Workers, international capital struggle over possible default
Published Sep 29, 2011 7:29 PM
While international finance ministers, treasury officials and bankers were scurrying around Washington at the fall meeting of the International Monetary Fund/World Bank, and Polish political leaders were attending a mass to pray for European Union unity — all in an attempt to stave off a Greek default on its “sovereign debt” — Greek workers were drawing the lessons of a 24-hour strike that shut down transportation in the country and preparing for general strikes called for Oct. 5 and Oct. 25.
Striking taxi drivers and bus, metro and rail workers meant that commuters in Athens had to use cars on Sept. 22, causing immense traffic jams. “The situation is dramatic, all major streets are jammed,” said one traffic police official. Air traffic controllers also struck, delaying flights or causing them to be canceled. This may have had an impact on tourism, a major industry in Greece. (Reuters, Sept. 23).
The nationwide strike saw 1,000 members of the communist group MAS marching to Parliament, chanting “Resist!” and “Plutocracy should pay for this crisis!” Another 6,000 students, some wearing gas masks, and teachers joined them outside the national Legislature. There was a huge deployment of riot police.
A few days later, a small protest march in Athens on Sept. 25 was broken up by brutal police attacks involving clouds of tear gas and baton charges. Public transportation system workers went out on a reaction strike the next day. (NPR) The main slogan of the Sept. 25 protest was, “No to further taxes, no to salary cuts, no to poverty.”
The bankers fear that a Greek default would destroy the European Union and the eurozone — those 16 countries that use the euro as their common currency. The workers fear that the austerity measures a bailout plan would impose, added to the draconian measures already in place, would lead to financial genocide for the Greek workers.
Will austerity work?
Conditions for workers in Greece are verging on catastrophic. The economy has been in a recession since 2008. Following a 4.4 percent decline in the economy last year, the forecast is for a 5 percent decline this year, along with 16 percent unemployment.
A number of private employers have cut pay by up to 30 percent, which is also the amount that the government has slashed some pensions. There have been dramatic price hikes in the last 15 months: a 100 percent increase for diesel fuel and gas; 50 percent for electricity, heat and public transport. It has raised the value-added tax on many goods and services, including food, from 13 percent to 23 percent. One-third of the country’s 165,000 small businesses have shut down; another third can no longer pay wages.
Government employees and employees of quasi-state corporations like Olympic Airlines and the hospitals have not been paid for months. They are promised a check in October — or “next year.” In the Ministry of Culture, many employees who worked on refurbishing the Acropolis have not been paid a salary for 22 months. (Die Presse, Vienna, Sept. 22).
The government has just imposed a very heavy real estate tax that many Greeks, reeling under the blows of harsh cuts, won’t be able to pay. The government will then order power company workers to turn off the power of these sister and brother workers. The power workers union says it will not cooperate in depriving people of one of the essentials of life.
Even with all these cuts and the damage done to workers and their living standards, the solvency targets set by the IMF and the European Central Bank have not been met. According to a Finance Ministry report of Sept. 22, the government’s net revenues were $4.7 billion below target and its expenses $1.35 billion above target for the first seven months of 2011.
Real bailout to German & French banks
Eric Toussaint, president of the Committee for the Abolition of Third World Debt in Belgium, points out in the book, “la Dette ou La Vie,” that the charter of the eurozone (Article 125 of the Treaty of Lisbon) forbids the ECB from directly buying the bonds of one of its members. When a country joins the eurozone and adopts the euro as its currency, it gives up the right to control its own money supply with its own central bank. It has to use the ECB. It is even prohibited from borrowing from another eurozone country.
But while the ECB can’t lend to Greece by buying its bonds, it can lend to private banks, mainly in France and Germany. These banks get euros from the ECB in the short term for 1 percent and then turn around and lend them to Greece (or Ireland, Portugal or Spain) at 2 percent or 3 percent. It’s a very profitable business.
Greece’s bailout funds might go into its vaults but they don’t spend much time there — their destiny is to prop up the big French and German banks that lent Greece money.
When Greece joined the eurozone it got subsidies and aid for its agriculture and industries. But the German economy is much more productive — it is the world’s second largest exporter after China — and the German bosses know how to drive their workers to the limits of their strength. With Portugal, Ireland, Greece and Spain in the eurozone, Germany had an assured market for its goods, which it could produce at better quality and for cheaper costs than these poorer countries. The situation is an updated version of 19th century mercantile exchange.
The world’s bourgeoisie faces two problems in Greece. One, it is impossible to pay off a country’s loans when conditions are driving that country deeper and deeper into recession. Two, the Greek working class is combative and organized. It is going to fight very hard when its back is to the wall.
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