European leaders breathed a sign of relief yesterday when Greek Finance Minister Euclid Tsakalotos announced that a new bailout deal had been agreed in principle, subject to the support of the Hellenic Parliament and the Bundestag. However there is a legitimate ideological debate going on within SYRIZA as to whether another bailout should be accepted as people on the left of the party argue that substantive left-wing reforms cannot be implemented whilst a part of the single-currency.
Leaving aside the financial questions of whether the deal should be accepted, the politics of this discussion is interesting; do you take the short-term approach to implement socialistic reforms by leaving the Euro, or do you take the internationalist approach to show to the European people that a left-wing government can stop austerity?
The political arguments in support of thee deal are numerous, and are largely focussed on potential electoral success. For Comrade Tsipras it is politically expedient to endorse the reforms, even though many of which he disagrees with, because it is illustrative to the Greek people that a SYRIZA government can not only be elected, but it can also make constructive changes. Furthermore, he will gain support from Greek social democrats who previously voted for PASOK but were more hostile towards a more radical government.
Domestically speaking Tsipras will have fulfilled his election pledge to end further austerity, and the servicing of Greek debt through the reform package coupled with the addition €35 billion of investment for the Greek economy to spur growth will see his approval rating increase, thus essentially ensuring future electoral success. The implementation of the bailout reforms will also keep Greece inside the Euro, which is incredibly popular among the electorate, and would further strengthen SYRIZA’s hold on power.
From an international perspective there are also some positive political outcomes. The success of SYRIZA in being elected and then ending austerity will only bolster left-wing parties in other parts of Europe, particularly in Spain with elections this year promising to see the election of Podemos. In addition voters in European countries who are hostile towards Greece for not accepting a deal sooner would no longer lament the Greek government’s supposed intransigence, and the lenders themselves would be more open to the idea of debt cancellation as Tsipras would be able to point to his track record of negotiating with the Troika and implementing reforms that were jointly agreed.
However, as many of the left of SYRIZA have said there are also many reasons why accepting the deal may have negative consequences. The deal is predicated upon the privatisation of sections of the economy such as electricity transmission network and the commercial ports of Piraeus and Thessaloniki. The bailout reform package also openly discusses the liberalisation of the labour market and possible changes to the law around collective bargaining. Some of the other fiscal measures have also the potential to be unpopular: welfare reforms may see a new financial burden shifted onto the poorest in society, the abolition of aid for the poorest pensions and the increase in retirement age may anger a significant portion of elderly people, and VAT rises will hit the poorest at the same rate as the richest.
In more abstract political terms, the left of SYRIZA could argue that the government would be pushing a neo-liberal agenda that is contrary to the radical politics promised to the electorate, and would also project the idea that left-wing parties are not viable parties of government so long as the Eurozone is dominated by centre-right leaders. The counter-points to this would be that had SYRIZA not been elected, the idea of debt cancellation would not have put at the forefront of public discourse and that the austerity measures may not have been stopped.
The left-wing figures of SYRIZA calling for the rejection of this new bailout, such as Comrade Varoufakis, who are now stating that it has become clear that in order to implement reforms that would be ideologically consistent with the party’s platform, Greece would have to leave the Eurozone not no longer be beholden to right-wing governments of other European nations. They have also pointed out that by retaining membership of the European Union whilst reintroducing the Drachma, they could devalue the currency to stimulate exports and still have access to other member states without paying tariffs.
The potential downsides of rejecting the bailout would be that Greece would be forced to leave the Eurozone which would almost certainly guarantee the downfall of a SYRIZA government; the question would then become what would replace it? A power vacuum in Italy saw the installation of a technocrat, which in Greece would implement the Troika’s policies without any ideological resistance, or see people flock to far-right groups. By rejecting the deal out of hand Tsipras would alienate all European leaders who have shown basic signs of co-operation and centre-right leaders would harden the rhetoric thus increasing the chance of further of austerity for the Greek people.
This may be based in naivety however I believed that the best option, politically speaking would be for SYRIZA MPs to hold their noses and vote in favour of the bailout. Polling has shown that SYRIZA is still the most popular party in Greece and in order to maintain power membership of the Euro is essential; by preventing the escalation of austerity, which was SYRIZA’s main policy proposal, Tsipras will have political capital to continue negotiations with Eurozone leaders and other European leaders to negotiate over debt cancellation.
However the international element is also important to consider: according to opinion polls a centre-left government may be elected in Spain, with the possible backing of Podemos, and Portugal may vote for a centre-left party with the support of one of two anti-capitalist parties. With two more countries having leaders that are either anti-austerity or more sympathetic to Greece’s cause, a SYRIZA government calling for debt cancellation will have more support in Europe more widely.
I cannot know for sure whether Tsipras would be in a better political position if he were to accept the bailout, because any adopted policy would have to be messaged correctly in order to maintain public and international support, but so long as the Greek people remain committed to the Euro, Tsipras cannot reject the bailout and maintain power. In order for this left-wing government to survive as an example to other countries that austerity can be slowed and debt cancellation can be openly discussed, as Christine Lagarde has done, SYRIZA must bite their tongue and make sure that this government doesn’t collapse.
If the polling is accurate then come the end of this year Tsipras will have more allies in Europe that he does currently, which will make negotiating for a pan-European debt cancellation conference, something that he has long been calling for, more likely to happen. I’m not going to pretend for a second that I like the bailout deal, the privatisation of industries is particularly hard to swallow, however if SYRIZA is established as a legitimate party of government, it could renationalise these industries in the future.