Greece: The Crisis of a Crumbling Populism

Against the Current No. 4-5, September-December 1986

James Petras

THE VICTORIES of the Greek socialist movement in 1981 and 1985 represented a major breakthrough in several senses: they brought significant new social forces into effective political activity; they gave nationalist and socialist ideology a new legitimacy; they led to the further dismantling of the police-state apparatus that had undergirded the electoral system.

Subsequently legislation was passed that increased the rights of women, transformed and modernized the system of higher education, extended social benefits, and increased income in rural areas. These political and social changes were important indicators of a strengthening of the mass movement in Greek society.

Papandreou’s adoption of left positions in foreign policy reflects the radical mass anti-U.S.-imperialism that forced even the previous conservative Karamanlis regime to withdraw from the NATO military command (but not from NATO as such).

There have been three distinct waves of anti-imperialist political activism in the postwar period, each affecting different social sectors. The first was essentially based on the working class, farmers, and intellectuals, who confronted the U.S. intervention during the 1940s in support of the pro-Nazi collaborators, the Security Battalion, royalists, and liberal anti-communists.

The second wave emerged in response to U.S. support and endorsement of the military dictatorship of 1967. The third wave resulted from U.S. endorsement of the over­ throw of the Greek Makarios government of Cyprus and the ensuing Turkish occupation which displaced tens of thousands of Greeks.

Papandreou’s formal criticism of U.S. policies has been of the most moderate sort, given that there were majorities in the country who favored the immediate expulsion of U.S. bases, withdrawal from NATO, and probably from the European Economic Community (EEC) as well. Greek sympathy with Third World struggles is based on their experience of U.S. military intervention, support for a client military regime, and manipulation of client politicians.

Papandreou adapted to the Greek popular majority in his election campaigns. His ascent to office was based on a historical compromise with Washington and the Greek military. In exchange for office, he sacrificed the program of his party, the Panhellenic Socialist Movement (PASOK). The U.S. got the status quo; the people got balcony rhetoric.

It is also true that the Papandreou regime, at least for a time, served as a dissident gadfly in NATO on issues pertaining to the Cold War, and as a pressure on the EEC for increased subsidies for Southern Europe. There was also a good deal of rhetoric by the government promoting Third World solidarity and nuclear-free zones.

Nevertheless, despite the image and perception in the U.S. of Greek socialism as radical, the Papandreou government has in fact been neither left wing in its internal policies nor nonaligned in its international policy. It was, and is, a traditional centrist regime.

Above all, Greece has remained an active, loyal member of NATO and the EEC. The U.S. military bases remain intact; the U.S. remains Greece’s principal supplier of weapons and military advisers; nuclear weapons continue to be stored on Greek territory; U.S. spying equipment against the Eastern bloc and North Africa operate from the U.S. bases.

Nor is there any disparity between the Socialists’ foreign and domestic policies. Despite their radical program, PASOK has, since its election in 1981, carried out a traditional populist political practice. Indeed, by understanding the continuing rightward drift of Papandreou’s domestic policies, we can better understand the limitations of his international program.

The PASOK program originally promised to promote worker self-managed enterprises, organize production and distribution co-ops in the countryside, transfer privately owned firms heavily indebted to the state to some form of state-worker control, and increase living standards. In the economic realm the government invited thousands of university-educated Greeks to return to participate in the transformation of Greece from a cheap tourist and shipping haven to a modern industrial economy based on high technology.

Nothing remotely resembling this program was implemented. The state and Papandreou never demonstrated any interest in self-management. When the electrical workers union struck for its implementation they were threatened with arrest. Subsequently worker representatives were sandwiched between a majority of state and management officials. The state continued to lend money to private firms with large debts, or to “reorganize” them-in order to return them to private hands. Papandreou has dropped the high technology rhetoric as his regime has trouble sustaining the fifty-year-old textile industry, let alone organize new initiatives.

Populism in Power

The victory of PASOK was based on a compromise among a multiplicity of social classes and class segments-many in mutually competing and conflicting positions. A broad coalition of classes brought PASOK to power. However, the very breadth of this constellation of forces prevented the government from developing a coherent program. If they wished to elaborate a new development policy and realize progressive social change, the Socialists would have had to sharply define their constituency, and risk offending powerful social groups.

What subsequently emerged, however, was not a coherent development policy but rather a political strategy to which basic socioeconomic policy was sub­ ordinated. The government sought to maintain the broad coalition on which it was based through the distribution of short-term consumption payoffs instead of undertaking needed and promised structural changes for development that might alienate particular elite groups. The crucial issue in its first term of office was sustaining the “populist compromise.”

To maintain the alliance of conflicting class forces the regime avoided all tough economic measures such as taxing landed property to finance agro-industrial complexes, socializing indebted “problematic” firms, or implementing a sustained investment program in new productive activity. After putting an initial stabilization program into effect, the government pursued policies that maintained Greece’s traditional role in the international division of labor: mass tourism, dependence on external finance, overseas remittances, and shipping.

To secure the populist compromise, the regime utilized foreign loans, fiscal deficits, and EEC subsidies, along with U.S. aid-in exchange for the continued use of bases, including nuclear-weapon storage. Business, large and small; farmers, bureaucrats, shopkeepers, factory workers, exporters, and importers-everyone, or almost everyone, got something, even if some got more than others. In this way the regime maintained the electoral support of almost every social interest. Greece’s deep structural problems, however, were ignored and grew serious: popular consumption was kept up while the productive base required to sustain it was left to stagnate.

Greece competes with Portugal for having the most backward agricultural and industrial system in Europe. In recent years many of the newly industrializing countries of the Third World have surpassed Greek industries in competitiveness. What passes for industrial facilities is largely assembly plants with little or no capital equipment or research and development capability. Most of the “industrialists” accumulated wealth by borrowing huge amounts of capital from the state banks, investing a fraction and diverting the rest abroad to foreign bank accounts.

The debt/capital-investment ratio in Greece is one of the highest in the world because industry was not directed by your usual entrepreneur but by specific strata of kleptocrats. Agriculture suffered from under­investment, irrational and costly marketing systems, with a multiplicity of small farms divorced from any organized credits or productive systems capable of providing cheap inputs or processing outputs.

After five years of Papandreou’s government, Greece still exports apples and imports apple juice from West Germany; it imports feta cheese from Denmark, lamb from New Zealand, and calamari from the People’s Republic of China. Traditional Greek agricultural products can no longer compete in the home market and the Socialists have done nothing to improve this situation let alone break new ground. The massive inflow of agricultural and industrial imports are paid for in large part (over eighty percent) by the hard currency remittances of overseas Greeks, foreign loans, tourism, and shipping. And all these areas are declining and/ or are unstable sources (tourism with the terror scare).

Retaining electoral victories through spending could only be a short-term strategy. In time the funds would be exhausted and loans would have to be repaid. Choices would have to be made: How should income be allocated between debt payments and investment? What forms of consumption would be restricted? What groups would have to be sacrificed?

From Populism to Austerity: Consequences of the Compromise

The high point of populist politics was achieved in June 1985 when PASOK was reelected with an absolute majority in parliament. The electoral victory and the broad “national” basis of support was indicative of the success of the populist measures in securing votes. The continuity of the free and open electoral system was taken as another indicator of the consolidation of democracy.

The rising political fortunes of the government were matched, however, by its deteriorating economic position. Having secured its reelection, the government was faced with increasing pressure to meet its external obligations: loan payments were increasing, credit was becoming increasingly costly and difficult to obtain, and the period of protection and subsidies from the EEC was drawing to a close. The populist policies had not led to an increasing capacity to deal with the underlying problems facing the Greek economy.

The greater the debts, the weaker the economic base, the less bargaining leverage the regime possesses in renegotiating debt payments. Past postponements mean even more severe pressure to accede to the more regressive measures of the banks. Austerity was inevitable, and sooner rather than later.

The government’s austerity program was essentially geared to lowering wages below price increases, and cutting back in public spending for social legislation and investment in production and construction. The result has been a decline in living conditions and a jump in spring of 1986. The government fiscal surplus will be used to pay the bankers, while the lower wage costs are part of a program to entice tourists, foreign investors, and new bank loans. Ironically the new economic policies have thus far failed to lure any significant venture capital.

To accompany its austerity campaign the government has adopted a technocratic and nationalist posture designed to present its policies as neutral and therefore equitable and necessary for all groups and classes. In fact, the austerity program has a class bias. The question is: austerity for whom? Which classes should shoulder the burden of economic adjustment to overcome the crisis? What budgetary cuts should be made? Should profits, prices, and/or wages be controlled? Should business be “disciplined” to increase investment, production, and exports, or should labor’s wages be cut and pressure applied to workers to produce more and consume less?

Clearly, if there is a need for austerity, it is not self­evident that it is social programs that should be singled out for the ax or wage-earners who should make the main sacrifice, as the regime’s bankers and government officials have decided. This is particularly so since most of the loans and state subsidies that created the crisis went to the propertied groups.

The economic crisis and austerity program is revealing the unequal division of benefits and costs of capitalist societies. Private capital received a disproportionate share of the benefits in the period of populist expansion; now labor pays a disproportionate share of the costs in the period of crisis. If austerity becomes a necessity, it is clearly in the interests of labor to shift the burden to where it belongs-onto the backs of capital. But it is precisely this effort by labor that the Papandreou regime is resisting.

Greek labor is willing to assume responsibility for the economic recovery and its costs only to the degree that it can exercise power and control over the enterprises. Greek labor has no reason to sacrifice its collective income so that private capital can once again extract private profit. The austerity program that has been imposed by the metropolitan banks and implemented by the PASOK government is designed to extract principal and interest payments before any other demands of the national society are met. It thus calls for increasing export earnings (either by increasing exports or decreasing imports, or a combination of both), reducing social welfare expenditures, freezing salaries, increasing prices and interest rates, and providing incentives to permit the free circulation of foreign capital.

Labor’s role and its relationship with the state will be decisive in determining the regime’s capacity to implement the austerity program. If labor’s reaction is weak, or is subordinated to the state, the regime will succeed. If labor can mobilize mass support it can compel the state directly to pursue other policies, or indirectly by a loss of authority if Papandreou goes ahead.

Monetarism or Socialism?

What alternatives does the government have? The failure to create a diversified economy, to increase worker self-management, and to modernize agriculture over the past years means that the government confronts the productive capacity, the industrial and commercial assets, to bargain effectively. It is in these circumstances that Papandreou accepted the IMF-type austerity pro­ gram, in exchange for a favorable credit rating.

As the experience of other countries demonstrates, now confirmed by Greece, the banks’ prescription results in a deflationary policy accompanied by increasing popular discontent. Strikes and conflicts are escalating and the regime’s resort to repression will further fuel the opposition. One example of this is the evolution of PASOK itself.

Papandreou has made of PASOK one of Europe’s (East or West) most authoritarian and personalistic parties by expelling all dissenters from the Central Committee, including the most important trade-union leaders (metal, light and power, telephone, etc.). Having reached an agreement with his international bank lenders, the government has threatened to use force to repress any and all opposition to the austerity measures.

The regime has not been above demagogic claims that working-class discontent is part of a sinister international plot to destabilize democracy and bring back the Right. As one electrical worker said to me at their recent trade­union convention: “I am more fearful of the repression that this government is bringing down now than I am of the repression that the regime claims will result if the Right comes to power.”

There is not even the justification for the government’s clash with the working class that victory for its policy is likely to improve Greece’s trade imbalances or financial position.

Coming under the influence of the banks also has repercussions for Greece’s foreign policy. Greece’s increasingly vulnerable financial position has further weakened the government’s capacity to sustain an independent agreement with his international bank lenders, the government has further weakened the government’s capacity to sustain an independent foreign policy and increased its tendency to move back into the U.S. orbit.

PASOK and the New Middle Classes

The roots of this rather unpleasant turn of history can be located in two sets of factors.

(1) The government lacked the political will to break with existing state institutions and to implement the measures that adversely affect the real-estate, commercial, and bureaucratic segments of the middle class. This was signaled by the unwillingness to mobilize labor behind a new development strategy. The basic problem was the incompatibility between the new socialist proposals and Papandreou’s decision to work within the existing economic structure and state machinery.

(2) The Socialist government failed to confront the contradictory position of the new middle classes which provided a substantial sector of the social base and leadership of the party.

The new middle class is composed of sectors tied to the economic expansion that took place in Greece during the previous decades. Educated, ambitious, and socially mobile, they were able to secure loans, obtain appreciating real-estate sites, plug into expansive consumer markets, and, in general, seize opportunities as they arose.

Members of the new middle class are less identifiable in terms of their common class position in production or distribution than they are by their initial “outsider” position in society, by their style of social advancement, by their social and political values, and by their increasingly central role in the political and economic system.

This new middle class includes professionals (lawyers, doctors, and others), merchants (in the new areas of transport, electronics, and so forth), public officials (in the larger economic enterprises), consultants, educational entrepreneurs, and the like. One striking aspect of these strata is the multiple economic and political roles they combine. Its individual representatives commonly hold multiple positions, either in rapid succession or simultaneously. They are typified by the polymorphous expert–familiar with everything and an expert in nothing.

They are marked by a chronic inability to consummate their original commitments; many projects are begun, few are completed. Thus the peculiar phenomenon of a group with tremendous energy, ambition, and high-level education that has turned in a rather unsatisfactory performance of public duties except as these directly affect private interests.

The gradual improvement in the socioeconomic position of the new middle class was obscured by their prolonged exclusion from the political system. Hence the radical style that earlier expressed their impoverishment was maintained, only now it is undercut by an increasing affluence that draws them closer in their way of life to the older dominant classes. Their social progressivism contrasts to the sources of their new wealth, which came mostly from windfall gains in nonproduction sectors: real estate, tourism, services, tax evasion.

In a word, the new middle class modernized itself at the expense of the society and economy. They built homes but not factories, bought cars but did not pay for highways, bought imported high-tech consumer goods but did not invest in manufacturing such products in Greece, and sent their children to private tutorial school in the afternoons while the daytime public school: deteriorated.

The growth of private wealth and the spread of public sector poverty penetrated the consciousness of the new middle class as they choked on their pollution, tripped on their unpaved suburban sidewalks, and saw their children shunted to school at odd hours of the day and evening. They demanded “change” but wanted to be passed over in paying for it, pointing the finger at an ill-defined oligarchy above them to provide the funds. The evasion of responsibility is manifest in a pseudoradicalism that refuses to recognize that even if the wealth of the elite was confiscated it would not begin to make a dent in the investment needs of the public sector.

Psychologically, the new middle class is unprepared for any sacrifices: nourished on the myth of being “outsiders,” they fail to see that they have consumed beyond the productive capacities of the society. They regard attempts to tax their income as attacks on the people. But they themselves have become the dominant group in society, the new establishment.

Industrialization and public services can be finance only out of their consumption fund, a hard choice tha1 they are unwilling to face. There is always the chance that they will forsake radicalism and return to the Right before they will consent to reorder their spending priorities. PASOK has abdicated its responsibility to present coherently and forcefully to its constituent among this class a clear-cut set of national priorities.

The abandonment by the new middle classes of their pre-electoral radical program reflects the conflict between that program and their actual class interests.

In the final analysis there was, at the highest level of government, a failure of nerve. Faced with a system in deep crisis, with a discredited, divided, and decaying governing class, backed by a massive popular mandate and with great numbers of highly trained and educate, overseas Greeks eager to return, Papandreou had reasonably strong basis to proceed with a strategy of radical transformation. His fateful decision to reject transformation strategy in favor of a crisis-management strategy contributed to the reversion toward traditional development, and ultimately increasing subordination to U.S. and European state and banking imperatives.

The deep abyss between the socialist program and the policies pursued has engendered political defections from the government and increased opposition on both the Left and the far Right. What remains to be seen is whether the increasing numbers of disenchanted PASO supporters can regroup and lead a struggle for an authentic labor-farmer-based socialist movement–or succumb to a revival of a virulent U.S.-backed Right wing.

Legitimating the Illegitimate

Contrary to the opinion of some U.S. pundits, Papandreou’s turn to repressive economic policies and alignment with the West is a product of the failure of centrist-populist politics, not socialist measures—which were never applied. In point of fact Papandreou’s reversion to Western alignments and traditional development strategies represents a historical breakthrough for U.S. foreign policy interests.

Papandreou was able to carry out policies that no right-wing politician would have dared without facing sustained, massive opposition. He legitimated Greek membership in NATO, allowed the U.S. military to retain its bases, provided U.S. defense contractors a major share of Greece’s arms market, and reconciled Greece to a stalemate or worse on the Aegean and Cyprus issues.

Just seven years after Washington was totally discredited in Greek political life for its obscene embrace of the colonels, its support for the overthrow of Makarios, and its endorsement of the Turkish occupation of Cyprus, Pandreou has reduced the conflict in U.S.-Greek relations to a question of the appropriate “tradeoff” for continuing U.S. control of the bases.

This political shrinkage of Greek interests has evolved to the point where Athens, not Washington, has been seeking to mend fences. It is Papandreou, not Reagan, who has been pursuing a meeting in Washington. This has been a major achievement for U.S. policymakers and it paves the way for a return of the Right.

This is all the more likely as socialism in Greece has also undergone shrinkage from a broad movement with many voices to a movement with a single authoritative leader. To increase PASOK’s parliamentary representation at the expense of the rival Communist parties, Papandreou rewrote the electoral code to favor PASOK, but at the price of creating an electoral system where parliamentary majority and voting majority among the general population are no longer the same thing. Today a rightist bloc with only a plurality among voters could potentially win a parliamentary majority, unseating a Left that retained majority support among the general population.

Papandreou’s main opposition from the left comes from within PASOK, in a strong left-socialist presence evident in certain trade unions, co-operative organizations, and in the universities. Papandreou made a major effort to silence this sector of the party in the autumn of 1985 by means of expulsions and the imposition of direct organizational controls. PASOK is constructed to offer 0 less freedom to review leadership policy than any socialist party in Western Europe. Only one congress has been held in ten years, and no serious debate took place there. All power is concentrated in a handpicked Political Bureau.

The government has passed a law (Article 4) restricting public sector trade unions from striking-under the guise that public enterprises are now socialized. It has also continued the right-wing practice of tying the financing of trade unions to the Ministry of Labor and placing trade union slates under party control. It has threatened to subject public sector strikers to military tribunals.

PASOK tries to prevent criticism of its government from within the trade unions on grounds of party loyalty. Among those sectors that have access to the formation of public opinion there is a similar void outside of official channels. There is an almost complete absence of any intellectuals, serious journals, or institutes under the party’s auspices. Anyone who disagrees with the leader is expelled or isolated. In the pages of the weekly party newspaper there is only the ubiquitous photograph of one intellectual-the helmsman.

Lacking any profound ideological commitments overly concerned with holding power and public office at any price, Papandreou has raised himself above any form of membership or constituency control. By turning the party into a centralized authoritarian vehicle for personal power and yielding to outside pressures from overseas financial interests to discipline the economy, Papandreou has been driving wage and salaried party members out and onto the only path open to them: direct action in the form of a continuous wave of strikes. Losing control over labor, Papandreou today is moving toward reactivating the formidable instruments of centralized power that have accumulated to the Greek state over the past forty years.

The Political Future of PASOK-Papandreou

The PASOK-Papandreou regime will sustain itself in power in the short run as there are no immediate dangers from a divided Right and a Left still in the process of regrouping. However, conflict continues and is escalating as the government’s policies are unable to achieve economic stabilization or produce a new political consensus.

Reagan accepts concessions from the Papandreou government, continues to pry for new ones, deepens his ties with Turkey, and ignores Papandreou’s pleas for support on the Aegean and Cyprus issues. The austerity program has depressed the economy without lessening inflationary pressures, while alienating business and sustaining labor unrest.

The end of protectionist measures and EEC subsidies has increased farmer discontent as the Greek government has done virtually nothing to prepare Greek agriculture to compete with expected imports. As one coop leader told me recently, the costs of Greek beef are at least twenty-five percent above the selling price of Western European stock.

The Greek military and police will accept their increased role in the political process as the austerity-protest-repression cycle unfolds. As their role increases it is expected that they will insist on commensurate rewards in the economic sphere as well as increased recognition and consultation in the political realm. The increased presence of the U.S. and the military will not secure Papandreou’s position but hasten and facilitate the return of the Right, and it is not a foregone conclusion that it will be an elected Right.

PASOK’s reversal of direction will have a boomerang effect: neither the Right nor the U.S. nor the army have any use for an ex-populist with declining fortunes. Populists are useful only as long as they can prevent mobilized forces from moving further left and herd them into innocuous channels. When they use up their credibility, they are discarded in favor of other sterner and more authoritarian forces.

Out of the failure of the PASOK experiment with a “Third Road to Socialism” several tendencies are emerging.

1. In recent months a burgeoning left-wing socialist movement linked to the trade unions has arisen which is capable of drawing substantial national labor support and cooperating in common defensive struggles and perhaps electoral blocs with the two Communist parties.

2. A center-left political bloc made up of dissidents within the parliamentary wing of PASOK continues to develop. Their perspective is derived in part from the earlier populist phase of the regime and they draw substantial regional and constituency support.

3. A center-right grouping, which is based on the bureaucratic apparatus of the party, the state, trade unions, and co-operatives, has naturally maintained itself. With Papandreou at its head, it might conceivably reach out to form an alliance of necessity with dissident sectors of the right-wing New Democracy Party.

The fragmentation of PASOK and the decline in its popular standing is matched by splits and dissension on the Right.

After listening to vacuous rhetoric for five years, the general public is becoming tired of, and disenchanted with, populist ideology. On the other hand the deteriorating economic situation 1s compelling all adversely affected groups to increase their level of activity. Non-ideological syndicalist activity is on the rise.

The basis exists for the gradual emergence of a new socialist movement, providing it can overcome the particularism and divisiveness of Greek left-wing politics. The space on the left vacated by PASOK is wide open. The question remains whether a new collective leadership capable of occupying it can come together and put forward a coherent alternative to austerity.

The most significant development has been the convergence of socialist trade unions, student and farmer groups, and the Eurocommunist and Orthodox Communist Party in the leadership of a successful series of general strikes which occurred beginning in October 1985 and continuing through March 1986. PASOK has lost de facto control over the most important trade unions to the class-oriented leaders expelled from the party. The electrical, telephone, machinists, bank, and airline unions are part of the new socialist opposition. Increasingly these unions are coordinating their activities and developing ties with other social movements.

If this regroupment of the major trade unions and social movements is successful it could lay the basis for a new mass socialist movement in which the working class will—for the first time in Greek history—exercise hegemony. A new generation of trade-union militants who began their struggles in the early 1970s has emerged and provides the best hope for a resurgence of Greek socialism in the 1980s.

September-December 1986, ATC 4-5

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