it can always move elsewhere if the state bothers it with heavy taxes or other
restrictions), it becomes increasingly an avenue of escape for Greek merchant capital. In this way, if
migration robs Greece of its most valuable human resources, shipping plays a similar role with
respect to the countrys financial resources..

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Greeces age-old specialization within the inter- national economy had gradually given rise to a
spectacular concentration of capital among a handful of shipping magnates, mainly based in London
or New York, whose aggregate holdings are widely reckoned to exceed the GNP of Greece.

(Petras, James. The Contradictions of Greek Socialism: New Left Review; I/163, May-June 1987)

In conclusion, Greece did not break out of the strait-jacket of a dependent economy. Despite large state structure
support, Greek capitalists did not establish an effective manufacturing base:

from a under-developed economy: i.e. a fast-growing, highly parasitic tertiary sector, a weak and
more or less stagnant manufacturing sector with a low labour absorption capacity, and a large but
inefficient agricultural sectorWhereas in 1938 manufacturing output amounted to 856 per cent of
all industrial output, it declined to 797 per cent in 19489 and to 73 per cent during the 195960

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Thus in the late fifties more than half the labour force was still employed in agriculture, whereas the
contribution of the industrial sector to the GNP was only around 25 per cent.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Correspondingly foreign investors ensured that favourable legislation was passed in 1953, and by the 1960s a large
scale influx of foreign capital flowed in. This was concentrated in the heaviest key sectors, and by the mid 60s the
industrial development had qualitatively changed with heavy industry capital making goods predominating:

TABLE 1 Flow of Foreign Capital into Greece (Dollars)

1960 11,683,700
1961 13,509,809
1962 16,764,758
1963 50,026,290
1964 59,716,887
1965 111,596,368
1966 157,606,242
1967 32,265,000
1969 64,000,000
1970 70,000,000

By the end of 1973, foreign capital invested in Greece had risen to a total of approximately $725
million. not very impressive if one takes into account that in a single year (1969) $2,504 million
went to the gross formation of fixed capital in the Greek economy.

Nevertheless, as foreign capital was mainly directed to-wards the key manufacturing sectors, its
impact on the economy was much greater than its relatively small size would suggest. In fact,
especially during and after the years 19623, when the metallurgical, chemical and metal
construction industries experienced a great boost due to foreign investments, one can speak of a
qualitative break in the growth of Greek industry. Not only did the industrial sector start expanding at
a much faster rate, but there was an important shift in investment from light consumer goods to
capital goods and durables.

Whereas in the period 194850 light industry represented 775 per cent of total manufacturing output,
its share went down to 609 per cent in 196370.31 This important shift is clearly reflected in the
changing structure of the Greek export trade.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Correspondingly, there was shift away from agriculture in the economy. And by the 1970s the economy had become
qualitatively industrialised:

In 1960 agricultural products constituted 80 per cent of the countrys exports, but this figure went
down to 54 per cent in 1966 and to 42 per cent in 1971, as Greece was more able to export industrial
goods. Despite the dramatic decrease of the agricultural population during the fifties and sixties,
the agrarian structure does not show any signs of basic change: there is no marked tendency towards
land concentration or the emergence of large-scale capitalist enterprises in agriculture.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

There was a major qualitative change by the 60s, towards industrial development. But it did not eliminate under-

Thus the sixties saw a qualitative advance in the industrialization of modern Greece. There can be
little doubt that the ability of the Greek economy to reap the benefits from concentrated foreign
investment in manufacturing was due to its own pre-existing capitalist development. This was not
able to generate a significant industrial sector autonomously, but it could adapt itself to, and
consolidate one with exceptional rapidity. Yet this type of capitalist development not only failed to
eliminate some fundamental aspects of Greek under-development, but on the contrary accentuated
them, creating disruptions and dislocations which are directly relevant to an understanding of
developments in the political superstructure.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

There ensued an enormous state monopoly centralized economy in the industrial sector:

The intrusion of foreign capital, in close collaboration with Greek capital and the Greek state,
reinforced the already impressive degree of capital concentration in the economy. A first rough
intimation of this is conveyed by the enormous size (in terms of assets) of such giants as ESSO-
Pappas or Pechiney, or the fact that out of the 200 largest companies in terms of fixed capital,
seventeen were fully foreign-owned and in another thirty-nine foreign capital had a degree of
participation varying from 10 to 90 per cent. As the share of foreign capital in the GNP steadily
increased (from 215 per cent in 1962 to 815 per cent in 1972), the monopolistic tendencies of the
Greek economy were markedly accentuated. If in the fifties monopoly or oligopoly were due mainly to
indiscriminate and nepotistic state protectionism, in the sixties they were due rather to the capital
intensive nature of the new industries and the small size of the Greek market.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

But the working class was still small. This is reflected in the predominance of small artisanal or petit-bourgeois

This impressive concentration of industrial capital did not eliminate the plethora of small industrial
units, which for the most part have a family-oriented, artisanal character. Indeed, one of the most
striking characteristics of Greek industry is the persistence, especially in the more traditional sectors
of the economy (footwear, clothing, leather, wood products), of small, low-productivity units side by
side with large firms that exercise a quasi-monopolistic control of the market. The extent to which
small firms persisted in the Greek manufacturing sector can be seen by the fact that whereas in 1930
932 per cent of manufacturing establishments were employing fewer than five persons, by 1958 this
percentage had only gone down to 849 per cent. In 1958 the percentage of firms employing more
than twenty persons was 21 per cent.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

The working class and peasantry of Greece became progressively more squeezed:

Gross per capita in- come, approximately $500 at the beginning of the sixties, had reached the
$1,000 level by the end of the decade.38 But the few rough calculations which have been made in
the absence of complete data leave us in no doubt as to the inequities which disfigure
this spectacular gain. For instance, according to a relatively recent estimate, 40
per cent of the lowest income groups receive 95 per cent of the national income (after deduction of
taxes and social security benefits), whereas the 17 per cent in the top income brackets receive 58
per cent. From 1954 to 1966, when the national income approximately doubled, profits
tripled (banking profits between 1966 and 1971 quadrupled).
Obviously, as the relative share of big capital increases, the relative share of all other
income decreases. Those engaged in agriculture are, as usual, the worst off. Thus in
1951 agricultural income amounted to 833 per cent of the average national income; the proportion
dropped to 603 per cent in 1962 and 511 per cent in 1971 in 1950 independent cultivators and
their working family-members constituted 9239 per cent of the agricultural labour force.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

In summary, there was an unusual dual character to the industrial landscape in Greece. It was one of a state
sponsored heavy industry tied into foreign capital, while the petit-bourgeois remained very active:

the capitalist mode of production, dominant in the Greek social formation, is linked to the mode of
simple commodity production (agriculture, artisanal industry) in such a way as to keep growing
continuously at the expense of the latterneither destroying it completely, nor helping it to develop.
And it is precisely here that the most crucial difference lies between the western European and the
Greek models of industrialization. The former involved either the destruction of simple commodity
production in agriculture and industry, or its articulated incorporation into the capitalist mode of
production through a specialization which established a positive complementarity with big industry.
As a result, the effects of technical progress, which originated in the dynamic sectors, spread fairly
quickly to the rest of the economy, with beneficial consequences for income distribution, the
expansion of internal markets and so on. In the Greek social formation, by contrast, capital intensive

industrial production has taken an enclave form. Despite its rapid growth in the sixties, it has not
succeeded in expanding or even transferring its dynamism and high productivity to the backward
sectors of the economy. Thus simple commodity production looms large within the Greek economy. It
gives a lot (directly and indirectly) to the capitalist mode of production, but takes very little in return
just enough to reproduce itself. As a consequence, inequalities in Greece are much greater than
those found in the West. For in addition to the usual inequalities between labour and capital in the
sectors where the capitalist mode is dominant, Greece has inequalities resulting from the persistence
of vast productivity differentials between modern and backward sectors of the economy.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

As the Greek countryside was becoming depopulated, many peasants emigrated. This deprived the Right wing
forces in the countryside of support. The on-going immiseration-depression of the living standards of the working
people led to a resurgence of left support. After some electoral gains of the left, the RIght wing army faction decided
to set aside the triarchy of Army, parliamentary forces and Monarchy and to become the sole power base.

How Cyprus Became the Focus of Imperialism and Heated Up Greek Battles

During this time, the relations between the Greek and Turkish pro-USA client states became strained with the
Cyprus crisis. The Cyprus struggle had initially started as a war of liberation against the Ottoman Empire and
Turkish oppression. It now pitched a small weak Cypriot national bourgeoisie against both the pro-Greek
compradors and the pro-Turk compradors.

The movement for liberation began under Turkish rule among the Greek Cypriots, who suffered particular
oppression, and its main demand was for Hellenic unity, for enosis (that is, union with Greece). The movement
continued to develop under British rule, and with the development of a weak Cypriot national bourgeoisie this class
came to lead the liberation struggle. The effective leader of the movement was the Ethnarch of the Greek Orthodox
Church, Mihail Mouskos Archbishop Makarios and embraced two organization
1) the National Organisation for Cypriot Struggle (EOKA), a right-wing body sponsored by the Greek
government and led for many years by Greek General Georgios Grivas; and by
2) the Progressive Party of the Working People of Cyprus (AKEL) a body representing more directly the
interests of the Cypriot national bourgeoisie, and presenting a left-wing image to appeal to the workers, peasants
and urban petty bourgeoisie; it was led by Ezekias Papaioannou.

(Marxist Leninist Organisation of Britain (MLOB) THE CARVE-UP OF CYPRUS Class Against Class; No.7, 1974.

The fortunes of the Cyprus liberation movement were inextricably tied to the turn of events in Greece. Here the US
imperialists held dominant sway:

By 1966 Greece had become a semi-colony of US imperialism, and this position of dependence was
reinforced by the military coup of 1967 which established a military dictatorship in Greece
subservient to US imperialism. From now on the demand of the Cypriot national bourgeoisie
(represented by the Makarios government) for national independence had the overwhelming support
of the mass of the Greek Cypriots, while enosis became the demand only of the pro-imperialist Greek
Cypriot comprador bourgeoisie.

(MLOB, The carve-up of Cyprus Ibid)

What was the character of the Independent state of Cyrus? In reality it was a neo-colony of Britain:

In December 1959, prior to the granting of independence, elections were held for a Provisional
President of Cyprus, Makarios stood on a platform of acceptance, with reservations, of the British
imperialists plan and was elected by a large majority.
Despite the fact that Makarios represented the interests of the Cypriot national bourgeoisie, the
British imperialists felt it safe to hand over power to a government headed by him by reason of the
antagonisms artificially built up between the Greek Cypriot and Turkish Cypriot communities on the
island, believing that these antagonisms and other safeguards could be effective in preventing the
Makarios government from taking any steps to end the neo-colonial status of the island.
The independent Republic of Cyprus which came into being on August l6th, 1960 was, in reality a
neo-colony of British imperialism.

(MLOB The carve-up of Cyprus Ibid)

While Archbishop Makarios was a representative of the Cypriot national bourgeois, he was unwilling to launch a
struggle that unleashed the power of the working class and peasantry. Thus he was left to resort to intrigue and
maneuvers aimed at seeking advantage of the contradictions between various powers (MLOB). However this was
ineffective as the USA blocked shipped arms from the USSR.

3. The Greek Junta Greece by now fully a client state of the USA

As noted, the 1967 Greek military dictatorship was established by a coup backed by the USA. It was precipitated by
the increasing working class struggles against the poor economic situation of the neo-colonial state of Greece,

US civil aid came to an end in 1962; Greece was admitted as an Associate to the European
Economic Community; and partial settlement was reached of Greeces long-standing indebtedness to
creditors in the USA and to private creditors in Britain. In each case the result was to add to the strain
on the balance of payments... nearly one third of the budget was still devoted to defence The
stringency of the economic state of the country led to a number of ugly demonstrations. Strikes
became increasingly frequent..

Woodhouse C.M Ibid p. 282-283.

The then King, Constantine II was the Commander-in-chief of the army.

That the right wing forces were loosing support became clear from the 1958 electoral gains by left wing party EDA.
The right wing section of the army IDEA launched the Pericles Plan:

devised for the purpose of neutralizing the communists in case of war, this was used instead by the
Right to achieve victory in the 1961 elections.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

This move by the extreme right-wing of the army, prompted George Papandreou
to start Anendotos a fight against the repressive policies of the Right. His party was the Center Union.

In the 1964 elections, Papandreous Centre Union successfully challenged the electoral dominance
of reaction. In the elections of the following year, it further consolidated its position by gaining an
unprecedented 53 per cent majority. Meanwhile, a strong left wing emerged within the Centre Union,
under the leadership of Papandreous son Andreas.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Although George Papandreou tried to move against IDEA. He also tried to improve some aspects of working
peoples lives. Together this prompted the Army and the Monarchy to plot against Center Union by slandering his son
Andreas, as a traitor who shared state secrets. An interim coalition government of centrists was formed but fell
quickly. Panagiotis Kanellopoulos formed a Service Government, prior to an election. However, the Army
remained determined to sweep away any opposition:

In 1967, the Greek military seized power in a coup dtat, overthrew the centre right government of
Panagiotis Kanellopoulos. It established the Greek military junta of 1967-1974 which became known
as the Rgime of the Colonels.

The Colonels did not change the economic direction of Greece, they made it simpler they suppressed both
workers, peasants and small petit-bourgeoisie in support of the capitalists:

The colonels, by following the logic of the economic model they had inherited, gave their unlimited
support to big capital, foreign and indigenous. They made sure through repression that the ensuing
growing inequalities would be accepted unconditionally, without protests or strikes to frighten capital
away. After a short period of hesitation private investment rose again and foreign capital continued
its penetration of the Greek economy. The rate of growth soon surpassed pre-dictatorial levels and
sustained an impressive acceleration. This achievement was a clear indication of the fit between
rapid capital accumulation and the dictatorship. Moreover despite growing inequalities, the
standard of living grew steadily during the period of the dictatorship. The colonels brought to fruition a
process of dependent industrialization that had started before them. They did not initiate it, they
merely pursued it with vigour and consistency.

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Although Mouzelis is sceptical that the USA supported the coup, it most likely they did. Much later on, USA
President Clinton admitted that the USA had backed the Junta:

When US President Clinton visited Greece in 1999, he obliquely offered what sounded like an
apology when talking about a painful aspect of their recent history.
When the junta took over in 1967 here, the United States allowed its interests in prosecuting the
Cold War to prevail over its interests I should say, its obligation to support democracy, which
was, after all, the cause for which we fought the Cold War. Clinton said in his conciliatory remark,
Its important that we acknowledge that.

Remarks By President Bill Clinton and Prime Minister Simitis of Greece to the Government of
Greece, Business and Community leaders. Inter-Continental Hotel Athens, Greece November 20,
Anti-Revisionism in Greece The Rule of the Colonels
the military Junta 1967-1974 https://www.marxists.org/history//erol/greece/junta-note.pdf

But there was never any serious threat to the Parliamentary section of the Triarchy. The working class had simply
been resisting the economic pressures.

They had not been organised into a meaningful communist resistance.

The Junta soon became led by George Papadopoulos, who instituted a reign of terror against leftists and
communists. The King tried in 1967 to establish himself as a sole dictator, but was rebuffed and fled to exile.

As Prime Minister, Papadopoulos continued a brutal dictatorship overseen by the dreaded Military Service Police
(ESA) of Ioannides. The crude overthrow of any democratic norms even led the Council of Europe to demand
Greeces resignation. But:

The Western Alliance as a whole continued to tolerate the dictatorship, on the grounds that Greece
formed an essential part of NATO.. The US went still further.. American policy became one of active
support. American and Soviet strategists were engaged in a duel in the eastern Mediterranean. It
became even more intense after the Six-Day War of June 1967 between Israel and the Arab
states In September 1972, an agreement was signed by which the US Sixth Fleet would enjoy
home-port facilities at Piraeus.

(Woodhouse C.M Ibid pp.298-99)

Repressions continued and provoked even a Mutiny in the Navy in 1973. In an infamous incident, the students at
Athens Polytechnic were brutally assaulted in November 1973. Using tanks to suppress a sit-in, more than 20
students died. This allowed Brigadier Ioannidis to seize power for himself, behind a puppet General Grivkas
(Woodhouse Ibid p. 305). Formal martial law was again installed.

Ioannidis now also moved to oust Archbishop Makarios from Cyprus in a coup detat. Moreover this was coordinated
with the imperialists in order to ensure the partition of Cyprus into a Greek area and a Turkish area. Events
unfolded as follows:

The pretext for action was a note from Makarios to Greek President Phaedon Gizikis on July 2nd.,
demanding the recall of the Greek officers of the National Guard on the grounds that they had been
collaborating with EOKA-B (the terrorist Organisation formed by Grivas following his return to Cyprus
in 1979 and continuing in existence after Grivass death in January 1974) in attempts to assassinate
him and overthrow the government. The note set the deadline of July 20th. for compliance with the

So, on July 16th, on the orders of their Greek officers, units of the (Greek Cypriot)National Guard, in
full collaboration with EOKA-B and with the Greek troops stationed on the island, staged a military
coup and established a military dictatorship over the part of the island outside the enclaves under the
control of the Turkish Cypriot comprador bourgeoisies Transitional Administration. A new puppet
President was installed, one Nicos Sampson, a curfew imposed and thousands of supporters of
the Makarios government arrested.

The Greek government recognised its puppet regime almost immediately. while the Turkish
government threatened that unless the situation in Cyprus were reversed it would order its troops to
invade Cyprus under the Treaty of Guarantee.

For four days the US imperialists and their allies in London, not only took no action, they deliberately
obstructed the calling of the Security Council of the United Nations which could have taken some
action. As Lord Caradon put it bluntly in a letter to the press:

Due to the deliberate delay of the United States and the United Kingdom, it was not until after the
invasion (i.e. of Cyprus by Turkish troops Ed.) that the Security Council passed any resolution at

(Lord Caradon: Letter to The Guardian 11 July 31st, 1974; p. 12).

Meanwhile, Makarios had managed to escape from Cyprus. He was received by the British
government with formal, but non-committal, protocol, but the United States government talked with
him only in his ecclesiastical capacity:

The President (i.e., Makarios Ed.) had been given the chilly US reception of in Dr. Kissingers
terms a loser, without hope of a comeback.
(The Observer, July 28th.9 1974; p. 9).

On July 20th., therefore, some thousands of Turkish troops invaded northern Cyprus according to
plan, occupying the principal area inhabited by Turkish Cypriots from the port of Kyrenia to the
outskirts of the capital, Nicosia.

Later the same day, the US and British imperialists brought the Security Council into action, and it
passed a resolution calling for an immediate cease-fire on Cyprus. And Greece and Turkey despite
being, according to the world press on the verge of war dutifully obeyed.

(MLOB; Ibid).

As Woodhouse rightly comments:

The US was legitimately suspected of having backed Ioannidis

(Woodhouse Ibid p.305)

4. Capitalist Class of Greece Moves to democracy and Europe

The work of the overt and now discredited dictatorship of the generals was done, they had suppressed any internal
left opposition. The stage was set for the partition of Cyprus. Now under an international odium, the Colonels took
off their uniforms again under pressure again from the USA imperialists. As the MLOB put it:

The Colonels Take Off Their Uniforms

On July 23rd 1967. The military junta that had exercised a military dictatorship suddenly stepped into
the background over the people of Greece since 1967, and announced that they had invited civilian
politician Konstantinos Karamanlis to form a civilian Cabinet.

Karamanlis is mainly remembered for his role as Prime Minister in arranging the murder (and its
subsequent cover-up) of rival politician Gregori Lambrakis (portrayed in the film Z). While in exile
in Paris, he was in June 1965 voted into Karamanlis party New Democracy. He was committed for
trial by an investigating committee of the Greek Parliament for bribery, dereliction of duty and

Due to an unfortunate error, the democratic revolution in Athens was announced by US Secretary of
State Henry Kissinger the day before it actually happened. Even the capitalist press was compelled
to treat the revolution with some cynicism:

Dr. Kissinger and his emissary Mr. Joseph Sisco have played a key role in promoting governmental
change in Gioecell.

(The Guardian, July 24th., 1974; p. 2).

And in fact, little fundamental in Athens seemed to be changed. True, a considerable number of
political prisoners were released (a necessary step in order to obtain enough politicians to form a
government). But Brigadier-General Dimtrios Ioannides remained in office as head of the hated
military police, martial law continued and in his Message to the Nation Karamanlis was careful not to
mention the word democratisation.

(Marxist Leninist Organisation of Britain (MLOB) THE CARVE-UP OF CYPRUS Class Against
Class; No.7, 1974. (http://ml-review.ca/aml/MLOB/CYPRUS_Fin.htm)

Nonetheless Karamanlis did restore the Constitution of 1952 (making it again a monarchy) and released all political
prisoners and legalised the CP for the first time since 1947. (Woodhouse; Ibid; p. 305). In actual fact he had no real
choice as the prior alliance that had formed the Triarchy (Army, right-wing parliamentarians, and Monarchy) had
been totally discredited.

When Constantinos Karamanlis, the grand old man of the Greek Right, stepped into the breech and
formed the first post-junta government in 1974, it was immediately apparent that there could be no
simple reversion to the old model of repressive parliamentarism (But) his freshly formed New
Democracy party retained and expanded the electoral support that had previously gone to the parties
of the Right. But the political discrediting of both the army and the thronewhich had, in any case,
regarded with suspicion Karamanliss sixties project of modernizing the monarchyleft him with little
choice but to seek the consolidation of right-wing hegemony through a populist inflection of internal
and external policy Within months of coming to power, the National Unity Government headed by
Karamanlis had withdrawn from NATOs military command structures, legalized the Communist Party
for the first time since the civil war, organized relatively free general elections, and called a
referendum that produced a 69 per cent majority in favour of the republic. Subsequent trials of junta
leadersin some cases leading to sentences of life imprisonmentunderlined the subordination of
the officer caste in normal political activity

(Petras, James. The Contradictions of Greek Socialism: New Left Review; I/163, May-June 1987)

By November 1974, elections had elected Karamanlis New Democracy party. A further plebiscite confirmed a
popular rejection of the monarchy. Karamanlis tellingly revealed his governments objective nature:

Karamanlis once remarked that he was himself the Americans only friend in Greece, and he dared

not admit it.

(Woodhouse Ibid p. 308).

Where was the economic development of Greece by now?

The hopes of the Greek capitalists had in fact not been fulfilled:

In Greece the early seventies already witnessed a rise in the specific weight of food, clothing and
construction industries, and in the latter half of the decade manufacturing as a whole was contributing
less than fifteen per cent of the annual increase in GDP, while fully three-quarters of GNP growth
came from the inflated services sector. Manufacturing exports, given the small size of the internal
market, had originally been conceived as one of the principal keys to success, and at first a number
of important openings were found in this area. However, the recessionary tides of the seventies,
together with the intense competition of low-wage economies precisely in textiles and other such
goods, led to a loss of Greeces market share everywhere except in the Middle East. By 1980, when
PASOK was preparing to take over the reins of government, it was possible to talk of an actual
tendency of deindustrialization, as the import/export ratio of manufacturing goods had risen to 3.2:1
from 2.5:1 in 1974.

(Petras, James. The Contradictions of Greek Socialism: New Left Review; I/163, May-June 1987)

While Karamanlis was not anti-American, he was moving Greece towards Europe. Relations with Europe, in order
to join the European Economic Community (EEC), became the focus. Karamanlis had spent 15 years as an exile
in France, and the French government had sent him back to Greece on a government plane.

On 1 January 1981, Greece joined the EEC becoming its tenth member.
But Karamanlis was struggling to withstand the growing resistance as inflation drove a left shift. The by now openly
revisionist Communist party of Greece (KKE) had begun to capture a portion of the electorate:

At the left end of the spectrum, the Communist Party of Greece (KKE) rapidly consolidated a strong
position in industry and a ten-per-cent bloc of the electorate;

(Petras Ibid New Left Review 1987)

A new faade to divert the masses was urgently needed. The prior centrist party of George Papandreou had been
the Centre Union. After the Junta dissolved itself, this won 20% in the first elections, and supported Karamanlis in
government. Consequently it soon disintegrated. Georges son, Andreas Papandreou had been trained as an
economist in the USA. He had been instrumental in the pre-Junta parliamentary government, in attempting to curb
the most right-wing elements of the Army (IDEA). He had fled into exile after the coup, and from there organised a
resistance grouping Pan-Hellenic Liberation Movement (PAK).

After the Karamanlis return to parliamentary rule, Papandreou organised the

Pan-Hellenic Socialist Movement (PASOK). Within 7 years it had won the in the Greek elections of 1981. It was
an explicitly social-democratic formation proposing:

full-scale nationalization and an end to the exploitation of man by man. . And an all-round

modernization of Greeces productive system that would bring to the fore hi-tech industries employing
local and expatriate skilled labour and producing for internal consumption and export. In foreign
policy, Papandreou retained his reputation as an intransigent opponent of NATO and of any Greek
involvement in the EEC .. All these themes came together in skillful and insistent propaganda centred
on the need for comprehensive change or allaghi.

(Petras Ibid New Left Review 1987)

By October, Andreas Papandreou was elected into power for the PASOK party.
It is true that early progressive moves were made during its government including early secularisation and
improvements in the role of women:

The more general secularization of Greek society, and the introduction of divorce by consent, civil
marriage and equal rights for children born out of wedlock.. the Greek parliament has abolished
various repressive laws from the fifties as well as some of the extreme powers given to the police,
and although the military has largely remained a world apart, subject to no fundamental restructuring
or parliamentary scrutiny, it has been deprived of the means of direct intervention that used to be
provided by its own radio station. .. the EAM/ELAS Resistance was officially rehabilitated.

(Petras Ibid New Left Review 1987)

However PASOK retreated quickly upon attempts to tax urban real estate, and did not try seriously to ever move on
this front again. Industry remained at a comparatively low level against other countries of Europe. PASOK did not
base itself on the working class, and thus never proposed any resolve to deal with either the Greek capitalists, or the
petit-bourgeois small business. Corruption was a real problem and Petras proposes the term kleptocrats to
describe a stratum of especially corrupt business:

Most of the industrialists continued to accumulate wealth by borrowing huge amounts of capital from
the state banks, investing a fraction and diverting the rest to overseas bank accounts. The debt/
capital-investment ratio remained one of the highest in the world because industry was directed not
by the usual kind of entrepreneur but by a highly distinctive stratum of kleptocrats. Agriculture too
suffered from underinvestment, irrational and costly marketing systems, with a multiplicity of small
farms divorced from organized credits or from productive systems capable of providing cheap inputs
or processing outputs.

(Petras Ibid New Left Review 1987)

The preponderance of petit-bourgeois ownership of small businesses had bred its brand of tax evasion and

In Greece, the pervasiveness of petty-bourgeois ideology and the ability of the non-productive
classes to evade taxes and acquire multiple sources of income. Until Greek society recognizes the
working class as its most valuable asset in the drive for industrialization, it will be doomed to
stagnation and crisis.

(Petras Ibid New Left Review 1987)

PASOK would not move against the capitalist class. Instead it resorted to short term loans to head off worker and
petit bourgeois discontent. PASOK rule led to inflation and the start of the debt. At the same time debt increased.
The financial sectors were bolstered whilst manufacturing was neglected:

PASOKs early spending spree increase(d) the consumption of nearly all sections of the
population without creating any new industrial capacity to meet that demand. The government raised
wage income, partially offsetting the inflationary erosion in Karamanliss final two years; private
capital responded by slowing investment to the merest trickle. Exports stagnated, while imports
mushroomed and invisible earnings (the mainstay of the external sector) began a sharp decline. To
secure the populist compromise the regime had turned to foreign loans, fiscal deficits and EEC
subsidies; .

Public sector borrowing soared from 121 per cent of GDP in 1983 to 171 per cent in 1985, without
having any effect on domestic output; and particularly in the run-up to the June 1985 elections it was
increasingly used to finance current expenditures, which rose from 39 per cent of GDP in 1984 to 41
percent in 1985. As one study has noted:

The fastest-growing category was employment in services, almost exclusively led by continuing
substantial increases at around 3 per cent per annum in employment in the public sector and in
banks . . . In the three years to 1985 employment in manufacturing declined by around 21 per cent.
Table Two (below) sets out the still sharper fall in output during
the first PASOK term.

Table 2: Greek Industry, 19811984: 1970 =100

1981 1982 1983 1984

Consumer goods 195 191 188 192
Capital goods 180 163 167 172
Source: OECD Report on Greece, 1985/86.

(Petras Ibid New Left Review 1987)

Agriculture also saw falling production:

Agricultural growth for its first term was as follows:

_1.6, 1981; _2.4, 1982; _6.8, 1983; _6.4, 1984; _0.5, 1985.
The reason for these meagre results was that only a small part of the funds were actually used in
agriculture. The remainder were employed to finance consumption, to be redeposited with banks at
much higher rates, and to be used for the acquisition of real estate in urban areas.

(Petras Ibid New Left Review 1987)

In fact, while the now infamous external Debt of Greece, became a ballooning problem under PASOK. Petras cites
figures from the OECD:

PASOK has also increased Greeces role as a subordinate debtor nation beyond the worst period of

the old Right (See Table 3 Below.) The foreign debt stands at 45 per cent of GDP and payments
account for close to a quarter of export earnings. Given the phasing- out of EEC balance of payments
assistance, commercial borrowing will soon have to increase more than twofold, on terms dictated by
the foreign banks: namely, the closure of unprofitable public enterprises; greater freedom for
employers to hire and fire workers; tough anti- strike legislation, relaxation of price controls, an
expansion of public private ventures, and an open door to foreign investment.

Table 3:

Greeces External Debt (in billions of $)

1981 1982 1983 1984 1985 1986
Total Debt 7.9 9.5 10.6 12.3 14.8 17.0

(Petras Ibid New Left Review 1987)

In fact all this is very similar to today, and the same demands for austerity were raised then by the European

This social-democratic party, now more openly objectively played the role of a pro-European comprador:

Papandreou .. freely engaged in anti-American rhetoric contending that the American imperialism
was the most serious threat to humanity, Papandreou unnecessarily antagonised Washington.

(Kofas JV; Under the Eagles Claw Exceptionalism in Postwar US-Greek Relations; Westport
2003; p.184)

Meanwhile Papandreou was moving Greece firmly into dependency to the EEC:

Dependency results from the growing EEC domination of the Greek economy. While the EEC has
increased the transfer of loans and grants to Greece, this has been more than offset by the takeover
of internal markets and the displacement of Greek manufacturers and farmers. To quote again from
the OECD report: Whereas Greek manufacturing output has remained broadly stagnant in the three
years to 1985, import volume of manufactures may have risen by roughly one fourth in the same

(Petras Ibid New Left Review 1987)

Neither PASOK nor the party New Democracy (Led by Kostas Karamanlis, the nephew of the former President)
differed substantially in their political orientation towards Europe. Both were realigning from the USA to Europe:

Greece evolved from a client-patron relationship with the US to being an EU member, subordinating
its national sovereignty to the community.
With increased competition of the regional economic blocs.. after the Cold War Greece drifted further
from the US, because Europe was drifting as it strengthened and expanded its own sphere
economically financially, politically, and militarily

(Kofas JV; Under the Eagles Claw Exceptionalism in Postwar US-Greek Relations; Westport
2003; p.248)

Greeces leaders also did not appreciate the USA more overtly favouring Turkey as its vassal state of choice in the
Aegean and Mediterranean. But in fact, Papandreou was posturing and perhaps to the populist base that PASOK
had bult, that he was ant-USA. After all, Papanadreous signaled to the USA that were better terms given to Greece,
that this re-orientation could be re-visited. Correspondingly during the 1984-1985 year, the total US military aid to
Greece actually went up (Kofas, p.200 Ibid). Moreover he renewed Greeces allegiance to NATO, and enabled the
US fleet continued facilities.

This hesitation of Greeces capitalist leader to completely cut the USA off as their pay-master, reflects that of the
European powers themselves (see below). The determination of the EEC to sharply diverge, reject its subordinate
status and openly challenge the USA, was still to come.

By 1985, PASOK reversed all its earlier progressive steps for workers wages and trade unions. It increased
unemployment to doubled its rate (it was now above 10%). It enabled employers to revert to arbitrary practices of
hiring and firing, and empowered them to break strikes.

Greeces path was set by the refusal to tackle the core problem: Refusing an independent path and adopting a pro-
European comprador path just as before it had been a pro-USA comprador path. What did this mean? Essentially
it mean chronic indebtedness with no possible release. Warnings that were later to be echoed in 2014 began to

Interest payments on the external debt have been undergoing a geometric progression (up from
$466 million in 1980 to $1.1 billion in 1984), while exports have fallen from $4.7 billion in 1981 to $4.4
billion in 1984. Capital flight has increased significantly in the 1980s, as it has done in other
indebted rentier states. .. a positive $15 million balance of payments in 1980 became a negative
$312 million in 1984. For these reasonstogether with the overwhelming predominance of
speculative over entrepreneurial capitalit is clear that the financing of further growth is virtually
excluded. Far from inducing the inflow of new resources for development, Greeces opening to the
outside or liberalization of the economy will facilitate the outflow of resources, thereby deepening
underdevelopment. Nor will the device of lowering wages make Greek capital competitive, so long as
industrial capital acts principally as a financial intermediary and fails to innovate and invent.

(Petras Ibid New Left Review 1987)

The details of individual governmental changes up to the 2010 financial crisis in Greece, are beyond the scope of
this article. In fact, they do not substantially alter the analysis. The trajectory of Greece was now set. While the
political leaders were acting in the interests of the dependent capitalists (in essence all of Greek capital) the
compact with foreign imperialism would ensure the Greece crisis became a financial chain-reaction.

We must briefly examine the politics of the European coalition at this point.

The Appendix carries a detailed chronology describing the history of Greece from 1981 up to 2010.

5. The USA Moves to Become the World Imperialist Leader The Character of the European Union from
pro-USA states to anti-USA coalition

Moving to a meaningful trans-national coalition of European capitalist states took several steps and forms. The
coalition morphed from a post-war Europe wish to re-build, through to the European Economic Community (EEC)
and then to the European Union (EU):
The Communitys initial aim was to bring about economic integration, including a common market
and customs union, among its six founding members: Belgium, France, Italy, Luxembourg, the
Netherlands and West Germany. It gained a common set of institutions along with the European
Coal and Steel Community (ECSC) and the European Atomic Energy Community (EURATOM)
as one of the European Communities under the 1965 Merger Treaty (Treaty of Brussels). In 1993, a
complete single market was achieved allowing for the free movement of goods, capital, services, and
people within the EEC

Upon the entry into force of the Maastricht Treaty in 1993, the EEC was renamed the European
Community to reflect that it covered a wider range than economic policy. This was also when the
three European Communities, including the EC, were collectively made to constitute the first of the
three pillars of the European Union, which the treaty also founded. The EC existed in this form until it
was abolished by the 2009 Treaty of Lisbon, which incorporated the ECs institutions into the EUs
wider framework and provided that the EU would replace and succeed the European Community.

(Wikipedia: https://en.wikipedia.org/wiki/European_Economic_Community)

Through these steps, the class alliances of the countries of the European alliance changed in its essential character.

Immediately post-Second World War, the European countries, were formed into a pro-USA formation. However over
time they became anxious to attain autonomy from the USA. This fight-back reached a climax after the USA
launched its financial attack in launching the Dollar Hegemony in the Plaza Agreement of Richard Nixon in August
1971. This act finally precipitated the formation of the Eurozone. This section traces the course of the changing
class character of Europe in the post-Second World War decades.

At the end of the Second World War, the USA planned to rebuild European capitalism through the USA Marshall
Plan for its own ends. This was facilitated by the fact that the Second World War had physically devastated Europe,
and that many countries were in debt to the USA. Britain, for example was now completely beholden to its major
competitor the USA:

When sales of foreign investments and of gold and dollars are added in, the net change on capital
account between the outbreak of war and the end of 1945 amounted to no less than Pounds Sterling
4,700 million. The United Kingdom ended the war with the largest debt in history.

(A.Cairncross. Years of Recovery, British Economic Policy. 1945-51. London, 1985. p.7).

American imperialists recognised that Europe needed to be re-built as a bulwark against further socialist upheavals.
Especially as the USSR successful battles, had become an inspiration across the world. The USA imperialists as
personified by James Warburg (part owner of the House of Morgan, a controller of USA international finance and
industrial and utility trusts) remarked:

Germany was the hub of the weak German economy the largest single compact mass of skilled
labour on the Continent, it should be transformed from the present poor-house and plague-center..
into a powerhouse for a rapid reconstruction of Europe, without letting the powerhouse acquire too
broad a permanent franchise and above all without letting the powerhouse ever again become an
arsenal. The Westward thrusting of communism will not be stopped by an physical frontier. It can
be only stopped only a planned, US-Aided reconstruction so liberal and even revolutionary as to
meet the challenge on its own grounds, and to strike the meaning from the accusation of American
dollar diplomacy.

(Van Der Pijl, K. The making of an Atlantic ruling class; pp. 42-43,146; London 2012).

As time would show, once Europe had been rebuilt as a bulwark, the USA could not restrain European capitalists
wanting their own dominance.

In postwar Europe the Marshall Plan was one of the three trade and economic tactical instruments by which the
USA imperialists wished to take advantage of the post-Second World War crippling of the European powers. The
other two were the creation of the International Monetary Fund (IMF) and the creation of the General Agreement
of Trades and Tariffs (GATT). The military instrument to back these up was of course the North Atlantic Treaty
Organization (NATO). The Marshall Plan was conceived as an anti-communist and anti-nationalist weapon and a
means to erode European independence:

The establishment of American hegemony in the North Atlantic area was directed simultaneously
against the spread of planned economy and social revolution beyond the Soviet-controlled area in
Europe and against the national, self-contained reconstruction programs pursued by most West
European states in the immediate post-war period. These programs in which local Communists
parties participated, were judged unsuited for maintaining capitalist rule in the long run. Europe
would have been Communistic if it had not been for the Marshall Plan, Marshall Aid administrator
Paul Hoffman claimed in February 1950.

(Van Der Pijl, K. Ibid; p.148-9)

Van Pijil summarises that:

Through the Marshall offensive, the Pax American was imposed on the economic ruins of the
defunct Pax Britannica in Europe.

(van Pijl Ibid p. 167) .

But the formation of the IMF was another key strand of the USA design.

Bretton Woods.. Shorthand for the system, designed by the US and Britain, that governed
international monetary and economic relations in the decades following the Second World War. (It
was) the launch of the post-war phase of super-dominance of the US and the dollar. .. All member
countries pledged themselves to play by an internationally agreed set of rulesthese rules were
quite strict, and enforced by a new world economic policeman, the International Monetary Fund
(IMF). Countries had to declare a par value an exchange rate of their currency in terms of the
American dollar and/or gold, and change it only in consultation with the IMF. Various forms of
currency manipulation were named to prevent a return to the competitive devaluations and
currency chaos of the 1930s. While countries could keep some controls on movements of capital,
they basically undertook gradually to dismantle the wartime systems of exchange and trade controls
and to move towards the free convertibility of their currencies they also pledged themselves to
adhere to the rules of the multilateral trades and payments scheme;

(Dean, Marjorie & Pringle, Robert The Central Banks; London 1994 p.75).

In return for this agreement, the USA agreed to take over the position as lender of last resort whereby it would
honour those creditors who wished to remove gold in exchange for dollar. It would:

Submit to discipline by its agreement to convert into gold any dollar balances presented to it by
overseas central banks at the fixed price of $35 an ounce. The US was the only country to accept
such a gold convertibility obligation and the only one in a position to do so, having ended the war
owning about two-fifths of the worlds stock of monetary gold;

Dean and Pringle; Ibid p. 76.

This in effect took over the dominant position of lender of last resort that the British government had previously held
from 1924 to September 1931 (Dean and Pringle Ibid p. 63). The US was anxious to see this agreement effected as
it would enable the USA to control international monetary policy:

In these countries (Ed -ie. those agreeing to join the IMF) national central banks of countries other
than the US had little influence on policy decisions. Domestic and economic policy came to be
dominated by one objective the maintenance of the fixed exchange rate against the dollar and
exchange rate policy, was of course entirely a matter for government. For the most part, a
government would respond to an impending payments deficit by tightening fiscal policy (Ed-i.e.
dropping the printing of money) or putting up interest rates; and a country with a surplus would ease
fiscal policy or lower interest rates. Of the major countries only France resorted regularly to
devaluation as way of maintaining its export competitiveness and growth.

(Dean and Pringle; Ibid p. 76).

This meant that the USA did not need to try to maintain its currency value. All countries had to acquire the dollar;
there was no need for the dollar to be defended at any particular rate of exchange. By 1949 the US had acquired 72
% of the worlds gold. The Bretton Woods Proposal had been resisted by Lord Maynard Keynes of Britain, but to no
avail. This Agreement eased the post war period for the USA, because all other Central Banks had to have a dollar

Making the dollar a reserve currency meant that central bankers round the world had to have dollars.
They had to buy dollars in the marketplace which pushed up the price of the dollar up, threatening the
parity of the currency with the dollar. Thus they could only buy when the dollar was weak This
suited the US and the US Federal Reserve which could follow a very lax monetary policy to make
sure that there were always dollars to go around. It worked wonders for post-war US domestic policy,
helping promote the wartime dream of full employment.

(Bose, Mihir The Crash London, 1988. p.135).

The USA was in an unusual position of dominance. It had funded the war for the Western capitalist allies, detonated
the Atom bomb thereby showing its military dominance, and had a home base that was unaffected to a large extent
by the war. It proceeded to further dictate terms, to ensure its vote in the IMF on decisions, was a veto:
In order to finance European and other foreign purchases from America, that is to ensure adequate
financial resources to sustain US exports, (world trade) the US Government had taken the lead in
1944 at Bretton Woods to establish the International Monetary Fund (IMF) and the World Bank.
Loans were provided by the U.S. Government and US credit markets via the World Bank to European
governments, which used them mainly to pay for goods supplied by American exporters. The source
of the original loan funds provided by the IMF came from foreign currency and gold subscriptions by
the participating nations. Americas subscription amounted to almost $3 billion and entitled it to nearly
30% of the voting power. The member nations agreed that an 80% majority vote would be required
for most rulings, thus conceding unique veto power to the US Europe was fully aware that it was
ceding to America the option of determining its own currency values and tariffs. The US was the only
nation with sufficient foreign exchange to finance a program of overseas investments, long term
financing and foreign aid

(Hudson, Michael. Global Fracture, the new international Economic Order. New York, 1977. p.11-12).

Such a ceding of power to the USA was self-evident as any debts to the USA were only made payable in dollars or
gold. The Bretton Woods Agreement had after all made the dollar as good as gold. The USA actively hoarded gold.
Until 1958 and the Korean war the gold stocks of the USA remained exceedingly high, in correspondence with the
USA stipulations on repayment). The USA also ensured that the major European powers joined the Gold Pool. This

To ensure that the gold parity of the dollar would be supported by the central banks, the European
ones mainly, who would thus have to sell central banks stocks of gold as the occasion demanded.
The price of gold was kept artificially low at a time when the price of goods was rising. The dollar thus
stayed as good as gold and the US was freed from the threat of having to support the gold parity of
the dollar by itself, or of seeing gold overtake the dollar as an international reserve instrument which
remained a theoretical possibility in the framework of the Bretton Woods Agreement. The US spared
no efforts in its campaign to impose and maintain the Gold Standard.

(Fiit,Yann, Faire, Alexandre, and Vigier, Jean-Pierre; (The World Economic Crisis, US imperialism at
Bay; London, 1980; p.76.;p.83).

Britain was being firmly eclipsed by the USA as the foremost imperialist. The pivotal point forcing even the most
stubborn British imperialists to recognise this, came in the Suez disaster of 1956 (these events were described in
The Gulf war the USA Imperialists Bid To Recapture World Supremacy at

Meanwhile the other European capitalists searched for ways to move into more independence. This was a slow
process. The USA continued to exert major obstruction to real independence for some time. Within each of the
major European states, some elements were more inclined towards the USA (i.e. compradors the so-called
pro-Atlantic bourgeoisie), some were more interested in maintaining an independent sovereignty (the so-called
Euro-nationalists). These tensions played out over decades, spanning three waves of USA offensives:

Three successive strategies of Atlantic unity .. corresponded to the different offensives periods of
American capitalism. The first was Roosevelts concept of Atlantic universalism, which derived its
specific Atlantic dimension from the American focus of World War Two and the key position of the
British Empire in the world America wanted to expand into. The second version of Atlantic unity was

the Atlantic Union idea, which surfaced at the time of the Marshall Plan and combined a status quo
approach to control of the periphery with a high-pitched Cold War unity against the Soviet Union. The
third Atlantic strategy was the Atlantic partnership scheme promulgated by President Kennedy in an
attempt to restore unity of purpose to an Atlantic world in which the establishment of a restrictive EEC
demonstrated the degree to which Western European capital had emancipated itself from American
tutelage and was intent on carving out a sphere-of-interest of its own.

(Van Der Pijl, K; Ibid; p.xxxiv; London 2012).

The so-called Atlanticists (the comprador bourgeoisie for the USA a term usually reserved for countries of
colonial or semi-colonial status) were largely representatives of finance capital. These were interested in the
freedom of shipping capital reserves freely across international boundaries. They are also termed liberal
internationalists by van der Pijil.

In contrast the Euro-nationalists represented industrial capital and were interested in ensuring reinvestment
in and redeveloping a European heavy industrial base. They supported single sovereign or independent, state
funding of heavy industry and can be termed state monopolists .

As an internal intra-European battle between these two segments of capital occurred, the USA imperialists initially
favoured steps to a pan-European supra-national state. Of course this single supra-national state, has still not been
achieved. However between 1945-1998 there were periods where the European Euronationalist capitalist powers
waxed and waned, as USA imperialism counter attacked.

Regardless of whose interests it served, the overall tendency was towards a move for unity of the smaller European
countries. Only later was directed against the USA hegemony. The class character of the European coalescing
would shift form a pro-USA vassal coalition to an anti-USA coalition. Ultimately this would end up being dominated
by the German bourgeoisie.

Through this period, the fading British imperialists continued to rely and favour USA imperialism. In fact it was
actually Ernest Bevin, British Foreign Secretary who first proposed the NATO alliance:

The actual initiative to found a North Atlantic military alliance was taken by Ernest Bevin in 1948
following a series of defence treaties between Western European states Bevin .. in early 1948,
urged formal Atlantic cohesion of a political nature.. to USA Ambassador Lew Douglas.. the treaty
establishing the NATO was concluded in April 1949

(Van Pijl Ibid p. 157).

Early on French imperialism, as represented by General De Gaulle, wished to utilise USA strength to stand against
the USA. The early events were summarised as below:

The war encouraged a proliferation of new schemes for European regional organisation. De Gaulle
for instance repeatedly voiced the idea that European unity might be a bulwark against both the
Soviet Union and the United States, and comparable arguments were heard in various segments of
the German, Italian, and Dutch bourgeoisie Resistances.

Churchills proposal for a Council of Europe provides probably the best example of the (Atlanticist)
concept of European unity coupled to Britains desire to maintain its special link with the
Commonwealth and the United States..
(Van Der Pijl, K. Ibid; p26; London 2012).

In contrast:

The Euronational concept combined a number of state-monopolisitic attributes like a strong

emphasis on a European economic policy with a distinct rejection of Atlantic unity ;

(Van Der Pijl, K. Ibid; p26; London 2012).

The first USA steps to infiltrate Europe were actually before the Second World War. In most accounts, Jean Monnet
the post-war Finance Minster of France figures prominently:

Jean Monnet was perhaps one of the foremost in the European postwar leaders to see the
necessity of a coalition of European countries. As early as 1921 Monnet had advised Eduard
Benes: To address the problem of the weakness of Central European economic by establishing a
federation because of the region formed a natural economic unit.

(James Laxer. Inventing Europe; Toronto, 1991.p. 27).

Later in the Second World War:

Writing on behalf of the French Committee of National Liberation, Monnet for the first time advocated
the formation of a federation of European states to be established following the conflict..

(Laxer, Ibid, p. 27).

But Jean Monnet was in reality, a pro-USA comprador. He had spent many years working in banking in the USA and
had married a scion of the US ruling classes. Ultimately he saw not a rivalry between the USA and pan-Europe, but
a partnership, which later USA President Kennedy was also to espouse (van Pijl p. 29):

The most important representative of the Atlantic Partnership, or Euramerican concept in France
was Jean Monnet. 1962 was Monnets year of triumph, in which he thought the partnership of equals
between the US and the EEC, by which the Soviet union could be effectively checked, was actually
materializing. In Monnets view this would entail European military autonomy as well. Equal
partnership must also apply to the responsibilities of common defense, it requires amongst other
things, the organisation of a European atomic force including Britain and in partnership with the US.

(Van der Pijl: Ibid; P. 225).

Monnets relationship with the USA ruling class representatives of capital was close at even a personal level:

There is no doubt.. Monnets initiatives .. owed much to American encouragement. His decisive
advantage was the closeness of his association with the USA political elite.. the Dulles brothers,
Acheson, Harriman, McCloy, Ball and Brice and others.. he was to become widely distrusted in his
own country because of it..

(Anderson, Perry. The New Old World; London 2009 p.15)

Monnets strength as an architect of integration (i.e. of Europe ed) did not lie in any particular
leverage with European cabinets but in his direct line to Washington.

(Anderson, Perry. Ibid; p. 17)

By May 1949, the first concrete post-war steps for uniting Europe into a pro-Atlantic (i.e. pro-USA) bloc led to the
Statute of the Council of Europe.

On 9 May 1950, the French Foreign Minister Robert Schuman proposed to integrate the coal and steel industries of
Europe. The Schumann Proposal for the European Iron and Steel Community , was designed to form a
competitive market in iron and steel, using substantial public sector capital. Britain refused to join at that stage. By
1958, trade in the ECSC in steel had increased by 157% and steel output by 65% (Laxer, p. 38).

In Alliance Marxist-Leninist of October 1992, the Schumann Plan was portrayed as an anti-American move; and
Jean Monnet as a Euronationalist. Alliance was incorrect in this analysis. (Alliance Marxist-Leninist ALLIANCE
(MARXIST-LENINIST (Number 3, October 1992) Crisis In Capital And Their Solution Free Trade And
Protectionism In Developed Countries http://ml-review.ca/aml/AllianceIssues/ALLIANCE3ECONOMICS.html

The reality was far more complex. In fact the USA had argued that the Schumann Plan was of use since:

Secretary of State Acheson in 1951 estimated that the Schumann Plan was useful.. since it would
pull Germany, certainly Western Germany into economic relationship with Europe. It will tie it in and
lay a foundation which will ally fears the Germany might come loose and go off on an independent or
pro-Russian policy.

(van Pijl Ibid p. 157) .

The USA imperialists with their European stooges and even with the Euro-nationalists at this stage all continued
to agree that Europe needed to unite. The vision of many planners of USA strategy, was akin to that of Paul
Hoffman leading member of the Committee headed by Averell Harriman secretary of Commerce speaking to
the Senate Foreign Relations Committee in 1950:

We know that there is no possibility of Europe becoming the kind of an economy that will make it a
great force of strength in the Atlantic community unless we break down the barriers between those 17
political subdivisions with which we are working so that you have a single market, or something
close to it, in which you will have large-scale manufacturing because you have a large market in
which to sell it.

(Van Pijl Ibid p. 197)

Britain and France after Suez, had to accept that in the immediate future, their only role on the world stage would be
as a junior partner to USA imperialism. They threw their lot in with the Americans. The USA used their influence with
the British to disrupt attempts at a defence force independent of the US.

But as the USA became ever more hegemonic in Europe, De Gaulle and others turned to resist USA incursion. This
was forseen by J.V.Stalin:

Britain and France .. are imperialist countries.. Can it be assumed that they will endlessly tolerate the
present situation in which.. Americans are penetrating into the economies of Britain and France and
trying to convert them into adjuncts of the USA economy?

Would it not be truer to say that capitalist Britain and France will be compelled in the end to break
from the embrace of the USA and enter into conflict with it in order to secure an independent position
and of course high profits?

(J.V. Stalin, Economic problems of the Socialism in the USSR; Moscow, 1952. p. 38).

The loosening of the dependency chains on European nations formed by the credit of the USA Marshall Plan would
take several interim steps.

By 1957, the Treaty of Rome was signed which established the European Economic Community (EEC). Consistent
with its overall European strategy, the formation of the EEC was supported by the USA. In fact:

Eisenhower (said) .. that the Treaty of Rome would be one of the finest days in the history of the
free world, perhaps even more so than winning the war;

(Anderson; Ibid; p. 18).

There was now a dramatic opening of the European market for financial penetration to take over European
industries, as well as their markets:

The shift from commercial to financial penetration (ie of Europe by the USA -ed) was confirmed by
the formation of the EEC. The Common Market dramatically changed American prospects for
expansion in this respect.

(Van der Pijil; Ibid, p.193)

In reply to De Gaulle, the USA attempted to weaken the development of the future European Union, by using its
stooge the weak British imperialists. Thereupon French General De Gaulle later on vetoed the entry of Great Britain
into the EEC for precisely this reason.

By the time of Nixon and Kissinger, the situation had shifted. Now the USA perceived the threat in the now built up
European Community:

(they) started to perceive the potential for a rival great power in Western Europe;

(Anderson Ibid p. 21).

How had things changed so dramatically? The balance of power between the Euronationalists and the pro-US
Atlanticists had changed after the rise of the dollar hegemony. To recap, the Bretton Woods Agreement of 1944 to
stay on a gold convertibility was simply put aside by the USA. By the 1960s, under USA President Johnson,
inflation was created by printing more dollars. This enabled the USA to fund the Vietnam War and its limited social
reforms of the so-called Great Society (Dean & Pringle Ibid p.80; Palmer Ibid p.61). This had dire consequences:

The net result in the succeeding decades was a scale of Federal domestic budget deficit and
increasingly, balance of payments deficit without precedent in US history. At first the deficits and
consequential outflow of dollars into the world economy had been regarded as benign.. The deficits
initially helped to finance the mutual economic recovery of Americans allied (and client) economies.
But as the outflow of dollars turned into a might flood, American control over banks grew by leaps and
bounds, Between 1970 and 1975 the assets of overseas branches of US banks grew from $47 billion
to $166 billion. The over-valued US dollar came to be seen as the means by which European
industry was being acquired cheaply by US interests fears were expressed that Western Europe
was being turned into a fiefdom of US multinationals.. By the late 1960s the gap between the US
dollars internal purchasing power and its international value had widened alarmingly. The Europeans
were faced with the choice of either accepting these depreciating dollars (and thus, in effect, of
subsidizing the American economy and worldwide military and political commitments) or exploiting
Americas Bretton Woods commitment to swap dollars for gold at the fixed prices.

(Palmer Ibid p. 62).

De Gaulle remarked early on, that this was a USA attack using dollarization of the world economy, and warned that:

The Americans only used the atom device twice on Asia. but they use the dollar on Europe every

(Cited Palmer, John: Europe without America? The crisis in Atlantic Relations; Oxford; 1988; p.62)

Essentially the USA was pursuing a policy of financial export to drive acquisition of European industrial and financial
companies. Simultaneously it unwittingly began the financialization driving world inflation from hot money.
European nationalist leaders of many countries objected. As well as De Gaulle, French President Giscard
dEstaing objected:

It is rather remarkable that the war in Vietnam, a localized conflict of a very special nature involving a
great power and a small power could have such a far reaching effects on world economic
equilibrium.. Any other country that was faced with a balance-of-payment deficit of this magnitude
would have been obliged to take steps to restore balance whereas the US was not obliged to do so;
the method of financing its deficit exempted it from having to restore equilibrium and it was therefore
a system which caused considerable inequality in the interplay of monetary power

(Hudson, Michael, Global Fracture, the new international Economic Order. New York, 1977; p.31).

In another more serious threat to USA hegemony, the German state had become more pro-independent. Earlier
leaders (Konrad Ardenauer Chancellor [1949-1962] and Ludwig Erhard [Chancellor 1963-1965]) of post-war
West Germany had been resolutely pro-USA. The attitude of later German leaders can be gauged from a remark
made by Chancellor Helmut Schmidt (Chancellor 1974-1982) when he decried:

The misuse of the dollar as an instrument of US foreign policy.

(Cited Palmer John: Europe without America? The crisis in Atlantic Relations; Oxford; 1988; p. 10)

This reaction against the USA had its counterpart in Britain in the Westland Helicopter crisis, where Defence
Minister Michael Hesletine revolted against Mrs Thatcher. He was soon despatched by the stalwart pro-USA Mrs
Thatcher. This was pointed out by the Communist League at the time.

The salient point is that the USA fiscal policies prompted the Euronationalists to move towards the European
Monetary System (EMS) and before that the Snake. This then became the European Monetary Union (EMU):

European Community alarm at the misuse of the dollars privileged position in the world currency
system encouraged the EEC states to distance themselves in monetary policy from the US in the late
1970s. President Valery Giscard DEstaing of France led despite British opposition to the
creation of the EMS.. the breakup of the dollar-dominated monetary system also marked the end of
the earlier Atlantic consensus enshrined in the Bretton Woods Agreement of 1944;

(Palmer J ibid p. 11).

In Alliance Marxist-Leninist Number 3, 1992, we traced the rise of the European Union and the emerging hegemonic
role of the unified single German State after the disintegration of the Comecon states including former East

We concluded Alliance 3 by characterising the then inter-imperial rivalries as follows:

The current crisis of capital forces formation of blocs.

The current epoch is one of a disintegration of the power of the USA imperialists and an increase in
power of the German and thereby European imperialists and the Japanese imperialists. Each of
these competitors strive to create a super trading bloc; within whose borders free trade (or freer
trade) occurs. Outside of the bloc, protectionism is the policy.

These policies result from the major crisis of over-production that the world is experiencing. The final
rupture of the Comecon capitalist block offers the only untapped market; and so the Blocs are trying
to extend themselves into the ex-Comecon markets.

In the case of the USA Free Trade Bloc being set up between Mexico, the USA and Canada; the
Block is clearly under the domination of the USA. Here there is no effective balance between
opposing international imperialism. The differences between the European imperialists do allow for a
certain balance; this is not achievable between the USA and Canada; and less so between USA and

.. The European Economic Community is more delicately balanced between the competing
imperialists. Of the nations within the fold, only Britain (now a junior partner) has significant
allegiance to the USA. The others are far more committed to the EEC; even risking domination by
In the Far East, it is likely that a massive trading bloc between Japan and China is going to make it
impossible for many of the Pacific basin nations not to enter an alliance dominated by the Japanese

These maneuvers are the first salvoes of the next World War.

(Alliance 3: Ibid: http://ml-review.ca/aml/AllianceIssues/ALLIANCE3ECONOMICS.html)

We believe that these assessments overall remain correct. They are also, consistent with Stalins famous
prediction that under capitalism competitive wars for markets were inevitable, and that sooner or later Europe
would chafe under USA domination:

Inevitability of Wars between Capitalist Countries; Some comrades think that owing to the
development of new international conditions since the Second World War, wars between capitalist
countries have ceased to be inevitable. These comrades are mistaken. Outwardly everything would
seem to be going well; the USA has put Western Europe, Japan, and other capitalist countries on
rations; Germany (Western), Britain, France, Italy & Japan have fallen into the clutches of the USA
and are meekly obeying its commands. But it would be mistaken to think that things can continue to
go well for all eternity, that these countries will tolerate the domination and oppression of the
United States endlessly, that they will not endeavor to tear loose from American bondage and take the
part of independent development.

(Stalin; Economic Problems of the USSR: Peking; p.33).

Now in 2015, as we update the picture in 2015, the basic rhythm of inter-imperialist struggle has not changed
dramatically but become even more intense. The final crumbling of the ex-Comecon countries postponed the final
reckoning of the European and USA rivalries. And yet rivalries have sharpened with the entry of China into the
leading echelons of imperialist rivalry. In this period:

i) Germany has benefited the most and now become the leading (if not yet quite hegemonic) partner of the
imperialist coalition of the EU.

ii) The EU has expanded enormously to now include the so-called Southern fringe (including Greece, Portugal,
Spain, with continuing discussion with Turkey); and the ex-Comecon countries.

iii) There has been a renewed attempt of the Russian bourgeoisie led by Putin to recreate its own imperial zone.

iv) China has dramatically enhanced its imperial might and come to near logger-heads with the neighboring Pacific
Oceanic states in particular those nations most tied to the USA (Japan, Philippines).

v) The most advanced of the former under-developed colonised world (Brazil, India) have been organized by the
renewed Chinese imperialists into conglomerates that pose increasing challenges to both the USA and EU
hegemony. Namely BRIC (Brazil, Russia, India, China) and the newly created International Bank.

The still unresolved contradiction at the heart of the European Community

Of course the EU has a major problem: Even now, it is not a unitary state with unitary fiscal policies. Although the
leaders of the EU wish to concentrate power against the USA, they are unwilling to cede complete national
autonomy to a Supra-European force (namely the European Union based at Brussels). However while EU leaders
can attempt to combine the monetary resources, unless there is a complete political unity there are centrifugal
forces they cannot control. For this would require to be overcome, a single unitary Bank.

This is far from a new realisation. The insoluble contradiction was pointed out by astute economists long ago such
as Lord Nicholas Kaldor (1908-1986). Kaldor was a Keynesian, who polemicized against both Milton Friedman
and Mrs. Thatchers worship of monetarism. He cited Keynes to say:

Keynes (a pamphlet far ahead of the times and ahead of much of his own future writing on the
subject), in which he branded monetary policy as simply a campaign against the standard of life of
the working classes, operating through the deliberate intensification of unemployment . . . by using
the weapon of economic necessity against individuals and against particular industries a policy
which the country would never permit if it knew what was being done.

(J. M. Keynes, The Economic Consequences of Mr. Churchill (London, 1925), reprinted in the
Collected Writings of John Maynard Keynes Vol. IX (London, 1972), pp. 207-30; Cited Foreword
Second edition; Kaldor, N: The Scourge of Monetarism; Oxford 1986.

In 1971, Kaldor pointed out that in the proposed Eurozone, there would be a tendency for some countries to
acquire increasing (and unwanted surpluses) in their trade with other members, whilst others face increasing
deficits. This could only be overcome he foresaw, by fuller political union:

The events of the last few years have demonstrated that the Community is not viable with its
present degree of economic integration. The system presupposes full currency convertibility and
fixed exchange rates among the members, whilst leaving monetary and fiscal policy to the discretion
of the individual member countries. Under this system, as events have shown, some countries will
tend to acquire increasing (and unwanted surpluses) in their trade with other members, whist others
face increasing deficits. This has two unwelcome effects. It transmits inflationary pressures
emanating from some members to other members; and it causes the surplus countries to provide
automatic finance on an increasing scale to the deficit countries.

Since exchange-rate adjustments or floating rates between members are held to be incompatible
with the basic aim of economic integration (and are incompatible also with the present system of
common agricultural prices fixed in international units) the governments of the Six, at their Summit
meeting in The Hague in December 1969, agreed in principle to the creation of a full economic and
monetary union, and appointed a high-level committee (the so-called Werner Committee) to work
out a concrete programme of action..

(Nicholas Kaldor On European Political Union Cited by Ramanan, 6 November 2012; in The Case
For Concerted Action Post-Keynesian Ideas For A Crisis That Conventional Remedies Cannot
Resolve; at http://www.concertedaction.com/2012/11/06/nicholas-kaldor-on-european-political-union/)

Those planning a momentary union explicitly recognised that in the ultimate third phase the individual central
beings (being) would be abolished altogether, or reduced to the state of the old colonial Currency Boards:

The realisation of economic and monetary union, as recommended in the Werner Report, involves
three kinds of measures, each introduced in stages: monetary union, tax harmonisation, and central
community control over national budgets. It envisages a three-stage programme, with each stage
lasting about three years, so that the whole plan is designed to be brought into operation by 1978-80.

In the monetary field in the first stage the interest and credit policy of each central bank is
increasingly brought under common Community surveillance and permitted margins of variations
between exchange rates are reduced or eliminated. In the second stage exchange rates are made
immutable and autonomous parity adjustments are totally excluded. In the third stage the individual
central banks are abolished altogether, or reduced to the status of the old colonial Currency Boards
without any credit creating power.

(Nicholas Kaldor Ibid)

Other political issues would also pose problems including the harmonisation of tax differences and differing budget
polices requiring fiscal standardisation between countries:

In the field of tax harmonisation it is envisaged that each countrys system should be increasingly
aligned to that of other countries, and that there should be fiscal standardisation to permit the
complete abolition of fiscal frontiers, which means not only identical forms but also identical rates of
taxation, particularly in regard to the value added tax and excise duties.

In the field of budgetary control the Werner Report says the essential elements of the whole of the
public budgets, and in particular variations in their volume, the size of balances and the methods of
financing or utilizing them, will be decided at the Community level.

(Nicholas Kaldor Ibid)

However, ominously for the proponents of a single currency responsibilities to have individual country Budgets and
tax polices set centrally were not envisaged as necessary. This was according to Kaldor, the basic contradiction:

What is not envisaged is that the main responsibility for public expenditure and taxation should be
transferred from the national Governments to the Community. Each member will continue to be
responsible for raising the revenue for its own expenditure (apart from the special taxes which are
paid to finance the Communitys own budget but which will remain a relatively small proportion of
total public expenditure and mainly serve the purposes of the Agriculture Fund and other
development aid).

And herein lies the basic contradiction of the whole plan.

(Nicholas Kaldor Ibid)

Kaldor argued this had to have harsh implications for inequity in the well-being of the peoples of different countries.
It was clear that unless harmonisation of country provision of benefits paid through by taxation was ensured,
there would be rising inequity:

For the Community also envisages that the scale of provision of public services (such as the social
services) should be harmonised i.e., that each country should provide such benefits on the same
scale as the others and be responsible for financing them by taxation raised from its own citizens.
This clearly cannot be done with equal rates of taxation unless all Community members are equally
prosperous and increase their prosperity at the same rate as the other members. Otherwise the
taxation of the less prosperous and/or the slower-growing countries is bound to be higher (or rise
faster) than that of the more prosperous (or faster-growing) areas.

(Nicholas Kaldor Ibid)

In turn, this rising inequity in the poorer countries would likely need to be countered by spiraling taxes, in order to
maintain a fiscal balance with the remained of the Community. But this would then become the source of vicious
circle as these higher taxes would lead to a further compromise of the less competitive countries. Worsening of
the inter-country inequity would need for distributing relief funds from the center:

The Community will control each member countrys fiscal balance i.e., it will ensure that each
country will raise enough in taxation to prevent it from getting into imbalance with other members on
account of its fiscal deficit. To ensure this the taxes in the slow growing areas are bound to be
increased faster; this in itself will generate a vicious circle, since with rising taxation they become
less competitive and fall behind even more, thereby necessitating higher social expenditures (on
unemployment benefits, etc.) and more restrictive fiscal policies. A system on these lines would
create rapidly growing inequalities between the different countries, and is bound to break down in a
relatively short time.

This is only another way of saying that the objective of a full monetary and economic union is
unattainable without a political union; and the latter pre-supposes fiscal integration, and not just
fiscal harmonisation. It requires the creation of a Community Government and Parliament which
takes over the responsibility for at least the major part of the expenditure now provided by national
governments and finances it by taxes raised at uniform rates throughout the Community. With an
integrated system of this kind, the prosperous areas automatically subside the poorer areas; and the
areas whose exports are declining obtain automatic relief by paying in less, and receiving more, from
the central Exchequer. The cumulative tendencies to progress and decline are thus held in check by
a built-in fiscal stabiliser which makes the surplus areas provide automatic fiscal aid to the deficit

(Kaldor, Nicholas On European Political Union Ibid)

Kaldor concluded that the Communitys present plan was like the house which divided against itself cannot stand
and that it was dangerous error: to have a full economic and monetary union preceding a political union:

The Communitys present plan on the other hand is like the house which divided against itself
cannot stand. Monetary union and Community control over budgets will prevent a member country
from pursuing full employment policies on its own from taking steps to offset any sharp decline in
the level of its production and employment, but without the benefit of a strong Community
government which would shield its inhabitants from its worst consequences.

Some day the nations of Europe may be ready to merge their national identities and create a new
European Union the United States of Europe. If and when they do, a European Government will
take over all the functions which the Federal government now provides in the U.S., or in Canada or
Australia. This will involve the creation of a full economic and monetary union. But it is a dangerous
error to believe that monetary and economic union can precede a political union or that it will act (in
the words of the Werner report) as a leaven for the evolvement of a political union which in the long
run it will in any case be unable to do without. For if the creation of a monetary union and
Community control over national budgets generates pressures which lead to a breakdown of the
whole system it will prevent the development of a political union, not promote it.

(Nicholas Kaldor Ibid)

We believe that the current crisis in Greece, fully confirms these warning. However Kaldor being a representative of
the ruling capitalist class in Britain, could hardly envisage a political solution of benefit to the goals of achieving a
socialist Europe. It is in this backdrop, that the Greek Crisis plays out.

6. The Greek Economic Crisis 2009-2015 How did it get to this stage?

Throughout the turn towards Europe, the ruling class of Greece faced the hostility of the Greek working class and
the rural small peasants. Nonetheless the ruling class allied itself firmly to the European imperialist bloc of the
European Union (Previously the EEC). To recap: the Greek state opened the doors to foreign debt. From the
viewpoint of a small capitalist class, who were not about to enter a left policy there was no alternative. In doing so
they also built a bureaucratic state machine, packed with protgs of the states. In addition the overwhelming
strength of petit-bourgeois production combined to allow a nepotistic and corrupt state. In this period, the Greek
capitalist economy did not do very well.

In reality profits for the leading elite of the Greek capitalist class were immense. While the international financial
capitalists are a giant leech on the back of the people, the main enemy of working people, remains the Greek
capitalist class.

A common complaint from European bankers is that the Greek people are lazy and inherently corrupt. This
propaganda has found resonance in otherwise progressive and people who are themselves hard-pressed by
capital. It is therefore important to refute the slander on the lazy Greek people and attach the charge of laziness
and parasitism to where it belongs to the ruling capitalist class of Greece. The propaganda often cites the lax tax
laws and the pampered pension clauses. Let us examine these aspects first.

i) Tax and Pensions in Greece

The capitalist class structured the tax system to its advantage, and also enabled the petit-bourgeois:

Greek taxation is a mess (there are six different bands and the wealthiest band of shipping is often
referred to as a tax-free zone) and over 133 separate pension funds. Buchanan, Rose T; Greece
debt crisis explained: A history of just how the country landed itself in such a mess; The Independent
4 July 2015; http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-

Data from one of Greeces ten largest banks, (allowed) economists Nikolaos Artavanis, Adair Morse
and Margarita Tsoutsoura..to (estimate lost tax revenue). The economists conservatively estimate
that in 2009 some 28 billion in income went unreported. Taxed at 40%, that equates to 11.2 billion
nearly a third of Greeces budget deficit.
Why hasnt Greece done more to stop tax evasion? The economists were also able to identify the top
tax-evading occupations doctors and engineers ranked highest and found they were heavily
represented in Parliament.

Greeks Hide Tens of Billions From Tax Man; Wall St Journal 9 July 2012.


The scandal of refusal to take action on the Lagarde List, makes the responsibility of the Greek ruling class for the
tax imbroglio even more clear:

The Greek government has not completed an investigation of a list of 1,991 persons purported to
hold accounts with Swiss bank HSBC that it received in 2010 from former French finance minister
Christine Lagarde. Initially, officials claimed at various times to have lost or misplaced the information.
On 29 October 2012 the government changed its position saying it would not use stolen information
to prosecute suspected offenders. Instead, Greek authorities arrested Kostas Vaxevanis, journalist
and editor of the weekly magazine Hot Doc, who published the Lagarde list.

The list includes an advisor to former Greek prime minister Antonis Samaras, as well as a former
minister and a member of Samaras New Democracy political party. The list also contains the names
of officials in the finance ministry.
Mr. Vaxevanis said he thought the government had not acted on the list because it included friends of
ministers, businessmen and powerful publishers.


ii) Pensions

First if examined by unadjusted numbers it does appear that the Greek pension system is the most expensive in the
OECD countries. We follow the Wall Street Journal analysis of February 2015 (Dalton, Matthew: Greeces Pension
System Isnt That Generous After All; February 27 2015; http://blogs.wsj.com/brussels/2015/02/27/greeces-

Graphs 1-3 on Pensions In Greece

First, how much does Greece spend as percentage of GDP on pensions? The data from Eurostat
looks like this as of 2012, with Greece expenditure easily highest in the eurozone as a percentage of

However the Wall Street Journal goes on to break this down, first as a percent of GDP and then by the proportion
of pensioners over the age of 65 years:

But part of that is due to the collapse in GDP suffered by Greece during the crisis look at pension
expenditure as a percentage of potential GDP, the level of economic output were eurozone
economies running at full capacity:

Greece is still near the top, though its not so far from the eurozone average. Moreover, Greeces
high spending is largely the result of bad demographics: 20% of Greeks are over age 65, one of the
highest percentages in the eurozone. What if instead you attempt to adjust for that by looking at
pension spending per person over 65 (graph below). Adjusting for the fact that Greece has a lot of
older people, its pension spending is below the eurozone average.

And finally a large proportion of the population are pensioners over 65 and many households depend on the

First, demographics. About 20.5% of Greeks are over 65 behind only Italy and Germany in the EU
when it comes to an ageing population. And with the countrys youth unemployment rate still above
50%, its young people are not going to be able to pay for their grandparents pensions any time soon.

Second, Greek society has a dependency on pensioners. One in two households rely on pensions to
make ends meet and the country has an old-age dependancy ratio above 30%, which means that for
every 100 people of working age in Greece there are 30 people aged 65 or over.

Third, Greek pensions arent so generous. About 45% of pensioners receive pensions below what is
considered the poverty limit of 665 per month.
Looking at the actual expenditure on beneficiaries, Greeces figures dont stand out as exceptional
and are instead on par with the EU average.

(Nardelli, Alberto: Unsustainable futures? The Greek pensions dilemma explained; Guardian, 15
June 2015; at http://www.theguardian.com/business/2015/jun/15/unsustainable-futures-greece-

There is no doubt a large financial burden form the pension schemes but they provide at an individual level a very
modest income:

What makes the countrys pension system unsustainable is not the specific size of each individual
pension, but the overall cost of a grossly inefficient and badly funded system (yes, mainly due to of
decades of endemic tax evasion that means as much tax revenue slips through Athens fingers as it
collects). According to analysis by Macropolis, the average pension in Greece is roughly 700 per
month, while the supplementary one is 169.
The same analysis also shows that nearly 90% (2.07bn) of the total monthly expenditure (2.35bn)
on pensions in March went towards the main pension.
It also reveals that only 0.6% of supplementary pensions were above 500 a month.
For 60% of pensioners the total gross monthly intake is below 800. In addition, many retirees in
Greece have already seen their pensions cut. Some by a third, others by nearly 50%.

(Nardelli,; Guardian, 15 June 2015; Ibid)

Moreover, although cutting them might shave off some debt not only is this unable to repair the basic financial
problem of a dependent economy:

In 2012, pension funds, which were obliged under a law introduced in 1950 by the then king of
Greece, Paul I, to keep a minimum of 77% of their assets in government bonds, took an 8.3bn hit
following the restructuring of sovereign debt.
Nearly a third of what pension funds have lost since then is due to a fall in contributions on the back
of surging unemployment. The unemployment rate is still painfully high (26.6%, while in 2009 it was
9.5%), and nearly eight out of 10 of the countrys jobless have been out of work for 12 months or
Any saving brought about by simply purging early retirees benefits, cutting supplementary pensions
horizontally across the board, or revenue raised by squeezing a drastically depleted pool of
taxpayers, would in the short-term allow Greece to unlock the 7bn tranche of bailout funds it needs
to carry on servicing its debt (and not default).
However, it would do little to solve the underlying challenges in the longer term.

(Nardelli,; Guardian, 15 June 2015; Ibid)

Debt and printing money drive Greek Inflation

As discussed in prior sections, the ruling class used inflationary funding to enable it to fool and quieten the working
classes. The scale of this is shown below.

Greece has had a tricky time with its finances. In the 1990s it consistently ran significant budget
deficits while using the Drachma. As a result of this economic mismanagement it joined the Euro in
2001, rather than 1999 like many other EU nations. (Buchanan, Rose T; Greece debt crisis
explained: A history of just how the country landed itself in such a mess; The Independent 4 July
2015; http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-

The following Graph 4, from the Michael Roberts Blog, tracks the inflation to the deflation tipping point, after the
debt crisis became evident:

(Roberts M; Greece Cannot Escape; 2nd Nov 2014: https://thenextrecession.wordpress.com/2014/02/11/greece-

However, once it was in the Eurozone, Greeces government could no longer so easily use inflationary
economics to easily boost living standards, as it was bound by the Eurozone and the single currency.

The alternative of devaluing its currency to boost its exports was also not possible. This left only loans. Since it was
now the era of financial hot money and rampant money-speculation had become standard, this was easy at first,
and the inflation graph shows that even the loan-injection money fueled a degree of inflation. But the spigot was
soon to be turned off with the Wall Street crash:

Shortly after joining the single currency, Greece enjoyed a period of growth (2001-2007). However,
economist and analysts have retrospectively labeled this boom as unsustainable, pointing out that
Greece (very broadly speaking) profited off the cheap loans available from the EU. This house of
cards came tumbling down with the financial crash of 2008. Like many other countries in the EU
Greece was seriously affected, but it was unable to climb out of the hole as it had in the past by
printing more currency (thus boosting the economy) as the Euro was controlled by the European
Central Bank (ECB). Unemployment spiraled to 28 per cent.

(Buchanan, Rose T; Greece debt crisis explained: A history of just how the country landed itself in
such a mess; The Independent 4 July 2015;

Greeces relationship to the EU was as a dependent colony to the leading capitalist countries of the EU. These were
of course Germany and also France.
International agencies progressively lent Greek governments large amounts of money. Consequently, Greece
progressively developed an external debt of gigantic proportions as seen below in the brown/dark red line (Graph

What is the nature of these debt burdens that the Greek government faces?
The German locomotive pushing the EU economy needed markets. The under-developed Southern perimeter of
the EU was one of the natural new markets:

Economist Paul Krugman wrote in February 2012:

What were basically looking atis a balance of payments problem, in which capital flooded south
after the creation of the euro, leading to overvaluation in southern Europe.

He continued in June 2015:

In truth, this has never been a fiscal crisis at its root; it has always been a balance of payments
crisis that manifests itself in part in budget problems, which have then been pushed onto the center
of the stage by ideology.

The translation of trade deficits to budget deficits works through sectoral balances. Greece ran
current account (trade) deficits averaging 9.1% GDP from 20002011. By definition, a trade deficit
requires capital inflow (mainly borrowing) to fund; this is referred to as a capital surplus or foreign
financial surplus. This can drive higher levels of government budget deficits, if the private sector
maintains relatively even amounts of savings and investment, as the three financial sectors (foreign,
government, and private) by definition must balance to zero.
While Greece was running a large foreign financial surplus, it funded this by running a large budget
deficit. As the inflow of money stopped during the crisis, reducing the foreign financial surplus,
Greece was forced to reduce its budget deficit substantially. Countries facing such a sudden reversal
in capital flows typically devalue their currencies to resume the inflow of capital; however, Greece
cannot do this, and has suffered significant income (GDP) reduction, another form of devaluation.


Lord Kaldors warnings about this developing were discussed above.

Who owns this debt?

Graph 6: Current account imbalances in the European Union (19972014)

The graph below (from Wikipedia at: https://en.wikipedia.org/wiki/File:Current_account_imbalances_EN_(3D).svg)

shows that one of the major owners is Germany. In more detail, the Economist Online of October 2011 described
the major ownership of the Greek debt. The main institutions owning the Greek debt are the IMF, the European
Central Bank (ECB) and various European governments:

Greece has total debts of 346.4bn. About a third of this debt is in public hands (34.8% is attributable
to the IMF, ECB and European governments), roughly another third is in Greek hands (28.8%,
essentially for banks) with the remainder (36.4%) held by non-Greek private investors.

And the New York Times Business news cites similar data:

Almost two-thirds of Greeces debt, about 200 billion euros, is owed to the eurozone bailout fund or
other eurozone countries. Greece does not have to make any payments on that debt until 2023.
(Editor: Graph 7: below graphically displays the ownership of the debt.)

Greeces debt crisis explained International Business; New York Times updated July 27, 2015

During this period, Greeces finances were monitored by external agencies, largely those who had loaned monies to
Greece. These were the International Monetary Fund (IMF), the European Community (EU) and the European
Central Bank (ECB). These formed the so-called Troika. The Troika was to become hated by the Greek peoples as
they plunged Greece into major social chaos and forced the living standards of the Greek people down.

As the New York Times comments, in many ways the crisis can be considered as a manufactured one as only a
portion of debt is coming due in the short term:

The International Monetary Fund has proposed extending the grace period until mid-century. So
while Greeces total debt is bigas much as double the countrys annual economic outputit might
not matter much if the government did not need to make payments for decades to come. By the time
the money came due, the Greek economy could have grown enough that the sum no longer seemed
In the short term, though, Greece has a problem making payments due on loans from the
International Monetary Fund and on bonds held by the European Central Bank. Those obligations
amount to more than 24 billion euros through the middle of 2018, and it is unlikely that either
institution would agree to long delays in repayment.
Greeces debt crisis explained International Business; New York Times updated July 27, 2015

Two additional problems have conspired to make the original sin of debt of even more enormous
Firstly, quite early on during this crisis, it was clear to the Troika lenders that the Greek government was in trouble in
repaying any significant fraction of this debt. However this was ignored. In fact the IMF despite its own rules and
despite the worries about default continued to fuel the fire of debt by giving more loans.

Then secondly, to worsen matters, the Greek government falsified data about the extent of its debt, and was helped
by the greed of USA banking capital.

As early as 2004, in its negotiations with the EU, the ruling class of Greece falsified the degree of its debt. Goldman
Sachs the giant stockbroker and trader bank of Wall Street, aided the Greek government in doing this:

In 2001, Greece was looking for ways to disguise its mounting financial troubles. The Maastricht
Treaty required all Eurozone member states to show improvement in their public finances, but
Greece was heading in the wrong direction. Then Goldman Sachs came to the rescue, arranging a
secret loan of 2.8 billion euros for Greece, disguised as an off-the-books cross-currency swapa
complicated transaction in which Greeces foreign-currency debt was converted into a domestic-
currency obligation using a fictitious market exchange rate.

As a result, about 2 percent of Greeces debt magically disappeared from its national accounts.
Christoforos Sardelis, then head of Greeces Public Debt Management Agency, later described the
deal to Bloomberg Business as a very sexy story between two sinners. For its services, Goldman
received a whopping 600 million euros ($793 million), according to Spyros Papanicolaou, who took
over from Sardelis in 2005. That came to about 12 percent of Goldmans revenue from its giant
trading and principal-investments unit in 2001which posted record sales that year. The unit was run
by Blankfein.

Then the deal turned sour. After the 9/11 attacks, bond yields plunged, resulting in a big loss for
Greece because of the formula Goldman had used to compute the countrys debt repayments under
the swap. By 2005, Greece owed almost double what it had put into the deal, pushing its off-the-
books debt from 2.8 billion euros to 5.1 billion. In 2005, the deal was restructured and that 5.1 billion
euros in debt locked in. Perhaps not incidentally, Mario Draghi, now head of the European Central
Bank and a major player in the current Greek drama, was then managing director of Goldmans
international division.

(Robert B. Reich How Goldman Sachs Profited From the Greek Debt Crisis; The Nation16th July
2015; http://www.thenation.com/article/goldmans-greek-gambit/)

Such was the pervasive greed, that of course such creative financing was standard, as explained by Robert

Greece wasnt the only sinner. Until 2008, European Union accounting rules allowed member nations
to manage their debt with so-called off-market rates in swaps, pushed by Goldman and other Wall
Street banks. In the late 1990s, J.P.Morgan enabled Italy to hide its debt by swapping currency at a
favorable exchange rate, thereby committing Italy to future payments that didnt appear on its national
accounts as future liabilities. But Greece was in the worst shape, and Goldman was the biggest
enabler. Undoubtedly, Greece suffers from years of corruption and tax avoidance by its wealthy. But
Goldman wasnt an innocent bystander: It padded its profits by leveraging Greece to the hiltalong
with much of the rest of the global economy. Other Wall Street banks did the same. When the bubble
burst, all that leveraging pulled the world economy to its knees.

(Robert B. Reich How Goldman Sachs Profited From the Greek Debt Crisis; The Nation16th July
2015; http://www.thenation.com/article/goldmans-greek-gambit/)

Of course such greed driven lying enabled the Greek Government to gain more loans. This was of itself a problem
since the country was developing intractable recession.

The Crisis heats up and the infamous Troika Memorandum

By 2009, significant fears that Greece would default on its loans prompted alarm. The Troika made moves to yet
another loan this time of $110 billion but only if there were significant austerity measures. Of course this was
intended to be an austerity for the working classes and not for the ruling classes:

From late 2009, fears of a sovereign debt crisis developed among investors concerning Greeces
ability to meet its debt obligations due to strong increase in government debt levels. This led to a
crisis of confidence, indicated by a widening of bond yield spreads and risk insurance on credit
default swaps compared to other countries, most importantly Germany. Downgrading of Greek
government debt to junk bonds created alarm in financial markets.

On 2 May 2010, the Eurozone countries and the International Monetary Fund agreed on a 110
billion loan for Greece, conditional on the implementation of harsh austerity measures. In October
2011, Eurozone leaders also agreed on a proposal to write off 50% of Greek debt owed to private
creditors, increasing the EFSF to about 1 trillion and requiring European banks to achieve 9%
capitalization to reduce the risk of contagion to other countries. These austerity measures have
proved extremely unpopular with the Greek public, precipitating demonstrations and civil unrest.


It was the collapse of the international financial and banking industries from the USA sub-prime crisis which rapidly
became an international financial crisis, that mushroomed the Greek situation into a crisis. Greece had no choice
but to reveal a truer picture of its deficit financing to the worlds creditors to seek more credit:

Greece became the epicenter of Europes debt crisis after Wall Street imploded in 2008. With global
financial markets still reeling, Greece announced in October 2009 that it had been understating its
deficit figures for years, raising alarms about the soundness of Greek finances. Suddenly, Greece
was shut out from borrowing in the financial markets. By the spring of 2010, it was veering toward
bankruptcy, which threatened to set off a new financial crisis.

Greeces debt crisis explained International Business; New York Times updated July 27, 2015

Up to around 2011, the loan monies in Greece continued to drive an inflation.
But then a sharp deflation began, as the Troika turned the screw on Greece. The Troika insisted on marked cuts in
the living standards of the Greek people the working lass and peasantry. Not the standard of the ruling class of
course who has moved its savings out of reach of the Greek state or the Troika. The Troikas conditions are noted

The so-called troika the International Monetary Fund, the European Central Bank and the
European Commission issued the first of two international bailouts for Greece, which would
eventually total more than 240 billion euros, or about $264 billion at todays exchange rates. The
bailouts came with conditions. Lenders imposed harsh austerity terms, requiring deep budget cuts
and steep tax increases. They also required Greece to overhaul its economy by streamlining the
government, ending tax evasion and making Greece an easier place to do business.

Greeces debt crisis explained International Business; New York Times updated July 27, 2015

Of course the Greek capitalists complied, and drove down and depressed the wage rates of the Greek people:

Its true that the crushing of the living standards and wage earnings of Greek households is making
Greek industry more competitive labour costs per unit of (falling) production have dropped 30%
since 2010 (See Graph 8 below).

((Roberts M; Greece Cannot Escape; 2nd Nov 2014: https://thenextrecession.wordpress.com/2014/02/11/greece-


Again the burden of austerity was laid only on the working class of Greece:

When Greece did cut some of its spending, the EU and ECB asked for a reduction in wages rather
than a cut in spending. So for example while the military budget remains intact, soldiers have
seen their wages fall by 40 per cent. Their experience is replicated across other public sector fields
notably in nurses and doctors. Buchanan, Rose T; Greece debt crisis explained: A history of just
how the country landed itself in such a mess; The Independent 4 July 2015;

An external German research agency found that indeed, it was the poor that had suffered disproportionate cuts
as compared to the rich:

The poorest households in the debt-ridden country lost nearly 86% of their income, while the richest
lost only 17-20%. The tax burden on the poor increased by 337% while the burden on upper-income
classes increased by only 9% This is the result of a study that has analyzed 260.000 tax and income
data from the years 2008 2012.
The nominal gross income of Greek households decreased by almost a quarter in only four years.
The wages cuts caused nearly half of the decline.
The net income fell further by almost 9 percent, because the tax burden was significantly increased
While all social classes suffered income losses due to cuts, tax increases and the economic crisis,
particularly strongly affected were households of low- and middle-income. This was due to sharp
increase in unemployment and tax increases, that were partially regressive.
The total number of employees in the private sector suffered significantly greater loss of income,
and they were more likely to be unemployed than those employed in the public sector.
-From 2009 to 2013 wages and salaries in the private sector declined in several stages at around 19
percent. Among other things, because the minimum wage was lowered and collective bargaining
structures were weakened. Employees in the public sector lost around a quarter of their income.

Unemployment & Early Retirement

Unemployment surged from 7.3% in the Q2 2008 to 26.6% in the Q2 2014. among youth aged 15-24,
unemployment had an average of 44%.
Early retirement in the Private Sector increased by 14%.
Early retirement in the Public Sector* increased by 48%
The researchers see here a clear link to the austerity policy, thats is the Greek government managed
to fulfill the Troika requirements for smaller public sector. However, this trend caused a burden to the
social security funds.
* Much to KTGs knowledge public servants with 25 years in the public administration rushed to early
retirement in 2010 out of fear of further cuts in their wages and consequently to their pension rights.

Taxes were greatly increased, but they had a regressive effect.
Since beginning of the austerity, direct taxes increased by nearly 53%, while indirect taxes increased
by 22 percent.
The taxation policy has indeed contributed significantly to the consolidation of the public budget, but
by doing so the social imbalance was magnified.

Little has been done against tax avoidance and tax evasion, however, the tax base was actually
extended downwards with the effect that households with low-income and assets were strongly
Particularly poorer households paid disproportionately more in taxes and the tax burden to lower-
income rose by 337%. In comparison, the tax burden to upper-income households rose by only 9%.
In absolute euro amounts, the annual tax burden of many poorer households increased only by a
few hundred euros. However, with regards to the rapidly declining of incomes and rampant
unemployment, this social class was over-burdened with taxes.

The Poor suffered more

On average, the annual income of Greek households before taxes fell from 23,100 euros in 2008 to
just below 17,900 euros in 2012. This represents a loss of nearly 23 percent.
The losses were significantly different to each income class with the poorest households to have
suffered the biggest losses.
Almost one in three Greek household had to make it through 2012 with an annual income below
(Research of the German Institute for Macroeconomic Research (IMK) affiliated with the Hans
Bckler Foundation; given blog Keep Talking Greece; by 20 March 2015; at

Both the Greek ruling class and the Troika saw that this squeeze on the poor and working class, was creating such
a social upheaval, as to be potentially pre-revolutionary. Yet they were caught, since the alternatives were dismal for
the international capitalist. Even the IMFs own rules were flouted. In 2010 the situation was as follows in Michael
Roberts telling:

The irony is that while austerity in Greece continues to be applied mercilessly, the IMF recently
issued a report that concluded that the Troikas approach was mistaken in imposing severe fiscal
retrenchment back in May 2010 when Greece could no longer finance its spending through borrowing
in bond markets (http://www.imf.org/external/pubs/ft/scr/2013/cr13156.pdf).

Back then, the Troika had three options. First, it could have provided a massive fiscal transfer to the
Greek government to tide it over without demanding massive cuts in public spending that eventually
led to a fall in Greek real GDP of nearly 20%, unemployment of over 25% and government debt to
GDP of 170%, with economic depression likely to continue out to the end of the decade. Or it could
have allowed the Greek government to default on its debts to the banks, pension funds and hedge
funds and negotiate an orderly haircut on those debts. But the Troika did neither and opted instead
for a third way. It insisted that in return for bailout funds the Greek government meet its obligations in
full to all its creditors by switching all its available revenues to paying its debts at the expense of jobs,
health, education and other public services.

The Troika insisted on this because it reckoned 1) that austerity would be shortlived and economic
growth would quickly return and 2) if the banks and others took a huge hit on their balance sheets
from a Greek default it would put European banks in danger of going bust (Greek banks first). There
could be contagion if other distressed Eurozone governments also opted not to pay their debts,
using Greece as the precedent. Of course, economic growth has not returned and despite huge
efforts on the part of Greek governments to meet fiscal targets through unprecedented austerity,
government debt has increased rather than fallen and the economy has nosedived.

Eventually, the Troika had to agree that the private sector took a haircut after all, massaged as it
was with cash sweeteners and new bonds with high yields. Now the IMF in its report admits that
austerity was too severe and debt restructuring should have happened from the beginning. The
IMF, now in its semi-Keynesian mode, tries to put the blame for the failure to do this on the EU
leaders and the ECB, which has not made the latter too happy, especially as the current IMF chief,
Lagarde was strongly in favour of the austerity plan when she was French finance minister in 2010.

If Greeks had defaulted back in 2010, that could have led to other defaults and Europes banks were
in no state to absorb such losses. As a recent study shows http://www.voxeu.org/article/ez-banking-
union-sovereign-virus), German banks were heavily overleveraged back in 2010 and they are not
much better even now. There was no way the German government was going to put German banks
in jeopardy and allow the profligate Greeks to get a huge handout of German taxpayers money to
boot. No, the Greeks had to pay their debts, just as the Germans had to pay their reparations to the
French after 1918, even if it meant Germany was plunged into permanent depression. Ironically, the
Germans did not and have not paid promised billions in reparations to the Greeks after 1945
something the Greeks are pursuing in negotiations!

(Michael Roberts Blog: Greece, the IMF and debt default; 16th June

As noted before, this fueling of the debt by new loans, was against even the principles of the International
Monetary Fund (IMF), and senior strategists in the IMF warned that the polices of the IMF in regards to Greece
were seriously in error, from the year 2010.

As stated above, one underlying reason on insisting that the Greek Government paid its debt fully , was
simply the usurers wish to ensure that debts owed by Greece to both France and Germany would be honoured.
German and French banks had become vulnerable by over-leveraging themselves. (i.e they had loaned so much
money that their actual capital holdings were unable to support them if there was a run on their deposits). The
Eurozone banks had become very vulnerable:

The Table below shows the degree of domestic leverage of the systemically important banks in
major Eurozone countries .. in most countries the domestic banking system would not survive a
Greek-style haircut on public debt. (In March 2012, holders of Greek bonds had to accept a nominal
haircut of over 50%, and on a mark-to-market basis the haircut was over 80%. It is apparent that no
bank that has a sovereign exposure worth over 100% of its capital would survive such a loss).

Table 4: Domestic sovereign debt leverage (sovereign exposure/capital)

Source: CEPS database. (From Roberts 16 June 2013; Greece, the IMF and debt default ibid) Michael Roberts
Blog: Greece, the IMF and debt default; 16th June 2013;

Amazingly, the IMF policy remained unchanged new loans were issued to Greece at least up till May 2015:

Greeces onerous obligations to the IMF, the European Central Bank and European governments
can be traced back to April 2010, when they made a fateful mistake. Instead of allowing Greece to
default on its insurmountable debts to private creditors, they chose to lend it the money to pay in full.
At the time, many called for immediately restructuring privately held debt, thus imposing losses on the
banks and investors who had lent money to Greece. Among them were several members of the IMFs
board and Karl Otto Pohl, a former president of the Bundesbank and a key architect of the euro.
The IMF and European authorities responded that restructuring would cause global financial
mayhem. As Pohl candidly noted, that was merely a cover for bailing out German and French banks,
which had been among the largest enablers of Greek profligacy.

Ultimately, the authorities approach merely replaced one problem with another: IMF and official
European loans were used to repay private creditors. Thus, despite a belated restructuring in 2012,
Greeces obligations remain unbearable only now they are owed almost entirely to official

Five years after the crisis started, government debt has jumped from 130 percent of gross domestic
product to almost 180 percent. Meanwhile, a deep economic slump and deflation have severely
impaired the governments ability to repay.
Almost everyone now agrees that pushing Greece to pay its private creditors was a bad idea. The
required fiscal austerity was simply too great, causing the economy to collapse. The IMF
acknowledged the error in a 2013 report on Greece. In a recent staff paper, the fund said that when a
crisis threatens to spread, it should seek a collective global solution rather than forcing the distressed
economy to bear the entire burden. The IMFs chief economist, Olivier Blanchard, has warned that
more austerity will crush growth.

Oddly, the IMFs proposed way forward for Greece remains unchanged: Borrow more money (this
time from the European authorities) to repay one group of creditors (the IMF) and stay focused on
austerity. The funds latest projections assume that the governments budget surplus (other than
interest payments) will reach 4.5 percent of GDP, a level of belt-tightening that few governments have
ever sustained for any significant period of time.

Following Germanys lead, IMF officials have placed their faith in so-called structural reforms
changes in labor and other markets that are supposed to improve the Greek economys longer-term
growth potential. They should know better. The funds latest World Economic Outlook throws cold
water on the notion that such reforms will address the Greek debt problem in a reliable and timely
manner. The most valuable measures encourage research and development and help spur high-
technology sectors. All this is to the good, but such gains are irrelevant for the next five years. The
priority must be to prevent Greece from sinking deeper into a debt-deflation spiral. Unfortunately,
some reforms will actually accelerate the spiral by weakening demand.

On April 9, Greece repaid 450 million euros ($480 million) to the IMF, and must pay another 2 billion
in May and June. The IMFs managing director, Christine Lagarde, has made clear that delays in
repayments will not be tolerated.

I would, certainly for myself, not support it, she told Bloomberg Television.

Ashoka Mody; Bloomberg 81 April 21 2015; The IMFs Big Greek Mistake;

Recall Lagarde was once the Minister of Finance for France:

Graph number 5 (see above) displays that it is not only Greece in

hock to Germany, but there are several leading Eurozone states in debt to Germany. In especial note the deficits of
France and of Italy.

This is the second reason at least for German imperialism on insisting that the Greek Government paid
its debt fully.
If the Greeks are allowed to default, what happens to the other loans that are outstanding? It has long been
recognised that Germany has been running a huge trade surplus, and it has been under pressure to alleviate this for
some time:

For years, Germany has been running a large current account surplus, meaning that it sells a lot
more than it buys. The gap has only grown since the start of the crisis, reaching a new record of
215.3 billion euros ($244 billion) in 2014. Such insufficient German demand weakens world growth,
which is why the U.S. Treasury and the International Monetary Fund have long prodded the country
to buy more. Even the European Commission has concluded that Germanys current-account
imbalance is excessive.

(Ashoka Mody, Bloomberg188 July 17, 2015, Germany, Not Greece, Should Exit the Euro)

Any lifting of the restrictions upon Greece will lead to repercussions as to what happens to the debts of these other
leading countries. It is no doubt, for this reason, that both Italy and France have been trying to ease pressures from
Germany, arguing that there must be a debt restructuring.

This fits with the later 2015 U-Turn of Cristine Lagarde and the IMF (Discussed in section 9 below) who are now at
the last moment urging the German government to reduce the obligations of the Greek government of Tsipras. We
believe also, that this U-Turn supports the USA wish to attack the German governments current rising economic

Moreover, the USA government itself suffers from an astronomical debt.

7. The Marxist View of National Debt under capitalism

What do Marxists and other informed economists make of the notion of a national Debt? Falling into debt of a
country or large institutions has been a historical feature of the growth of capital. Karl Marx pointed this out in
Capital, saying that the only part of the so-called national wealth that actually enters the possession of modern
people is their national debt. In full:

The system of public credit, i.e., of national debts, whose origin we discover in Genoa and Venice as
early as the Middle Ages, took possession of Europe generally during the manufacturing period. The
colonial system with its maritime trade and commercial wars served as a forcing-house for it.
National debts, i.e., the alienation of the state whether despotic, constitutional or republican
marked with its stamp the capitalistic era. The only part of the so-called national wealth that actually
enters into the collective possessions of modern peoples is their national debt. Hence, as a
necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is
in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of
faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be

The public debt becomes one of the most powerful levers of primitive accumulation. As with the
stroke of an enchanters wand, it endows barren money with the power of breeding and thus turns it
into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its
employment in industry or even in usury. The state creditors actually give nothing away, for the sum
lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as
so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from
the improvised wealth of the financiers, middlemen between the government and the nation as also
apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national
loan renders the service of a capital fallen from heaven the national debt has given rise to joint-
stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-
exchange gambling and the modern bankocracy.

At their birth the great banks, decorated with national titles, were only associations of private
speculators, who placed themselves by the side of governments, and, thanks to the privileges they
received, were in a position to advance money to the State. Hence the accumulation of the national
debt has no more infallible measure than the successive rise in the stock of these banks, whose full
development dates from the founding of the Bank of England in 1694. The Bank of England began
with lending its money to the Government at 8%; at the same time it was empowered by Parliament
to coin money out of the same capital, by lending it again to the public in the form of banknotes. It
was allowed to use these notes for discounting bills, making advances on commodities, and for
buying the precious metals. It was not long ere this credit-money, made by the bank itself, became.
The coin in which the Bank of England made its loans to the State, and paid, on account of the State,
the interest on the public debt. It was not enough that the bank gave with one hand and took back
more with the other; it remained, even whilst receiving, the eternal creditor of the nation down to the
last shilling advanced. Gradually it became inevitably the receptacle of the metallic hoard of the
country, and the centre of gravity of all commercial credit. What effect was produced on their
contemporaries by the sudden uprising of this brood of bankocrats, financiers, rentiers, brokers,
stock-jobbers, &c., is proved by the writings of that time, e.g., by Bolingbrokes

(Marx, Karl: Capital Volume One Chapter Thirty-One: Genesis of the Industrial Capitalist; at:


Not only is National Debt crucial for the capitalist, but it was coincident with the credit system, and this in turn was
associated with an international trade of capital (i.e. money) and systems of modern taxation:

With the national debt arose an international credit system, which often conceals one of the sources
of primitive accumulation in this or that people. Thus the villainies of the Venetian thieving system
formed one of the secret bases of the capital-wealth of Holland to whom Venice in her decadence lent
large sums of money. So also was it with Holland and England. By the beginning of the 18th century
the Dutch manufactures were far outstripped. Holland had ceased to be the nation preponderant in
commerce and industry. One of its main lines of business, therefore, from 1701-1776, is the lending
out of enormous amounts of capital, especially to its great rival England. The same thing is going on
today between England and the United States. A great deal of capital, which appears today in the
United States without any certificate of birth, was yesterday, in England, the capitalised blood of

(Marx, Karl: Capital Volume One Chapter Thirty-One: Genesis of the Industrial Capitalist; at:

Moreover, Marx points out that governments want loans for extraordinary expenses. This is because they do not
want to tax the people too heavily lest it anger them. But eventually these loans will need an increase in taxes to pay
the loan off. Then a vicious circle begins, where even more loans are needed to off-set the higher taxation burden:

As the national debt finds its support in the public revenue, which must cover the yearly payments for
interest, &c., the modern system of taxation was the necessary complement of the system of national
loans. The loans enable the government to meet extraordinary expenses, without the tax-payers
feeling it immediately, but they necessitate, as a consequence, increased taxes. On the other hand,
the raising of taxation caused by the accumulation of debts contracted one after another, compels the
government always to have recourse to new loans for new extraordinary expenses. Modern fiscality,
whose pivot is formed by taxes on the most necessary means of subsistence (thereby increasing
their price), thus contains within itself the germ of automatic progression. Overtaxation is not an
incident, but rather a principle. In Holland, therefore, where this system was first inaugurated, the
great patriot, DeWitt, has in his Maxims extolled it as the best system for making the wage labourer
submissive, frugal, industrious, and overburdened with labour. The destructive influence that it
exercises on the condition of the wage labourer concerns us less however, here, than the forcible
expropriation, resulting from it, of peasants, artisans, and in a word, all elements of the lower middle
class. On this there are not two opinions, even among the bourgeois economists. Its expropriating
efficacy is still further heightened by the system of protection, which forms one of its integral parts.

(Marx, Karl: Capital Volume One Chapter Thirty-One: Genesis of the Industrial Capitalist; at:

What were these extraordinary expenditures the state wished to fund? Even bourgeois economists recognise that
wars were one key such expenditures:

The Bank of England was created explicitly,, to finance wars, in its case the Nine Years War with
France which started in 1688The Bank of France .. having been started with that name in 1800
specifically to satisfy Napoleons wartime financial needs. (Dean and Pringle Ibid; Central banks;
pp38; p. 42).

Modern bourgeois economists have of course long supported the principle of national debts. Maynard Keynes
recognised the utility of deficit financing for the capitalist control of the state, as he stated:

Loan expenditure.. may .. enrich the community on balance; ref 31: (Cited Van Der Pijl, K. The
making of an Atlantic ruling class; p.17; London 2012).

While we cannot dwell further on the subject in this article, the amount of the USA current debt is astonishingly
large. So there is nothing reprehensible about the Greek Debt per se. What is at issue is an international lack of
confidence that the Greek state would be able to pay it back. There is no underlying manufacturing or trading base to
support the debt, and will not be. Unless a complete break with the past is offered. However thus far, a
meaningful solution has never been on offer by the Greek or international merchants of capital, to the Greek working

8. The Debt Crisis leads to an increasing struggle of the growing Greek working class and gives rise to the
United Front of Syriza the political parties of the left

By the time of the current era in 2000-2015, the Greek social and class structure had changed dramatically. Despite
the absence of a major manufacturing sector, unemployment was rising, and the urban-rural divide was widening
even before the austerity moves of the Troika:

Greece is still low on competitiveness and this undermines self-sustaining growth, with low
employment rates, low R&D, high levels of poverty, especially in rural and remote areas. The Greek
economy grew by 0.7 per cent in the 1980s, compared with 2.4 per cent in other EU states.
Demographically, the number of over 65-year-olds, set to increase by 30 per cent between 2010 and
2050, with fewer people in employment, will create a massive dependency on social security and
health care. Greece has the largest agricultural population in the EU, with a low capacity to attract
foreign direct investment (FDI). The collapse of the Soviet Union and opening of markets in the
Balkans means that many investors have relocated their activities in neighbouring countries.

Since 2004 there has been a drop in most manufacturing output (textiles, leather goods, paper, office
equipment, furniture), steadily constant production of food, beverages, oil, with the only growth in
tobacco, chemicals and plastic goods. Therefore, long-term stagnation in manufacturing has led the
state to adopt rescue interventions or public loans. Shipping and tourism contributes 17 per cent to
gross domestic product (GDP) and employs 18 per cent of the working population. The uneven
rural/urban divide is particularly acute as some areas, notably the islands and the farming
communities, benefited more from Euro-funds for tourism or agridevelopment than others. Athens, in
particular has had massive infrastructure developed.

(Liddle, Joyce. Regeneration and Economic Development in Greece:

De-industrialisation and Uneven Development p.340; Local Government Studies; Vol. 35, No. 3,
335354, June 2009)

Nonetheless, the weight of the working class had risen between 1991 and 2011, as had a class polarisation:
Based on the Greek Statistic Service data for the fourth trimester of 2011 in comparison to those of
1991 consists in
1. an increase of the bourgeois class (3.4% from 1.4%) and of the rich rural strata (0.6% from 0.3%),
2. a huge decline of the traditional petit-bourgeois class (15.2% from 13.2%), and of the middle rural
strata (2.2% from 3%),
3. a small increase of the new petit-bourgeois class (15.2% from 13.2%), due to the increasing
demand of their abilities for the achievement of capital profitability, in parallel to an effort of their
submission to the most direct capital exploitation and domination,
4. An important increase of the working class (62.2% from 47.5%), and
an important decrease of the poor rural strata (6% from 47.5%).
*In any case, what is clear is the tendency of intensification of class polarisation, which leads to the
adoption of a social structure akin to that of other European countries (small number of farmers and
of the traditional petit-bourgeois class, stable presence of the new petit-bourgeois class as the
executive organizer of the productive process, broader bourgeoisie and heterogeneous uneven but
numerous working class.

(Eirini Gaitanou. An examination of class structure in Greece, its tendencies of transformation amid
the crisis, and its impacts on the organisational forms and structures of the social movement. At:

Under these enormous burdens, the now sizeable working classes of Greece mounted serious struggles to resist
austerity. The ruling classes struggled to implement their commitments to the EU and the IMF. Consequently a
series of short lived coalition governments took power.

Following the May 2012 legislative election where the New Democracy party became the largest
party in the Hellenic Parliament, Samaras, leader of ND, was asked by Greek President Karolos
Papoulias to try to form a government. However, after a day of hard negotiations with the other
parties in Parliament, Samaras officially announced he was giving up the mandate to form a
government. The task passed to Alexis Tsipras, leader of the SYRIZA (the second largest party) who
was also unable to form a government. After PASOK also failed to negotiate a successful agreement
to form a government, emergency talks with the President ended with a new election being called
while Panagiotis Pikrammenos was appointed as Prime Minister in a caretaker government.
Voters once again took to the polls in the widely-watched June 2012 election. New Democracy came
out on top in a stronger position with 129 seats, compared to 108 in the May election. On 20 June
2012, Samaras successfully formed a coalition with PASOK (now lead by former Finance Minister
Evangelos Venizelos) and DIMAR. The new government would have a majority of 58, with SYRIZA,
Independent Greeks (ANEL), Golden Dawn (XA) and the Communist Party (KKE) comprising the
opposition. PASOK and DIMAR chose to take a limited role in Samaras Cabinet, being represented
by party officials and independent technocrats instead of MPs.


We discuss these parties below. The coalition government led by Samaras, proved to be another short lived and
contentious government, as it toed the line of Troika conditions. As such it was unable to disguise its nature from the
increasingly militant and impoverished working class of Greece.

By the time of the January 2015 elections, the situation had become even more parlous for Greeces working

Greece saw official unemployment rising up to 27% and youth unemployment up to 50%
suffered a cumulative contraction of almost 25%, saw a massive reduction in wages and pensions,
and witnessed the passage of massive legislation oriented towards privatizations, labor market
liberalization, and neoliberal university reform.

(Panagiotis Sotiris; https://viewpointmag.com/2015/01/28/a-strategy-of-ruptures-ten-theses-on-the-


A more credible left bulwark against the masses was necessary for the Greek ruling class. This coincided with a
reformation of the Greek left. At this point we must discuss Syriza in more detail.

As seen, PASOK had fallen into rank opportunism and open betrayal of the working class. After ensuing scandals of
corruption implicated the leader, Andreas Papandreou, its appeal to the workers and poor of Greece was falling fast:

The socialist Prime Minister Andreas Papandreou and his key associates were under accusation of
scandal, which involved party funding from illicit sources and revealed the extensive clientelistic
linkages between business interests and politics which had been built up under PASOKs eight-year

(Tsakatika, Myrto and Eleftheriou, Costas: The Radical Lefts Turn towards Civil Society in Greece:
One Strategy, Two Paths; South European Society and Politics, 2013; p.3;

The space on the left had opened up again. Who was there to fill it?
We reprise the main outlines of events, focusing on analyses by Syriza, the revisionist KKE, and the pro-Hoxha

After the destruction of many of its cadre after the Battle of Athens in 1949, the KKE slowly reformed, after having
adopted some mistaken sectarian paths during the Second World War. The KKE went through several splits,
summarized below:

There have been a series of splits throughout the partys history, the earliest one being the Trotskyist
Organisation of Internationalist Communists of Greece.
In 1956, after the 20th Congress of the Communist Party of the USSR.
a faction created the Group of Marxist-Leninists of Greece (OMLE), which split from party in 1964,
becoming the Organisation of Marxists-Leninists of Greece. In 1968, amidst the Greek military junta
of 19671974 and the Soviet invasion of Czechoslovakia, a relatively big group split from KKE,
forming KKE Interior, a Greek Nationalist Communist Party claiming to be directed from within
Greece rather than from the Soviet Union.
In 1988 KKE and Greek Left (the former KKE Interior), along with other left parties and organisations,
formed the Coalition of the Left and Progress .
Also in 1988, the vast majority of members and officials from Communist Youth of Greece (KNE), the
KKEs youth wing, split to form the New Left Current (NAR) , drawing mainly youth in major cities,
especially in Thessaloniki.
In the early 2000s, a small group of major party officials such as Mitsos Kostopoulos left the party
and formed the Movement for the United in Action Left (KEDA), which in the 2007 legislative election
participated in the Coalition of the Radical Left, which was to win the 2015 national elections with a

(https://en.wikipedia.org/wiki/Communist_Party_of_Greece) and also see Tsakatika, Myrto and

Eleftheriou, Costas: The Radical Lefts Turn towards Civil Society in Greece: One Strategy, Two
Paths; South European Society and Politics, 2013; p.3;

The Marxist Leninist party supporting Hoxha in Greece is or Anasintaxi Organization

(reorganization). They are also known as The Movement for the Reorganization of the Communist Party of
Greece 191855 or KKE 1918-55. They characterize the KKE disintegration post-war as follows:

The old revolutionary KKE, under the leadership of the then General Sceretary Nikos Zachariadis,
was the only communist party from a capitalist not to have accepted Krushchevian revisionism. For
this reason, it was eliminated by the brutal intervention of the soviet Krushchevian revisionists in
1955-1956 and replaced by the Greek Krushchevian revisionist party (KKE), a bourgeois, party of
social-democratic type. More than 90% of the party members led by Nikos Zachariadis opposed and
fiercely resisted Krushchevian revisionism and many tens of cadres were sent to exile in Siberia
including Nikos Zachariadis himself who has murdered by the social-fascist clique of Brezhnev
(CPSU) Florakis (KKE) in August of 1973, in Sorgut, Siberia after of 17 years of exile. In 1968,
KKE was split into two parties: the euro-communist part known as KKE (interior) and the
Krushchevian-Brezhnevite part known as KKE. SYRIZA originates from the first part and,
consequently, is a social-democratic and reformist party guided by a right opportunist general line
and characterized by petty bourgeois class features

Anasintaxi Organization Some questions and answers about the current situation in
Greece; Article to be published in Unity & Struggle (Extended version of an interview given to the
comrades of Iran); march 30; 2015; at http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-

The revisionist KKEs attitude to the European Union is characterised as follows:

It is important to clarify that, despite its verbal attacks against EU and the Eurozone, KKE does not
put forward (not even for the sake of demagogy) the question of Greeces immediate exit neither from
the EU nor the Eurozone. In relation to Euro, the leadership of KKE has stated: A solution outside
the euro and return to the drachma in the present circumstances would be catastrophic (30/5/2011),
i.e. a position that is similar to the one expressed by the president of the Union of Greek
Industrialists (20/3/2012): Europe or chaos This is also evident in the partys program that was
approved by its last congress). Since some time now, KKE has expressed the view that the term
national dependence is not applicable in contemporary conditions (1/2/2005). After the 19th
Congress, it has openly adopted Trotskyite positions that mention imperialist Greece, imperialist
Second World War etc and are evident in the Program approved in the last party Congress: the
capitalism in Greece is in the imperialist stage of development (KKE Program, p. 12, Athens 2013).
Concerning the character of the Second World War it is claimed that: the problem was not only with
KKE but the overall strategy of the international communist movement before and during the Second

World War. In 1941, another negative point was added when the correct assessment of the war as
imperialist with respect to both sides of capitalist states was replaced by the position that it was
only anti-fascist (Rizospastis, 21/12/2104)

Anasintaxi Organization Some questions and answers about the current situation in
Greece; Article to be published in Unity & Struggle (Extended version of an interview given to the
comrades of Iran); march 30; 2015; at http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-

As PASOK had been fully exposed, a general disillusion enabled the formation of Synaspismo (Coalition of the Left
and Progress) in 1991:

Synaspismos emerged initially as an electoral coalition at the late 1980s, with the pro-Soviet
Communist Party of Greece (KKE) and the Greek Left, one of the successors of the eurocommunist
KKE Interior, as its largest constituents. The Party of Democratic Socialism, a splinter from the Union
of the Democratic Centre which occupied a similar position to PASOK, was the largest non-
Communist member party.


The many parties of the left are displayed in the diagram below, which helps to show the umbrella nature of the
Syriza United front. Beneath the figure itself (at the site Lenins Tomb) is a potted history of these factions.
(Seymour, R. Map of the Greek Radical Left February 9, 2015; http://www.leninology.co.uk/2015/02/map-of-greek-
radical-left.html). However the figure does not explain include the currents of the Marxist-Leninist left. The OMLE
was a pro-Maoist party. We further discuss at points, the positions of Anasintaxi Organization, the
pro-Hoxha Marxist-Leninists. Here we continue to trace the currents of Syriza.

The revisionist KKE joined Synaspismo, which contested three national elections (June 1989, November 1989,
1990). For a period they joined in Government alliances with mainstream centre-right New Democracy, ND under
the premiership of Tzannis Tzannetakis. This collaboration was not viewed kindly by the increasingly politicised
Greek working class and petit-bourgeois:

The governments official purpose was to send the former prime minister to trial and impose a clean-
up of the corrupt clientelistic politics of the time (But) leftist voters did not appreciate the decision of
the left parties leaderships to engage in government cooperation with the centre-right; moreover, the
stated aim of the Tzannetakis government was not achieved: after a long judicial process there was
ultimately very little cleaning up.. the KKE pulled out of the coalition and lost 40 per cent of its cadres
after a major party split in the partys 13th Congress (February 1991). The former coalition was re-
established as a unified party In the first part of the 1990s, the Greek left as a whole was thus
delegitimised in the eyes of its traditional electorate, bruised by participation in government with the
centre-right and experienced internal strife and extensive demobilisation of party members, while the
collapse of the Soviet Union (USSR) added an identity crisis to its woes. (Tsakatika, and Eleftheriou,
Ibid; 2013).

The United Front of Synapsimos or Syn as it is known tried to appeal to a broad front, and one that explicitly
crossed class lines:

SYN.. in 2001 established a political and electoral alliance with a host of smaller parties, groups
and networks of the extra-parliamentary left in the context of the Synaspismo Pizospastikh Aristra
(Coalition of the Radical Left [SYRIZA]) SYN was and remained (until 2012) the largest party in the
SYRIZA coalition, representing at least 80 per cent of its cadres, activists and voters. SYRIZA was
one of the core choices of the partys new leadership after 2000..
(Tsakatika, and Eleftheriou, Ibid; 2013).

SYN.. defined itself as a pluralist left party of democratic socialism, neither orthodox communist nor
social democratic, supporting a mixed economy and placing a fresh emphasis on new issues,
particularly feminism, democratic rights and the environment. SYNs original core consisted of cadres
whose political origins lay in the party of the Ellhnikh Aristra (Greek Left [EAR]) founded in 1987 (in

turn established after the KKE-es leaderships decision to dissolve the party and contribute to the
foundation of a non-communist left party) and a large group of dissidents who broke ranks with the
KKE in 1991. It also incorporated a number of individuals and small groups coming from left social
democracy, ecologism and the extra-parliamentary left, as well as independents.

The partys founding document appealed to the men and women of work and culture, the young and
the excluded. This was explicitly not a class appeal, since SYN effectively presented itself as a
catch-all party throughout the 1990s, one that aimed to be present in every nook and cranny of
Greek society. There was also an explicit trans-class appeal to groups affected by gender inequality
and environmental degradation. In practice, most of its vote share, membership and cadres have
mainly been from among the ranks of highly educated employees in the public sector, professionals
and small employers. However, as a result of changes in internal factional dynamics, with the radical,
moderate (and sympathetic to government cooperation with PASOK) Anan vtikh ryga (Renewal
Wing) in the party leadership after 2000, SYN shifted to a broadly defined class appeal aimed at
targeting, primarily, younger cohorts and, secondarily, precariously employed workers in the services
sector, social categories that were politically under-represented
(Tsakatika, and Eleftheriou, Ibid; 2013).

The later creation of Syriza, was also a United Front. The word commonly means coalition of the radical left; or
originally coming from the roots (Wikipedia):

The Coalition of the Radical Left (Greek: Synaspisms Rizospastiks Aristers), mostly known by its
acronym, Syriza which signifies a Greek adjective meaning from the roots, is a left-wing political
party in Greece, originally founded in 2004 as a coalition of left-wing and radical left parties. It is the
largest party in the Hellenic Parliament
The coalition originally comprised a broad array of groups (thirteen in total) and independent
politicians, including social democrats, democratic socialists, left-wing patriots, feminists and green
leftist groups, as well as Maoist, Trotskyist, Eurocommunist but also Eurosceptic components.
Additionally, despite its secular ideology, many members are Christians who, like their atheistic fellow
members, are opposed to the privileges of the state-sponsored Orthodox Church of Greece. From
2013 the coalition became a unitary party, although it retained its name with the addition of United
Social Front.

Syriza between 2004-8 was led by Alekos Alavanos. They created a vigorous youth movement in the driving force
of the Ellhniko Koinvniko Foroym (Greek Social Forum [EKF]) which later organised the 4th European Social

Forum (ESF) that took place in Athens in 2006. The Syriza United Front did undergo some splinters:
In March 2009, some 10 small groups and parties formed another coalition, Antarsya (literally, the
Anti-Capitalist Left Cooperation for the Overthrow). Composed primarily of university student activists
in various communist organizations of orthodox Marxist, Trotskyist and Maoist backgrounds, as well
of members of the relatively new rank-and-file unions outside the established bureaucracies of the
official union structure of the country, it proved effective for activism in a broad range of
mobilizations, but it never managed to achieve anything more than 1.8 per cent in the regional or
general elections.

(Spourdalakis, Michalis; Left strategy in the Greek cauldron: explaining syrizas success. Socialist
Register 2013; p. 105)

By 2010, Alex Tspiras was leading the Syriza party, after a section (The Renewal Wing) split to form DIMAR
(Renewal Wing):

The exit of the Renewal Wing faction from SYN (which evolved into DIMAR) in the summer of 2010
curtailed political disagreement and factional infighting within SYN and resulted in the effective
dominance of Alexis Tsiprass leadership in both SYN and SYRIZA.
(Tsakatika, and Eleftheriou, Ibid; 2013).

The social democratic wing of Synaspismos definitely lost control of the party in 2006 when Alekos
Alavanos was elected its president. This right wing, led by Fotis Kouvelis, almost exclusively
originating in the Eurocommunist right group coming from EAR, ultimately left Synaspismos and set
up another party called Democratic Left (Dimar): a formation that claims to be a sort of halfway house
between Pasok and the radical left.

(Stathis Kouvelakis interview with Sebastien Budgen: Greece: Phase One


But the revisionist KKE left Syn early on, and adopted a sectarian approach. Later on the KKE did not join the Greek
Social Forum (EKF). Much of the KKEs broad front work was instead performed through a Trade Union organisation
Panrgatiko Agvnistiko Mtvpo (All Workers Militant Front, PAME) formed in the late 1990s. Insisting on this
tactic, the KKE lost ground amongst much of the youth. For example those joining the Indignants movement who
rejected all parties.

Also indicative of the qualitative new dimension of the Greek peoples resistance were the now
famous mobilizations of the aganaktismeni, i.e. the frustrated or indignant in the squares. These
movements, which appeared in almost every major city nationwide, used new means of political
mobilization (including the internet) and developed a political language which was clearly hostile to
the previously existing patronizing practices of the party system. In fact this hostility was frequently
displayed by spontaneous verbal and even physical attacks on politicians of the governmental
parties, which at times extended to representatives of the established trade unions and the KKE.

(Spourdalakis, Michalis;Left strategy in the Greek cauldron: explaining syrizas success. Socialist
Register 2013; p. 108)

Stathis Kouvelakis, is a member of the central committee of Syriza and a leading member of its Left Platform.

Kouvelakis pointed to the post-1968 divisions of the Greek left as two poles. Supposedly bridged by Syriza: the
first bridge to factions of the KKE:

Since 1968, the radical Left had been divided into two poles. The first was the Greek Communist
Party (KKE), which (after splits) (had) a rightist wing (that) constituted the Greek Left (EAR) and
joined Synaspismos from the outset, and the leftist one reforming as the AKOA. The KKE that
remained after these two splits was peculiarly traditionalist It managed to win a relatively significant
activist base among working-class and popular layers, as well as among the youth, particularly in the
universities. (Stathis Kouvelakis interview with Sebastien Budgen: Greece: Phase One

Kouvelakis describes Synaspsimos, as a second pole, seeding the later Syriza:

The other pole, Synaspismos, opened out in 2004 with the creation of Syriza, which itself came from
the joining together of the two previous splits from the KKE. Synaspismos has changed considerably
over time. At the beginning of the 1990s, it was the kind of party that could vote for the Maastricht
Treaty, and it was mainly of a moderate left coloration. (Stathis Kouvelakis interview with Sebastien
Budgen; Ibid).

Actually the Marxist-Leninist pro-Hoxha party ( Anasintaxi Organization) is more emphatic. It

places Syriza as directly deriving from the revisionist KKE, and as having taken over the KKE social-democratic
and reformist character. Although Syriza is socially anti-fascist, it has contradictions that impede it:

In 1968, KKE was split into two parties: the euro-communist part known as KKE (interior) and the
Krushchevian-Brezhnevite part known as KKE. Syriza originates from the first part and,
consequently, is a social-democratic and reformist party guided by a right opportunist general line
and characterized by petty bourgeois class features.

Syriza has pledged to implement a kind of neo-Keynesian economic program with the aim, at best, of
relieving the burden of the consequences coming from the economic crisis of over-production and
extreme neo-liberal economic policy without, however, touching the capitalist system and the
imperialist dependence of Greece. Nevertheless, the implementation of this program has met
negative reactions from the representatives of the imperialist organizations Commission ECB
IMF that continue to interfere in the internal affairs of the country provocatively and without any
pretext. This attitude amounts to the annulment of the recent (editor: January 2105) elections in our

In the sphere of social questions, Syriza is an anti-fascist party suffering from inconsistencies and
contradictions as it is evident from the fact that it formed an alliance with the bourgeois nationalist
party of ANEL and the nomination of Prokopis Pavlopoulos for President of the Republic, a right-
wing politician from Nea Demokratia who was responsible, as Minister of Public Order in the
Karamanlis government, for the bloody police violence unleashed on the countrys school youth after
the murder of Alexis Grigoropoulos in December of 2008.

( Anasintaxi Organization Some questions and answers about the current situation
in Greece; Article to be published in Unity & Struggle (Extended version of an interview given to the
comrades of Iran); march 30; 2015. At http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-

Syriza was always an electoral alliance:

Syriza was set up by several different organizations in 2004, as an electoral alliance. Its biggest
component was Alexis Tsiprass party Synaspismos initially the Coalition of the Left and Progress,
and eventually renamed the Coalition of the Left and of the Movements . It emerged from a series
of splits in the Communist movement. Some (smaller parties also Editor) came out of the old Greek
far left. In particular, the Communist Organization of Greece (KOE), one of the countrys main
Maoist groups. This organization had three members of parliament (MPs) elected in May 2012.
Thats also true of the Internationalist Workers Left (DEA), which is from a Trotskyist tradition, as
well as other groups mostly of a Communist background. For example, the Renewing Communist
Ecological Left (AKOA), which came out of the old Communist Party (Interior). (Stathis Kouvelakis
interview with Sebastien Budgen; Ibid).

The United Front of Syriza, had almost electoral immediate success:

It managed to get into parliament, overcoming the 3 percent minimum threshold. (Stathis Kouvelakis
interview with Sebastien Budgen; Ibid).

Syriza went on to replace PASOK as increasingly, Syriza candidates won in the ballot boxes. By this stage a number
of other new parties had emerged, including a fascist party Golden Dawn:

After three years of political instability, the system collapsed in the dual elections of May and June
2012. New Democracys strength was halved and PASOKs vote share diminished by 75 per cent.
Three new political actors emerged, each winning around seven per cent of the vote, namely the
party of the Dhmokratikh Aristra (Democratic Left, DIMAR) , a recent split from SYN, Anya rthtoi
Ellhn(Independent Greeks), a recent split from ND, and the extreme-right Xrysh Aygh (Golden
Dawn). (Tsakatika, and Eleftheriou, Ibid; 2013).

A short lived coalition government in 2012 was formed by ND, PASOK and DIMAR in June 2012

What does Syriza represent? According to its own leaders it is an anti-capitalist coalition as class-struggle
parties but both emphasising electoral alliances:

Syriza is an anti-capitalist coalition that addresses the question of power by emphasizing the
dialectic of electoral alliances and success at the ballot box with struggle and mobilizations from
below. That is, Syriza and Synaspismos see themselves as class-struggle parties, as formations that
represent specific class interests. (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

In another description, it is a hybrid party:

That is, it is a political front, and even within Syriza there is a practical approach allowing the
coexistence of different political cultures. I would say that Syriza is a hybrid party, a synthesis party,
with one foot in the tradition of the Greek Communist movement and its other foot in the novel forms
of radicalism that have emerged in this new period. (Stathis Kouvelakis interview with Sebastien
Budgen; Ibid).

In 2012 there were about 16,000 members in Synaspismos, and the Maoist KOE had about 1-1500 members. But
in the ensuring period of a year, Syriza grew rapidly further to 35,00036,000. By May 2012, it became the second
party in Greece with 16.7 percent of the vote, beating Pasok. It relied largely on a trade union base, and pulled its
voters away from the KKE. There were 3 reasons why strategists feel they did so well in the 2012 elections:

First, The violence of the social and economic crisis in Greece and the way it developed from 2010
onward, with the austere-ian purge .. inflicted under the infamous memorandums of understanding
(the agreements the Greek government signed with the troika in order to secure the countrys ability
to pay off its debts). The second factor resides in the fact that Greece and now also Spain are
the only countries where this social and economic crisis has transformed into a political crisis. .. The
third factor is popular mobilization. The real breakthrough came when Tsipras focused his
discourse on the theme of constituting an anti-austerity government of the Left now, which he
presented as an alliance proposal reaching out to the KKE, the far left, the parliamentary left, and the
small dissident elements of Pasok. (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

Within the United Front of Syriza itself, there are two main wings (See Diagram above): The Left Platform and the
majority. The Left Platform is also a United Front of the Left Current mainly influenced by the KKE and a
Trotskyist component:

The Left Platform has two components, the Left Current, which is a kind of traditional communist
current essentially constituted by trade unionists and controlling most of the trade union sector of
Syriza. These people in their vast majority come from the KKE, so they are those who broke with the
KKE in the last split of the party in 1991. And then there is the Trotskyist component (DEA and
KOKKOINO, recently fused). (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

In turn, this Left wing has formed a sub-group the Platform of the 53:

The left of the majority has coalesced around the Platform of the Fifty-Three, signed by fifty-three
members of the central committee and some MPs in June 2014, immediately after the European
elections. They strongly criticized Tsiprass attempts to attract establishment politicians, and for
leading a campaign that didnt give a big enough role to social mobilizations and movements.
(Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

From quite early on, Tsipras had been criticised from his Left on charges along the lines of opportunism. What
Programme did Syriza put forth?

9. What was the elected programme of Syriza?

The Thessalonika Conference is accepted as being the progaramme of the United Front of Syriza. (Syriza The
Thessalonika Programme at http://www.syriza.gr/article/id/59907/SYRIZATHE-THESSALONIKI-

In broadest terms the Programme calls for cessation of the Nazi Occupation forced loan from the Bank of Greece
and lifting of the Greek Public Debt: A slogan No sacrifice of the Euro was often heard:

Write-off the greater part of public debts nominal value so that it becomes sustainable in the context of a
European Debt Conference. It happened for Germany in 1953. It can also happen for the South of
Europe and Greece.
Include a growth clause in the repayment of the remaining part so that it is growth-financed and not
Include a significant grace period (moratorium) in debt servicing to save funds for growth.
Exclude public investment from the restrictions of the Stability and Growth Pact.
A European New Deal of public investment financed by the European Investment Bank.
Quantitative easing by the European Central Bank with direct purchases of sovereign bonds.
Finally, we declare once again that the issue of the Nazi Occupation forced loan from the Bank of Greece is
open for us. Our partners know it. It will become the countrys official position from our first days in power.
On the basis of this plan, we will fight and secure a socially viable solution to Greeces debt problem so that
our country is able to pay off the remaining debt from the creation of new wealth and not from primary
surpluses, which deprive society of income.
With that plan, we will lead with security the country to recovery and productive reconstruction by:
Immediately increasing public investment by at least 4 billion.
Gradually reversing all the Memorandum injustices.
Gradually restoring salaries and pensions so as to increase consumption and demand.
Providing small and medium-sized enterprises with incentives for employment, and subsidizing the energy
cost of industry in exchange for an employment and environmental clause.
Investing in knowledge, research, and new technology in order to have young scientists, who have been
massively emigrating over the last years, back home.
Rebuilding the welfare state, restoring the rule of law and creating a meritocratic state.
We are ready to negotiate and we are working towards building the broadest possible alliances in Europe.

In this document it further says that within our first days in power, after negotiations end with the Troika (And on
its Memorandum) they will begin enacting the following National Reconstruction Plan What does this embody?
There are Four Pillars to this, which we recap briefly.

The 1st Pillar is Confronting the humanitarian crisis at an estimated Total estimated cost of 1,882 billion

Our program. amounts to a comprehensive grid of emergency interventions, so as to raise a shield of protection
for the most vulnerable social strata. Free electricity (Total cost: 59,4 million).

Programme of meal subsidies to 300.000 families without income. Total cost: 756 million.
Programme of housing guarantee. The target is the provision of initially 30.000 apartments (30, 50, and 70
m), by subsidizing rent at 3 per m. Total cost: 54 million.
Restitution of the Christmas bonus, as 13th pension, to 1.262.920 pensioners with a pension up to 700.
Total cost: 543,06 million.
Free medical and pharmaceutical care for the uninsured unemployed. Total cost: 350 million.
Special public transport card for the long-term unemployed and those who are under the poverty line. Total
cost: 120 million.
Repeal of the leveling of the special consumption tax on heating and automotive diesel. Bringing the
starting price of heating fuel for households back to 0,90 per lt, instead of the current 1,20 per lt. Benefit is

The 2nd Pillar is Restarting the economy and promoting tax justice Total estimated cost: 6,5 billion; Total
estimated benefit: 3,0 billion

This second pillar is centered on measures to restart the economy. Priority is given to alleviating tax suppression on
the real economy, relieving citizens of financial burdens, injecting liquidity and enhancing demand.

Excessive taxation on the middle class as well as on those who do not tax-evade has entrapped a great part of
citizens in a situation which directly threatens their employment status, their private property, no matter how small,
and even their physical existence, as proved by the unprecedented number in suicides.

Settlement of financial obligations to the state and social security funds in 84 installments. Estimated
benefit: 3 billion

The revenue which we expect to collect on an annual basis (between 5% and 15% of the total owed) will be
facilitated by the following measures:

The immediate cease of prosecution as well as of confiscation of bank accounts, primary residence, salaries,
etc, and the issuance of tax clearance certificate to all those included in the settlement process.
A twelve-month suspension of prosecution and enforcement measures against debtors with an established
zero income, included in the settlement process.
Repeal of the anti-constitutional treatment of outstanding financial obligations to the state as offence in the
act (in flagrante delicto).
Abolition of the mandatory 50% down payment of the outstanding debt as a prerequisite to seek a court
hearing. The down payment will be decided by a judge. It will be around 10%-20%, according to the financial
circumstances of the debtor.
Immediate abolition of the current unified property tax (ENFIA). Introduction of a tax on large
property. Immediate downward adjustment of property zone rates per m. Estimated cost: 2 billion.

That tax will be progressive with a high tax-free threshold. With the exception of luxurious homes, it will not apply on
primary residence. In addition, it will not concern small and medium property.

Restitution of the 12000 annual income tax threshold. Increase in the number of tax brackets to
ensure progressive taxation. Estimated cost: 1.5 billion.
Personal debt relief by restructuring non-performing loans (red loans) by individuals and

This new relief legislation will include: the case-by-case partial write-off of debt incurred by people who now are
under the poverty line, as well as the general principle of readjusting outstanding debt so that its total servicing to
banks, the state, and the social security funds does not exceed of a debtors income.

Establishment of a public development bank as well as of special-purpose banks: Starting capital at 1

Restoration of the minimum wage to 751. Zero cost.

The 3rd Pillar is Regaining employment Estimated cost: 3 billion

A net increase in jobs by 300,000 in all sectors of the economy private, public, social is expected to be the effect
of our two-year plan to regain employment. Restitution of the institutional framework to protect employment rights
that was demolished by the Memoranda governments. Restitution of the so-called after-effect of collective
agreements; of the collective agreements themselves as well as of arbitration.. Abolition of all regulations allowing
for massive and unjustifiable layoffs as well as for renting employees.

Zero cost: Employment programme for 300000 new jobs. Estimated first-year cost: 3 billion

The 4th Pillar is: Transforming the political system to deepen democracy

Total estimated cost: 0

From the first year of SYRIZA government, we set in motion the process for the institutional and democratic
reconstruction of the state. We empower the institutions of representative democracy and we introduce new
institutions of direct democracy.

Regional organization of the state. Enhancement of transparency, of the economic autonomy and the effective
operation of municipalities and regions. We empower the institutions of direct democracy and introduce new ones.

Empowerment of citizens democratic participation. Introduction of new institutions, such as peoples legislative
initiative, peoples veto and peoples initiative to call a referendum.

Empowerment of the Parliament, curtailment of parliamentary immunity, and repeal of the peculiar legal regime of
MPs non-prosecution.

Regulation of the radio/television landscape by observing all legal preconditions and adhering to strict financial, tax,
and social-security criteria. Re-establishment of ERT (Public Radio and Television) on a zero basis.

(Thessalalonkia Programme; Ibid)

This is viewed by significant leaders of the Syriza as a transitional programme, as explained in an interview with
Efklidis Tsakalotos, a member of Parliament with SYRIZA and responsible for the economic policy of Syriza. (An
Interview With Syrizas Efklidis Tsakalotos Syrizas Moment; by E. AHMET TONAK JANUARY 23-25, 2015;
http://www.counterpunch.org/2015/01/23/syrizas-moment/) :

Syrizas programme is a transitional one. It wants to start the process of not only reversing the
policies of austerity but also dismantling some of the central pillars of the neo-liberal order. As with all
transitional programmes the goal is to open up fissures for more radical polices. Whether we in
Europe can achieve this depends on the extent that social movements are inspired to make use of
the opportunities that arise to broaden the agenda in favour of a more participatory, institutionally-
diverse, and socially just economy. Left-wing governments can do only so much. Social
transformations, especially in the modern era, need the active engagement of millions. Parties and
governments of the Left must see their role as catalysts of these wider developments. What is certain
is that we are living in interesting times!

(Interview with Tsakalotos Ibid).

In truth, the programme that was put forward by Syriza entirely stays within the confines of the EU. Instead of
breaking that mould, it attempts to lay a negotiating position to lessen the burdens that are being demanded of the

Greek peoples. It is correct that Syriza has never claimed to be a Leninist type party. Nonetheless, this perspective
put above, is the antithesis of Leninism. As explained by Lenin in State and Revolution trasnational forms are
needed. Both Marx and Lenin certainly agreed that a special stage or a stage of transition from capitalism to
communism was needed:

The first fact that has been established most accurately by the whole theory of development, by
science as a wholea fact that was ignored by the utopians, and is ignored by the present-day
opportunists, who are afraid of the socialist revolutionis that, historically, there must undoubtedly be
a special stage, or a special phase, of transition from capitalism to communism.

However, crucially, this transition needed to be a revolutionary transition:

Between capitalist and communist society lies the period of the revolutionary transformation of the
one into the other. Corresponding to this is also a political transition period in which the state can be
nothing but the revolutionary dictatorship of the proletariat.

Previously the question was put as follows: to achieve its emancipation, the proletariat must
overthrow the bourgeoisie, win political power and establish its revolutionary dictatorship.

Now the question is put somewhat differently: the transition from capitalist societywhich is
developing towards communismto communist society is impossible without a political transition
period, and the state in this period can only be the revolutionary dictatorship of the proletariat. What,
then, is the relation of this dictatorship to democracy? We have seen that the Communist Manifesto
simply places side by side the two concepts: to raise the proletariat to the position of the ruling class
and to win the battle of democracy. On the basis of all that has been said above, it is possible to
determine more precisely how democracy changes in the transition from capitalism to communism. In
capitalist society, providing it develops under the most favourable conditions, we have a more or less
complete democracy in the democratic republic. But this democracy is always hemmed in by the
narrow limits set by capitalist exploitation, and consequently always remains, in effect, a democracy
for the minority, only for the propertied classes, only for the rich. Freedom in capitalist society always
remains about the same as it was in the ancient Greek republics: freedom for the slave-owners.
Owing to the conditions of capitalist exploitation, the modern wage slaves are so crushed by want
and poverty that they cannot be bothered with democracy, cannot be bothered with politics; in the
ordinary, peaceful course of events, the majority of the population is debarred from participation in
public and political life.

Lenin State & Revolution: Experience of the Paris Commune of 1871. Marxs Analysis

Lenin points out that there is a hemming in by narrow limits of democracy. How much narrower is it when not only
the single state hems it in but the imperialists of the EU also hem it in? The next period, following the January
elections of 2015, would answer this question.

10. Elections of 2015 and Negotiations with the Troika

The short-lived governments could not maintain credibility, as they were always accomodating to the new Troika
demands. The mass movement shifted to the left, as shown by the huge demonstrations in the central Square. The
elections of January 25 2015, sealed the rise to power of Syriza:

After the Hellenic Parliament failed to elect a new President of State by 29 December 2014, the
parliament was dissolved and a snap 2015 legislative election was scheduled for 25 January 2015.
Syriza had a lead in opinion polls, but its anti-austerity position worried investors and eurozone
supporters. The partys chief economic advisor, John Milios, has downplayed fears that Greece under
a Syriza government would exit the eurozone, while shadow development minister George Stathakis
disclosed the partys intention to crack down on Greek oligarchs if it wins the election. In the election,
Syriza defeated the incumbent New Democracy and went on to become the largest party in the
Hellenic Parliament, receiving 36.3% of the vote and 149 out of 300 seats.


January 25th marks a historic turning point in recent Greek history. After five years of devastating
austerity, a social crisis without precedent in Europe, and a series of struggles that at some points,
especially in 2010-2012, took an almost insurrectionary form, there has been a major political break.
The parties that were responsible for putting Greek society under the disciplinary supervision of the
so-called Troika (EU-ECB-IMF) suffered a humiliating defeat. PASOK, which in 2009 won almost
44% of the vote, now received only 4.68%; and the splinter party of Giorgos Papandreou, the PASOK
Prime Minister who initiated the austerity programs, got 2.46%. New Democracy came in at 27.81%,
almost 9% below SYRIZA. The electoral rise of the fascists of Golden Dawn has been halted,
although they still maintain a worrying 6% of the vote. Another pro-austerity party, the RIVER,
representing the neoliberal agenda (although nominally coming from the center-left) took only 6.05%,
despite intensive media hype.

(Panagiotis Sotiris; https://viewpointmag.com/2015/01/28/a-strategy-of-ruptures-ten-theses-on-the-


Rapidly, by 26 January 2015, Tsipras and Independent Greeks (ANEL) leader Panos Kammenos agreed on a
coalition government between Syriza and ANEL. Tsipras would be the Prime Minister of Greece, with the academic
economist Yanis Varoufakis as his Minister of Finance.

Yet, in a graphic display of its intended response to the rebuke that the Troika and especially the German
imperialists had received, the official line was hard:

German government official Hans-Peter Friedrich however said: The Greeks have the right to vote for whom they
want. We have the right to no longer finance Greek debt. http://en.wikipedia.org/wiki/Syriza

The Greek pro-Hoxha Marxist-Leninist view is that the Greek people took a stand against both the Troika and the
Greek capitalists:

By voting for SYRIZA, the majority of the Greek people rejected and condemned the cruel economic
measures that were imposed, the neoliberal economic policy, in general, and the great-bourgeois
parties of ND and PASOK that implemented these measures with the outmost servility. The victory of
SYRIZA is also explained by the peoples resentment towards the fascist re-modeling of social life
promoted by the government of the fascist scoundrel Samaras. (January 24, 2015; BOYCOTT the
electionsThe elections do not solve the problem of imperialist DEPENDANCE (economic-political-
military, NATO bases etc.), nor repel-cancel ongoing EU politics against the people http://anasintaxi-
However Anasintaxi also had called for abstention from the elections of 2015, arguing that:

In contrary ALL the bourgeois parties are in favor of Greeces STAY in imperialist European Union,
and in EURO-EMU and propagate consciously, serve the interests of the EU imperialists with
misleading MYTH-fantasies about equal participation (!) of the country in the pit of lions of the
powerful European monopolies. At the same time they propagate that Greece leaving the Euro-EMU-
EU will be a major disaster (!).

ALL the reformist social democratic parties (K KE-SYRIZA, etc.) and the extra-parliamentary
organizations follow the same strategic choice of the EU monopolies and the local capital.

It is not only SYRIZA which supports the country STAY (in) EURO-EMU-EU, but also the K KE: A
solution outside the euro and return to the drachma in the present circumstances would be
catastrophic (A. Papariga, Rizospastis 31/5/2011, p.6) Moreover: the leaders of the K KE
definitively renounced the anti-imperialist struggle for the overthrow of dependence

(January 24, 2015; BOYCOTT the electionsThe elections do not solve the problem of imperialist
DEPENDANCE (economic-political-military, NATO bases etc.), nor repel-cancel ongoing EU politics
against the people http://anasintaxi-en.blogspot.ca/2015/01/boycott-electionsthe-elections-do-

After the election, Anasintaxi warned that Syriza had entered into coalition with right-wing ANEL. However early on,
the government had taken some progressive steps:

During the first three weeks following the elections, the SYRIZA government has taken a series of
actions in order to implement its program that has won the support of wide popular strata, an attitude
that is unfortunately accompanied by certain illusions. At the same time, the governments actions
have met a very negative reception from Commission ECB IMF whose pressure and constant
interference in the countrys internal affairs is condemned by the Greek people. We think that, up to a
certain extent, SYRIZAs victory creates favorable conditions for the strengthening of class struggles.
Whether this possibility becomes a reality depends, of course on many factors the most important of
which is the organization of the majority of the working masses in independent and united trade
unions and the influence exerted on these and, the society in general, by the consistent left-wing,
anti-imperialist and revolutionary communists.

( Anasintaxi Organization Some questions and answers about the current situation
in Greece; Article to be published in Unity & Struggle (Extended version of an interview given to the
comrades of Iran); march 30; 2015. At http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-

At this early point, both Tsipras and Varoufakis were apparently determined to negotiate hard, with the threat to
leave the EU if the Troika did not back down:

Greeces finance minister Yanis Varoufakis has spelled out the negotiating strategy of the Syriza
government with crystal clarity.
Exit from the euro does not even enter into our plans, quite simply because the euro is fragile. It is
like a house of cards. If you pull away the Greek card, they all come down, he said.
Do we really want Europe to break apart? Anybody who is tempted to think it possible to amputate
Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us?
Portugal? What would happen to Italy when it discovers that it is impossible to stay within the
austerity straight-jacket?
There are Italian officials I wont say from which institution who have approached me to say they
support us, but they cant say the truth because Italy is at risk of bankruptcy and they fear the
consequence from Germany. A cloud of fear has been hanging over Europe over recent years. We
are becoming worse than the Soviet Union, he told the Italian TV station RAI.
This earned a stiff rebuke from the Italian finance minister, Pier Carlo Padoan. These comments are
out of place. Italys debt is solid and sustainable, he said.
Yet the point remains. Deflationary conditions are causing interest costs to rise faster than nominal
GDP in Italy, Spain, and Portugal, automatically pushing public debt ratios ever higher.
Berkeley economist Barry Eichengreen warns that Grexit would be Lehman squared, setting off a
calamitous chain reaction with worldwide consequences. Syrizas gamble is that the EU authorities
know this, whatever officials may claim in public.
Premier Alexis Tsipras is pushing this to the wire. Rightly or wrongly, he calculates that Greece holds
the trump card the detonation of mutual assured destruction, to borrow from Cold War parlance
and that all the threats from EMU power centres are mere bluster.
His cool nerve has caught Brussels, Frankfurt, Berlin, and the markets off guard. They assumed that
this 40-year neophyte would back away from exorbitant demands in his landmark policy speech to
the Greek parliament on Sunday night. Instead they heard a declaration of war.
He vowed to implement every measure in Syrizas pre-electoral Thessaloniki Programme in their
entirety with no ifs and buts. This even includes a legal demand for 11bn of war reparations from
Germany, a full 71 years after the last Wehrmacht soldier left Greek soil.
There is no possible extension of Greeces bail-out programme with the EU-IMF Troika, for that would
be an extension of mistakes and disaster, a perpetuation of the debt-deflation trap. The People
have abolished the Memorandum. We will not negotiate our sovereignty, he said.
Macropolis said every item was in there: a pension rise for the poorest; no further rises in the
retirement age; an increase in the minimum wage to 751 a month by 2016; a return to collective
bargaining; an end to privatisation of utilities; cancellation of a new property tax (ENFIA); a rise in tax-
free thresholds from 5,000 to 12,000; and a rehiring of 10,000 public workers fired illegally.

(Ambrose Evans-Pritchard. Greeces leaders stun Europe with escalating defiance. The
Telegraph; 09 Feb 2015; http://www.telegraph.co.uk/finance/economics/11400778/Greeces-leaders-

However in a foretaste of the future intransigence of the German imperialists, led by Wolfang Schauble the
German Finance Minister Greeces first counter-offer was rejected out of hand:

Schauble continues to insist that Greece sticks to the bailout conditions agreed with previous
governments under which financial support will be given only in exchange for substantial structural
The finance ministrys position risks deepening splits within Europe over how to deal with Greece as
an end of February deadline nears at which the previous bailout agreement with its creditors and the
European Central Bank runs out, leaving Greece facing bankruptcy.
In contrast to Berlin, the EU commission president Jean-Claude Juncker welcomed the Greek
application, saying in his opinion it could pave the way for a sensible compromise in the interest of
financial stability in the Eurozone as a whole.
But experts said Greece was merely playing for time, and that its application had indeed contained
no new commitments. The Greeks have simply tried to pass the buck back to the middle, Matthias
Kullas from the Centre for European Politics in Freiburg told The Guardian.
He stressed the German reaction was not a rejection over reaching a compromise with Greece, but
did mean that expectations of an agreement on Friday when finance ministers from the eurogroup
meet again, were now slim.
If an agreement is reached, it will be at the last minute, he said. Its in the interest of both sides to
stick to their guns. The earlier one of them diverts from his course, the weaker his position becomes
and the more elbow room he leaves for the other.

(Kate Connolly. Germany rejects Greek bailout plan as it happened. The Guardian 19 February
2015; http://www.theguardian.com/business/blog/live/2015/feb/19/greece-to-seek-bailout-extension-

A furious cycle of media reports and counter reports paralleled a back and forth between the European Union and
the Greek negotiating team of Tsipras and Varoufakis. In essence no counter-offer by the Greek team was deemed
acceptable. It is true that the initial efforts of the Greek team to counter the demands were insubstantial. However
even when substantial retreats had been offered, they were humiliatingly rejected. While the European team was
overall untied, strains emerged. It was apparent that the Germans were the most stout in the rejections. However
both the French and the Italians were wavering. Nonetheless even the IMF initially firmly supported the German

Last week Greece received a four-month extension of its $277 billion bailout program. The
parliaments of Finland, Estonia and, most importantly, Germany, as well as Greeces other EU
partners, approved the bailout program that was agreed to Feb. 20, provided that Greece submit a
list of planned reforms. Greece submitted six pages of reforms last Monday, but not all of Greeces
creditors think they are sufficient.Christine Lagarde, managing director of the International Monetary
Fund (IMF), wrote a letter to Dutch Finance Minster Jeroen Dijsselbloem, who is also president of
the Eurogroup of eurozone finance ministers, expressing her concern that Greeces proposed
reforms were not specific enough, nor did they contain sufficient assurances on their design and
implementation. The letter is the most recent, and public, indication of the IMFs hesitancy toward
Greece and its bailout program.

(Maria Savel. IMF Stands Firm, Forcing Greece and Syriza to Accept Hard Concessions Politics
Review, March 3, 2015, http://www.worldpoliticsreview.com/trend-lines/15210/imf-stands-firm-forcing-

By March, Tsipras was still assuming the EU would not want to have a member leave:

SPIEGEL: Many experts now fear a Graccident Greeces accidental exit from the euro. If the
ECB doesnt agree to your T-Bills, thats exactly what might happen.
Tspiras: I cannot imagine that. People wont risk Europes disintegration over a T-Bill of almost 1.6
billion. There is a saying for this in Greece: A wet man does not fear the rain.

(Der Spiegel Interview Conducted By Manfred Ertel, Katrin Kuntz and Mathieu von Rohr: Greek
Prime Minister Tsipras: We Dont Want to Go on Borrowing Forever; March 7 2015; at

As time went on, the Greek banks were forced to put restrictions on withdrawals. The EU allowed some further
liquidity in Greece by allowing Greece to print more T-Bills, but purely for internal use. This was violated by Greece.
More and more comments were heard that Greece might have to exit the EU a so called Grexit or Greccident:

The current money-go-round is unsustainable. Euro-region taxpayers fund their governments, which
in turn bankroll the European Central Bank. Cash from the ECBs Emergency Liquidity Scheme
flows to the Greek banks; they buy treasury bills from their government, which uses the proceeds to
repay its International Monetary Fund debts!
Theres blame on both sides for the current impasse. Euro-area leaders should be giving Greece
breathing space to get its economic act together. But the Greek leadership has been cavalier in its
treatment of its creditors. Its been amateurish in expecting that a vague promise to collect more
taxes would win over Germany and its allies. And its been unrealistic in expecting the ECB to plug a
funding gap in the absence of a political agreement for getting back to solvency. Greeces three-
year bond yield is back above 20 percent, double what it was just before Alexis Tsipras was elected
prime minister on an anti-austerity platform in January. At that level, theres no way Greece can end
its reliance on its bailout partners anytime soon.
German Finance Minister Wolfgang Schaeuble was scathing yesterday about Greeces efforts to
balance its election promises with its bailout obligations, and about its standing with international
None of my colleagues, or anyone in the international institutions, can tell me how this is supposed
to work. Greece was able to sell those treasury bills only in Greece, with no foreign investor ready to
invest. That means that all of the confidence was destroyed again.
Every days delay in cutting a deal pushes Greece a little closer to leaving the common currency.
That would be a shame, since its an outcome no one apart from Schaeuble seems to desire.
The mutability of euro membership could also unleash contagion and a domino effect. But it looks
increasingly inevitable.

(Mark Gilbert; Greeces Euro Exit Seems Inevitable: 17 March 2015;


By April 2015, reports circulated that secret plans were being drawn up to revive the Drachma and go into default
(Evans-Pritchard A, 2 April 2015; Telegraph at http://www.telegraph.co.uk/finance/economics/11513341/Greece-

On May 4th the BBC reported that Greek banks were not allowing pensioners to withdraw more than a small
amount, and that public sector workers were nto being paid regularly (http://www.bbc.com/news/world-europe-
32580919). However on May 6th however Greece paid back $200 million to the IMF and avoided insolvency. At that
time the European Central Bank (ECB) granted further liquidity to Greece. (Phillip Inman and Helena Smith; 6 May,
The Guardian; at http://www.theguardian.com/world/2015/may/06/greek-debt-default-avoided-after-200m-payment-

By June the situation was still not resolved, and Greeces peoples were in an even more precarious position. By this
time, Syriza had retreated substantially more. Michael Roberts summarises to June:

The IMF representative in the negotiations, Poul Thomsen, has pushed the austerity agenda with a
curious passion that shocks even officials in the European Commission, pussy cats by comparison
(here are the latest demands of the Troika Greece Policy Commitments Demanded By EU etc Jun
2015). The IMF is demanding further sweeping measures of austerity at a time when the Greek

government debt burden stands at 180% of GDP, when the Greeks have already applied the biggest
swing in budget deficit to surplus by any government since the 1930s and when further austerity
would only drive the Greek capitalist economy even deeper into its depression. As the Daily
Telegraph summed it up: six years of depression, a deflationary spiral, a 26pc fall GDP, 60pc youth
unemployment, mass exodus of the young and the brightest, chronic hysteresis that will blight
Greeces prospects for a decade to come.

The Syriza government has already made many and significant retreats from its election promises
and wishes. Many red lines have been crossed already. It has dropped the demand for the
cancellation of all or part of the government debt; it has agreed to carry through most of the
privatisations imposed under the agreement reached with the previous conservative New Democracy
government; it has agreed to increased taxation in various areas; it is willing to introduce labour
reforms and it has postponed the implementation of a higher minimum wage and the re-employment
of thousands of sacked staff.

But the IMF and Eurogroup wanted even more. The Troika has agreed that the original targets for a
budget surplus (before interest payments on debt) could be reduced from 3-4% of GDP a year up to
2020 to 1% this year, rising to 2% next etc. But this is no real concession because government tax
revenues have collapsed during the negotiation period. At the end of 2014, the New Democracy
government said that it would end the bailout package and take no more money because it could
repay its debt obligations from then on as the government was running a primary surplus sufficient to
do so. But that surplus has now disappeared as rich Greeks continue to hide their money and avoid
tax payments and small businesses and employees hold back on paying in the uncertainty of what is
going to happen. The general government primary cash surplus has narrowed by more than 59
percent to 651 million euros in the 4-month period of 2015 from 1.6 billion in the corresponding period
last year
The Syriza government has only been able to pay its government employees their wages and meet
state pension outgoings by stopping all payments of bills to suppliers in the health service, schools
and other public services. The result is that the government has managed to scrape together just
enough funds to meet IMF and ECB repayments in the last few months, while hospitals have no
medicines and equipment and schools have no books and materials; and doctors and teachers leave
the country.

Even Ashoka Mody, former chief of the IMFs bail-out in Ireland, has criticised the attitude of his
successor in the Greek negotiations: Everything that we have learned over the last five years is that
it is stunningly bad economics to enforce austerity on a country when it is in a deflationary cycle.
Trauma patients have to heal their wounds before they can train for the 10K.

The final red lines have been reached. What the Syriza leaders finally balked at was the demand by
the IMF and the Eurogroup that the government raise VAT on electricity by 10 percentage points,
directly hitting the fuel payments of the poorest; and also that the poorest state pensioners should
have their pensions cuts so that the social security system could balance its books. Further down the
road, the Troika wants major cuts in the pensions system by raising the retirement ages and
increasing contributions. The Syriza leaders were even prepared to agree to some VAT rises and
pension reforms, but the two specific demands of the Troika appear to have been just too much.

(Roberts, Michael Blog; June 15, 2015;: Ten minutes past midnight;

Increasingly leading economists including Nobel Laureates Joseph Stiglitz and Paul Krugman, Amartya Sen and
others warned about a new Versailles moment, and insisted that German stubbornness was actually bad for
Europe as a whole, and that a hair-cut to the debt was necessary i.e. a dramatic waiver-cut of the debt (Simon
Wren-Lewis. Why Amartya Sen Is Right About What Is Being Done To Greece; 12 June 2015; in Social Europe at
http://www.socialeurope.eu/2015/06/why-amartya-sen-is-right-about-what-is-being-done-to-greece/). President
Obama of the USA had already agreed that :

You cannot keep on squeezing countries that are in the midst of depression.
At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate
some of their deficits, (Aurelia End; Obama joins ally list on Greek austerity relief
http://news.yahoo.com/obama-joins-ally-list-greek-austerity-relief-033040983.html )

As the Left inside Syriza resisted Tsiprass slippery slope of acceptance of new demands, they increasingly pointed
to the example of Iceland who had defaulted on international debts in a similar situation. They got substantial
agreement from even the ANSEL coalition party members also. (Ambrose Pritchard-Evans. Syriza Left demands
Icelandic default as Greek defiance stiffens.14 June Daily Telegraph;

In a twist to the pre-July series of negotiations, as even more demands were made of the package being offered by
Tsipras and Varoufakis, Tsipras called a snap referendum, saying he needed to have a further mandate form the
Greek people, in order to agree to the latest demands and obtain the new tranche of bail-out funds. Bizarrely
however, he then wrote to the Imperialists saying he would accept only to find that the imperialists had withdrawn
their offer. Tsipras had to go on to the snap Referendum:

Tsipras infuriated eurozone finance ministers by calling a snap referendum on proposals to agree a
deal to release the 7.2bn in bailout funds it needed to meet an IMF repayment. His argument was
that the concessions still being demanded by creditors, including VAT rises and rapid reform of the
unaffordable pension system, and the lack of any serious prospect of debt relief, meant he could not
sign up without a fresh public mandate and, indeed, he and Varoufakis immediately urged their
countrymen to vote No.

Yet it emerged that while publicly lambasting the troika, the very same Tsipras had dispatched a two-
page letter to Brussels that caved into many of the demands he had angrily rejected a few days
earlier and continued to insist on putting to the public vote. It was too late: his exasperated
creditors, and Germany in particular, in the person of Berlins implacable finance minister, Wolfgang
Schuble, decided enough was enough and the offer was no longer on the table. Amid the storm of
political recriminations, the European Central Bank capped financial support to the Greek banking
sector, forcing the government to impose capital controls, to stem the relentless slow-motion bank
run that has been leaching the life out of the countrys financial system for months. And last Tuesday,
as it warned it would, Athens defaulted on its payment to the IMF. To all intents and purposes, the
country is bust.

So Greek voters now face trudging to the polls today, either to vote Yes to a set of proposals that are
no longer on the table presumably ushering in a new, more emollient government that would get
straight back to the negotiating table or to send a defiant no to further austerity. Tsipras and
Varoufakis insist that No would not mean plunging out of the eurozone, let alone the EU. Instead,
they say they would re-enter talks as if brandishing a petition. Yet last time they were handed a stock
of political capital by the Greek public, in Januarys general election, they quickly squandered it. Both
Tsipras and Varoufakis have forged their political reputations by rejecting consensus and overturning

the received wisdom. But international diplomacy means understanding that everyone at the table,
whatever your grievances against them, has their own mandate and their own domestic audience to

Instead of opening up ways for the troika to save face, Tsipras and Varoufakis have used every
means available from provocative tweets to spiky speeches in Syntagma Square to heighten the
divisions between Greece and its eurozone partners, accusing them of trying to blackmail and
humiliate the Greek people into submission.

(Observer Editorial. The Observer view on Greeces referendum 5 July 2015;


In the midst of this circus, before the Referendum the USA and the IMF (in the person of Christine Lagarde)
exerted further pressure on the Germans to bend. Already calls had been made by many economists, that Germany
had been granted a waiver on the demands at the end of the First Word war (the Versailles treaty). These had been
firmly ignored by the German imperialists. Now the IMF threw a spanner into the erst-while United Front of the

The International Monetary Fund has electrified the referendum debate in Greece after it conceded
that the crisis-ridden country needs up to 60bn (42bn) of extra funds over the next three years and
large-scale debt relief to create a breathing space and stabilise the economy.
With days to go before Sundays knife-edge referendum that the countrys creditors have cast as a
vote on whether it wants to keep the euro, the IMF revealed a deep split with Europe as it warned
that Greeces debts were unsustainable.
Fund officials said they would not be prepared to put a proposal for a third Greek bailout to the
Washington-based organisations board unless it included both a commitment to economic reform
and debt relief.
According to the IMF, Greece should have a 20-year grace period before making any debt
repayments and final payments should not take place until 2055. It would need 10bn to get through
the next few months and a further 50bn after that.
The Greek prime minister Alexis Tsipras welcomed the IMFs intervention saying in a TV interview
that what the IMF said was never put to him during negotiations.

(Philipp Inman, Larry Elliot, Alberto Nardelli; IMF says Greece needs extra 60bn in funds and debt
relief; The Guardian 2 July 2015; at http://www.theguardian.com/business/2015/jul/02/imf-greece-

The Referendum was held on 5th July 2015. The result was a defiant NO! to the European imperialists:

The final result in the referendum, published by the interior ministry, was 61.3% No, against 38.7%
who voted Yes.
Greeces governing Syriza party had campaigned for a No, saying the bailout terms were
Their opponents warned that this could see Greece ejected from the eurozone, and a summit of
eurozone heads of state has now been called for Tuesday.
Greek Prime Minister Alexis Tsipras said late on Sunday that Greeks had voted for a Europe of
solidarity and democracy.

As of tomorrow, Greece will go back to the negotiating table and our primary priority is to reinstate
the financial stability of the country, he said in a televised address.
This time, the debt will be on the negotiating table, he added, saying that an International Monetary
Fund assessment published this week confirms Greek views that restructuring the debt is

(Mark Lowen; Greece debt crisis: Greek voters reject bailout offer; 6th July; BBC

Strangely Tsipras appeared not too happy. It became clear that he had been expecting a Yes vote, which would
enable him to cave in to the EU demands. He had relied on the often remarked on wish of the Greek peoples to see
themselves as European and thus not to risk leaving the EU. But the Greek people had seen the callous
manipulations of the EU leaders.

On the same day the results were announced, Yanis Varoufakis resigned saying that this would help the
negotiations going forward, but that this resignation had been essentially, at the request of Tsipras.

Proponents of the logical outcome of the No Vote such as Yanis Varoufakis were simply told to drop alternative
plans. Varoufakis had been drawing up Plan B whereby if the Troika did not retreat to any key extent Greece
would resurrect the pre-Euro currency of the Drachma.

Astonishingly, given this pledge by the Greek people to stand fast, in the final run of negotiations with the EU,
Tsipras then completely capitulated to Eurozone, primarily German imperialists. Unsurprisingly, in the
renewed negotiations the European leaders and most sections of banking capital had simply turned their backs
on the Greek populations views and demanded even harsher terms:

The Greek government capitulated on Thursday to demands from its creditors for severe austerity
measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an
emergency meeting of EU leaders on Sunday.Athens has put forward a 13-page document
detailing reforms and public spending cuts worth 13bn with the aim of securing a third bailout from
creditors that would raise 53.5bn and allow it to stay inside the currency union.
A cabinet meeting signed off the reform package after ministers agreed that the dire state of the
economy and the debilitating closure of the countrys banks meant it had no option but to agree to
almost all the creditors terms.

(Phillip Inman, Graeme Wearden and Helena Smith: ; 9 July 2015 Greece debt crisis: Athens
accepts harsh austerity as bailout deal nears Greek cabinet backs a 13-page package of reforms
and spending cuts worth 13bn to secure third bailout and modest debt writeoff

As even the Guardian concluded: Generally, Tsipras appears to have finally capitulated in the face of threats that
Greece would be ejected from the eurozone:

Greece and the rest of the eurozone have finally reached an agreement that could lead to a third
bailout and keep the country in the eurozone.
Greek PM Alexis Tsipras conceded to a further swathe of austerity measures and economic reforms
after more than 16 hours of negotiations in Brussels. He has agreed to immediately pass laws to
further reform the tax and pension system, liberalise the labour market, and open up closed
professions. Sunday trading laws will be relaxed, and even milk producers and bakers will be
The Financial Times has dubbed it:
The most intrusive economic supervision programme ever mounted in the EU.
Greece was forced to accept these measures after Germany piled intense pressure, as a price for a
new deal. EU officials told us that Tsipras was subjected to mental waterboarding in closed-door
meetings with Angela Merkel, Donald Tusk and Francois Hollande.
The plan must now be approved by the Athens parliament by Wednesday, and then voted through
various national parliaments. If agreement is reached, talks can then begin towards a a new three-
year bailout worth up to 86bn (61bn), accompanied by further monitoring by Greeces creditors.
The deal appears to end Greeces five-month battle with its creditors, which has gripped the
eurozone, dominated the political agenda and alarmed the markets.
Emerging from the summit, Tsipras admitted it had been tough but insisted he had won
concessions on debt relief (sometime in the future) as well as the medium-term funding plan.
He also managed to persuade the eurozone that a new investment fund, that will manage and sell off
50bn Greek assets, would be based in Athens not Luxembourg.
But generally, Tsipras appears to have finally capitulated in the face of threats that Greece would be
ejected from the eurozone.

(Graeme Wearden and Helen Davidson. Greek debt crisis: deal reached after marathon all-night
summit as it happened. The Guardian 13 July 2015;

Yanis Varoufakis summed the story up to that point as a coup:

The recent Euro Summit is indeed nothing short of the culmination of a coup. In 1967 it was the
tanks that foreign powers used to end Greek democracy. In my interview with Philip Adams, on ABC
Radio Nationals LNL, I claimed that in 2015 another coup was staged by foreign powers using,
instead of tanks, Greeces banks. Perhaps the main economic difference is that, whereas in 1967
Greeces public property was not targeted, in 2015 the powers behind the coup demanded the
handing over of all remaining public assets, so that they would be put into the servicing of our un-
payble, unsustainable debt.

(Varoufakis, Y. On the Euro Summits Statement on Greece: First thoughts; 14 July 2015.

While the Referendum gave a clear signal that the Greek people had rejected the spirit of compromise being forced
by the Western Banks the questions had been framed deliberately imprecisely. It did not ask the Greek people to
consider the option of leaving the Eurozone as such. This allowed the Tsipras government to posture it did not have
a mandate to reject the harsh terms of the Troika and move Greece to leave the Eurozone.

Inevitably this will lead to a rupture of the Syriza United Front:

. Syriza, which is in coalition with the rightwing populist Independent party, is expected to meet
huge opposition from within its own ranks and from trade unions and youth groups that viewed the

referendum as a vote against any austerity.

Panagiotis Lafazanis, the energy minister and influential hard-leftist, who on Wednesday welcomed
a deal for a new 2bn gas pipeline from Russia, has ruled out a new tough austerity package.
Lafazanis represents around 70 Syriza MPs who have previously taken a hard line against further
austerity measures and could yet wreck any top-level agreement.

(Phillip Inman, Graeme Wearden and Helena Smith: Guardian Ibid; 9 July 2015)

The concession made by Greece in accepting the further round of austerity measures is huge:

The new proposals include sweeping reforms to VAT to raise 1% of GDP and moving more items to
the 23% top rate of tax, including restaurants a key battleground before. Greece has also dropped
its opposition to abolishing the lower VAT rate on its islands, starting with the most popular tourist
attractions. Athens also appears to have made significant concessions on pensions, agreeing to
phase out solidarity payments for the poorest pensioners by December 2019, a year earlier than
planned. It would also raise the retirement age to 67 by 2022. And it has agreed to raise corporation
tax to 28%, as the IMF wanted, not 29%, as previously targeted.
Greece is also proposing to cut military spending by 100m in 2015 and by 200m in 2016, and
implement changes to reform and improve tax collection and fight tax evasion. It will also press on
with privatisation of state assets including regional airports and ports. Some government MPs had
vowed to reverse this.
In return, Greece appears to be seeking a three-year loan deal worth 53.5bn.
Several EU leaders said the troika of creditors the European commission, the International
Monetary Fund and the European Central Bank must also make concessions to secure Greeces
future inside the eurozone.
Donald Tusk, who chairs the EU summits, said European officials would make an effort to address
Greeces key request for a debt write-off.
On Thursday, the German finance minister, Wolfgang Schuble said the possibility of some kind of
debt relief would be discussed over coming days, although he cautioned it may not provide much
The room for manoeuvre through debt reprofiling or restructuring is very small, he said.
Greece has long argued its debt is too high to be paid back and that the country requires some form
of debt relief. The IMF agrees, but key European states such as Germany have resisted the idea..
German ECB governing council member Jens Weidmann argued Greek banks should not get more
emergency credit from the central bank unless a bailout deal is struck. He said it was up to eurozone
governments and Greek leaders themselves to rescue Greece.
The central bank has no mandate to safeguard the solvency of banks and governments, he said in a
The ECB capped emergency credit to Greek banks amid doubt over whether the country will win
further rescue loans from other countries. The banks closed and limited cash withdrawals because
they had no other way to replace deposits.
Weidmann said he welcomed the fact that central bank credit is no longer being used to finance
capital flight caused by the Greek government.

At the time of writing the final scenes in the disintegrating Syriza United Front parliament have yet to be played out.

However the shrewdest elements of the non-Marxist-Leninist left recognize that the time is long due, for Greece to
exit the European Union to regain its own measure of independence. Many on the left agree that this will be hard.

The leading proponent of this has been Costas Lapavitas a MP in the Greek Parliament but not a member of
Syriza and radical economist. His view has been put in several books and articles for example these cited here:
([1], Lapvitas, C. Interview with Sebastien Budgen: Greece: Phase Two; in Jacobin. At
https://www.jacobinmag.com/2015/03/lapavitsas-varoufakis-grexit-syriza/ [2] Costas Lapavitsas: The Syriza strategy
has come to an end. Interview with Press Project and Der Spiegel; http://www.thepressproject.gr/details_en.php?
aid=74530. [3[ The crisis of the Eurozone, July 10, 2010 ; Greek Left Review. At

Although this view has certainly been challenged (Bach, Paula. Exit the Euro? Polemic with Greek Economist
Costas Lapavitsas. Left Voice News Project, at: http://leftvoice.org/Exit-the-Euro-Polemic-with-Greek-Economist-

Marxist-Leninists argue that leaving the imperialist bloc of the EU would be the correct policy for the working class,
peasantry and poor sections of Greece.

When asked on how the Anasintaxi Organization sees the future events, they replied:

Both reformist parties (KKE and SYRIZA) have accepted the Greek capitals present strategic
choice to maintain the country in the EU and the Eurozone In order to contribute to the growth of
the working class struggles and the rise of the revolutionary movement, the Movement for
Reorganization of KKE (1918-1955) is striving, under very unfavorable conditions, to achieve the

A) Together with the reorganization, the re-birth of KKE (1918-1955) and the ideological-political-
organizational unity of the Greek communists on basis of Marxism-Leninism-Stalinism and the
dissemination of the Marxist conception of socialism-communism;
it actively supports and participates in the struggle of the working class and all the toilers against the
reduction of salaries and pensions, against the deterioration of their position in general and supports
all demands that aim to defend their (economic, trade-union, social and political) class interests in
opposition to the foreign and Greek capital and in particular, the EU monopolies which impose
directly the current austerity measures.

B) The formation of united, massive and truly independent trade unions whose aim will be the
resistance to the extreme neo-liberal policy of austerity and the further development of the workers
and peoples struggles combined with the struggle against nationalism-racism-fascism-Nazism (all
very dangerous enemies of the working class and the people) as well as anti-Germanism and anti-
Hellenism (the two sides of the bourgeois nationalism) incited, during this period, by the nationalist
circles of the two countries. At the same time, these new trade unions will put forward the demand for
the exit of the country from the imperialist EU not only because of the increasing dependence and the
deterioration of the Greece-EU relations at the expense of our country but also because of the fact
that the economic policy and the hard, anti-popular measures are directly imposed by Brussels.

C) The cooperation between the consistent left-wing, anti-imperialist and anti-fascist forces that will
aim at the formation of a massive, anti-fascist, popular, front that will fight against the dependence on
imperialism, in general, and the exit of Greece from the EU, the Eurozone and NATO.

( Anasintaxi Organization Some questions and answers about the current situation
in Greece; Article to be published in Unity & Struggle (Extended version of an interview given to the
comrades of Iran); march 30; 2015. At http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-

APPENDIX: Select Chronology 1975 to 2015:

Amended from BBC version at: http://www.bbc.com/news/world-europe-17373216

1975 New constitution declares Greece a parliamentary republic with some executive powers vested in a
1980 Conservative Constantine Karamanlis elected president.
1981 Greece joins EU. Andreas Papandreous Socialist Party (Pasok) wins elections.
1985 President Karamanlis resigns in protest at government plans to reduce powers of president. Christos
Sartzetakis becomes head of state.
1990 Centre-right New Democracy party forms government under party leader Constantine Mitsotakis
1993 Election returns Papandreou to power for PASOK.
2004 March Conservative New Democracy party led by Costas Karamanlis wins general election, ending over a
decade of Pasok government.
2005 April Parliament ratifies EU constitution.
2005 December Amid protest strikes by transport workers, parliament approves changes to labour laws, including
an end to jobs for life in the public sector. The plans sparked industrial action in June.
2006 March Public sector workers strike over pay and in protest at government plans to scrap job security laws
and intensify privatisation.
2007 September Minister Karamanlis wins a narrow majority in the poll. He says he now has a mandate for more
reforms but also pledges to make national unity a priority.
2008 March Parliament narrowly passes governments controversial pension reform bill in face of general public
sector strike and mass protests.
2008 December Students and young people take to city streets in nationwide protests and riots over the police
killing of a 15-year-old boy in Athens. Major public-sector strikes coincide to increase pressure on the government
over its economic policies.

Economic meltdown
2002 January Euro replaces drachma.
2004 December European Commission issues formal warning after Greece found to have falsified budget deficit
data in run-up to joining eurozone.
2009 October Opposition Pasok socialist party wins snap election called by PM Karamanlis. George Papandreou
takes over as new prime minister.

Debt crisis
2009 December Greeces credit rating is downgraded by one of worlds three leading rating agencies amid fears
the government could default on its ballooning debt. PM Papandreou announces programme of tough public
spending cuts.
2010 January- March Government announces two more rounds of tough austerity measures, and faces mass
protests and strikes.
2010 April/May Fears of a possible default on Greeces debts prompt eurozone countries to approve a $145bn
(110bn euros; 91bn) rescue package for the country, in return for a round of even more stringent austerity
measures. Trade unions call a general strike.
2011 June 24-hour general strike. Tens of thousands of protesters march on parliament to oppose government
efforts to pass new austerity laws.

Crisis deepens
2011 July European Union leaders agree a major bailout for Greece over its debt crisis by channelling 109bn
euros through the European Financial Stability Facility.
All three main credit ratings agencies cut Greeces rating to a level associated with a substantial risk of default.
2011 October Eurozone leaders agree a 50% debt write-off for Greece in return for further austerity measures.
PM George Papandreou casts the deal into doubt by announcing a referendum on the rescue package.
2011 November Faced with a storm of criticism over his referendum plan, Mr Papandreou withdraws it and then
announces his resignation.
Lucas Papademos, a former head of the Bank of Greece, becomes interim prime minister of a New
Democracy/Pasok coalition with the task of getting the country back on track in time for elections scheduled
provisionally for the spring of 2012.

New bailout plan

2012 February Against a background of violent protests on the streets of Athens, the Greek parliament approves a
new package of tough austerity measures agreed with the EU as the price of a 130bn euro bailout.
2012 March Greece reaches a debt swap deal with its private-sector lenders, enabling it to halve its massive
debt load.
2012 May Early parliamentary elections see support for coalition parties New Democracy and Pasok slump, with a
increase in support for anti-austerity parties of the far left and right. The three top-ranking parties fail to form a
working coalition and President Papoulias calls fresh elections for 17 June. The far-right Golden Dawn party based
its 2012 election campaign on hostility towards immigrants
2012 June Further parliamentary elections boost New Democracy, albeit leaving it without a majority. Leader
Antonis Samaras assembles a coalition with third-placed Pasok and smaller groups to pursue the austerity

Anti-austerity protests
2012 September Trade unions stage 24-hour general strike against government austerity measures. Police fire
tear gas to disperse anarchist rally outside parliament.
2012 October Parliament passes a 13.5bn-euro austerity plan aimed at securing the next round of EU and IMF
bailout loans; the package the fourth in three years includes tax rises and pension cuts.
2013 January Unemployment rises to 26.8% the highest rate in the EU.
2013 April Youth unemployment climbs to almost 60%.
Public broadcaster closed
2013 June The government announces without warning that it is suspending the state broadcaster ERT in a bid to
save money. The decision gives rise to mass protests and a 24-hour strike.
2013 August New state broadcaster EDT is launched.
2013 September Government launches crackdown on far-right Golden Dawn party. Party leader Nikolaos
Michaloliakos and five other Golden Dawn MPs are arrested on charges including assault, money laundering and
belonging to a criminal organisation.
2013 December Parliament passes 2014 budget, which is predicated on a return to growth after six years of
recession. Prime Minister Samaras hails this as the first decisive step towards exiting the bailout.
2014 February Greek unemployment reaches a record high of 28%.
2014 March Parliament narrowly approves a big reform package that will open more retail sectors to competition,
part of a deal between Greece and its international lenders.
2014 April Eurozone finance ministers say theyll release more than 8bn euros of further bailout funds to Greece.
Greece raises nearly four billion dollars from world financial markets in its first sale of long-term government bonds
for four years, in a move seen as an important step in the countrys economic recovery.

Left in power
2014 May Anti-austerity, radical leftist Syriza coalition wins European election with 26.6% of the vote.
2014 December Parliaments failure to elect a new president sparks a political crisis and prompts early elections.
2015 January Alexis Tsipras of Syriza becomes prime minister after winning parliamentary elections, and forms a
coalition with the nationalist Independent Greeks party.
2015 February The government negotiates a four-month extension to Greeces bailout in return for dropping key
anti-austerity measures and undertaking a eurozone-approved reform programme.
2015 June European Central Bank ends emergency funding. Greece closes banks, imposes capital controls and
schedules referendum on European Union bailout terms for 5 July.Government reinstates former state broadcaster
ERT as promised in Syriza manifesto.
2015 July Greece becomes first developed country to miss a payment to the International Monetary Fund, having
already delayed it

The Rise and Fall of Third Worldism Part 1

Final Declaration of the 19th International Seminar: Problems of the Revolution in Latin America

Categories: Economic Exploitation, Greece, History, Imperialism, International, Theory, Workers Struggle, World

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