Greek workers resist austerity drive
By Andy Gianniotis
With a general strike on May 20 and large demonstrations in Athens and other cities, the workers of Greece continued their struggle to overturn an austerity program imposed by the Greek government, European Union and the International Monetary Fund. Up to 50,000 protesters marched through Athens to parliament in the fourth general strike this year, following the May 5 general strike and demonstration, one of the biggest ever seen in the Greek capital.
Demonstrators outside the parliament building banged pots and pans and shouted “Thieves, thieves, come out!”, while members of the trade union organisation of the Greek Community Party occupied the Labour Ministry. “It is incomprehensible, outrageous, unacceptable to cut pensions of 600 euros, 700 euros”, Stathis Anestis of the General Confederation of Labour (GSEE), Greece’s peak union body, told protesters. “Those who … have looted the pension funds are immune; no one has gone to jail.”
For the first time in many years, Athens police carried out “pre-emptive arrests”, targeting mostly young demonstrators as they approached the rally site. Despite the provocation, there were many well-organised contingents: teachers, hospital workers, mass transit workers, municipal workers, and water, electrical and bank workers, along with many union locals from the private sector, marching under their own banners. The GSEE said participation was 100% at shipyards, refineries and docks, 90 percent at construction sites and 70 percent in industry, banks and state-run companies. The strike closed schools, halted ferries and trains and kept hospitals running with only emergency staff. The Acropolis and other ancient sites were also closed.
In a sign of the coming class struggles in Europe and around the world, Spanish public sector workers have announced a general strike on June 2 against plans to freeze pensions and reduce civil servants’ wages.
The Greek economy was one of the fastest growing in the euro zone during the 2000s, growing at an annual rate of 4.2% from 2000 to 2007. When the global financial crisis erupted in 2008, it had a particularly large impact on Greece. Two of the country’s largest industries are tourism and shipping; their revenues fell by 15% in 2009.
But in late 2009 the newly-elected social-democratic PASOK (Panhellenic Socialist Movement) government announced that the 2009 budget deficit was around 13.6% of GDP. Prior to the October 2009 elections, the conservative New Democracy government had claimed that the deficit was “6-8%” of GDP. Total 2009 public sector debt was 115% of GDP.
It has since been revealed that successive Greek governments had been hiding the total debt level with the use of credit derivatives and the help of Goldman Sachs. They did this in order to be allowed into the euro zone, the economic and monetary union of 16 European Union states that have adopted the euro as their currency.
In the wake of the debt revelation, international financial institutions downgraded Greece’s credit rating. Bond markets either refused to roll-over Greek government debt or demanded higher premiums on the interest rates for new loans. On April 27, the Greek debt rating reached “junk” status. The credit rating agencies that designated Greek government bonds as “junk” are the same ones that gave triple-A credit ratings to billions of dollars in US sub-prime mortgage securities. The PASOK government requested an EU-IMF bailout package in order to avoid default. The EU and the IMF will provide €110 billion ($150 billion) in emergency loans, the biggest bailout in history.
The price for Greek working people will be high. Along with steep tax increases and cuts in spending, the loans are conditional on a public sector wage freeze being extended to 2014. This is in reality a wage cut, because there will be drastic cuts to so-called bonuses — holiday pay that has become an essential part of the income package of low-paid public sector workers. The “rescue package” is designed for the German, French and other European banks that hold most of the Greek government’s debt. In a default, as much as 70% of the debt would likely be non-payable, hitting the balance sheets of these banks. Hence, the bailout is simply a subsidy for their profits.
On May 6, the government agreed to impose a fourth and supposedly final round of austerity measures. These include wage reductions for public servants, a three-year freeze on increases in public sector wages, an increase of the retirement age for public sector workers from 61 to 65, reduction of state-owned companies from 6000 to 2000 and across-the-board increases in value added tax (VAT) and taxes on alcohol, cigarettes, fuels and luxuries. The measures are a windfall for financial markets: transport, energy and some services will be liberalised and opened to privatisation; the financial sector will benefit from a fund set up with the help of the EU and the IMF; “flexibility” of work will increase; lay-offs will become easier; and the economy will be controlled by the IMF.
In remarks to parliament, PM George Papandreou claimed that the cuts were part of a fundamental restructuring of the economy. “The emergency measures are the condition for us to regain our credibility and win ... the time to make the big changes that were delayed for years”, he declared. The final vote was 172-121 in favour of the austerity bill, with ND voting for. KKE and the Syriza coalition voted against.
Why it won’t solve anything
Since Greece is part of the euro zone, it can neither devalue its currency nor alter interest rates. Its debt cannot be restructured either, because European financial institutions hold 80% of it. These same banks borrow from the European Central Bank at 1% in order to make high-interest loans to governments. As a counterpart to the above measures, countries in the euro zone will lend €100-135 billion over three years to Greece at a rate of 5%. Banks in the richest countries of the eurozone will thus make huge amounts money from the misery of Greek working people. Christine Lagarde, French minister of finance, forecasts a profit of €150 million a year.
Economists have also expressed concern that the measures will lead to an unprecedented collapse in the Greek economy, which could be replicated throughout Europe. The May 6 New York Times cited calculations by Brussels-based economist Daniel Gros: “For each 1 percent of GDP decline in Greek government spending, total demand in the country falls by 2.5 percent of GDP”. This suggests that if Athens cuts state spending by 10-15% of GDP as planned, the economy will fall by roughly 30%. Even if the austerity program leads to an “assumed” GDP contraction of 4% this year, then by another 2.6% in 2011, Greece’s public “debt/GDP ratio will be a debilitating 145% of GDP at end 2011”, according to Times journalists Peter Boone and Simon Johnson.
The main message from the corporate press regarding the austerity measures is that they are needed to solve the debt crisis, but this is not true. They are needed to shift the burden of the crisis on to the Greek working class. If tax evasion were a sport, rich Greeks would be world champions.
In the wealthy northern suburbs of Athens, where summer temperatures often rise above 35oC, just 324 residents on their tax returns admitted owning swimming pools. When tax investigators studied satellite photos of the sprawling collection of expensive villas tucked behind tall gates, they found 16,974 pools.
Greece has the world’s second largest commercial fleet: more than 4000 vessels that, via Goldman-Sachs-like “advantageous mechanisms”, rob the state of about 6 billion euros in lost VAT each year. These shipping companies pay basically no tax, even though they represent 5% of GDP. As the rest of the shipping world downsized last year, Greek shipping tycoons bought up vessels at bargain prices. The majority of the large employers have transferred their financial assets to Cyprus, where they face a tax rate of only 10%.
Furthermore, Greece has the EU’s largest military expenditures as a share of GDP, nearly a third of the budget deficit. There has been no suggestion from the capitalist politicians in Germany and France that these military expenditures be cut. Germany and France are the largest sellers of military hardware to Greece.
To win government last year, PASOK, the Greek equivalent of the Australian Labor Party, conducted a classic social-democratic campaign. Party leaders spoke of income redistribution and raising social spending, while condemning the “medieval” conditions in labour relations. But PASOK’s victory was also a vote against the ND’s proposed austerity policies. PASOK, which dominates the GSEE, has now adopted the worst measures against working people since the end of the civil war in 1949.