During World War II, Greece was subjected to occupation by Hitler's Nazi Germany. Seventy years later, Germany, at the helm of a bullying Europe, is again out to colonise Greece by crushing it under a debilitating debt burden and a cruel, crippling regime of austerity. And this devastating economic blow has been delivered with a brutal political punch. The Syriza government headed by Alexis Tsipras which was voted to power in January with a powerful anti-austerity mandate, reinforced most decisively with a 61% OXI vote in the July 5 referendum rejecting the bailout conditionalities of the Troika (the IMF, European Central Bank and European Commission), has now been made complicit in subjecting Greece to this utter humiliation and untold misery.

Various lies are being dished out to explain the present turn of events in Greece. The loudest and most brazen lies are coming from the Troika which attribute the Greek debt to profligate public spending by successive Greek governments and camouflage the brutal blows of austerity as a package of rescue and recovery. The Truth Committee on Public Debt – an independent committee of experts from 11 countries set up by the President of the Greek Parliament – shattered this propaganda in its preliminary report released on 17 June 2015. The preliminary report has shown that public spending in Greece has been lower than that in other Eurozone countries and that the debt burden is almost entirely due to the payment of extremely high rates of interest to creditors, excessive military spending under previous governments, massive illicit capital outflows and the transition from the erstwhile Greek currency Drachma to the new common currency Euro.

Particularly revealing is the escalation of the debt burden since 2010, when Greece was subjected to harsh measures of austerity in the name of ‘rescuing’ its economy. The so-called ‘bailout’ packages have been appropriated almost entirely by Greek and other European private banks, with hardly 10% going to fund any kind of public spending. The cuts in wages, pension and public spending rather depressed the economy and increased the debt-GDP ratio, thereby deepening the debt trap. The committee says the IMF itself had warned about the unsustainable nature of the debt, yet it opposed any rational restructuring of the debt and only allowed the burden to escalate. The committee has therefore described the debt as not only unsustainable but illegal, illegitimate and odious, insisting on a substantial write-off and restructuring of the debt and rescheduling of loan repayment.

• • BOX 1

‘Somewhere in a Greek jail, the former defence minister, Akis Tsochatzopoulos, watches the financial crisis unfold….In 2013, Akis (as he is popularly known) went down for 20 years, finally succumbing to the waves of financial scandal to which his name had long been associated. For alongside the lavish spending, the houses and the dodgy tax returns, there was bribery, and it was the €8m appreciation he received from the German arms dealer, Ferrostaal, for the Greek government’s purchase of Type 214 submarines, that sent him to prison.

…the fear of Turkey has been the reason given for recent Greek (military)spending. Along with German subs, the Greeks have bought French frigates, US F16s and German Leopard 2 tanks. In the 1980s, for example, the Greeks spent an average of 6.2% of their GDP on defence compared with a European average of 2.9%. In the years following their EU entry, the Greeks were the world’s fourth-highest spenders on conventional weaponry.

So, to recap: corrupt German companies bribed corrupt Greek politicians to buy German weapons. And then a German chancellor presses for austerity on the Greek people to pay back the loans they took out (with Germans banks) at massive interest, for the weapons they bought off them in the first place. Is this an unfair characterisation? A bit. It wasn’t just Germany. And there were many other factors at play in the escalation of Greek debt. But the postwar difference between the Germans and the Greeks is not the tired stereotype that the former are hardworking and the latter are lazy, but rather that, among other things, the Germans have, for obvious reasons, been restricted in their military spending. And they have benefited massively from that’.

From ‘Throughout history, debt and war have been constant partners’ Giles Fraser, The Guardian, 3 July 2015

BOX 2

Extracts from Report of the Truth Committee on Public Debt established by the Greek Parliament in April 2015:

‘Greece’s public debt is a legacy of past trends….:

■ Rather than being a product of high public budget deficits, the increase of debt was clearly related to the growth in interest payments. Greece entered the crisis with a debt inherited over the period of debt accumulation of 1980-1993; the main contributor to debt accumulation was the ‘snowball effect’ – present when the implicit interest rate on the debt is higher than GDP nominal growth. This explains two thirds of the increase of debt between 1980 and 2007.

■ Public expenditure was lower than that of other Eurozone members. The only primary public spending which was higher (as a ratio to GDP) was in defence expenditures, about which a series of corruption scandals need to be further investigated. The excessive spending in defence constitutes €40 billion of the debt created from 1995 to 2009.

■ Primary deficits feeding the debt have been further affected by poor performance in income tax collection and employers’ contributions to social security collection. These were much lower than the rest of Eurozone, and are attributed to fraud and illicit capital flows - explained below - benefiting only a minority of the population. The cumulative losses due to these two types of income from 1995 to 2009 explain the remaining growth of debt.

■ Illicit capital outflows provoked further tax revenue loss, amounting to €30 billion from 2003 to 2009. This was accompanied by lower amounts of spending for other expenditures, like social security, education and R&D as compared to other EU countries.

■ Adopting the euro led to a drastic increase of private debt, from 74.1% to 129.1% of GDP, to which major European private banks, as well as Greek banks, were exposed. This provoked a banking crisis in 2009, which triggered the Greek sovereign debt’

‘….this report shows that Greece not only does not have the ability to pay this debt, but also should not pay this debt first and foremost because the debt emerging from the Troika’s arrangements is a direct infringement on the fundamental human rights of the residents of Greece. Hence, we came to the conclusion that Greece should not pay this debt because it is illegal, illegitimate, and odious.

…the unsustainability of the Greek public debt was evident from the outset to the international creditors, the Greek authorities, and the corporate media. Yet, the Greek authorities, together with some other governments in the EU, conspired against the restructuring of public debt in 2010 in order to protect financial institutions. The corporate media hid the truth from the public by depicting a situation in which the bailout was argued to benefit Greece, whilst spinning a narrative intended to portray the population as deservers of their own wrongdoings.

Bailout funds provided in both programmes of 2010 and 2012 have been externally managed through complicated schemes, preventing any fiscal autonomy. The use of the bailout money is strictly dictated by the creditors, and so, it is revealing that less than 10% of these funds have been destined to the government’s current expenditure’.
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The rationality of the Greek position can be best appreciated when compared to Germany's own experiences in the past. Germany was itself a beneficiary of a major debt write-off in the post-war period. The end of World War II in 1945 had left Germany with a crushing debt burden twice its GDP, but the London Debt Agreement of 1953 cancelled 60% of Germany’s external debt obligations and also favourably restructured its internal debt. Yet, the same Germany today is inflicting what many have described as a 21st century version of the 1919 Treaty of Versailles when at the end of World War I Germany was forced to sign a treaty making substantial territorial, military and economic concessions to Allied Powers. The Treaty of Versailles of course happened against the backdrop of a war which Germany had waged and lost, while Greece has been forced to cede its economic sovereignty without having caused any war damage to any other European country.

Tsipras had assured the Greek people that the overwhelming OXI vote in the July 5 referendum would strengthen his bargaining position. Yet all he got from the European establishment was the promise of a third 'bailout' package subject to immediate enforcement of a host of austerity measures, a package worse than what the Greek people had been experiencing since 2010. The only concession that Tsipras could get was largely notional - the sale proceeds resulting from privatisation of what remains of the Greek public sector will not go abroad, but remain in Athens as part of a fund monitored by the Troika. Tsipras presented the memorandum to the Greek Parliament saying he knew that the measures would have adverse impact but argued that this was the only way to save the Greek economy from a certain collapse. But surely if 'bailout' (the so-called 'extend and pretend' loans where creditors know that the loans being extended are unrepayable but pretend otherwise) and austerity were to ease the situation then the people would not have rejected it so resoundingly bringing Syriza to power? And the fact that a third bailout became necessary only underlines the failure of the ‘bailout’ strategy.

• • BOX 3

‘Schäuble (The German Finance Minister) was consistent throughout. His view was “I’m not discussing the programme – this was accepted by the previous government and we can’t possibly allow an election to change anything. Because we have elections all the time, there are 19 of us, if every time there was an election and something changed, the contracts between us wouldn’t mean anything.”

So at that point I had to get up and say “Well perhaps we should simply not hold elections anymore for indebted countries”, and there was no answer….
Interview with Yanis Varoufakis (the Syriza government’s Finance Minister who resigned on 6 July), New Statesman, 13 July 2015

Soon after the July 5 referendum, Tsipras got rid of finance minister Yanis Varoufakis and brought in Euclid Tsakalotos as his chief negotiator. On his part, Varoufakis promised to continue to help Tsipras in using the 'capital' that the Greek people had granted the government through the referendum. But within a few hours, the negotiation ended in utter humiliation and disaster for Greece. The referendum stood completely overturned by the memorandum. Tsipras is telling Greece that he had no other option, but as many in the Leftwing within Syriza have pointed out it is actually Tsipras who never really considered the only meaningful option that Greece should have explored.

There was no way Greece could have persuaded Germany and other major European powers to accept the Greek demand for debt restructuring by simply pleading on the basis of rational economics. Only a Greek readiness to default on the debt repayment, quit the Euro and restore Greece's own currency could have possibly had some impact on the terms and trajectory of the negotiation. But Tsipras would not budge from his government's commitment to Euro, and it was Germany which therefore managed to blackmail and armtwist Greece by threatening to throw Greece out of the Eurozone. Instead of being used as a weapon of resistance and assertion of Greek sovereignty, the 'threat of Grexit' was thus allowed to become a tool of intimidation and coercion by Germany. Having come to power on an anti-austerity mandate, Syriza should have begun preparations to free Greece from the tyranny of the Troika and the Euro, instead five months were wasted in fruitless negotiations leaving Greece utterly vulnerable in the face of Germany's neo-colonial onslaught. Unlike Latin America, where in several countries governments have stood by the people in resisting IMF diktats and other forms of imperialist armtwisting including military coup attempts, Greece has sadly become a classic case of a weak and vacillating leadership in power letting down a brave and fighting people.

The Greek people and the fighting Left forces of Greece have of course refused to approve thr Syriza government's abject surrender to the Troika. Tsipras is having to face sharp opposition inside the party and parliament and determined public protests all over Greece. Even though the memorandum of surrender has been passed by the Greek parliament with 229 MPs voting in favour and 64 voting against, along with 6 abstaining and one remaining absent, but the majority that supported the memorandum included no more than 119 out of 149 Syriza MPs, with 110 MPs roped in from the non-Syriza parties, mostly from the opposition. In other words, the Tsipras government has lost its majority, and can continue in office only with the help of its opponents, who will be no less demanding than the European creditors. As Tsipras now begins to enforce the memorandum under European supervision, the battle on the street is bound to get sharper. It is well known that while Syriza emerged as the dominant vehicle of popular hope and resistance against the deepening economic crisis, Greece has also seen a significant rise of the neo-Nazi right-wing in the form of the Golden Dawn in recent times. Let us hope the Greek Left is able to successfully spearhead the popular resistance against the acute economic hardship and national humiliation and prevent Greece from falling prey to economic ruin and further ascendance of fascist forces.

The resounding assertion of the Greek people in the July 5 referendum had evoked wider resonance across Europe and even beyond. People fighting against the tyranny of neoliberal policies and austerity measures felt inspired and vindicated worldwide. By the same token, the Syriza government's tame surrender to the Troika is bound to disappoint the people across the world while emboldening the neoliberal ruling elites to intensify their offensive. This is especially true of India where the ruling classes and successive governments have been complicit with the troika of IMF, World Bank and WTO in inflicting the policies of liberalisation and privatisation and measures of austerity on the people. While India's debt burden may not have hit the alarming Greek level, the increasing dependence on foreign investment - FII calls the shot for share markets while the Modi government's 'Make in India' programme revolves around FDI - surely does not augur well for the future of the Indian economy. The Indian Left must therefore draw appropriate lessons from the Greek experience and intensify the Indian battle against the assault of austerity and corporate plunder.

BOX 4

'You cannot be on the Left and not fight these institutions' - some critical perspectives and alternative strategies from the Left in Greece

Speech by Costas Lapavitsas (Syriza MP and Professor of Economics) in Athens 17 July 2015

‘The deal is…neocolonial for many reasons. First, the deal proposes the establishment of a privatization fund of 50 billion Euros which will basically sell public property under foreign management. The first 25 billion will go to the banks by the agreement. If there's anything left, and there won't be anything left because they'll never make 50 billion, it might go to repaying the debt and possibly to investment. Essentially, then, this fund will sell what it can of public property to recapitalize the banks. …We've also agreed to reforms of civil administration managed by the EU. We've also agreed to monitoring, and this monitoring will be very severe and it will last a lot longer than the three years that this deal will last.

To me this deal as it stands represents a disastrous capitulation. …What we need to do is to withdraw our consent to this agreement. And to redesign a radical program that is consistent with our values, our aims, and what we've told to the Greek people all this time, all these years. And that radical program is impossible without Euro exit.…

Now, do we have the forces for this? We do. We do because the referendum, which said no so powerfully, showed two things. The first thing that it showed is that the Euro is a class issue. It isn't some impersonal form of money. It crystallizes and encapsulates class relations. And people have instinctively understood it. The rich voted yes, the poor voted no in the referendum, period.

The second thing that the referendum showed, and that's a massive change, the first time we've seen this during the last five years is that the youth of Greece have at last spoken…And it -that youth that is so European in outlook, so educated, presumably so far away from all these dinosaurs of the extreme left that believe in Marx and all these other people… 80 percent of it said no. And that is the basis for a radical line, for a different line for Syriza today.

... A plan, in the form of a road map, will contain a few very clear things. First, default on the national debt. The weapon of the poor is default. … Default on the debt is the first step to achieving a deep write-off of the debt.

Second, effective nationalization of the banks….The banks must continue on the bank and capital controls…But properly operating bank and capital controls, not this ramshackle affair that we've witnessed the last two weeks. (This)would allow working people and small businesses to start functioning again. It's perfectly possible. We've seen it time and time again.

Next, conversion of all prices. Conversion of all obligations. Conversion of all money stocks at the rate of 1:1 to the new currency... Those who hold deposits will lose some purchasing power. Not nominal value, but some purchasing power. But they will gain because the purchasing power of what they owe in debt will also decline. So the majority of people will probably gain from this.

Next, organize the supply of product markets. Oil, medicine, and food. Perfectly possible to do with an ordering of hierarchies, so long as you start doing it a little while ahead, not at the last moment. …And finally, decide how to take the pressure in the exchange rate…

So the contractionary aspect will last several months, then the economy will pick up….Once that period of adjustment is over, I would expect the Greek economy to return to fairly rapid rates of growth in a sustained way. First, changing the currency this way would allow the Greek productive sector to re-conquer the domestic market, to recreate opportunities and activities, something which we've seen time and again whenever you have monetary events of this scale. And with the left government this will be fostered. Partly because exports are also likely to pick up. Partly because there will be a sustained program of public investment to boost also private investment and to lead to growth for years ahead.

…. No one is advocating exiting Europe…Here we're talking about exiting the monetary union. Greece will remain very much part of Europe and of the European structures as long as the Greek people want it to do so. This is a strategy instead for freeing Greece from the trap of the monetary union, and allowing it to enter a path of sustained growth with social justice that will tip the social balance in favor of the labouring people of this country.

There is no other strategy’.

BOX 5

'This is a Betrayal'

Interview with Professor Spyros Marchetos, who served on the Truth Committee on Public Debt and is a member of Antarsya, in Telesur, 15 July 2015

‘…We are going to see tomorrow in Greece, the banks begin to throw out of their homes people who until now have been protected. This will create an explosion. Another thing is that there is a whole middle strata that cannot survive the new provisions. The agricultural workers, the independent professionals, the small jobs. They stayed alive up to now. They hoped that the Syriza government will change some things. They voted for Syriza. And now they are being viciously attacked with the new provisions. All the people who have seen some benefits in the last five months, they were not many, but there were a few thousand, whose homes were given back to them by the state, now they have to be thrown again out of their homes. Just imagine that at the time of contraction of incomes and of huge unemployment, they are going to add 10 percent to the price of basic food stamps. Now we’re entering the stage of the IMF riots, as they are called. But these IMF riots will be against Syriza…

…Among the people there is an incredulity which is turning to anger. And we have new elections.. They will try to avoid them at any cost but it does not mean that they will manage. Now for the first time you have masses that have been truly part of a habitual political representation.

And there is a mass feeling that the recent events, the betrayal by Syriza of the trust placed by the vote of 25th of January and of the referendum, it shows that people must organize in different ways. This is a very widespread feeling. And it would be difficult to contain it. It opens the field for political contestation now from a radical Left that will demand abolition of the debt and a Grexit.

…These people (the Syriza leadership) have made from very early on an ideological commitment that we are with the European Union, we are for Europe. They were instrumental in the last five years in drowning the voices of the people who were anti-European Union and anti-Euro….And this led them to go to negotiations with the Troika without being prepared at all. They were adamant that they would have some kind of compromise. There were other people on the Left who were telling them that there would be no compromise…They just dismissed us…My impression is that only in the last month they understood that the other side was serious, that there would be no compromise. And that it would be even more serious since it showed that they didn’t prepare at all for a Grexit which was the most serious weapon. So they were prepared, not for a compromise but for a surrender…..The Euro is not just nominal money but is a social relationship, it is a dictatorship of the bankers and you cannot stay in the Eurozone and have a left-wing government. …You cannot be on the Left and not fight these institutions’.