Against the Current, No. 164, May/June 2013
Keystone and Humanity's Fate
— The Editors
Immigration and Racial Bias
— Malik Miah
Detroit: Restructured or Ravaged?
— Dianne Feeley
Independent Politics and Self-Determination
— an interview with Chokwe Lumumba
Greece Nearing the Breaking Point
— Dan Georgakas
The Sussex University Occupation
— an interview with Maïa Pal
El Salvador: Labor vs. P3
— an interview with Jaime Rivera
The Flint Sitdown Comic
— Ethan Heitner
Labor's Bitter Defeat in Detroit
— Barbara Ingalls
The NGO-Industrial Complex
— Dawn Paley
The H-Block Struggle
— Brad Duncan
Rebellion in India's Heartland
— Sara Abraham
Realities of Zionism
— David Finkel
Arabs and Muslims After 9/11
— Thomas Abowd
Tear Down These Walls!
— Jimmy Johnson
— Charlie Post
- In Memoriam
Jerry Tucker, 1938-2012
— Peter Downs
THE GREEK FINANCIAL crisis stems largely from actions by the same economic forces that sent the United States economy to the brink of fiscal collapse in 2008. These forces interacted with corrupt Greek governmental practices, some of which date back to the Ottoman Empire.
Another factor in the crisis involves the wealthy nations of the northern tier of the Eurozone making de facto economic colonies of the southern tier. Mass media, however, have generally highlighted the specific Greek aspects of the crisis, downplayed the Eurozone aspects, and virtually ignored the intrigues of international capital.
Mass media, particularly in Germany, the Netherlands, and Finland proclaimed that the debts negotiated by Greek governments were squandered on payments and services to overpaid and lazy Greek workers. When the valid issue of tax evasion is raised, the impression is left that it is a blanket evasion by all classes in Greek society, rather than primarily by the middle and upper classes.
In like manner, charges of political corruption are largely framed as clever Greek politicians misleading well-meaning Eurozone politicians on fiscal matters. An economic profile of Greek workers, based on 2010 statistics developed by Eurozone officials, indicates the realities of the Greek workplace are quite different from what’s presented in mass media.(1)
Economic and Workplace Realities
The “lazy” Greek worker has a 42-hour work week, which is longer than the Eurozone average of 40 or the EU average of 40.3. The Eurozone average age of retirement is 61.1; the Greek rate is currently 61.4, and new measures will gradually raise the retirement age to 67. Sensational accounts of Greeks who retire on full pensions after 20 years of service involve only some select groups, not unlike the special retirement arrangements for police and firefighters in the United States.
The average monthly pension in 2010 was $990, which was much lower than Spain’s $1,378, Ireland’s $2,466, and the Netherlands’ $4,643. These already low Greek 2010 pensions have been reduced by 30-50% over the past three years.
The average monthly wage of 2010 was $1,063. The lowest wage bracket in other Eurozone states was much higher: (Ireland: $1,886; France: $1,813, Netherlands: $2,031). In other words, the average Greek wage even before austerity and unemployment was less than the lowest wage brackets of other Eurozone nations. This wage is even lower today.
The minimum weekly wage has been cut to $129 with further cuts threatened. As of 2013, however, any job is valued as there is an unemployment rate of 30% for the general public and 65% for Greeks under age 30. Making matters worse is that 300,000 workers are under temporary contracts with no pensions or legal protection.
A 2012 austerity “reform” eliminated the two extra monthly checks paid at Christmas and Easter. These payments are calculated into the 2010 average, so this represents an effective wage cut of 16.6%.
The presence of over a million immigrants, mostly undocumented males who identify themselves as political refuges, would pose an economic problem in the best of times. Greece, which has a native population of 10 million, is unable to absorb such numbers. European Union rules make it difficult to return them to their homeland or allow them easy passage to the rest of Europe.
Given that good employment is virtually impossible and immigrants cannot leave the country, a social catastrophe has ensued with the predictable major rise in crime and urban destabilization, particularly in Athens.
None of the governing parties has come up with a workable program to deal with immigrants. One consequence has been the rise of the neo-Nazi Golden Dawn organization, which won seats in parliament in the last election and is growing. Golden Dawn offers social services to Greeks, and violently clashes with immigrants daily. An ominous aspect in this situation is that in the last election, 50% of the Athens security police voted for Golden Dawn.
Greek civil servants are frequently targeted by foreign political pundits as having drained government funds with elaborate “featherbedding” arrangements. The actuality is that Greek public workers make up 22% of the Greek work force, which is less than the percentage of such workers in the Netherlands (27%), France (30%), and Sweden (34%).
There are indeed problems with the Greek bureaucracy, but they are primarily managerial. Greek governments, for example, have never devised a system to collect the 23% Value Added Tax charged by restaurants, and during the most recent administration of the Panhellenic Socialist Movement (PASOK), the education minister “forgot” to send textbooks to the public schools.
A managerial scandal that surfaced early in 2013 involved 12 million euros that had disappeared from the funds of the National Tourist Board. This was followed by conviction of the ex-mayor of Thessaloniki and two deputies (all three members of New Democracy) for embezzling $66.1 million from pension funds for public workers.
Another false assumption is that the Greek cost-of-living is lower than elsewhere in the Eurozone. In fact, since the introduction of the euro, prices have risen dramatically while wages have been stagnant. The cost-of-living reality is that prices in Greece for everyday necessities are higher than in nations such as France, Britain and Germany.
Tax Evasion and Business Collapse
Tax evasion in Greece is endemic. Unpaid taxes are currently estimated to be no less than $78 billion. The chief offenders are not workers, who have taxes deducted from wages, but professionals and financial elites. The vast majority of doctors, lawyers, accountants and professionals declare average annual incomes of 10,000 euros, about the salary of a bank teller.
Many of the super-wealthy pay no income tax, and a recent scandal involved a list of 2,000 Greeks who illegally moved $1.29 billion out of the nation in just the past two years. Present PASOK leader Evangelos Venizelos and then New Democracy’s Antonis Samaras refused to make the list public for years. The list was only released when French authorities decided to publish it.
Diligent journalists soon noted that missing from the Greek-issued list were three relatives of former PASOK finance minister George Papaconstantinou. Suspicions that the list and financial data have been significantly “doctored” in other ways has led to two former heads of the financial crimes squad appearing as suspects before prosecutors. At no time during the crisis has there been a single major prosecution of tax cheats.
As of 2013, in addition to the astronomical unemployment rates, nearly half of the nation’s 300,000 small businesses have failed. The flight of investment capital has created a shortage of food, fuel and vital medicines. The suicides rate has leapt 18% and the crime rate even faster, particularly crimes related to drugs.
Austerity measures, rather than lowering the ratio of debt to Gross Domestic Production (GDP), have steadily increased that ratio. Over the past three years, GDP has fallen by 30% with the rate of contraction increasing each year. A fall of another 4.5% is expected in 2013.(2) Austerity has also succeeded in causing tax revenue to fall $1.5 billion and putting hundreds of thousands of Greeks on free food lines.
The response to this financial chaos by the ruling Greek government, headed by the conservative New Democracy,(3) is more austerity. In addition to wiping out more social benefits and firing public sector workers, New Democracy proposes a massive sell-off of national assets.
The main opposition party, SYRIZA (Coalition of the Radical Left),(4) demands that the highly unfavorable terms of the financial agreements that now plague Greece be unilaterally terminated. SYRIZA also states that the corrupt nature of the agreements is not simply due to individual greed but to a corrupt system of government.
Many historians of modern Greece believe the present governance miasma is rooted in Ottoman practices. The intellectuals of the Greek war of independence (1821-1830) sought to create a system modeled on the French Enlightenment and the American Constitution. The major intellectual figure of that movement, in fact, was in direct correspondence with none other than Thomas Jefferson.(5)
The most powerful military powers of the time, however, imposed a monarchy on Greece, leaving most of the old Ottoman practices in place. The system was also designed to foster Greek parties whose success was dependent on support from France, Germany, Russia or Great Britain.
For the next 150 years, democratic movements attempting to modernize the state have been repeatedly thwarted by military intervention. The present system that is dominated by two parties was developed after the fall of the junta in 1974. Rather than modernizing Greek government, the alternating reigns of the conservative New Democracy and the social democratic PASOK wrote new legislation to solidify their power.(6)
At the heart of the Greek system is the most bloated parliament in Europe. Each of its 300 members represents 3,500 voters. Germany, in contrast has one MP for every 131,600 voters and the U.S. Congress has one rep per 689,655 voters. This number could mean that Greek voters have ready access to MPs sensitive to their needs. This is not the case.
Legislation by a New Democracy government agreed to by PASOK allows 50 extra seats to the party with the highest total of votes in a national election. These 50 MPs owe their position solely to their party’s national committee rather than a local constituency.
Another recent provision is that if a candidate wins in a given district, but the candidate’s party does not have at least 4% of the national vote, the seat goes to the majority party. A further club for the national leaders is that they can dismiss members of their party at will and replace them with anyone they wish. Members, in short, are controlled by the national party, not by local voters.
The rewards for being in this parliament club are considerable. The average monthly salary is five times the Greek national average, with the bonus that MPs earn 150 euros extra per hour for work on committees. This last measure ensures that there are many committees and long meetings. Juicing up the cash package are the right to tax-free and low-interest loans from the national bank and immunity, while in office, from prosecution for any misconduct.
A variety of other perks include health benefits, four free phones, free entrance to public institutions, free fuel (currently roughly $10 a gallon) and a free car (usually a BMW). Cars often go to staff as well and are rarely returned when a term or job ends. Currently 40,000 people have these free cars, including a person who worked in the 2004 Olympics and another person now in prison for financial crimes.
Parliamentary committees and the numerous local and regional counterparts they spawn have produced a bureaucratic quagmire. Even getting a coffee bar installed in a bookstore can take years if there is no helping hand in government. That helping hand invariably involves a bribe; money is just put into an envelope and handed to those who can take action.
Vexing as this individual daily corruption may be, it pales before the wholesale corruption involving international finance.
The International Debt
The principle beneficiaries of loans to Greece have been foreign financiers and the Greek political elite. The typical foreign loan contains an agreement that most of the loan will be recycled to the lender, which is classical “colonial” exploitation.
One such loan backed by Deutsche Bank involved building a $6 million submarine. Although the Greek navy said it did not need the vessel and Greek shipbuilders were capable of constructing it, the borrowed funds were used to build the submarine in Germany.
The new state-of-the-art Venezilos airport mainly used German technology, including the security system, even though Greek firms are very skilled in this area. Greek firms, for example, were chosen to do security for the 2002 Winter Olympics held in the United States. Rather than building the Greek economy, loans of this nature offer economic support to foreign firms.
Siemens, which has been fined millions of dollars for illegal practices by several nations, including the United States, recently agreed to “sacrifice” $106 million in a case involving alleged bribery in Greece. The Greek press duly noted that if the bribes ran to $106 million, one can only guess the profits the bribes were meant to secure. Although the Greek government is still seeking $2.6 billion in overcharges by Siemens, it blithely paid Siemens another $118 million in fees in 2012.
The wholesale financial and political malpractice at the heart of the Greek crisis has been the subject of a number of TV programs by Nick Dunbar of the BBC. His “How Goldman Sachs Helped Mask Greece’s Debt” is the most illuminating.
Dunbar documents how the American-based Goldman Sachs devised a financial arrangement in 2001 to hide the Greek national debt. This scheme involved a bilateral credit swap in which Greece exchanged one set of bonds for another at a fictitious rate of exchange created by Goldman Sachs for this one transaction. A debt of 2.8 billion euros was temporarily cleared. Goldman Sachs thought it would make additional profits from future currency fluctuations, but it guaranteed its investment with high fees that increase, rather than decrease, the longer the bonds are not paid.
EUROSTAT, the agency set up to protect the EU and its national economies from dubious financial arrangements, claimed in 2010 that it had just learned of the nature of this arrangement. Greek economists, however, had blown the whistle in 2005. A group centered in the University of Athens had warned EUROSTAT in writing about the noxious deal and made their analysis known to various EU governments and economists.
The Goldman Sachs deal is emblematic of what has gone wrong in Greece and elsewhere in the EU. Even in 2001, it was not high-living Greek workers who were responsible for questionable finances but corrupt Greek politicians, greedy financial institutions, and an indifferent, possibly corrupt EU bureaucracy.
Much of the Greek debt can be classified as “odious,” a concept developed in the United States by economist Alexander Nahum Sack. Odious debts are debts made in the name of the nation by dictators, who promptly pocket most of the funds. Sack argued that if the dictatorship is replaced by a democratic government, the nation is not liable for the debts incurred by the dictators. Lenders who had bet on the dictators staying in power, and had understood what would happen with the loaned funds, had to bear the financial loss.
The concept of odious debt is well known to the Greek public due to “Debtocracy,” a widely seen video. The Greek governments that plunged Greece into debt were democratically elected, to be sure. Nonetheless, the bulk of the loans they approved went into the pockets of government officials (both New Democracy and PASOK) and their associates.
The more militant members of SYRIZA have demanded an investigation of all debt and argue that any odious debts should go unpaid. SYRIZA is also asking that World War II reparations from Germany, and the restoration debts of Germany that were rescinded in 1953, should be reinstated and used as a credit against Greek debts now owed to Germany. SYRIZA also advocates that sums equal to the debts that Nazi Germany forced on Greece in the 1940s should be similarly treated.
The Greek public, spearheaded by unions representing 2.5 million workers, has been fighting this avalanche of exploitation with considerable vigor. Industrial workers have frequently been joined by farmers. In 2012, there were 17 general strikes and innumerable local strikes, roadblocks, occupations and other direct actions. Strikes by transit workers and seamen (unpaid for six months) were broken in February 2013 only through state of emergency laws that put the workers under virtual conscription.
In various campaigns, people stopped paying one or another fee and one small city led by its mayor used armed resistance to keep from being used as a dump site for refuse from Athens.(7) More spectacular have been repeated massive demonstrations before parliament. Similar demonstrations have occurred in other populous cities such as Thessaloniki and Patras.
The major legislative challenge to the system has been the surge of SYRIZA to second place in the last election, with polls indicating it would be the likely winner of any new election. SYRIZA refuses the idea that Greece should be a mandated colony of northern Europe. It pledges to terminate the present agreements with the “troika” (International Monetary Fund, EU, and European Central Bank) and negotiate new agreements that promote growth. Any government it heads is pledged to reject participation of any party that accepts the agreements in hand.(8)
Privatization of national assets would cease, a tax crackdown would focus on upper class evaders, electoral reforms would be pursued, and the most onerous of the austerity measures would be immediately revoked.(9) Longer term, SYRIZA proposes a revival of far left parties throughout the EU as it believes basic change must be on a continental basis guided by a militant socialist orientation.
How long the present Greek government can hang on is unclear. Whether a victorious SYRIZA government would have a big enough electoral mandate for effective change is also unknown. What is absolutely clear is that the present course in Greece is untenable.
Ilias Iliopoulos, General Secretary of the ADEDY (The Civil Servants Conference), the huge public service union, has stated, “A social explosion is very near.” Leonidas Chrysanthopoulos, a career diplomat, has noted that the government has hired Blackwater (now renamed Academi) and four other international mercenary forces to personally protect the regime, as it does not trust the loyalties of the police. He has also revealed that the present coalition has gotten a dubious assurance from the military that it will not intervene if there is an uprising.(10)
What many commentators of varied ideological positions fear is that an incident that could have been contained in previous years may set off lethal violence with unpredictable consequences.
- This work was compiled by Marxist Voice and was republished in The National Herald, a mainstream Greek American newspaper on May 2, 2012.
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- Wall Street Journal, Feb. 25, 2013, front page of Section C.
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- New Democracy is supported by PASOK and the Democratic Left. Although PASOK and New Democracy have alternated in power since 1974, PASOK seems to be on the brink of extinction. The Democratic Left are social democrats, many of whom were previously associated with the organizations of SYRIZA.
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- SYRIZA is composed of former PASOK cadre, euro-communists, two Trotskyist parties, one Maoist party, an anarchist group, and an assortment of radical intellectuals. Each formation inside SYRIZA is free to promote its views but each component supports the common SYRIZA agenda, even if it does so critically. A solid treatment of the early PASOK is found in Theodore C. Kariotis (ed.), The Greek Socialist Experiment: Papandreou’s Greece, 1981-1989 (NY: Pella Publishing, 1992).
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- Constantine G. Hatzidimitriou (ed.), Founded on Freedom & Virtue — Documents Illustrating the Impact in the United States of the Greek War of Independence (New York/Athens: Caratzas Publishing, 2002), 28-36.
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- There were numerous small parties but their influence was largely in tipping the bigger parties in one direction or another.
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- For details of this movements see Dan Georgakas, “Hell No, We Won’t Pay: Uprisings in Greece,” The Fifth Estate, # 385 (Fall, 2011), 29-32.
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- The Greek Communist Party (KKE) regularly wins 5-10% of the national vote and controls several of the most militant industrial unions and some farm unions. The KKE, however, has remained Stalinist and does not cooperate with any of the other Left parties. It is highly unlikely it would be part of any government organized by SYRIZA. Nonetheless, many in the KKE are asking why it is SYRIZA, not the KKE, that has vaulted in popularity as a result of the crisis.
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- Particularly onerous are huge one-time tax assessments that have threatened elders on fixed incomes with the loss of homes already fully paid.
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- The New Statesman, Feb. 24, 2013, 12:01.
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May/June 2013, ATC 164