Greece - three years of repeated attacks by the capitalist class

Jan/Mar 2013

Of all the eurozone countries, Greece has been the most drastically affected both by the present crisis and by the predatory speculation of the financial markets. The Greek government was finally bailed out by the eurozone countries, partly to protect the profits of the big international banks which had already squeezed the country's finance dry, and partly to pre-empt the potential threat of an even worse financial meltdown - but at an exorbitant price for the Greek population.

The following article, translated from the monthly journal published by our French comrades of Lutte Ouvière (Lutte de Classe No 149 - February 2013) describes the mechanisms which led to Greece's bankruptcy, the consequences of the country's bail out for its Greek population and its resistance against the government's austerity policies.

Over the past three years the Greek population has become considerably poorer. But the cause of this rapid slide to the bottom wasn't so much the crisis, but the drive of the European capitalist classes to rescue their bankers. The same austerity measures which have been introduced elsewhere, were given a formal and systematic character, as part of a series of plans. The "Troïka" - which includes the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) - drafted these plans and oversaw their implementation by complicit Greek governments. This was done in such a ruthless way that one protester accused the Troïka of using the country as a "guinea pig to test austerity in Europe". And there is some truth in this.

Indeed the situation of the Greek population - especially that of the Greek working class which is most affected by the austerity measures - concerns all European workers, not just out of solidarity, but also because they can expect the same policies from their own capitalists.

A catastrophic situation

Not all the austerity measures included in these plans have been implemented yet, whether they are aimed at dismantling the public sector, repealing the employment legislation or increasing taxes. This is because their implementation has come up against the resistance of the working class in the streets and in the workplaces, the reluctance of some administrations to provide the requested list of employees due to be sacked, and the recent rulings of decisions of some tribunals against the state. But what has been implemented has been enough to impoverish the population and push large numbers into deprivation. In 2011, according to ELSTAT, the Greek office of statistics, out of a population which is just under 11 million, 3.4 million lived at, or close to, the poverty line and 850,000 were recipients of food aid.

In September 2012, unemployment reached a record 26%. Over half of the 15-24 age group are unemployed and one third of the 25-34 group. Between the end of 2009 and May 2012, 100,000 jobs had disappeared in the public sector. In the public sector, after having sacked casual employees and stopped replacing retiring workers, the government wants to suspend thousands of workers for a year during which they would be paid half of their wages, before deciding whether they are to be transferred or sacked. In the private sector, temporary, part-time jobs are increasingly the rule. The black economy is booming, now including, according to an Employment ministry report, 35% of all jobs - and almost 50% in hotels, restaurants and the rest of the tourist industry.

The repeal of all employment legislation has been put on the agenda and is already mostly completed. Workplace deals now take precedence over industry-wide agreements, allowing bosses to ignore such agreements. The probation period for permanent jobs has been increased from 2 months to 12 months. Redundancy payments have been cut - usually halved - together with the jobless benefit (now £300 per month, for at most 12 months) and the minimum wage (£488 per month gross, which represents a 22% cut since 2009).

An OECD report shows that private sector wages went down by 25% in 2011 alone. In the public sector, wages have already been cut by 20% and a new grading which is to be introduced will cut them by another 25%. The latest austerity plan includes provisions to raise retirement age from 65 to 67 and to cut pensions even further - this, when for a long time already, pensioners have had to wait for months to get any money! According to the private sector union GSEE, on average, the Greek workers' standards of living has been halved over the past three years.

In 2011, according to the labour inspectors' union, 400,000 workers were paid three months or more late. Others have to wait even longer or receive an advance worth £80 or £160 to keep them going. Employers do not hesitate to cut working hours - and, therefore, wages - or to sack workers and replace them with others (or the same workers) on a lower wage. For instance, a tribunal ruled against a company involved in the construction of the Thessalonica underground which had sacked 30 workers whose wages were too high to its liking and rehired them on a monthly rate of £490. The tribunal ruled that this was unconstitutional as no-one could live on such a low wage.

It is difficult to get medical treatment in some hospitals due to a shortage of staff, medicines and even the most basic equipment - like dressings and disposable gloves. The €5 flat rate (£4.20) that one has to be pay for every consultation has been raised to €25 (£21). This is unaffordable for a large part of the population, especially for the long-term jobless who receive no benefit and have no health insurance. More and more patients turn to NGOs such as Doctors Of The World or they wait, sometimes for hours, outside the handful of pharmacies which are directly connected to the National Insurance system, in order to get their medicines for free.

Beyond the empty city streets which used to be blocked by traffic jams, the crisis is reflected by the many boarded up shops and the shanties set up by the homeless. In January 2012, according to the local authorities and NGOs, 15,000 people were homeless in Athens. Those who are in a job may not face such a dramatic situation, but they have to cut on everything, including food. The price of domestic fuel increased by 35% in September 2012, reaching £1.12 a litre (almost twice the average price in Britain). So heating has to be turned down and a number of schools may have to close temporarily as a result. Given the cost of petrol, car journeys must be cut too. The car often stay in its garage and many people return their registration plates to the authorities in order to avoid paying the road tax.

Most Greeks are home-owners. The government introduced a new property tax tied to electricity bills: failure to pay this tax could result in your electricity supply being suspended. But the High Court has nullified this measure - at least until March 2013. Electricity bills will still need to be paid, though, despite the monthly hike of £8.30 to £12.50 announced this January (except for the poorest).

As to the income tax, waged workers can't avoid it since it is taken directly out of their wages. They can't be exempted from paying it, unlike the magnates of the shipping industry or the Church; nor can they use the services of experts in "tax optimisation", as businessmen and well-off professionals do.

The Greek population pays for the banks' rescue

The big banks produced the country's debt. Like all states, the Greek state has been borrowing for a long time. However, borrowing money in order to develop the economy and build infrastructure which has, at least, some use for the population, was one thing - even if the many beneficiaries of this were still the lenders. But it was quite another to borrow in order to pay through the nose for infrastructure which can only turn into rusty white elephants, like for the 2004 Olympics, or in order to waste 3 to 4% of the country's GDP on buying weapons. This amounted to looting public finances on the back of the population and for the sole benefit of big business, both international and Greek - since Greek capital has close links with international finance.

After it joined the eurozone, in 2001, thanks to US bank Goldman Sachs' help in concealing its deficit, Greece became an even more attractive target for speculators. Lenders must have thought that a state, and one which, in addition, was part of the eurozone, would not be allowed to go bust. If it did, the other states would make up for its failings. This is what has happened so far. When it turned out that Greece might fail to meet its repayments, the European states came under pressure from the financial sphere. In order to avoid a wave of panic in a system which was totally unpredictable and uncontrollable, they pressurised the Greek government to agree to meet its repayments. The Greek population was told it had to foot the bill by tightening its belt in order to allow Greek and international banks and companies of all kinds to retain their profits or limit their losses.

Greece carried on borrowing, paying ever rising interest rates, not to strengthen its economy, nor to pay back its debt, but just to pay the interest payments on its past loans. The country's debt pile grew even more while its economy was becoming increasingly bankrupt. Since 2008 GDP has fallen by 20%, according to the IMF. Instead of going down thanks to the European austerity plans, Greece's public debt has increased, due to the paralysis of its economy and its additional borrowing - from 133% of GDP in 2009, to 150% in 2010, 165% in 2011 and an estimated 190% in 2012.

In March and December 2012, new European bailouts introduced a debt "restructuring", which involved Greece buying some of the bonds held by private creditors at a discount ("a haircut"). At the same time, Greece was able to borrow at a slightly lower rate - something that lenders could well afford, since they lent to Greece at a rate which was far higher than what they paid to borrow from the ECB. In addition Greece was granted a delay for its repayments to the publicly-funded European Financial Stability Facility (EFSF). Finally lender states were meant to return to Greece some of the capital gains they would make on their lending to the country in 2013 - but only provided this money was used to reduce Greece's total debt. This had nothing to do with philanthropy, but rather with the risk of instability which might result from a spiralling indebtedness.

Private lenders were reluctant to agree to the proposed "haircut" of 53% in March and just over 60% in December. But to exchange junk bonds against bonds which were supposedly more reliable, at least for some time, as was the case in March, was not the worst possible scenario. And selling these bonds before they become valueless, as was the case in December, could even prove very profitable. Third Point, an investment fund run by US billionaire Dan Loeb, admitted to having made $500 million in profits on this occasion, by selling its bonds at twice the price it had paid for them. Some of its customers who had no need for cash even kept their bonds, hoping to make an even higher profit later.

As to the ECB, after a 6-month interruption, it has re-started buying Greek junk bonds. Since what matters is to rescue the financial sphere, the latest tranche of the European loan includes, in addition to the planned €11bn (£9.2bn) earmarked to repay some of Greece's debt, another €23bn (£19.1bn) to recapitalise the Greek banks (a first recapitalisation was already done in March). By injecting some cash into the economy, the aim is to "restore trust in the markets and among investors". Meanwhile the same "markets", always on the lookout for more profits, are demanding more financial "liberalisation" and privatisation.

Greece, looted by international companies...

Greece owes its indebtedness to the banks of the rich countries - especially to the French banks (with 26% of Greece's debt up to 2010) and to the German banks (with 15%). Companies based in these countries, which are often linked to these international banks, were also able to impose their goods on Greece. Through this mechanism, the money lent to Greece went back to its lenders or to their associates - which is another reason for the EU to refuse to allow Greece to default on its debt.

Theses loans were used to get the Greek population to buy goods produced in other countries or to invest in infrastructure projects for tourism or commercial activities, often in partnership with Greek companies. The Greek indispensable middlemen required to invest in Greece, whether politicians or businessmen, took their cut in the process, including basic bribes. For years, this system worked. France and Germany (but other countries were also in that situation) had around 150 companies each operating in Greece, where they sold their goods - medicines, cars, electronics, telephones, planes, food, etc.. In 2010, still, Germany was Greece's largest commercial partner and its exports to Greece were worth €6bn (£5bn). France sold to Greece €675m worth of food, €319m (£266m) worth of medicines and cosmetics, €162m (£135) worth of cars, not to mention large sales of weapons.

All kinds of weapons manufacturers, from every country, have used and abused the rivalry between Greece and Turkey in order to sell the same weapons to both countries at the highest possible price. In 2004-2008, Greece bought €3 to €4bn worth of weapons each year (£1.2bn to £3.3bn), with 2/3 coming from German companies like Krauss-Maffei for tanks, or Ferrostaal and HDW (a subsidiary of Thyssen-Krupp) for submarines. From France, Greece bought Mirage aircraft, together with missiles, frigates and helicopters. In 2011, despite its budget cuts, Greece was still spending more money in proportion to its CGP than any other European country on importing weapons!

The subsidiaries of European companies operating in Greece were only aimed at helping to sell their products (showrooms, customer services, etc..), just as the subsidiaries of European banks were only there to increase the country's indebtedness. The only "investment" ever made by these companies and banks in Greece, was aimed at taking a stake in Greek companies which already had a significant market of their own, or a share of the state's procurement. For instance, thanks to the stake it bought in Marinopoulos, the French supermarket giant Carrefour was able to take advantage of this company's expansion into the Balkans. When the crisis made the Greek market less profitable, Carrefour sold its stake to its partner. Nevertheless, Marinopoulos remained franchised to sell Carrefour's products in its 600 shops in Greece, Cyprus and the Balkans (last October, it opened its 8th supermarket mall in the Balkans, in the capital of Macedonia, Skopje).

Infrastructure projects have been a big source of profits for international companies in Greece. Between 1996 and 2000, German group Hochtief built Athens' new airport (£1.9bn). French group Vinci and its Greek subsidiary Gefyra won the contract to build and run the Rio-Antirrio toll-bridge, which crosses the straight of Rio (£666m). Vinci, Hochtief and two Greek companies have won a £2.3bn contract to build and manage a network of motorways. With the crisis, these companies have reduced their activities. They keep an eye open for signs that business might flourish again, for instance in case of a future privatisation. This was the logic of Carrefour's part withdrawal. ThyssenKrupp Marine Systems sold 75% of its stake in the Scaramanga shipyard to a shipbuilding group based in Abu Dhabi, but kept the rest. Deutsche Telekom even increased its stake in OTE, a phone company which does business in Greece, Albania, Bulgaria and Romania. But whatever happens, the EU it there to act as an insurance. Last April, Siemens, which had already modernised OTE's switchboards, won a £34 million contract as part of the extension of Athens' underground - and 70% of that amount will be paid by the EU. The French company Alstom also won a contract in this same extension, as well as an Italian company. Last November, the European Investment Bank approved a £666m loan to restart the construction work on motorways - and the flow of profits into the Vinci's pockets.

These big companies, which are mostly European in the case of Greece, have piled up profits and continue to do so regardless of the crisis, at the expense of the population.

... And by Greek capitalists

The country's looting by international companies, then the attacks against the population in order to appease the international financial markets and finally the role of the "Troïka" in Greece - all this has revived a feeling of national oppression among the population and all the more easily as Germany's current leading role in the EU and in Greece may come as a reminder of its past occupation of the country, during WWII.

In fact, both the nationalist right and the far-right have tried to turn this feeling to their advantage, with demonstrators even welcoming Angela Merkel's October 2012 visit with a fascist salute.

This nationalist influence even spread to the far-left, in particular during election campaigns during which the main issue was whether or not Greece should remain in the EU and in the eurozone. However, taking this national feeling into account is one thing, trying to tap anti-European prejudices is quite another. Any ambiguity in this respect can only provide the right-wing and the far-right with more ammunition. Moreover it can only conceal the responsibility of the Greek wealthy and help Greek capitalism to retain its "quasi-invisible" appearance, to use a phrase coined by the Trotkyist activist Dimitris Livieratos.

It is true that Greek companies tend to be small, or even very small and many collapsed with the crisis. However the Greek wealthy do exist, even though it may be difficult, at a time when financial capital dominates everything, to tell what is Greek and what is not. The shipowners are quite visible. Greece's commercial fleet has been in first or second position in the world for a long time. It has even increased its tonnage since 2011, with fewer, but larger and more modern ships. The funds manipulated by shipowners are large and the Constitution grants them an exemption from paying corporation tax and VAT on anything related to their ships. Three-quarters of their ships are registered under a flag of convenience, like Cyprus. Their companies are treated as foreign for all accounting purposes and their accounts remain, therefore, very opaque. The Swiss daily Tribune de Genève wrote that, in 2009, these companies managed to avoid paying an estimated £17-£25bn in tax, either through tax evasion or by means of "optimisation". The old shipowning families have diversified their activities, in areas like real estate, oil and finance - among other things. For instance, Spiros Latsis runs a family conglomerate which includes a shipping company, a real estate company, shares in oil (Hellenic Petroleum), air transport, as well as luxury yachts and properties everywhere in the world. From Geneva, Latsis manages this empire which also includes 49% of a Zürich private bank ((EFG International) as well as a Greek bank (Eurobank-EFG Group). Due to the crisis, the net value of the family is said to have dropped by £667m. Nevertheless, Latsis is still one of the three Greek billionaires on Forbes' rich list, with a net worth of £2.2bn!

The collapse of the Soviet Union has opened the Balkans to Greek capital. After 1990, Greece played the role of a self-proclaimed regional power and became a major investor in the region... thereby increasing its own indebtedness. Its banks expanded their operations to the 16 neighbouring countries, including Turkey, where by 2010, they had 3,400 branches employing 50,000 people. The restructuring of the Balkans - a programme led by the Greek government from the year 2000 onwards - provided Greek companies with new business, including companies like Viohalco and Alumyl (aluminium, steel and cables), Titan and Herakles (cement) or Hellenic Petroleum (oil and gas). Many Greek companies moved production to Bulgaria or Romania where wages were lower. Viohalco, which had a factory in Romania employing 1,500 workers, boasted about the resulting "improvement in production costs". The company directory lists 216 Greek multinationals. One of them is the international gambling company Intralot. Another is the Marfin group, which includes the Marfin bank, food company Vivartia (dairy products, frozen food, fast-food catering) as well as medical activities, tourism, etc..

Obviously, the crisis has affected the profits of Greek companies. But even in construction, which was particularly badly hit, the big companies managed to resist. Half of the industry's jobs have disappeared. But, in April 2011, a company like Aktor claimed to have contracts worth £2.5bn, thanks to Qatar. Likewise, Mytileneos Holdings, which was originally a mining company, has diversified its activities and builds power stations in the Middle East. It has made a joint bid with Motor Oil (Hellas) to buy the state gas company DEPA. In the banking sector, the EU plans to recapitalise four of the largest banks - Alpha Bank, the National Bank of Greece, Eurobank and Piraeus Bank. This is designed to reassure the markets and should lead to a restructuring of the banking system which, in the name of making it healthier, could result in 20,000 job cuts out of a 56,000-strong workforce.

The population's reactions

Over the past two and a half years, two dozen general strikes have taken place in Greece. They were mainly called by the two main union confederations - GSEE for the private sector and ADEDY for the public sector - as well as by PAME, the trade-union linked to the Greek Communist Party, KKE. Each time a new austerity plan was announced, tens of thousands of protesters took to the streets. During the most recent of these strikes, on 7 and 8 November 2012, there were still 100,000 demonstrators.

During these strikes, anger has superseded the usual demoralisation, but without any real perspective being offered. Just as in the other European countries, the leaderships of the two main union confederations (which are close to the Socialist Party, PASOK) stopped short of using these strikes to set real fighting objectives which could resolve the population's immediate survival problem, let alone to spell out how they could be achieved. And nor did PAME.

In between the general strikes, many other mobilisations have taken place, often on a sectional and local basis, involving artisans, taxi drivers, truck drivers, shopkeepers, pharmacists, lawyers, etc... These mobilisations have been even more frequent in the public sector, but also in an atomised way, with each union calling for specific actions. In December 2012, for instance, there was a teachers' strike on the 5th, a prison staff strike between the 4th and the 6th, a local government strike on the 17th and 18th, and a wider call-out involving the health service, the railways and urban transport on the 19th and 20th. Judges and prosecutors who have been involved in a partial strike for months, every day between midday and 3pm, carried on their action until mid-January this year.

In the private sector, there have been some tough, protracted strikes, against wage and job cuts. Such was the case at the Aspropyrgos Helliniki Halivourgia steel mill, near Athens. In October 2011, the company owner, Nikos Manessis, told the plant's 400 workers that the length of the working day would be cut from 8 to 5 hours, with a 40% wage cut. The strike against these attacks - and subsequently against the resulting sackings of workers - was mainly led by PAME. It was hailed as a heroic struggle by the KKE, but remained confined inside the plant and was concluded by the police moving the pickets away, in July 2012, after a 9-month strike.

There were mobilisations in other workplaces. Before the 2012 elections, Coca-Cola workers in Patras and Thessalonica went on strike against job cuts and so did the workers of the Fage dairy company. In early October 2012, 250 workers from the Scaramanga shipyards invaded the Ministry of Defence to demand the payment of their wages (they hadn't been paid for 6 months, because the government had failed to pay its bills to their employer). They were received by the riot police which arrested a hundred of them. In December, the government finally promised to pay £4bn to £6bn towards submarine maintenance.

There have been many forms of protests. Public buildings have been occupied by their employees. Activists have organised "free-toll operations" (whereby they got motorists to go through motorway toll gates for free), like the "I won't Pay" operation. There was also the short-lived "mobilisation of the outraged", in May and June 2011, in Athens and Thessalonica, which brought together students, youth and the jobless, but also a number of protesters who were not so young, and many activists from various organisations. Meanwhile many activists devote their efforts to local self-help organisations, organising soup kitchens and collective groceries for those in need.

However, apart from the fact that the morale of the protesters tends to wear out with time, these struggles suffer from their atomisation and, above all, from the lack of any political perspective.

The working class needs a policy of its own

Even more than anywhere else, the austerity measures imposed on Greece have turned the economic crisis into a social crisis. A large section of the population was mobilised and came up against the opposition of the traditional parties' politicians - from the New Democracy party on the right, and PASOK on the left. These politicians were notorious for their corruption and their links with the capitalist class. But their credit was further undermined by their zeal in pushing the population into deprivation. Their discredit was highlighted in the June 2012 elections, which revealed a shift towards parties which have had very little influence so far - one on the far-right and another on the left of the traditional left-wing parties.

On the left of the traditional left, SYRIZA (Radical Left Coalition) polled 27% of the votes (as opposed to 6% in 2009) and won 71 seats. This result showed that a section of voters, mostly from PASOK's electorate, were looking for a party on its left which might help them to counter the capitalists' attacks. But the aim of SYRIZA's president Tsipras, is to form a left-wing government which, he claims, would be more effective because its leaders wouldn't be "corrupt nor worn out". But for whose interests would such a government be more effective? SYRIZA's policy never was to raise the class consciousness of the exploited, in order to prepare them for the necessary battles against the capitalist class, both to defend their interests today and to ensure that they will be in the best possible position, tomorrow, to challenge the capitalists' control over the economy. The truth is, that although SYRIZA bids for political power, it does it only within the framework of present capitalist society, without putting into question the rule of the capitalist class. Like all reformist parties, SYRIZA just fuels among the working class an illusion which is very useful to the capitalist class - that the capitalist system can be reformed through the ballot box.

On the far-right, the emergence of "Golden Dawn" shows a shift of public opinion in this direction. The danger does not lie in its 18 seats won in the election, but in the fact that a section of the electorate supported a party which is violently anti-working class and anti-immigrant, and which is prepared to attack foreigners with iron bars, while the police, whose ranks include many far-right supporters, looks the other way. Golden Dawn's electoral success encourages racist thugs to act, and not only among its own members, judging from the fact that, according to the Migrant Workers' Association, there have been 500 attacks against immigrants over the past six months. It is hard to tell whether Golden Dawn's influence will grow, nor how fast. But if it managed to be seen as representing a possible alternative policy against the crisis, especially among the ruined petty-bourgeoisie, this party could turn into a deadly threat for the working class. And even more so, if it managed to gain a substantial influence among the ranks of a disoriented working class.

The crisis is raising the real problem which is facing the working class: the bankruptcy of the capitalist system as a whole, and not just of the policies of some of its parties, means that it has become necessary to deprive the capitalist class of any power over society, even though those who are in a position to do it are not yet conscious of this need. The capitalist class can use a large variety of parties to defend its interests. Of course, whether SYRIZA or Golden Dawn gets into government, would make a difference for the working class - but it would not change the domination of capital. What is vital, is for the working class to succeed in winning over the population to its own policy and its own perspective for society as a whole. And this immediately raises the need for an instrument representing the political interests of the working class, to achieve this.

For the time being the Greek working class does not have such an instrument. Yet, it will need a party which is both capable of putting forward objectives designed to allow workers to defend their interests in the day-to-day struggle, but also prepared to clearly challenge the political power of the capitalist class. Nowhere in the world does the working class have such a party. In Greece, just as everywhere else, it is towards its construction that our efforts must aim.