The German Left Party and Greece

The current moment in the economic crisis has certainly given left-leaning ideas and political projects a wider appeal in Europe.

In Greece, Alexis Tsipras and his SYRIZA Party (SYRIZA = Coalition of the Radical Left) have a strong possibility of winning the national elections of August 25. In Spain, the Podemos Party, to the left of the neoliberal Socialist Democrats (PSOE) and founded last year, is leading in the polls there.

The Left Party in Germany has yet to see any notable surge in its national popularity. Not only has Germany so far not been nearly so badly affected by the eurozone depression and now deflation as periphery countries like Greece, Ireland, Italy, Spain and Portugal. But the Left Party has struggle with public suspicion over its historical continuities with the East Germany ruling Communist Party.

But the fall of the Berlin Wall is more the 25 years out. Whatever its shortcomings, it is far more than former supporters of the East German dictatorship. It has not only attracted news adherents and leaders having nothing to do with thhe former East German government. It has participated in numerous governments on the state and local level and continues to demonstrate its adherence to democratic government.

And with the German Social Democratic Party (SPD) not only firmly committed to neoliberal economic policies but serving as the junior partner in Angela Merkel's coalition government and firmly backing her Herbert Hoover/Heinrich Brüning policies and her "Frau Fritz" posturing, what does it mean in Germany right now to be to the left of the SPD? Wolfgang Münchau in The wacky economics of Germany’s parallel universe Financial Times 11/16/2014 explains:

German economists roughly fall into two groups: those that have not read Keynes, and those that have not understood Keynes. To describe the economic mainstream in Germany as conservative misses the point. There are some overlaps with the various neoclassical or neoconservative schools in the US and elsewhere. But as compelling as a comparison between the German mainstream and the Tea Party may appear, it does not survive scrutiny. German orthodoxy straddles the centre-left and the centre-right. The only party with some Keynesian leanings are the former communists [the Left Party]. [my emphasis]

In the drastically conservative economic situation that the EU elites have succeeded in creating, most intensely under Angela Merkel's domination of the eurozone, having "some Keynesian leanings" means a party qualifies as part of the radical left.

So political times in Europe really have changed since 2008!

C.J. Polychroniou's description in Greece, Europe and the Neoliberal Nightmare: Is There a Way Out? Truthout 01/14/2015 may be couched in polemical terms. But it may be at this point that only polemical terms can make the point properly:

A "Grexit" [Greek exist from the euro] would be an extremely painful process for Greece, particularly if it occurs in a disorderly way, but it is hard to see Germany having a change of heart or the EU becoming more progressive. The EU is an undemocratic, regressive and thoroughly neoliberal entity pursuing nothing short of open class war policies against the common people of Greece (as well as those in the other highly indebted nations of the eurozone) while it protects the interests of banks and big corporations. If Syriza believes it can change the institutional framework and the policies of the EU, then even the great revolutions of past history may pale in comparison to its accomplishments. [my emphasis]

Just to be clear, that particular take is overblown. And it doesn't represent the position of SYRIZA, Podemos or the German Left Party.

But, unsurprisingly, the Left Party is paying attention to events in Greece. It's reflected in the reports in their paper Neues Deutschland and the Rosa Luxemburg Stiftung (RLS), whose positions are close to those of the the Left Party.

Griechenland vor den Neuwahlen (Jan 2015; accessed 01/16/2015) from the RLS presents a background account of the Greek classes leading up to the January 25 elections (also in PDF form). The paper gives a good straightforward descriptions of the economic conditions imposed by the Troika (EU Commission, IMF, ECB) in exchange for the bailout arrangements after the 2009 debt crisis hit Greece:

... harte Sparmaßnahmen, die Entlassung Zehntausender Staatsangestellter,
Strukturreformen, Privatisierungen, die Senkung des Lohnniveaus, eine Schwächung der Gewerkschaften usw. Griechenland folgte weitgehend den Forderungen.

[... hard savings measures, the laying off of tens of thousands of public employees, {neoliberal} structural reforms, privatizations, the sinking of wage levels, a weakening of union, etc. Greece went a long way in fulfilling the demands.]

It recounts some of the threats we've discussed her made to Greek by Eu President we've discussed here from Jean-Claude Juncker and the German government warning them not to vote for SYRIZA.

The RLS notes an important consideration. If SYRIZA wins the elections, as currently expected, but doesn't win the 151 seats to constitute a Parliamentary majority, they will have three days to form a government. If they don't succeed, the President can ask another party to give it a try, presumably the conservative New Democracy, currently the lead party in the current Greek government. If that doesn't fly, a new election would have to be scheduled within 30 days.

They also give a description of the devastating effects of the depression in Greece, e.g., domestic demand now lies around 30% below the level of 2008. Greece has achieved a current surplus in its national budget, which could be used to stimulate economic demand if it weren't being sucked away into debt payments.

The paper also does a good job of skewering the pathetic claim made by EU austerity advocates including Greek Prime Minister Antonis Samaras that a small uptick in the reported growth rate of the Greek economy in late 2014 was a sign that Greece has turned the corner. And, austerity works! (Bill Mitchell provides additional, wonky debunking of this trope in Greece – return to growth demonstrates the role of substantial fiscal deficits 11/19/25014.

SYRIZA's planned program to combat the immediate crisis is definitely New Dealish. And the New Deal was radical in comparison with Herbert Hoover's austerity politics, which Merkel has imposed on Greece in an even more brutal form. They have a program for relief of the substantial private debt that is devastating ordinary Greek households and holding down domestic demand. They also intend to go after tax evasion and smuggling, which earlier Greek governments promised but on which they delivered little. But SYRIZA is not currently a party of the One Percent. So their intention to do this may be more serious than previous neoliberal governments. But they are clearly taking a pro-European position with the intention to solve Greece's problems as part of the EU and the eurozone.

The RLS paper also makes an important point that very much relates to arrogant, destructive and ludicrous claim by Merkel and her supporters that Greece and all other eurozone countries should become net exporters like Germany. And that they should impoverish their workers to facilitate exports. "Syriza verweist jedoch darauf, dass trotz deutlich gesunkener Löhne die Exporte Griechenlands nicht gestiegen sind: Sie liegen derzeit acht Prozent niedriger als 2008." ("SYRIZA points out, however, that despite the significantly reduced wages, Greece's exports have not risen: They currently lie eight percent lower than 2008.")

The paper also makes the important and plausible point that a 2012 euro crisis involving speculative attacks on eurozone countries' bonds would not likely be repeated in the event of a technical default by Greece. However, if Merkel stays with her Brezhnevian attitude toward ruling the eurozone and decides to kick Greece out of the euro currency zone in the event of a default, that would provoke a new round of the euro crisis. Would Merkel be that reckless? I really think she might. But more on that another time. In a couple of weeks, it may have become much more of a real-time issue, anyway.

One avenue of pressure the ECB can bring on Greece if they choose to do so is to cut Greek banks off from ECB credit. That could have the short-term effect of freezing up the Greek economy even more than it is. But it would also virtually insure that Greece would be pushed into default on its bonds. Which would put them in violation of their EU agreements and tempt German hardliners to kick Greece out of the euro.

Greek banks are currently facing some immediate pressure because of capital flight out of Greece as the One Percenters get nervous about having a New Deal government. EU rules prevent individual country from imposing capital controls, i.e., to prevent The banks require more short-term capital from the ECB. At this point, I haven't seen any indication that the ECB is ready to play a highwire pressure game with the Greek banks. (Kapitalflucht: Griechische Banken brauchen Nothilfe Spiegel Online 16.01.2015)