Greece’s Syriza government proposes list of social cuts to European Union

By Johannes Stern

25 February 2015

Just days after capitulating to European Union (EU) demands for austerity, Greece’s Syriza-led government matched its words with deeds. Early Tuesday morning, it presented a promised list of “reforms,” that is, attacks on the working class, as demanded by the EU in Brussels.

In response, the euro group of euro zone finance ministers agreed to extend credit to Greece under the so-called “aid program” until the end of June. Their speedy agreement yesterday afternoon shows that the Greek government’s proposed cuts broadly met the requirements of Brussels and Berlin.

Greek Finance Minister Yanis Varoufakis’ seven-page document could have been written by conservative German Finance Minister Wolfgang Schäuble. In it, the Syriza government confirms not only its complete submission to the hated diktat of the EU, it announces social cuts going well beyond those implemented by previous conservative and social-democratic governments.

In his letter to the euro group’s president, Dutch Finance Minister Jeroen Dijsselbloem, Varoufakis wrote pompously, “In addition to codifying its reform agenda, in accordance with PM [Alexis] Tsipras’ programmatic statement to Greece’s parliament, the Greek government also committed to working in close agreement with European partners and institutions, as well as with the International Monetary Fund, and take actions that strengthen fiscal sustainability, guarantee financial stability, and promote economic recovery.”

The “Greek savings list,” as the German media dubbed it, contains one proposal for cuts after another.

The “Public expenditure” section states: “The Greek authorities will review and control spending in every area of government spending (e.g., education, defence, transport, local government, social benefits).” They will also “Identify cost-saving measures through a thorough review of spending by every ministry.”

In the section on “Reform of social security systems”, Syriza pledges “to continue modernising the pension system.” The authorities will “eliminate loopholes and incentives that give rise to an excessive rate of early retirements… [and] Consolidate pension funds to achieve savings.”

In the section on “Privatization and management of public assets,” Syriza pledges “not to roll back privatisations that have been completed.” Moreover, “where the tender process has been launched, the government will respect the process, according to the law.”

This is intended to “attract investment in key sectors and utilise the state’s assets efficiently” and does not rule out further privatizations. Privatizations that have not yet been completed should be reworked so as “to achieve better conditions and revenue” and “to promote competitiveness.”

The document states that “labour market reforms” are intended to create a “better business environment.” To this end, the government effectively abandons calls for an increase in the minimum wage, one of its main election promises. “The scope and timing of changes to the minimum wage will be made in consultation with social partners and the European and international institutions.” In other words, the banks will decide whether or not to raise wages in Greece, after they have reduced wages for many workers by as much as 50 percent!

Other topics in the paper are the “Fight against corruption”, tax policy, and the health of the Greek and European banks.

Varoufakis’ paper comes as no surprise to those who have followed the politics of Syriza. It originates from a man and a government that from the beginning saw their task as saving the EU and European capitalism. Like its predecessors, the Syriza government has submitted to the dictates of the EU and the financial markets, who even after five years of brutal austerity, demand ever more sacrifices from the Greek population.

According to calculations by the Bank of Greece published in the newspaperKathimerini, Greece needs another ten billion euros in March, most of which will go directly into the pockets of the banks and international financial institutions. On March 6, government bonds amounting to €1.4 billion fall due; on March 20, a further €1.6 billion must be repaid. In addition, €1.6 billion in loan repayments are due to the IMF.

Only recently, Greek economics blog Macropolis calculated that only eleven percent of the second so-called “aid package” for Greece went to the Greek government. The rest of the bailout was used for loan financing, i.e., it flowed directly to the banks.

Athens’ new list of social cuts carries forward the EU debt Memorandum, continuing to bleed the Greek population on behalf of finance capital. In the coming weeks, further concrete proposals for budget cuts are expected from Athens.

IMF chief Christine Lagarde confirmed on Tuesday that Athens’ plans were sufficient to continue the aid programme. However, she criticized Syriza’s proposals as being not very specific. In many areas, “including perhaps the most important,” the IMF head complained that there were no “clear assurances that the government intends to implement the envisaged reforms.”

Dijsselbloem said that the proposals submitted by Athens were only “a first list” and an “indication” of the cuts the Tsipras government will implement. He believed, however, that the new Greek government was “very serious” about carrying out the cuts.

As Syriza moves to continue the austerity policies of previous Greek governments, Dijsselbloem said that it nevertheless has “quite a different political vision” from its predecessors.

The recent agreement between Brussels and Athens underscores the fact that Syriza’s “political vision”, i.e., pro-EU and pro-capitalist policies dressed up in pseudo-left phrases, is seen by growing sections of the European ruling elite as a strategy to continue with austerity in Greece.

Leading economists are therefore calling for at least some verbal concessions to Syriza, so that the pseudo-left party does not discredit itself too quickly while moving ahead with its reactionary agenda.

In a comment for Die Welt, the director of the German Institute for Economic Research (DIW), Marcel Fratzscher, warns, “Greece will only emerge from the crisis when the country takes ownership of the reforms. This can only be achieved if the government in Greece can emerge from the negotiations as a winner as well.”

“Rarely in the past 30 years, has support for a government in the country been so great,” said Fratzscher. “Europe should seize this opportunity and help the Greek government to convert its popularity into a constructive reform programme, by allowing the government to implement at least some of its campaign promises.”

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