The outcome of the election in Greece is sending shock waves across Europe. Syriza, the left-wing, anti-austerity party led by new Greek Prime Minister Alexis Tsipras, won 36% (149 of the Parliament’s 300 seats,) and, by forming a coalition government with the center-right Independent Greeks’ win of 13 seats, will have least 162 seats, a viable majority.
The new government plans to raise the minimum wage, and create 300,000 new jobs, reverse the bank bailouts and stop banks from foreclosing on home owner’s principle residences, close corporate loopholes and offshore havens, and bring in a voucher system to help seniors in need receive food and healthcare.
For more than five years, the Greek citizens have been crushed under austerity policies imposed by the Economic Union’s “troika” of creditors; the European Commission, the European Central Bank, and the International Monetary Fund. Greek foreign debt currently stands at 175% of Gross Domestic Product.
Almost a third of Greece’s economy collapsed under the restrictions. Since June 5, 2011, when the “Indignant Citizens Movement” or the “Greek indignados“, held a demonstration of between 300,000 – 500,000 people protesting in front of the Greek Parliament, a change in government thinking has been pre-ordained.
The Greek protest was non-violent for about a month, but on June 29, 2011, the police cracked down viciously on the protesters. Three people were killed, and accusations of police brutality, excessive use of tear gas, as well as the alleged use of other expired and carcinogenic chemical substances, led to an outcry by international media and Amnesty International.
“Both Syriza and Independent Greeks have detailed emergency economic programs that will commit their government to deal with the humanitarian catastrophe left by five years of the hated Troika policy. The damage has been unprecedented short of wartime, and has led to unemployment officially at 28%, but considered by experts to be actually as high as 45%; pensions and salaries have been slashed by 25-45%. The destruction of the health-care system has increased the child mortality rate, the suicide rate, and the death rate.” (http://www.larouchepub.com/other/2015/4205grk_elex_eup_new_deal.html)
European leaders were swift to denounce Greece’s audacity. British PM David Cameron tweeted, “The Greek election will increase economic uncertainty across Europe.” (Britain’s membership in the European Union is a major issue in the campaign for the upcoming May election.)
German Bundesbank President Jens Weidmann told ARD network that he hoped “the new Greek government will not make promises it cannot keep and the country cannot afford.” But Germany’s opposition Left Party l called the Syriza victory a “sign of hope for a new start in Europe.” And today, Russian Finance Minister Anton Siluanov told CNBC that Russia would consider giving financial help to debt-ridden Greece.
The EU is shaken by the possibility that Italy, Portugal and Ireland, also horribly impacted by austerity measures, will follow Greece’s lead. Fiscal conservatives fear that Greece’s demand to write off up to half of their of €240bn debt will create a “Global Event,” on the scale of the 2008 collapse of the Lehman Brothers Holdings, who went bankrupt with $600 billion in assets.
But there is precedent in countries restructuring debt. In 1953, Germany was in a similar position to Greece today. With debt from pre-and post-war, they owed nearly 30 billion Deutschmarks to around 70 countries. With no access to capital, and creditors who didn’t believe the country could turn the economy around, Germany was desperate for cash to begin the country’s reconstruction and growth.
Despite budget cuts and laborious repayments, the economic burden was crushing their population. Financial negotiations were begun by banker Hermann-Josef Abs, who led a German delegation in London in 1953. He hoped to turn the creditors of today into the financiers and investors of tomorrow. But the foreign creditors felt his first offers were insulting.
The London Debt Agreement, finally signed on February 27, 1953, saw half of Germany’s debts written off, with the rest restructured for the long-term. Germany was not to be economically overburdened. Today, our view of Germany’s economy is paired with the idea that the German people are just a very hard-working people. But none of what Germany accomplished would have been possible without the Agreement.
Those who believe that Greece’s new vision is childish and selfish stereotype Greece’s economy as being irreparably rife with corruption and greed, and fed by an indolent, Mediterranean lifestyle. Those same people once thought that all Germans were Nazis.
In fact, the average Greek retirement age is nearly 65, but the pension is quite small, requiring many retirees to continue working as long as they are physically able. According to Eurostat statistics, the Greeks work 40.6 hours a week, the highest of all 27 EU member states. The ordinary Greek citizen in not lounging on the beach drinking ouzo, they have been protesting in the streets, as tax increases and social security cuts destroy the peoples’ hope, and the public sectors are privatized to serve as collateral to service the European debt.
The Eurozone finance ministers have no intention of continuing debt relief negotiations unless the new Syriza government promises to honour all existing austerity agreements. Meanwhile, the Euro is trending downward, and the Podemos in Spain, a year-old political party that has surged to the top of the polls promising to reverse austerity in Spain and impose a levy on banks, are poised to join Greece in challenging the stranglehold of the Troika. As Tsipras pointed out during his victory speech, the old ways of doing things in Europe are doomed.