The Greek Elections and the question of debt

With elections due in Greece on Sunday, Costas Todoulos surveys where the parties stand on the crucial issue of debt.

Greeks are called to cast their votes in the national elections on 6 May, during what is described as “the most turbulent period since World War II”. The outgoing government was led by the non-elected ex-banker Loukas Papademos with a cabinet drawn from three parties. The economy has gone downwards since the debt crisis started back in 2009 and every intervention by the IMF, EU and ECB (the ‘Troika’) thereafter has deteriorated the situation. The economy is still in freefall and unemployment is at an all time high, while there has been no success in limiting the extraordinary amount of debt which has gone up from 110% to 160% of GDP between 2009 and 2012. Even the most recent ‘haircut’ to restructure the private debt has been merely able to facilitate new loans to Greece from the IMF and impose austerity until 2020.

The two main parties who have alternated in governments since the fall of dictatorship in 1974, PASOK (Labour) and Nea Dimokratia (Conservatives) have pledged with open letters to the European Commission to carry on with the reforms agreed on the 26 October 2011. They have only trivial differences on how they plan to deal with the debt and they are determined to stay in the Euro currency zone and repay the debt at any cost – lest a catastrophe ensues. Along with them, the far-right LAOS party, through its involvement in the latest coalition government, has accepted the commitment of repaying the loans.

After 17 general strikes and the explosion of square assemblies (the Greek ‘Occupy’ or ‘indignados’), a popular debt audit initiative has been launched, supported by academics, journalists and activists. Existing for almost a year now, it has captured the imagination and the support of many people who participate in the debate on debt and has helped to make closer connections with other debt audit initiatives in Europe, as a united answer from the people of Europe to the blackmailing of the creditors.

Over the last two years since the IMF got involved in Greece, the issue of debt renegotiation and default has been central. The opposition is largely dominated by parties who have opposed the involvement of the IMF and the austerity measures. Syriza (coalition of the radical left) supports the popular debt audit and the subsequent cancellation of the part that is illegitimate and unsustainable while remaining within the EU. Along these lines, EPAM (United Popular Front), a party lead by economist Dimitris Kazakis, and the Independent Greeks party led by Panos Kamenos, a conservative ex-MP, call for a non-recognition of debt, in accordance with international law and return to a national currency. The communist party of Greece (KKE) calls for a debt default, while the Anti-capitalist left coalition (ANTARSYA) calls for an immediate unilateral debt default, a radical restructuring of the economic system, and exit from the Euro and the European Union.

The head of the IMF Christine Lagarde, speaking on CBS talk show 60 Minutes on 8 April, urged Greeks to carry on with the implementation of reforms and the structural adjustment programmes supervised by the Troika. She urged people to vote for one of the parties that have agreed to carry on with them and went even further by opposing voting for smaller, anti-memorandum and anti-austerity parties, blatantly intervening in the political life of Greece. On the last polls announced, the two main parties cannot secure a percentage for an absolute majority, even by forming a coalition similar to the short-lived recent coalition under Loukas Papademos.

Overall, the creditor banks, hedge funds and international institutions are applying pressure on Greek politics, with a barrage of articles about post-election scenarios portraying any radical restructure of the debt, or a people-led default of the debt, as a fatal blow to the EU and a guarantee of chaos and misery for the Greek people. Although the election results are uncertain, the movements against the repayment of the debt have shaped the agenda of the election and the stronger and more determined they are, the more popular support they will win, in order to affect the outcome of this struggle against the creditors.