In every economic crisis, the central question is who shall bear the cost—the bosses or the working class? In Greece, that question is being fought out on the streets, with workers backing waves of mass strikes.
On March 5, The Guardian reported that airports, metro and bus services shut in Athens as staff protested against the government’s promise to slash public sector pay. The government wants to cut its budget deficit to 3 per cent of GDP by 2013, from 12 per cent now.
Riot police attacked protesters outside the Greek parliament. Police used tear gas and baton charges, amid the worst violence seen in the last few years of protest in Greece.
The protests came as Prime Minister George Papandreou, leader of the PASOK (Labor) party, introduced proposals to cut public sector workers’ annual bonuses by 30 per cent, increase GST by 2 per cent and freeze state-funded pensions.
The austerity package, which passed through parliament, will slash government spending by $7.7 billion.
Two weeks earlier, 2.5 million workers from a total workforce of five million joined a general strike.
All flights in and out of the country were cancelled. There was no live TV, some shops were closed, and few buses or trains ran. There were no Greek newspapers the following day as there were no workers to produce them.
“The strike is very strong,” Yiannis Theoharis, a union rep at the Intracom telecoms company in Athens told Socialist Worker in London. “The whole working class believes we have to fight back against the government’s attacks.
“The employers, bankers and the EU stand behind the government. They want us to have cuts in wages, benefits and an increase in our retirement age.
“European leaders want to use Greece to attack all workers on the continent. If they win here they will go further in other places. They want to generalise the attack to Spain, France, Britain, Germany and Portugal.”
The struggle is a result of Greece having major problems financing its debts, as do the governments of the other so-called PIGS countries (Portugal, Italy, Greece, Spain).
The Australian media says the global financial crisis is over—but the reality is that it is continuing to destabilise the world economy.
The GFC has made credit harder to come by and the bankers are punishing weaker economies by making their governments pay extra for loans.
The Greek government has to offer interest rates of 6 or 7 per cent to persuade bankers to buy its bonds so that it can cover debt interest payments. That’s 3 per cent more than the German government has to pay.
The situation has been made worse by years of cover-up by the former conservative government. In 2003 it claimed the deficit was 1.7 per cent of GDP, well under the 3 per cent required of model European Union members.
Within 18 months they had been forced to admit that the deficit was more than three times greater. Last October the newly elected PASOK government revealed that the deficit was in fact nearly 13 per cent of GDP.
The former Greek government was helped by bankers Goldman Sachs, who used the complex derivatives deals that characterised the GFC to “borrow” billions of dollars in exchange rate swaps, which did not officially count as debt under EU rules.
Goldman Sachs was the most heavily involved of a dozen Wall Street banks, so much so that The Guardian reports that its chief operating officer has visited Athens twice since November to pitch debt products, and has met Papandreou.
Now the same bankers, the EU and Greek capitalists who connived at piling up the debt are demanding that the Greek government must prosecute a war on Greek workers and pensioners. If it does not, then its bonds will not find buyers, and the government will not be able to pay its debts.
The stakes are international. A failure by the Greek government could threaten the credibility of the euro and other currencies.
As a British paper, The Telegraph, said: “The PIGS are old hat. The new acronym on trading floors for possible dominoes if Greece should fall is STUPID (Spain, Turkey, UK, Portugal, Italy, Dubai).”
Politicians may hope that the stabilisation (austerity) plan agreed between the EU and the Greek government will stem the immediate crisis.
But increasingly people are nursing a different kind of hope—that resistance in Greece can spread to show a way out of the crisis where the rich pay.
By David Glanz