Eurozone's Hidden Class Struggle

The success of Alexis Tsipras in the Greek elections of January 25 is at the origin of the first huge eurozone’s political crisis since its foundation, fifteen years ago. Greece has the rope around the neck of a gigantic debt: 320 billion euro, the 175 per cent of GDP. Most economists are convinced that, given its size, the debt is not refundable. Alan Greenspan was brutally plain on the impossibility for Greece to repay the debt and, eventually, on its exit from the euro: "I believe [Greece] will eventually leave… it is just a matter of time before everyone recognises that parting is the best strategy” (Interview to BBC, 8.2.2015) .

The Tsipras government is aware of the difficulties, but it is moving in a direction opposite to that predicted by Greenspan. The program of the new government is divided along two main lines: the first concerns the conditions of debt reimbursement; the second is centered on the review of the economic and social policy imposed on the country by the European authorities.

On the first point, the Greek government makes the proposal of a restructuring based on indexing the debt to the GDP growth. An instrument to ensure repayment to creditors and, at the same time, to avoid the deterioration in the financial condition of the debtor country in times of economic stagnation. In any case, the primary surplus - the share of the budget devoted to interest payments - should be limited to 1.5 percent of GDP (against 4.5 forecasted),  to leave room for investment and collective consumption needed to boost growth.

The second point of the program focuses on domestic measures. It’s worth remembering that the Troika - the technocratic group representing European Commission, BCE and FMI - has caused huge economic disruption and a social catastrophe. The sovereign debt has increased from 110 percent of GDP, at the beginning of the crisis, to the current 175 percent. Meanwhile, the GDP fell by a quarter, and unemployment has exceeded 25 percent of the workforce..

The Tsipras government has asked to define a bridge program of few months, allowing to agree a new overall accord. In this intermediate stage, the European Financial Stability Facility (FEFS) would keep the commitment to deliver the last tranche of 7.2 billion euro tied to the bailout.

The Tsipras government has proposed to define a bridge program of few months, allowing to agree a new general accord. In this intermediate stage, the European Financial Stability Facility (FEFS) would keep the commitment to deliver the last tranche of 7.2 billion euro tied to the bailout.

Finally, with a compromise of the eleventh hour, a laps of time has been gained by the Greek government.  But in the intentions of the European authorities time has to be used to break the resistance of Greece, bringing back the pieces to the starting point.

The balance of power remains uneven. Nevertheless,Wolfgang Münchau writes on the Financial Times: "My advice to Yanis Varoufakis would be to ignore the exasperated looks and veiled threats and stand firm. He is a member of the first government in the eurozone with a democratic mandate to stand up to an utterly dysfunctional policy regime that has proved economically illiterate and politically unsustainable.(“Athens must stand firm against the eurozone’s failed policies" (Financial Times, 15.2. 2015).

Regardless of the final outcome, the Greek challenge has the merit to clarify the very terms of the question. In fact, the true center of the conflict is not about the debt issue, but the other side of the coin: the structural reforms. In regard to the debt, as we have seen, the Greek government has presented a comprehensive proposal, and is ready to negotiate its terms. Instead, the dissent explodes, even before opening the debt issue, on the chapter of structural reforms, the dark side of the austerity.

The Eurozone’s authorities claim full control of the economic and social policy of the Member States. And the very heart of the infamous structural reforms is made up by privatizations, cuts of welfare systems and radical market deregulation that, essentially, is firing freedom and wages cut.

A gigantic privatization plan, that should have brought into the coffers of the state 50 billion euro, imposed by European Commission in return for the bailout, The most intriguing aspect is that its revenue would have been used to repay the debts incurred by Greek private banks towards a number of German French and Dutch banks. A typical way of passing on private debts to the public budget. The Economist, although traditionally in favor of privatization policy, wrote: “With a target of €50 billion ($72 billion) by 2015, Greece's privatisation plan aims to raise more cash as a share of GDP than any OECD government has managed before… The timetable to design a regulatory environment for privatised utilities is absurdly tight” (The privatisation illusion, Jul 15th 2011).

In any case, the core of the structural reforms is not so much the privatization, but the labour market and welfare system reforms. Here the eurozone’s ideological fundamentalism takes its concrete shape. The main proposals for Greek government intervention directed to relieve conditions of poverty of a large part of the population are shot down, or otherwise put under the strict verification of compatibility with the budgetary constraints imposed by the European Commission.

Structural reforms, in the specific version of the European institutions, are of a strategic nature. Before or after, the austerity measures will have exhausted their task, but the changes brought about by the structural reforms will have introduced a radical change in the pattern and equilibrium of the social relationships - the reforms' long term goals being the drastic reduction of state intervention in the economy, the compression and progressive privatization of welfare systems,and  the marginalization of the trade unions and collective bargaining.

In the past, this politics would have been judged reactionary. In fact, it has become the conventional paradigm in the eurozone. The peculiarity is that in all democratic countries this policy has a rightwing connotation, and the governments, who practice it, must contend with an opposition that has more or less leftwing colors. Instead, in the Eurozone the difference between right and left is faded, and it substantially disappears, when leftwing parties come to the governmentIn the past, this politics would have been judged reactionary. In fact, it has become the conventional paradigm in the eurozone. The peculiarity is that in all democratic countries this policy has a rightwing connotation, and the governments, who practice it, must contend with an opposition that has more or less leftwing colors. Instead, in the Eurozone the difference between right and left is faded, and it substantially disappears, when leftwing parties come to the government.

The dominant view is that the eurozone lacks a political governance. This statement is partially true, if we specifically refer to foreign and defense politics But it is groundless if one refers to economic and social policies. With the gradual modification of the European treaties and their interpretation, the initial surveillance of budgetary policies by European authorities has been extended to all aspects of economic and social policy, that now are totally subued  to prior checking, meticulous scrutiny, and sanctioning power of the Brussels technocracy.

It is worth to keep in mind this framework, to fully grasp the "subversive" feature of the Tsipras government. Not coincidentally, the Greek government remained alone in front of the German Finance Minister Schäuble assault. In effect, the opposition to the Greek government has put together all the eurozone's governments with some more tactical then substantial differences . Indeed, all agree on the need to bring back Greece within the stringent framework of the collective discipline. Showing a minimum tolerance towards Tsipras government would risk getting them in contradiction with their own deeply unpopular policy choices.

The single currency was implemented also to strengthen the area in dealing with the globalization dynamics. The task has miserably failed. Neoliberal policies adopted to respond to the global crisis have resulted in a striking eurozone economic regression in comparison to all other developed regions of the planet.

The economic failure is, however, only one side of the coin. The most serious consequences affect its hidden face: that is the deep damage inflicted on the democratic order of Member States. Greece makes explicit what was masked. No government can claim its own political autonomy. The popular and democratic consensus is considered outmoded, essentially useless. The essential political agenda is that one established at the center of the euro-empire. Member states have less autonomy and internal adjustment options on some relevant economic and social features than those that might have a small state in the United States of America.

Greece cannot, not even gradually, bring the minimum wage to the pre-crisis level of 750 euro that, incidentally, would still be less than half of the German, French or Belgian ones. It cannot restore a normal collective bargaining of wages and working conditions; neither decide what services to yield to the national and international private speculation, and so on. In short, a caged government.

Eurozone's progressive sliding towards a covered authoritarian regime, which has its hegemonic center in Berlin and its executive arm in Brussels, has created a context of deep deterioration of the democratic rules in which the right wing movements easily gain space, as is shown by Marine Le Pen’s Front National in France and the old Northern League in Italy.

The eurozone politics has  deeply frayed the fabric of democracy in member countries, downgraded to a role of provinces. In this framework, the economic and financial elites have used the combination of austerity and structural reforms to advance neoliberal policies, which in a number of European countries had hovered for many years without finding a stable anchorage. They found a way to lead an overall class struggle without any ideological advocacy, but using the mediation of the European technocracy, performing its politically and ideologically oriented, even though technically abstruse and obscure, neoconservative policies.

On 25 January 2015, with the victory of Syriza, the whited sepulchers of the eurozone have been violated. It was naive to guess that the new Greek government could with one shot strike eurozone imperial politics. Yet, it has challenged the arrogance of its leadership. The unusual claim to open a negotiation is, in itself, a heresy that tarnishes eurozone's fundamentalist theology. Over the next months many things can happen. However, one thing has already happened: the new Greek government has cut the old complicity with eurozone’s institutions, unveiling their fiercer side.

Tsipras government has opened a game set to expand on many fronts. Not surprisingly, the contagion is what eurozone's governments most fear, starting from Spain, where Podemos party has good chances to win next end-year general elections. A deep breach has been opened in the powerful eurozone walls.