Euro-capital imposes U-turn on Tsipras

Abject capitulation or a Brest-Litovsk

moment?
by Kumar David-July 25, 2015

It is the most
humiliating surrender of a leftwing
government in living memory, but others
may say it is a Brest-Litovsk moment when
it survived to fight and perhaps to win on
another day. If Tsipras was Lenin, I would
not hesitate to endorse the surrender - but
is he? Was it capitulation or a Brest-Litovsk
moment? The 5 June referendum ratified
two points: (a) No further austerity and
(b) Greece must remain in the Eurozone. The political powers in Europe
torpedoed the linkage: Either swallow harsher austerity and surrender
national sovereignty, or get out of the Euro and face instant catastrophe;
crumbling banks, economic strangulation and social turmoil. Tsipras
buckled as he saw the alternative as Armageddon. This has a parallel with
the Brest-Litovsk Peace Treaty of March 1918 when the four month old
revolutionary government in Russia capitulated, ceded huge territory,
agreed to pay compensation for war time Tsarist acquisition of German
property and signed a humiliating treaty with the Central Powers.
Here is the Brest-Litovsk story in two paragraphs. Immediately after the
revolution the Russian army had collapsed and Trotsky had still to build the
Red Army out of its rag tag remnants. The Germans advanced, ominously
ignoring Lenins call for peace without annexations; extinction of the
revolutionary flame stared the Bolsheviks in the face. Urgent negotiations
were called at a Byelorussian-Polish border town, Brest-Litovsk. Germany
demanded harsh concession. Trotsky, leading the Russian delegation as
Peoples Commissar for Foreign Affairs (Foreign Minister), refused, walked
out on 8 February 1918 and sided with Bukarins Central Committee (CC)
faction that wanted to fight on till revolutions in Central European states
were victorious and came to the rescue.

Lenin was adamant: "Sign the deal, forestall the destruction of the Russian
Revolution and live to fight another day". There was conflict in the
Bolshevik CC, but the Germans were advancing and the infant Red Army
was threatened with invasion on 17 fronts by White Russians (loyalists of
the Tsarist monarchy, armed and financed by Britain, the USA, Japan,
France and Italy). Under German and Civil War pressure, Trotskys group
abstained at the next CC meeting in March and Lenin pushed through his
capitulation to German demands. Interestingly, in seven months Germany
lost WWI, the Russians tore up the treaty, reoccupied surrendered lands
and paid none of the reparations.
Angela Merkel for Kaiser Wilhelm II, German Finance Minister Wolfgang
Schauble for Field Marshal von Hindenburg (during the war, more powerful
than the Kaiser), European finance capital for the Central Powers, a 18
nation Eurozone and Troika (EC, ECB, IMF) onslaught for a 17 front
invasion; the parallel has merit. Furthermore, Tsipras says he had no
choice, "a knife was held to my throat" and he has no confidence the deal
will work (the IMF, the Economist magazine and ECB President Mario
Draghi agree). One would be hard pressed to find better words in which
Lenin could have couched the predicament of the Russian Republic (there
was no USSR yet). But the similarity abruptly ends; on the "What Next?"
question, Alexis Tsipras and V.I. Lenin part company.
What is Tsipras going to do next? He has to implement the programme he
has signed up to; steep new consumption taxes (13 to 23%), pension
restrictions and wage freezes, if action on the streets does not stall him;
privatisation of ports and the states share of banks, if public sector strikes
fail to scuttle it. Will he use police-military machinery to suppress protests?
I think so; he is evolving into an as yet mildly authoritarian Bonapartist.
Syriza is internally split; 40 of its 149 members refused to support Tsipras
in parliament. European finance capital intends to use him as its battering
ram to bust the left alternative in the European periphery and put out the
fire lit in the streets of Athens before it reaches Spain, Portugal and Italy.
He seems willing.
Many have parted company with Tsipras, but not with Syriza. Its left is led
by Energy Minister Panagiotis Lafazanis joined by Political Secretary Tasos
Koronnakis. Lafazanis, Labour Minister Panos Skourletis, the Deputy
Defence Minister and the Deputy Social Security Minister have been
removed from Cabinet; earlier Finance Minister Yaris Varoufakais was

kicked out; Deputy Finance Minister Nadia Valavani rejected the deal and
resigned; House Speaker Zoe Constantopoulou called it "social genocide".
As a Marxist Tsipras is damaged goods; his government hangs on a
gossamer thread.
Lenins post Brest-Litovsk
intentions were opposite.
Yes, he was restricted in
Europe to a rump European
Russia and lost most of the
south, Armenia, much of
Georgia, to the Turks
Germanys ally. Siberia and
the East was undeveloped
hinterland. Nor could he
have foreseen that war
would end quickly and that
he could shove the Brest-Litovsk Treaty in the commode so
serendipitously. Nonetheless, he had full control of albeit a rump state, was
determined to nurture its socialist ideas in that part of Russia (and that
was vast given the size of the country), and he was committed to using
that state as beacon and launching pad for revolution elsewhere. The score
then is: Tsipras 0, Lenin 2.
How did Greece get here?
What follows is a brief account of the genesis of the debt catastrophe. It
refers to the fifteen years before Syriza came to power in 2015 January. A
freewheeling bonanza for European finance-capital, and free-living
populism for the Greek populace commenced in 2002 when the country
joined the Euro. Greece became the offshore banking playground of
European financial operators, Russian oligarchs and money launderers; its
banks a vehicle for German and French investors to buy up the Greek
economy in the halcyon days of Euro mesmerised capitalism.
Money was raised by the Greek state and European investors thanks to the
modest yield-spread from the German bond and a general mood of
confidence.
The active side of the economy was tied to the roulette wheel of financial

speculation, corruption and deliberate misrepresentation of government

accounts the best know case was with the connivance of Goldman Sachs.
Misrepresentation of official accounts covered-up rising fiscal deficit (16%
of GDP in 2009) and burgeoning state debt. Successive governments from
2004 ran up budget deficits to pay off the public with populist policies of
never ending good times while finance-capital made glorious profits in a
Hellenic sun of endemic scam. Industrial growth, investment, productivity
enhancement development in the broad sense was effete as somnolent
Greek capitalism remained a slave to the roulette wheel. The peoples work
motto was not "Never on a Sunday" but never on week days either! As the
chart shows debt as a percentage of GDP had begun to rise even in 20052008 well before the 2008 global crisis.
The global financial system went kaput in Q4 2008; banks and
governments with weak balance sheets hit the pits; loss of confidence led
globally to capital flight from dicey institutions. Interest rates (yield)
demanded of Greece rose sharply, at one point reaching 15.5% (spread of
14% above Germany), private sources dried up, existing ones refused to
renew. The debt crisis ran out of control and Greek banks were on the
verge of collapse. A Holy Trinity, the Troika, was incarnated (EU the Holy
Ghost; ECB God the Son; IMF God the Father); its first job was to rescue
European finance-capital stuck in Greek banks. The diabolical rescue
mechanism was: (a) Greek government to take over the bonds of the
banking sector, that is finance-capitals booty, (b) the Troika to pay off
these bond holders, and (c) Greece to become indebted to that amount to
the Troika.
Step (b) rescued European investors using European tax-payer money (the
Greek government was not allowed to touch it; the Troika reimbursed
bondholders directly). By step (c) the Greek people (state) became
debtors of the Troika; that is European and global (IMF) taxpayers. This is
where we are now; Greece owes the Troika $400 billion on which it cannot
pay interest nor service repayment; the IMF says repayment and economic
recovery will take till 2050, that too only if loans are restructured
(repayment schedules pushed back) and a haircut (write-off of a top slice
of all debt) is implemented. The $93 billion debt relief package now on the
table is just another piece of the ongoing Ponzi scheme.
Grexit the only way
Greece cannot survive with austerity; the economy is crippled, 58% youth

unemployment and spiralling mass hardship; this is what every economist

and tacitly the IMF says. There is no investment and recovery possible in
the prevailing gloom; only economic suffocation and civil strife. When
banks opened on Monday, on a lifeline thrown by Eurozone emergency
funds, there was relief, gasps of a rescued drowning man and a brief uptick in Tspiras popularity. But thats premature; in the coming months the
screws will tighten. The new Finance Minister Euclid Tsokalotos (also a
Marxist and friend of Varoufakis) predicts that the fiscal tightening will not
benefit the economy and that the government was forced to accept them.
After five years of austerity, not recovery but misery is spreading.
Even ardent original enthusiasts now concede the Euro project was flawed.
You cannot have one currency, one monetary policy and unique exchange
and interest rates for 19 countries, but at the same time 19 different
budgets and 19 different debt structures! In this wacky scenario Greece
cannot do what it urgently needs to do; devalue. Even wackier, a state
whose banks have dried and businesses shut down does not have a central
bank as an instrument of survival. It has no primary tool of intervention in
the face of a national catastrophe. And its a one-way street; if you get in
there is no way out. Tory leader William Hague called the Euro "a burning
building with no exit". Greece is trapped in this building. Now the Eurozone
powers are taking control, laying down policy and shoving national
sovereignty aside. This is perverse proof that currency unity sans political
unity is infeasible.
There is no option for Greece but Grexit (exit from the Euro) followed by
a bold state led economic policy-drive like other countries that recovered
from war, revolution or disaster (Japan, Korea, India after independence,
China, Vietnam, and Argentina a weak example). Grexit will be hard at the
start and the EU must ease the way. The IMFs backroom plan foresees
20% forced devaluation of the new drachma at the start and price inflation
up to 25% even with ECB stabilisation help. Then the hard road to
recovery will start; there is no other road but Tsipras does not have the
courage to tell his people that they have no option other than Grexit.
I am aware of the downside of state-owned enterprises, but a dirigismethrust is not about ownership, it is about policy drivers. Also, the Greek
economy cannot recover in isolation as the previous examples show; it
needs to diversify investment sources China, the USA, Russia, Europe of
course, and what about the $150 billion Iranian funds soon be unlocked.
The sine qua non however is leadership and a determined work ethic;

nothing can be achieved without effort. And a driving national and social
ideology is imperative; the Greeks arent going to kill themselves for
capitalist bosses.
Posted by Thavam