Costas Lapavitsas: Elections were a moral victory for Syriza as vote held up under ferocious pressure; the new pro-bailout Government will not be able to service it’s debt as austerity measures deepen, and eventually Greece will leave the Euro-Zone


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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Baltimore.

The Greek elections are over and the pro-bailout party New Democracy has won slightly more of the popular vote than the anti-bailout party SYRIZA, although the majority of popular vote went to various parties who were opposed to the bailout. But still, New Democracy is now expected to try to form a government of pro-bailout parties.

Now joining us from [sÉ’lanɪkÉ] in Greece to discuss the elections is Costas Lapavitsas. He’s a professor of economics at the School of Oriental and African Studies at the University of London, and he’s also the author of a new book (it’s out in Europe; it’s going to be out in September here in the United States and Canada) called the eurozone crisis—or Crisis in the Eurozone I guess it is. Thanks for joining us, Costas.

COSTAS LAPAVITSAS, PROF. ECONOMICS, UNIV. OF LONDON: Pleasure to be with you, Paul.

JAY: So what happened, and what do you make of it?

LAPAVITSAS: I think it’s a mixed bag. The real victor of the election, in my view, is, of course, SYRIZA, which not so long ago had 5 percent of the vote, or not even that, and now has 26, 27 percent of the vote and it is the official opposition. So it’s a major achievement. And SYRIZA has come to represent all those who have suffered enormously from the bailout policies. There’s no doubt at all about it.

However, in recent days, in the last couple of weeks, there were expectations and even anticipation that SYRIZA would come first in the election. And because it didn’t, there is an element of disappointment among some people, even in SYRIZA itself. I think it’s unfounded. I think the true outcome is basically a triumph for SYRIZA, which is on course to become the organized and major voice of Greek wage labor and Greek low- and middle-income social layers.

JAY: Yeah. I mean, if you think back to an interview you and I did, I don’t know, maybe five, six months ago, one of the points of the interview you were making is that there was very little, really, organized political representation for those who were opposed to austerity and this type of bailout and now vying for power. That being said, unless SYRIZA had accomplished something of a significant majority, might they have had trouble winning this? I mean, they might have won, but if they won with a very narrow margin, what would they have been able to do?

LAPAVITSAS: Let me answer this question in a slightly different way, not what they would have been able to do, but what the new, the formal victors might be able to do from now on. That’s a better way, I think, of looking at it.

And the party of the right, New Democracy, came first with a slight excess over SYRIZA—2.5 percent of the vote. They will form a government held by the previous ruling party, PASOK, because by themselves they cannot do it. So it will be a coalition government.

Now, what are the prospects of the coalition government? Well, in my view, this will not be a long-lived government, and I can give you three reasons for it. The first is that this government will have to continue implementing very tough, very serious bailout policies. It will have to impose new taxes, it will have to bring in new cuts. The economy of Greece has shrunk enormously the last couple of years. It is highly debatable (A) that they will be able to implement these measures; (B) even if they implement them, that these measures would have the expected results. So that’s the first problem they’re going to face.

The second problem that they’re going to face is, of course, internecine fighting between PASOK and New Democracy. These are precisely the people who have run the country for three to four decades and brought it to this disaster. They’re old-style politicians. They’ve got no understanding of the long-term interests of Greece and its society. They’re unlikely to work in peace with each other. There’s going to be infighting, I’m sure.

And the third reason is, of course, after a little while, I think that there will be popular opposition to all these measures and all these problems, not perhaps immediately, because the new government will have the legitimacy of winning the election in the eyes of many, but soon. Once the bailout policies continue to bite, they will face opposition from below. So this government is not likely to be a stable government, it’s not likely to last for very long, and in some ways SYRIZA will not have to face problems of this type, because it’s the official opposition now rather than the [crosstalk]

JAY: Right. I mean, what do you expect the mood of people to be? Is there a feeling that this is a legitimate mandate? Or is there—do you think there’s going to be a feeling that a majority of people voted for anti-bailout parties, and thus this election actually doesn’t give that kind of a mandate to New Democracy?

LAPAVITSAS: On one level, there is a mandate, because these two parties will have won a significant proportion of the vote.

JAY: And these two parties being PASOK and New Democracy.

LAPAVITSAS: New Democracy and PASOK. They will have very significant proportion of the vote, and they will have a clear majority in Parliament. So formally it’s not the case. There is no issue of legitimacy.

However, in the minds of many people, as your question indicated, there will be an issue of substantive legitimacy, because previously we had a coalition government of PASOK and New Democracy that basically messed things up. Now we’re going to have a coalition government of New Democracy and PASOK, which presumably is going to rescue the situation. People will put two and two together for the reasons that I just mentioned to you. The problems of the country are so deep and the bailout policies so nonsensical that it is highly unlikely that people will give the government the benefit of the doubt for very long.

JAY: Do you get any sense that the leaders of the eurozone, financial and political elite of Europe, when they actually had to stare in the face the possibility of Greece leaving the eurozone, that the danger of that leading to a kind of unraveling of the euro actually might scare them a little more than they might have thought, and that they themselves may want to pull back a bit? There is some indication in the news reports, you know, of Europe saying, well, we’re going to be a little more lenient, we’ll give Greece more time. Are they going to do something to this bailout package to try to stop Greece from, the next election, voting out of the eurozone?

LAPAVITSAS: I do not believe it for a moment. I think that the new government, once it is formed, a coalition government of this type will get some cosmetic concessions from the European Union, probably a lengthening of the period over which the government will have to register a primary budget surplus, possibly some help with infrastructure investment of some sort. But these will not be really serious measures, serious concessions that will go to the heart of the bailout policies. The bailout policies—the logic of the bailout policies is clear neoliberalism, hard neoliberalism as we’ve known it for the last several years. That is unlikely to change. And it has been said, it has been declared by, particularly, German authorities many, many times. So I don’t expect any serious concessions. Greece has got a path of austerity, structural adjustment, privatization, and liberalization ahead of it. This is what this government will have to implement. Its task is going to be very, very difficult.

JAY: And where does this lead? They implement all these policies, and it’s clear. I mean, even Monti in Italy is saying this—what he calls fiscal discipline—doesn’t lead to more growth. I mean, how in the end does this even pay back the debt? The revenues of the Greek government are going to continue to drop. I don’t understand where this solves anything for anybody, this path.

LAPAVITSAS: You’re not the only one who’s got difficulty understanding what the logic of this policy package is. I mean, there is many, many of us who—there are many, many of us who are trying desperately to understand if there’s any sense in this. The reality is that there isn’t. Greece is incapable of servicing its debt and will remain incapable of servicing its debt for the foreseeable future. Its economy will continue to shrink. Unemployment has reached an unbelievable levels. Production continues to decline. In the first quarter of this year, output contracted by 6.5 percentage points. This is a disaster, and it will continue to be so.

So the only plausible outcome of this is default, this time organized by the Greeks, not organized by the European Union and the European Central Bank, but organized by the Greeks, default, and then, obviously, exit from the eurozone. And the present government, if it continues with the policies that it says it will continue with, has in front of it just a few months. By the end of the year, I would expect Greece to be out of the eurozone.

JAY: Now, one of the things we’ve talked about in previous interviews is that one of the objectives of the financial elite in Europe is, we’ve called, picking the bones of the Greek economy, privatization. Is that in—any suggestion this new government will resist any of that? Or as long as they are in power, are we going to see a sort of a picking up this, the pace of privatization, in Greece?

LAPAVITSAS: They are not going to find it easy. The New Democracy Party contains within it many different currents and eddies when it comes to privatization. It contains out-and-out neoliberals who wish to privatize everything. But it also contains people who come from the so-called popular right, people who—or nationalistic right, people who believe in a continuing role for the state. They are not going to find it easy, however, to adopt a different line on nationalization and privatization, because the pressures from the European Union are enormous. If they get any concessions, they will be minor. They will be pathetic, again, in my judgment. It’s not going to change. The logic of the European Union is very clear: if you want to raise productivity, you’ve got to privatize and you’ve got to deregulate. This is the logic of growth that’s been coming from the—emanating from the European Union. It’s a dead end. I know it’s a dead end. But that’s the logic that’s been coming from over there, and that’s what the New Democracy government will be faced with.

JAY: And in terms of the eurozone crisis more generally, and particularly Spain, which seems to be the sort of main threat to the eurozone right now, where are we at? I mean, can the ECB (European Central Bank) and the financial elite of Europe, can they keep putting Band-Aids on? They have the resources, I would guess, to keep putting Band-Aids on. I mean, is the strategy is just keep the crisis going and just manage it so it doesn’t cross a certain red line? And can they keep doing that?

LAPAVITSAS: At times it’s very hard to tell if there is a strategy. At other times there seems to be a strategy which simply doesn’t work. The problem at root is a problem of lack of competitiveness by the periphery, and therefore an inability to integrate all these peripheral countries properly into the Monetary Union, and therefore an accumulation of debt. This is the root cause of the problem, which appears as a financial problem. It appears as a number of banks that are basically bankrupt or a number of states that are basically bankrupt, and these banks and states are often closely connected with each other. So if banks fail, states fail, and if states fail, banks also fail. This is really the problem at heart.

And resolving it is an incredibly, a fiendishly complex task. It would require major, major structural adjustment across Europe by now because it’s been allowed to fester. It would require a Marshall plan, it would require a proper banking authority across Europe. It would require debt cancellation. These things are unlikely to happen.

So to some extent what we see is the continuing application of Band-Aids by the European Central Bank, which cannot resolve the problem, because the problem is not a liquidity problem. And the German government, which dictates policy, insisting that the underlying problem of lack of integration will be resolved through privatization and through austerity and so on, it’s not going to work.

The most likely thing is we’re going to have a breakup, we’re going to have a disintegration of some sort. I only hope that it’s not a total and sudden disintegration, because the costs for the people of Europe would be enormous should that happen.

JAY: Alright. Thanks for joining us, Costas.

LAPAVITSAS: Thank you.

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