The Question Greece Poses to Empire's Power Elite: What is to be Done?

Empire is in a pickle. Its mainstream political parties have faithfully implemented the neoliberal credo of austerity -- attempting to balance budgets during recession by cutting basic government services and spending -- and the results -- slow growth, no growth, large numbers of long-term unemployed -- have discredited the mainstream political parties with the citizens that they putatively represent.

So a situation arrives like the one we now have in Greece, a parliamentary democracy that has been a laboratory for experiments in austerity, where Empire -- here represented by the troika (European Commission, European Central Bank and IMF) of creditors -- can no longer feel confident that it can control the outcome of elections.

From the perspective of the power elite, the captains of the foundering mainstream political parties, Empire's 1%, what then is to be done? We will find out on January 25. If Syriza wins fair and square and Alexis Tsipras becomes prime minister, maybe the troika will do the smart thing and rescind some of its demands for austerity. This is unlikely because the bankruptcy of neoliberalism would then have to be publicly acknowledged and governments in France, Italy and Spain would likely collapse.

So the question once again for the power elite is what is to be done? Certainly a repeat performance of the "No" vote on Scottish independence will be staged. You will recall that was a combination of undefined promises of future goodies coupled with dire predictions of mass joblessness and a non-existent currency. All the mainstream organs of opinion will trumpet fear as well as blessings if the good little Indians of Greece should stay on their austere reservation.

The problem with the parallel to Scottish independence vote, as Suzanne Daley makes clear today in her excellent story, "Greek Patience With Austerity Nears Its Limit," is that Greeks will be immune to scaremongering:

Nowhere have austerity policies been more aggressively tried — and generally failed to live up to results promised by advocates — than in Greece. After more than four years of belt tightening, patience is wearing thin, and tentative signs of improvement have not yet trickled down into the lives of average Greeks. 

Now, after its Parliament failed to pick a president on Monday, forcing early elections, Greece faces a turning point in how to heal its devastated economy.

In the Jan. 25 general election, a majority center-right coalition government that has reluctantly stuck with austerity policies will face a charismatic left-wing challenger who says it is time for Greece to take its future into its own hands and do what it can to stimulate growth. Whichever path the country chooses, the outcome is likely to have broad implications for Greece and its place in the European Union.

In 2010, with Greece crippled by debt and threatening the survival of the euro, the European Union, the International Monetary Fund and theEuropean Central Bank began imposing German-inspired austerity on the country. The aim was to slash the budget deficit and address fundamental problems like corruption and a failure to collect taxes. Such policies, they promised, would get Greece back on its feet, able to borrow again on financial markets.

Greeks grudgingly went along, assured that painful reform would return the country to growth by 2012. Instead, Greece lost 400,000 jobs that year and continued on a decline that would see a drop in the gross domestic productsince 2008 not much different from the one experienced during the first five years of the United States’ Great Depression.

Greece’s unemployment rate was supposed to top out at 15 percent in 2012, according to International Monetary Fund calculations. But it roared to 25 percent that year, reached 27 percent in 2013 and has ticked downward only slightly since.

Among international policy makers and economists, the debate over austerity remains as intense as ever. Chancellor Angela Merkel of Germany, the most high-profile advocate of the argument that only through fiscal prudence can nations achieve stability and prosperity, has given little ground even as larger and more influential countries like France and Italy have started balking at her demands.

But at the street level in Greece, there is little debate anymore, if there ever was. The images of suffering here have not been that different from the grainy black and white photos of the United States in the 1930s. Suicides have shot up. Cars sit abandoned in the streets. People sift garbage looking for food.

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Even supporters of Prime Minister Antonis Samaras say that he faces an uphill battle to persuade the electorate to stay the course after five years of austerity.

His principal opponent, Alexis Tsipras, is promising to defy Greece’s creditors, renegotiate the country’s enormous debt, cut some taxes and work to restore cut pensions. 

It is unclear where such an act of defiance might lead, whether Greece’s creditors would be willing to change their approach or whether Greece even might find itself in the unprecedented position of facing expulsion from the eurozone, or even the European bloc altogether. 

Yet for many Greeks who have lost everything, rebellion may be a choice they cannot resist, even if it is a scary one.

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In a wide-ranging review of the Greece program last year, the I.M.F. found that many of its predictions had failed. There was a sharp fall in imports, but little gain in exports. Public debt overshot original predictions. Predicted revenues from selling public assets were way off. The banking system, perceived as relatively sound at the beginning of the bailout, began having problems as the economy soured. 

Looking back, the I.M.F. concluded that many errors had been made, including too much emphasis on raising taxes instead of cutting expenses. In addition, the monetary fund overestimated the ability of the government to deliver the changes it was demanding — because they were proving politically unpopular and because Greek institutions were far weaker that anyone understood. 

Over the last four years, the three lenders have demanded more than 800 actions a year, Greek officials say, requiring hundreds of new laws, sometimes changed and readopted within weeks or days. 

Administering these changes would have been difficult in a country with sound institutions, but Greece’s were filled with poorly qualified political appointees and were undergoing hiring freezes and budget cuts even as they were supposed to be managing a huge overhaul: a large assortment of new taxes, the opening of closed professions and the sale of state-owned assets. 

Experts say that even now the Greek tax collection system does not truly function. Investigations into the Greek elite and their secret foreign accounts have foundered even in the face of public exposure of the accounts.

Germany will not allow a collapse of the eurozone. The eurozone benefits Germany; it gives Germany a continental-sized economy to lord over. But it won't yield to Tsipras' demand for growth-first budgeting. So what is to be done?

It seems to me that if Syriza cannot be defeated at the polls by ballot stuffing and blackmail then the next step will be for the troika to draw out negotiations while at the same time attempting to crack and destabilize the solidarity of the Greek majority.

If one were to look at Chile under Allende as an example of the kind of terror the dominant Western powers have in store for Greece led by Syriza, one would foresee the possibility of transportation strikes, power struggles within the military, etc. -- a panoply of subversion and skulduggery. The coming year will be a momentous one.