Photo: flickr/ fdecomite

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After some five months — capped off with a gruelling 31-hour weekend “EuroSummit” — the Syriza government has finally reached an agreement with its northern partners to remain within the Eurozone.

Unsurprisingly, the stock markets reacted positively to the news. But I can’t say the same for myself.

Syriza’s defeat — for indeed, this “deal” represents a defeat — offers an invaluable lesson for radical political activists. Many I know were put off by the technical terms and jargon that dominated so much of the coverage of the negotiations.

For those unfamiliar with the workings of the international financial system, talk of “bond yields” and “market capitalization” was simply unappealing. For many of us with a radical bent, it was much more satisfying to read about the massive demonstrations in Syntagma Square or the strike actions of the Athens’ dockworkers. These stories are always more exciting than negotiations among stodgy old finance ministers in business suits.

But if we are to learn anything from the Greek experience, surely it must be that the financial system itself is a site of political struggle. And no matter their determination, “peripheral countries” are in a sad position to put up a fight.

Crucially, understanding what’s happening to Greece doesn’t require an elaborate understanding of the financial system. What’s at stake is pretty clear: Who is going to foot the bill to keep the European financial system afloat? 

That the Greek state is being “bailed out” is a misconception. It’s actually Greece’s creditors — think large French and German banks — that are being saved. The so-called “institutions” acknowledge this. A recently leaked IMF document reveals that had Greece accepted a series of previously proposed reforms, its debt-load would have remained unsustainable into the 2030s.

When it became apparent that Greece could not repay its public debts, other Eurozone countries stepped in to loan the Greek state money for the purpose of paying its creditors. The other Eurozone countries simply took over the bulk of Greece’s privately held debt.

In other words, the debt passed from the hands of private banks, mutual funds and other financial intermediaries into the hands of the various Eurozone member states. What’s more, very little of the €220 billion loan has stayed within Greece. Most has gone right back into the hands of Greece’s creditors.

Such large sums of money don’t come without strings. Lenders need to be sure they’ll regain their principal. In the world of petty, small-scale loan sharks, the “string” usually comes in the form of some threat to the borrower’s bodily security (non-payment might cost a thumb or two), but amongst nation states, the cost is usually some form of “economic liberalization.”

Greece is far from the first country to experience this. Just think of all the IMF-sponsored “structural adjustment programs” in the 1980s and 1990s. Greece has received so much more attention than, say, Jamaica ever did because of its position within European capitalism and the potentially disastrous impact of a Greek default on the European financial system.

The most radical political party to come to power in Europe in a generation, with an anti-austerity mandate supported by a clear majority of the population could not withstand the pressures brought to bear by its creditors. Syriza’s need to ensure for the Greek state a reliable base of finances, without which it could not function, trumped its commitment to social justice. 

At this point, pessimism seems more than warranted. If Syriza couldn’t pull something off, who can? I can only conclude with a series of questions, because what seems clear at this point is that none of us really know how to proceed at the current juncture.

If the financial system is the terrain of political struggle I suggest it is, how do we go about incorporating this into our political programs? What form of popular organization can mount a struggle to “democratize” the financial system and withstand the inevitable pressures that will be brought against it? Is capturing state power sufficient? Are we back at the old Marxist position that meaningful “revolution” is only possible if the core countries go first?  

Syriza’s defeat is but another setback for the world’s democratic forces, something we should be pretty used to by now.

 

Matthew Corbeil is a PhD candidate in political science at York University. His main research interests include labour movement renewal and the relationship between mining firms and the Ontario government in the formation of the province’s mineral development strategy. Read his blog at www.wordpress.matthewcorbeil.com 

Photo: flickr/ fdecomite