| Austerity, limited sovereignty and social devastation. Greece and the dark side of European Integration

Juni 2012

by Panagiotis Sotiris

Athen, November 2011, Foto: Ed Yourdon

In the past two years Greek society has been under constant attack. The sovereign debt crisis has led to the imposition of severe austerity packages that have already created something very close to a social disaster. Average wages are already down by more than 20%,[1] schools and hospitals are facing difficulties to function properly, the official unemployment rate already exceeds 20%. Soup kitchens, homelessness and other manifestations of poverty are becoming integral parts of the urban landscape. Worker’s rights of over a century have been revoked, including a complete overhaul of the collective bargaining process that will lead to more wage reductions. Greece is becoming the test ground for an extremely aggressive form of neoliberal social engineering. Moreover, Greek society is being subjected to constant ideological blackmail. According to the official discourse, either Greece accepts austerity or it will face the prospect of default and the exit from the Eurozone. This poses an important challenge for the Left. Is the correct strategy to insist that it is possible to have a progressive reversal of the policies of austerity and still remain within the Eurozone or it is better to actually articulate a radical alternative that will include Greece’s exit from the Eurozone? In what follows, I will try to show why the second option is the only viable and also why any attempt to think about progressive solutions in Europe must start with a rejection of the European Union and the whole European Integration process.

To understand this we must start with the European dimension of the current crisis. However correct it is to say that what is happening in Greece is an expression and manifestation of the global economic crisis, and its also a manifestation of the crisis of the Eurozone and of the European project in general.

Regarding the Eurozone, current developments have shown that that the Euro has been a basic mechanism in the intensification of inequalities and imbalances.[2] A common currency in an economic space marked by divergences in productivity and competitiveness it only tends to increase these imbalances. Maastricht treaty provisions could answer the danger big differences in inflation and interest rates posed for monetary union, but not more structural contradictions. Consequently, the euro as a common currency could function properly only in periods of economic stability and within countries of the same level of economic development. But since the differences in productivity and competitiveness remained in place along with trade imbalances, the material ground for the current crisis of the Eurozone was in place from the beginning.

It is necessary that we think of European Integration and especially Monetary Union as both class strategies and imperialist politics. On the one hand, monetary unification has not only been a way to facilitate investment or interstate trade and capital flows. It has also been a conscious choice not only from the part of hegemonic, ‘European core’ countries, but also from non-hegemonic to take advantage of this lowering of protective barriers as a way to use competitive pressure as means for capitalist restructuring. On the other hand, it was a way for hegemonic powers to take advantage from a bigger economic space for investment and also from the very architecture of the Eurozone. In this second sense it was an obviously imperialist strategy. The very architecture of the Eurozone has meant that in fact, because of the differences in productivity, competitiveness and inflation, it is as if Germany has been in a constant competitive devaluation against countries such as Greece. Current German growth trends are the results of prolonged attack on workers but also of the functioning of the Eurozone.

It is true than in periods of relative growth and stability these imbalances could be tolerated. Dominant elites in peripheral social formations such as Greece could take advantage of cheaper credit or increased access to imports, or use them as policy tools to gain consensus for neoliberal policies from segments of the subaltern classes. But this is exactly one of the mechanisms that lead to the Greek sovereign debt crisis because only through increased indebtedness they could sustain levels of consumption or state spending.

In this sense it is obvious that the euro was from the beginning an aggressive neoliberal and imperialist strategy. It is true that as common currency seemingly much more stable than national currencies, especially those associated with memories of inflation, it could gain some form of support. This can explain positive attitudes towards it, despite the fact that in most cases it led to initial price increases. But now we are witnessing the true nature of the euro as mechanism. It can only lead to a ‘race to the bottom’ of austerity, to endless sacrifices and to a constant erosion of the productive base of peripheral countries. In this sense it brings forward the true face of the European integration process.

Contrary to the dominant narrative about Greece’s participation in the European Union being to the benefit of Greek society through subsidies, funding of public works, and modernizing institutions, the balance sheet of Greece’s relation to the project of European Integration in negative: Restructuring of agricultural production, forced privatization of basic infrastructure, trade deficits, labor market and pension system reforms, unemployment, implementation of ‘Bologna Process’ higher education reforms, increased indebtedness.

Of course we can think of the European Union as a possible means for redistribution of resources, as a potential space of convergence and social cohesion marked by inter-state solidarity, as a federate democratic polity with the euro as a common currency. But the problem is that today, with the actual configuration of forces, this is not possible. All the institutional evolution of the European Union works in the opposite way.

What is more important is the current turn of the European Union policies. Right from the beginning the European project included the logic of reduced national and popular sovereignty in the name of integration. Now, this is taking not only the form of a ‘collegial’ voluntary ceding of sovereignty in favor of increased authority and regulatory power for European Union institutions, but also the form of EU mechanisms and hegemonic countries getting an increased ability to intervene and dictate policies. In the current setting of the debt crisis this has turned into an open call for peripheral countries to have a regime of reduced sovereignty.[3]

The example of Greece is exactly the manifestation of this tendency towards reduced sovereignty. In the name of the bail-out packages the EU and the IMF, as parts of the so-called EU-IMF-ECB Troika, have increased powers to dictate not only policies but also forms of governance, exemplified in the November 2011 blackmail of the Greek political elites in order for the Papadimos government to be formed. The new loan agreement includes increased powers of supervision and interference for the representatives of the European Union and the IMF. [4]

Moreover, in many instances this is accompanied by almost neocolonial overtones about the inability of Greeks to deal with their own problems because of their chronic laziness and lack of proper capitalist discipline.[5] Despite all the supposedly reassuring references to the lack of such intent and on the ability of Greece to stand up on its feet with just a little help from European institutions, an immense mechanism of supervision is being formed, parallel to the actual government process of decision. In the upper floors of Greek ministries, the representatives of the Troika, in collaboration with representatives of the respective ministries, are not just rewriting Greek laws but also redesigning the social fabric. Gone is the rhetoric of real convergence and growth based on technology and innovation. The new ‘growth model’ for Greece is based upon low labor cost export competitiveness and getting rid of any environmental, archaeological and social barrier to investors.

Of course that is not to say that the EU is simply dictating to a whole country what to do. This would have been an oversimplification of how European Union policies and class strategies are articulated. It is obvious that Greek capital openly supports these policies, even if prolonged recession means that even capitalist enterprises are paying a dear price. Indeed, it is as if they are using this condition of limited sovereignty as a way to violently change the social balance of forces and get rid of more than a century’s workers gains and rights.[6]

All recent attempts to accelerate European integration, such as the failed attempt towards a European Constitution that led to the Lisbon Treaty have been rightly accused as being openly and aggressively neoliberal. What must also be stressed is the deeply reactionary and undemocratic character of this turn towards limited popular sovereignty. The ‘constitutionalization’ of neoliberalism and ‘free market’, though the increased importance, scope and authority of European supranational legislation and regulation, is at the expense of democracy and popular sovereignty and is designed specifically to severely limit the ability of social movements and the political Left to change the balance of forces within European societies.

The current discussion about a “European Economic Governance” exemplified in the new fiscal treaty that is being currently ratified by member-states, presents an even more aggressive institutional configuration for the EU. All the references to obligatory measures of fiscal prudence, the mechanism of penalization of countries that over-spend, all the demands for the inscription of permanent austerity in national constitutions, exemplify this. In this sense, Greece is indeed the sign of things to come for other European countries. The terms inscribed in the Loan Agreement, the endless lists of violent measures to be implemented before each installment of the bail-out money is being handed to Greece, the mechanisms of permanent supervision reminding of colonial governance, all these have nothing to do with the ‘Greek exception’, but are integral aspects of the current form of European Integration. That is why the new forms of cooperation between the International Monetary Fund and the European Union and the inclusion of aggressive IMF ‘structural adjustment’ policies – with their well documented devastating consequences especially in Latin America countries – mark a crucial turning point in European Union policy and the strategy of integration. Austerity, extreme neoliberalism and total disrespect for democratic procedure mark this turn, plus a growing determination of ‘European core’ countries such as Germany to have a more openly hegemonic role, putting an end to the ideological mythology about a ‘community of equals’ (see Anderson in diesem Heft).

On top of this, the insistence on these policies, despite the open failure of neoliberalism exemplified in the current capitalist crisis, and the treatment of politics as an auto-pilot of even more aggressive solutions, without any consideration for social alliances or social cost mark a post-democratic and post-hegemonic turn. And this can explain the authoritarian turn evident all over Europe. It is not that they are unaware of the danger of social explosions. The problem is that they seem totally unable to incorporate this estimate into policy formation in the sense of a different strategy. That is why they opt for this “fuite en avant” tactic of even more aggressive measures. And this is also why they opt for disregard of democratic procedure. In the past two years we have witnessed the forced placement of European central bankers as prime-ministers, the forced passing through parliament of extensive legislation without any discussion (in Greece it is not uncommon to see hundreds of pages of legislation passing through parliament in a single day), the treating of political parties and members of parliament that have lost all legitimacy as useful ‘walking dead’ that must fulfill the obligation of putting all creditor’s demands into law.

It is in light of the above that I think that we must insist on the need for a rupture with the project of European Integration. This is not to deny the importance of all the democratic and internationalist traditions of the labor movement and the Left in Europe exemplified in the vision of a Europe of democracy, cooperation and social justice (see Händel in diesem Heft). But this has nothing to do with the materiality of the actual institutional framework of the European Union. The famous acquis communautaire is nothing less but the accumulated attempt to impose capitalist imperatives across Europe. And of course, even the vision of a democratic European Union has nothing to with the Eurozone and current policies.

Of course there is the well-intended position that at the European level social movements can have better results. I think that things move to the exactly opposite direction. The European Institutions, with their embedded neoliberalism and their structural ‘democratic deficit’ are in no way a better terrain of struggle than national social formations and polities. Moreover, the very financial and monetary architecture of the European Union as exemplified in the euro, acts as a major preventive barrier to any potential for social change.

Therefore, reclaiming some form of monetary and economic sovereignty, through the rupture with the European Union seems at the moment the only socially acceptable way to find a socially just way to deal with the current crisis. Of course we are not suggesting simply leaving the Eurozone, as a ‘technical’ monetary measure.[7] This should be part of a broader set of radical measures that should also include an immediate stoppage of debt payments, nationalization of banks and strategic infrastructure, re-imposing of capital controls. Moreover, it must be thought of as the beginning of a broader process of social transformation, which must include an emphasis on public ownership, self-management, alternative non-commercial networks of distribution, and environmental protection, as aspects of a necessary reinvention of socialist strategy. And this requires a broad social and political alliance in radical anticapitalist direction. But nothing of all these will ever be possible with the Europen Central Bank governing monetary policy, with the European Union and the IMF supervising Greek ministries and with all the European Union regulations in place that make privatization obligatory and forbid any form on national industrial policy.

Leaving the euro is not about competitive devaluation, but about an attempt to reclaim monetary sovereignty as part of a break with “actually existing neoliberalism” by a counter-hegemonic alliance of the subaltern classes. It is not a form of economic protectionism but an attempt to protect collective productive abilities against the violence of capitalist internationalization. It is not economic nationalism but an attempt to dismantle an aggressive imperialist and capitalist monetary framework suited only to the interests of multinationals and big banks.

And this is an internationalist position. Dismantling the monetary and political framework of the European Union is the only way to liberate actual potential for cooperation between European social movements and peoples. Replacing the European Union with a new form of cooperation, this would require a prolonged struggle that must begin by individual countries leaving the Eurozone and the European Union or redefining their relation to it. There is no way such a change can be accomplished through normal processes of deliberation and decision-making in the European Union. It must take the form of a break. Instead of trying to think how social movements might force institutions that are by their very institutional arrangement designed to be immune to such pressure or trying to find a potential for a actual progressive majority in a European Union that especially since its enlargement it has moved politically to the Right, isn’t it better and more viable to try and think of a way that would enable social movements and the political Left to impose actual breaks with these policies and the institutional framework of the European Union?

This is even more important if we think that today one of the challenges in current social and political struggles is also how to redefine popular sovereignty, not in the mystifying way this has been inscribed in the European constitutional tradition, but as the collective ability of a broad social alliance of workers and other subaltern classes to impose its will against capitalist imperatives. This means that any attempt to rethink the possibility of transforming the European social and political space cannot be done in terms of a potential pan-European process, but more in a more complex and uneven way, where those countries will take the form of the ‘weak link in the chain’ will open the way for broader processes of transformation.

Any attempt to think of a socially just and democratic exit from this crisis must necessarily entail a radical redefinition of Greece’s whole frame of international relations including its relation to the Eurozone and the European Union.

This is not to deny the need to think new forms of cooperation beyond the limits of European Integration. On the contrary, breaking away from the compulsive neoliberal European Union, is the only way to think of international relations based on principles such as fairness, solidarity and mutual benefit. Moreover, in a period when the liberalization of the flows of capitals and commodities has been the battle cry of aggressive capitalist imperatives, only some form of de-linking from processes of capitalist internationalization can open the way for alternative forms of exchange and solidarity. In the past two years we have witnessed an impressive wave of protest, social struggle and popular insurrection, from the ‘Arab Spring’ to the Greek streets. Social change seems more possible. One can legitimately expect that any society’s attempt to experiment with a different social configuration will not be left alone. How countries behave on the international plane in the last instance has to do with their prevailing social relations. Countries and societies in the process of social transformation will be more willing to think of relations based on fairness and solidarity. And this is the answer to the question of isolation. Exiting the Eurozone or even leaving the EU is not isolation, but the only way to have a broader spectrum of possible forms of international economic relations.

In Greek mythology Europa is associated with violence and trauma. In a strange way this is what is happening now. Struggle against the “European Project” not within it, is the only way to reclaim Europe for its peoples.

[1]              Bank of Greece calculates than in by the end of 2012 real wages will be reduced by more than 25% in comparison to 2009. (Bank of Greece, Report on Monetary Policy 2011-2012, Athens, 2012, p. 75 (In Greek) http://www.bankofgreece.gr/BogEkdoseis/NomPol20112012.pdf)

[2]              On the crisis of the Eurozone see C. Lapavitsas et al., Breaking up? A Route out of the Eurozone Crisis, London: Research on Money and Finance, 2011, http://www.researchonmoneyandfinance.org/wp-content/uploads/2011/11/Eurozone-Crisis-RMF-Report-3-Breaking-Up.pdf,

[3]              Eurogroup chairman Jean Claude Juncker openly called in a July 2011 interview for massively limited sovereignty for Greece. (http://www.reuters.com/article/2011/07/03/us-greece-juncker-idUSTRE7620ZK20110703).

[4]              On current developments in Greece see S. Kouvelakis, “The Greek Cualdron”, New Left Review, 72, 2011 and P. Sotiris, “Greece: From Despair to Resistance”, Greek Left Review http://greekleftreview.wordpress.com/2012/02/13/greece-from-despair-to-resistance/.

[5]              On this see Stephan Kaufmann, “Sell your islands, you bankrupt Greeks.” 20 popular fallacies concerning the debt crisis, Rosa Luxemburg Foundation, 2011

[6]              On this see P. Sotiris, “Growth Model” or strategy for disaster? http://www.thepressproject.net/detailsen.php?id=15793

[7]              On the technical and sociopolitical aspects of a possible exit from the Eurozone see Lapavitsas et al. op.cit.