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SYRIZA MP: Greek Austerity Cannot End Within the Euro Zone

λαπαSYRIZA MP Costas Lapavitsas wrote an article in The Guardian claiming that austerity in Greece will not end as long as the country remains in the euro zone.
Lapavitsas is an economics professor at London’s School of Oriental and African Studies and has often expressed his rather radical views regarding the Greek economic crisis and the austerity measures imposed on countries in debt.
According to Lapavitsas, the article’s original title was “The battle for Greece has just started.” However, the Guardian changed it to “To beat austerity, Greece must break free from the euro.”
According to the SYRIZA MP, the agreement signed between Greece and the European Union was a compromise reached under economic pressure. It only succeeded in keeping the SYRIZA government afloat until the crucial negotiations in June where the financing program will be decided on.
In the coming four months, the newly elected government will have to work hard in order to implement its radical program. Lapavitsas argues that the success of the leftist Greek government will benefit the European Left that struggles against the forces of austerity that keep the continent in tight financial shackles.
In February, the Greek negotiating team fell into a trap of two parts. The first was the reliance of Greek banks on the European Central Bank for liquidity. Mario Draghi, president of the ECB increased pressure by demanding stricter provisions. Worried depositors rushed to withdraw funds and during negotiations Greek banks were losing a billion euros of liquidity a day.

The second part was the Greek state’s need for finance to service debts and pay wages and pensions. As negotiations proceeded, funds became tighter. The EU, led by Germany, waited until the pressure on Greek banks had reached fever pitch. By the evening of Friday February 20 the SYRIZA government was forced to accept any deal offered.

The resulting deal has extended the loan agreement, giving Greece four months of guaranteed finance, subject to regular review by the “institutions,” ie the European Commission, the ECB and the International Monetary Fund. The country was forced to declare that it will meet all obligations to its creditors “fully and timely.”
The coming four months will be a period of constant struggle for the SYRIZA government. It will face major difficulties in passing the April review conducted by the “institutions” to secure the release of much-needed funds. Tax revenues are hard to come by, partly because the economy is frozen and partly because people are withholding payment in the expectation of relief from the extraordinary tax burden imposed by the previous government. The public purse will come under considerable strain in March, when there are sizeable debt repayments to be made.
Even if the government would manage to come out of these four months unscathed, in June it will have to re-enter negotiations with the EU for a long-term financing agreement.
“The strategy of hoping to achieve radical change within the institutional framework of the common currency has come to an end. The strategy has given us electoral success by promising to release the Greek people from austerity without having to endure a major falling-out with the eurozone. Unfortunately, events have shown beyond doubt that this is impossible, and it is time that we acknowledged reality,” Lapavitsas says.
The SYRIZA MP continues, “we must be truly radical. Our strength lies exclusively in the tremendous popular support we still enjoy. The government should rapidly implement measures relieving working people from the tremendous pressures of the last few years: forbid house foreclosures, write off domestic debt, reconnect families to the electricity network, raise the minimum wage, stop privatizations. This is the program we were elected on. Fiscal targets and monitoring by the ‘institutions’ should take a back seat in our calculations, if we are to maintain our popular support.”
Lapavitsas is convinced that the euro zone cannot be reformed and the Greek government must approach the June negotiations bravely since it has the people’s support. It must be prepared for all eventualities, even exiting the euro zone. “After all,” he says, “the EU has already wrought disaster on the country.”
In concluding, the SYRIZA lawmaker says that the Left must shake off illusions and propose “sensible policies that might at last rid Europe of the absurdity that the common currency has become. There might then be a chance of properly lifting austerity across the continent.”

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