Syriza: Live to Fight Another Day

Written by Dae-Han Song (chief editor, World Current Report)

On July 7, after 62% of Greeks voted against austerity in a national July 5 referendum, Greek Prime Minister Alexis Tsipras faced off against the Eurozone elites to negotiate a third bail-out package. The referendum vote backfired, and tragically, on July 13, with the next payment to the European Central Bank (ECB) looming, the Syriza government negotiated a framework for harsher austerity measures. The challenges, limitations that Syriza faces and its struggle to overcome them provide valuable lessons to left parties taking power amidst crisis and a hostile environment.

Syriza came into power after winning the January 25, 2015 snap elections after the two major parties failed to form a governing coalition. When Syriza came into office, it inherited 25% economic contraction (compared to before the crisis), debt amounting to 177% of GDP, and a humanitarian crisis. Despite two bailout packages totaling 210 billion euros,[1] the five years of Troika [2] prescribed austerity measures did not remedy the debt crisis but exacerbated it. The ruling parties offered no alternative other than rubberstamping the austerity measures that came from the Troika in the form of memoranda. People lost confidence in the ruling parties’ ability to deal with the crisis. This opened the way for Syriza to emerge with a mandate to fight austerity and the implicit understanding it would stay within the Eurozone.

Upon entering office, Syriza had to immediately negotiate a third bailout with the other Eurozone countries or risk expulsion from the Eurozone. In March 27, Syriza proposed a set of reforms that adopted austerity measures and privatization to pay off its debt as well as humanitarian relief for the poorest and a growth strategy. The Troika led by Germany rejected the proposal: They wanted more austerity. Allowing an upstart left-party to roll back the Troika’s austerity line, even if slightly, would encourage other Southern European countries in the same debt problem to do the same. Greece needed to become an example to those that dared defy the Troika’s austerity values. In June 25, five days before Greece’s next payment to the IMF was due, the Troika gave the Greeks an ultimatum: To get a bailout package, Greece had to accept the Troika’s terms. With little room to maneuver or negotiate, Syriza made clear it did not like the bailout terms and then called a national referendum so Greeks could vote on whether or not to accept the bailout package. On June 29th, the European Central Bank (ECB) gave Greek people a glimpse of what would happen if Syriza defied them. The ECB capped emergency funds for Greek banks, provoking a run on the banks and forcing the Greek government to close down its banks and ration cash. Despite all this, 62% of people voted to reject the bailout package terms.

Syriza returned to the negotiation table to face an intransigent Troika: The latter had already immunized itself against a Greek collapse and the Greek people’s defiance incurred harsher bailout terms. Faced with a complete collapse of the banking system and a push out of the Eurozone, on July 13th, Prime Minister Alexis Tsipras secured a framework for a deal with the Troika, followed by two sets of reforms passed through Greek Parliament as conditions for talks on a third bailout of up to 86 billion euros for the next three years.

Many have condemned the Prime Minister for his actions. The right-wing has criticized Syriza’s July 5 referendum for leading to harsher austerity measures by the Troika. The left-wing has criticized Syriza’s willingness to accept a harsher proposal than the one rejected by the referendum. Both sides ignore Syriza’s reality. The July 5 referendum may have led to harsher austerity measures; yet, the onus must fall not on Syriza for consulting with its citizens, but on a Troika that trampled over national sovereignty and democracy to enforce its interests. Yet, given the Troika’s reactions, the decision to adopt these harsher demands despite the July 5 vote is a realistic assessment of the situation. If Syriza was expelled from the Eurozone, it would have to create a new currency while dealing with a banking collapse and a worsening humanitarian crisis.

The Prime Minister’s framing of the bailout package framework as a “bad deal” means that while he may have lost this battle, he’s not yet given up the war against austerity. Left criticism within Syriza has still a role to play. It may be what keeps a tactical retreat from becoming a strategic shift. The role for the rest of us, especially those in the Eurozone countries, is to help - through international solidarity - create greater space within the Eurozone for Syriza to maneuver.

  1. The first bailout package was signed on May 2010 for 110 billion euros. The second bailout package was signed on March 2012 for 100 billion euros.
  2. The Troika is an informal name for the three bodies negotiating a bailout plan with Greece: the European Commission, the European Central Bank, and the IMF.