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Wednesday 29 November 2023 Dublin: 1°C
Associated Press

The Greek people have said no – so what's next?

Yesterday’s result will have inspired millions across Europe that the forces of the 1% can be taken on.

AN INCREDIBLE RESULT: 61% No after an unprecedented co-ordinated campaign of scaremongering and terror. That campaign stretched from the European Commission, through the European Central Bank, European governments, including the Irish, to the right-wing politicians in Greece and the private media.

They voted No, despite it all, because they have experienced what signing up to more austerity means. It has already meant a contraction of the economy by 25%. It has meant an increase in the debt from around 110% of GDP to close to 180%. It has meant humanitarian catastrophe, with a massive increase in rates of suicide, homelessness, poverty and deprivation. More of the same ‘medicine’ would lead to more of the same results. The Greeks knew it and the Troika knew it too – illustrated by the IMF’s paper which concluded that even with 4% economic growth, the debt would still be unsustainable.

A mobilisation of the working class

The outcome is potentially the most important political event since the collapse of the Berlin Wall. Depending on what happens next, it can represent a turning point towards a challenge to the rule of the 1% in Europe and the dominance of Thatcherite neo-liberalism.

The vote was a mobilisation of the working class, which voted over 70% No, and young people, with the overwhelming majority of under 34s voting No. The result was that every county in Greece voted No, although rich suburbs in cities voted Yes. These were the same groups present at the mass rally in Athens on Friday night and across the country.

Committees were formed in local areas at short notice, bringing together activists from Syriza and other parts of the left to campaign for a No. After Tsipras announced last Wednesday night that the referendum would definitely go ahead, momentum and energy developed behind the No side, the fears were pushed back and people felt confident to take the brave stance they did.

The next days will be crucial. The clock that is ticking in the background to the negotiations is the money emptying out of the Greek banks. Essentially, without a change, they will run out of money in the coming days. This is a result of the European Central Bank’s decision to cap emergency funding last week in order to blackmail people into voting Yes.

What happens next?

Three outcomes are possible. The first is that the Troika feels pressured by the scale of the No victory, wants to avoid a Greek exit from the eurozone and offers significant new concessions, including debt write-down or restructuring and allows the Greek government to tax the super-wealthy and corporations. In that case, a deal may be done.

The second is that the Troika does not make significant concessions, but that the government, feeling the need to stay in the euro at any cost, does a deal which includes significant austerity and no reduction of the debt. That would not be welcomed by the Greek people. Those who mobilised for a No were not for a very slightly better deal, they were against austerity. A deal like that would likely split Syriza, demoralize a section of people, and push others to protest.

The third option is that there is no deal. The statements coming from the German and EU establishments today indicate that they have not shifted their position one iota after yesterday’s vote. The German Minister for Economic Affairs has said negotiations for a new programme are “hard to imagine.”

A parallel national currency 

They may continue to insist on lots more austerity, with no debt relief. The resignation of Varoufakis may not be enough for them – they may want Tsipras himself gone. In that case, the financial terrorism against Greece will escalate in the coming days, with no further funding for the Greek banks pointing to a banking collapse. That would leave the government with effectively no choice (other than sign a humiliating deal) but to begin printing some form of parallel national currency in order to re-open the banks.

Would that spell the disaster that the European elites predict? Not necessarily. Remember that the euro has not been a friend to Greek workers – it trapped them in a race to the bottom, which German capitalism won, at the expense of German workers.
Greece had a balance of payments surplus last year (exports exceeded imports) and has a primary balance (government revenue exceeds expenditure, apart from debt repayments). This gives a potential basis of stability to a new currency, after an initial period of turbulence and decline. If a new currency was combined with the old politics of austerity, then economic dislocation would follow. However, if combined with socialist policies which challenge the domination of the Greek oligarchs, exit could be successfully managed.

Redeveloping the economy on a sustainable basis

Non-reliance on the ECB would allow the government to impose a total moratorium (freeze) on all debt repayments (with close to €20 billion still to be paid this year), while completing its debt audit and then refusing to pay odious debt. The banks would have to be fully nationalised, with the burning of the ECB and bondholders and then taken into democratic public ownership and used as an instrument for the development of the economy. This could be combined with public investment and democratic public ownership of key sectors of the economy to counter-act the collapse of private sector investment. This would allow the construction of a plan to redevelop the economy on a sustainable basis.

Of course, this would just be the start. Yesterday’s result will have inspired millions across Europe that the forces of the 1% can be taken on. A rupture in Greece from the domination of the Troika and austerity would inspire further resistance. It can open the way for other countries to take that path, a step towards building the kind of Europe that we need – a truly democratic, socialist Europe that works for the millions, instead of the millionaires.

Paul Murphy is the Anti-Austerity Alliance TD for Dublin South West. He is currently in Athens, where he participated in the campaign for a No vote.

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