PAUL JAY: Welcome to The Real News Network. I'm Paul Jay in Toronto. On Wednesday, June
15, in Athens, Greece, opposition groups and unions called a general strike. Tens of thousands
of people are expected to be there. They're going to make a ring around the Parliament
buildings to prevent Parliament from enacting further austerity measures, measures demanded
by the European Union and international banks. Now joining us to talk about how Greece got
into this predicament and some alternatives is Leo Panitch. Leo is the author of the book
In and Out of Crisis: The Global Financial Meltdown and Left Alternatives, and he teaches
political science at York University. Thanks for joining us.
LEO PANITCH: Hi, Paul.
JAY: So retrace the steps a bit. We're told the reason Greece--we're told by mainstream
press, anyway, the main reason Greece is in this situation is pensions are too high, people
retire too early, and it's time for the Greek people to pay up like everybody else. So what's
the cause of the crisis to start with?
PANITCH: Well, in capitalist terms that's probably right, but that's what's wrong with
capitalism. Why shouldn't Greek pensions be what they are? Why shouldn't people be able
to retire at 60? No. I think one has to trace this back to the fact that Greece indeed,
when it was admitted to the European Union, was a state that never had much of a modern
bureaucratic structure. It was very clientalist. Almost all the states in the old Ottoman Empire
were. They haven't been very good at collecting taxes. And the main capitalists in Greece
haven't wanted them to be very good at collecting taxes. And this goes back to the famous ship
builders and ship owners, you know, the Aristotle Onassises that people knew so well in the
old Kennedy days, that, you know, have been the key political force inside Greece. It's
true that Greece has run a fiscal deficit and that the Greek parties, including PASOK,
which was a new party after the dictatorship in the mid '70s, which promised that it would
modernize Greece and had a very, very radical, really socialist program--.
JAY: The party that Papandreou--.
PANITCH: That Papandreou is now head of and his father was the founder of. And he was
here in Canada teaching at my university during the military dictatorship. And the current
prime minister of Greece was born in the United States while Papandreou was teaching down
there. So--you know, while his father was teaching there. So there is a problem in terms
of Greek's finances, but that problem existed before the crisis. It was aggravated considerably
by the fact that Germany is the big exporter in Europe's free trade zone. That's what the
European Union is, a free trade zone. And Greece got the money through transfers from
the EU, from the European Commission for a while, but mostly from borrowing from German
banks to buy German goods. Right? And they were very heavily in debt when the global
economic crisis hit. That global economic crisis was made in the United States in the
American mortgage market, but Deutsche Bank was very heavily invested in the American
mortgage market. Deutsche Bank owned almost all of black Cleveland's mortgages. They'd
been foreclosing black Cleveland. Well, Deutsche Bank is in a precarious situation. They were
bailed out, as were other banks, mainly by the Fed, not only by the European Central
Bank.
JAY: The American Fed.
PANITCH: The American Fed. And when they saw a situation in which Greece would not be able
to repay its debt, they were very worried that they would face a liquidity problem,
and maybe even an insolvency problem, not from Greece alone, but insofar as that would
have knock-on effects, especially to those other countries in Europe which also have
been the importers of German exports and borrowed very heavily in order to be able to buy those
imports. Now, what's very important here is that it wasn't primarily the states that were
borrowing that money; it was private banks borrowing that money, lending it to Greek
consumers and corporations who were importing this stuff. But the state then bailed out
those banks, right, in order to make them solvent or guarantee their debt.
JAY: Not so unlike what Iceland did.
PANITCH: Not so unlike what Iceland did. That's right.
JAY: Now, the people in Iceland said no, we're not going to pay [crosstalk]
PANITCH: Yes, and people in Greece have been saying no. And the demonstration today, you
need to remember, follows on a long series of demonstrations which did peter out a bit
after there was a firebombing of a bank and some people died. And that was a moment at
which the demonstrations, you know, began to calm down a little. And they're now coming
back. And the reason they're coming back, very clearly, is, you know, what--the medicine
that has been applied to these countries on the periphery of Europe is as draconian or
more draconian than during the debt crisis imposed by the IMF, the US Treasury, and the
Federal Reserve on Latin America in the 1980s, with very similar requirements, that is, the
privatization of what state assets are left, the privatization of the port of Greece, for
heaven's sake. That's what's being demanded here, as well as enormous cutbacks in state
expenditure. The rate of unemployment, which was, you know, really below 5 percent in Greece,
5 to 6 percent before the crisis blew in 2008, is now pushing over 20 percent. This is Depression
level that's going on here. It's very, very serious. And some of what has gone on in the
Arab uprisings has been a problem in Greece for a long time. There is a tremendous overeducation
relative to the amount of hiring that goes on. So, for instance, amongst teachers, when
I was in Greece last, a couple of years ago, there were daily demonstrations outside the
Ministry of Education by highly educated young people who are trained to be teachers and
don't have jobs. Now, you can imagine how much worse the situation is now.
JAY: So what's the alternative? Your book is Left Alternatives. So what's the left alternative?
A lot of people are saying Greece should default. And Standard & Poor's issued a recommendation
lowering the Greek credit rating today. Apparently, now, if you want to insure Greek debt, it's
twice as much as it would cost to insure Pakistan's debt, and they've said if Greece tries to
even restructure the debt, they're going to consider it a default. So why not default?
PANITCH: Well, Pakistan is assured of getting loans from the United States, at least from
the American Defense Department. Now, Greece, you know, has certainly had those loans as
well. One of the things that the Greek left regrets most of all is the way in which the
American Defense Department had placed itself during the Greek Civil War in the 1940s and,
you know, really has never left, despite left-wing governments that--. And that's one of the
reasons, often, that, you know, you find activities in Greece that are so anti-American, you know,
having to do with that type of military influence. [incompr.] Greece will default. I mean, it's
not a matter of whether they should default. There is no choice. All you read in the media,
all you see in the media is hard bargaining. It's hard bargaining. You know, what will
be the cost to Greece of defaulting? It will happen. No question it will happen. So whereas
after the Asian crisis, when, you know, the great booming East Asian countries, Korea
and Thailand and so on, you know, experienced a tremendous outflow of capital, after that,
the knock-on effects were such that they got the banks to restructure debt in a whole bunch
of countries which felt the knock-on effects of this, as they apply structural adjustment
programs to those countries as well. And they did so without the kind of hard bargaining.
They were trying to stop the bleeding. In Greece's case, what they are afraid is that
if the default takes a form that doesn't involve very, very heavy costs, and certainly the
German and French banks are insisting no cost to themselves--.
JAY: They want--"heavy cost" meaning heavy cost for the Greek people, not [crosstalk]
PANITCH: Yeah, to some extent for the German budget and the European budget and the French
budget, and to some extent perhaps even for the American budget, because a lot of the
quantitative easing that the Fed is doing is flowing into these banks to keep them liquid
in case there's a default on that debt. So there's no question it'll default, and all
that's going on is, you know, what the arrangement will be, you know, how serious it will be,
and how severe the penalties will be so that others won't default.
JAY: So what are the global implications with the inevitable Greek default?
PANITCH: Well, they may not be great. It's by no means the case that Greece is a big
player in the world. And it's a matter of whether it sets an example or not, what kind
of an example it sets. That's--you know, this is all about school--schoolyard discipline
is what is going on here. So what can the Greeks do?
JAY: So the banks have to make this painful for Greece so that others don't follow its
example.
PANITCH: Of course. You know, there's nothing new about this. You know, this has been done
throughout history.
JAY: So what are the Greek people demanding? What is the Greek left putting up as an alternative?
PANITCH: Well, you know, there's no easy answer to this. Even the most left-wing, the most
progressive, the most creative of new independent socialist parties in Europe, which I take
to be SYRIZA, which is a collection of left parties in Greece, broke from the old Soviet
communist tradition a long time ago, wasn't related to that communist party that was tied
to Moscow, etc. The most creative people are in it. They are not calling openly for a default.
They are not calling openly for leaving the euro. In fact, they are opposed to leaving
the euro.
JAY: Why?
PANITCH: You know, the Greeks like to be able to travel to Paris. They are indeed dependent
on German imports. How would they pay for their imports? These are very, very serious
questions, and they raise large questions for the whole world, especially for a small
country in terms of going on its own. So it would only be very viable if there were a
balance of political forces in Europe more generally which would be able to support Greece
in a different alternative. You know, this goes back to the weakest-link thesis when
the Russian Revolution happened. You know, the Russian Revolution had had the effect
of producing a revolution in Germany [incompr.] trigger, we perhaps wouldn't have had Stalinism.
But in the face of being isolated in that way, with the kind of hardball that will be
played, it's understandable why the left in Greece hesitate so rhetorically. You will
find people increasingly, I think, increasingly, from all the reports I hear, increasingly
saying that they ought to even leave the euro. They probably would not prefer to leave Europe.
But the implications of that are enormous.
JAY: And what about the demand to start making the elite of Greece pay taxes?
PANITCH: Well, of course. And it isn't only the elite of Greece, however. You know, it
isn't only the elite of Greece at all that doesn't pay taxes. You know, your average
working-class guy will try to get out of paying property taxes. But the party system runs
on the basis of you vote for me and I'll find a way for you not to pay your property taxes.
Right? So you can't blame the people in that sense. This is the structure of that system.
And yes, of course it also applies to the wealthy. It applies more to the wealthy because
they ought to be paying much more. But it is, I think, part of the political culture
of that society, and not only that society by any means, as we know. But that's not the
fundamental problem. That problem existed before this crisis. This problem existed when
people were rushing to give Greece money, to lend them money. So it's only in the context
of the still very precarious nature of the Western banking system that this is a problem.
But one needs to see it as a problem because of the precarious nature of the banking system.
This is not a story that'll be answered with bad guys and good guys; this is a systemic
problem that has to do with the financial volatility of global capitalism. And there's
no way in which there won't be recurrent Greeces, and recurrent suffering as in Greece around
the world, unless we get out of that system.
JAY: Whether it's Greece or whether it's Spain, the solution being offered is austerity. But
I don't understand how austerity leads to anything but deeper recession, more unemployment.
And how does that solve anything?
PANITCH: Well, it breaks the back of this militant working class, which is the most
politicized and demonstration-prone working class in Europe, without any doubt. It has
been for a long, long time. The student movement, you know, including, you know, the left of
the student movement, is, you know, to be found in medical schools, in engineering schools.
This is a student movement in which the Greek police are not allowed on campus. Now, that's
a law that goes back to the dictatorship, where, you know, the dictatorship did terrible
things, as in Chile, with the students. But a law was then passed, and those students
hold the state to that law. So when there are, you know, demonstrations of this kind,
people go on to the University of Athens campus, and the police are not allowed to follow them
there. There's a very militant culture there, and what the austerity will do will break
it. In the same way, at the time of the IMF crisis, as it was known, in Britain in 1976,
Thatcherism was introduced by the Labour government before Thatcherism and began to break the
public sector union. Right? And you now see a balance of forces in England, in the United
Kingdom, in which Labour is--I mean, the labor unions are very weak. Now, there's again been
a response to Cameron's austerity there as well, and one hopes it'll lead now in other
directions. But the effect of the austerity is not to get Greece going again. The effect
of the austerity is to change the balance of class forces in that society.
JAY: So we'll see in this general strike and in the coming days whether the Greek people
go along with being broken.
PANITCH: That's right. That's right.
JAY: Thanks for joining us, Leo.
PANITCH: Good to talk to you, Paul.
JAY: And thank you for joining us on The Real News Network.