Paul Jay discusses the results of the Greek referendum with Costas Lapavitsas and asks whether Syriza was prepared for this moment
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to the Real News Network. I’m Paul Jay. The Greek people, 61 percent of those who voted in the referendum on Sunday, said no to the austerity package that had been proposed by the European Troika, as it’s called. That’s the European Commission, the European Central Bank, and the International Monetary Fund. Well, they said no to that package, but it’s not entirely clear what the Greek people are willing to say yes to. Now joining us to help us answer that question is Costas Lapavitsas. He’s a professor of economics at the University of London’s School of Oriental and African Studies. He was elected at the top of the list as a Syriza MP in January, and he recently co-authored the book Against the Troika with Heiner Flassbeck. He now joins us from his constituency in Greek Macedonia. Thanks so much for joining us, Costas. COSTAS LAPAVITSAS, UNIV. OF LONDON SOAS: It’s a pleasure to be with you, Paul. JAY: So before we get into what’s next, let’s just talk about the moment. Even just a little bit from a personal angle, I know you’ve been in the midst of this struggle for many years, for long before you were elected as an MP. You’ve been critical to some extent of Syriza’s negotiations and how things have been proceeding. What did that moment mean, for you? LAPAVITSAS: There’s no question this is a historic moment. No question at all. It’s a historic moment for Greece, and it’s a historic moment for Europe. This is a moment when all these tensions and problems and most things that have characterized Europe the last few years, they’re all coming to a head, and there’s going to be resolution. Not in the next few days, but certainly the next few weeks. So it’s a historic moment, for sure. We’re going to know which way the European monetary union is going to go, and which way the European Union is going to go. JAY: Now, in terms of the results of the vote, it’s clear that the will of the Greek people was against that austerity package. Against an enormous pressure through the media and threats that it was going to lead to disaster if people voted no. I know there were television commercials and pundits on television talking about the total collapse of the Greek economy and how much all of a sudden they were so worried about ordinary working people, the same people that couldn’t give a damn about wages and pensions are all of a sudden so worried about it. But the Greek people were not intimidated. LAPAVITSAS: I have to say that this is one of those moments when it does feel good to be the Greek. You know, one can feel proud. Because the last few years and the last few months, have been years of very great difficulty. No one likes to be begging others for money, if you see what I mean. No one likes to feel that his country and his people are in such dire straits that they’re at the mercy of others. This week has been an extraordinary week. The pressures internally and the pressures internationally have been–I’ve never seen the like. The only thing that Greeks were not threatened with was a mass outbreak of syphilis in [disguise] if they voted no. And they said no. They said no. They basically stood their ground and said no, we’re not going to have it. We’re not going to accept the old ways. We want something different. We might not be entirely clear what it is, but we’re perfectly clear that if we go the way of the lenders, that’s no future at all. And the most dramatic thing was that actually this was said by the youth. What made the big difference this time is that the youth said no. That’s the first time they’ve spoken since the beginning of the crisis, and they said no. JAY: Now, Monday morning finance minister Varoufakis resigned. Did that surprise you? What significance does it have? LAPAVITSAS: Yanis Varoufakis has had a mixed record during these five and a half months. I’ve known Yanis for a long time. I’ve got respect for him. I’ve had my criticisms about his performance as a finance minister. I might not have agreed with everything he’s done and the way he’s gone about his business. But I cannot take back from him the fact that he tried to put across a radical line [the hands of] [inaud.] Now, he came under enormous pressure. An incredible attack about a month and a half ago. He was slammed by the European powers, and he had to retreat during the last week or so. He’s managed to salvage a lot of personal pride and a lot of personal standing. He did a very good job arguing for the no vote. But that really was the end for him, because he was obvious that he couldn’t go to [inaud.] he just didn’t have any scope to do so. So he stepped down. And now it’s a question of who is going to replace him. I’m a little worried about who that might be. I don’t want people, someone to stand in his shoes who hasn’t got some radical outlook on Yanis. So I’m a bit concerned. JAY: In his resignation, little statement that he wrote on his blog, I guess maybe he’s gone more public with it. But it kind of positioned it in a nuanced way, that the Europeans don’t want him. They want him absent from the discussions, and it’s kind of a concession, it seemed, to have him–remove him from those negotiations. LAPAVITSAS: I’m not sure it’s a concession. I think it’s a realistic move. I think relations between Varoufakis and the lenders have become so tense that it would have been impossible for him to negotiate with any seriousness, that’s the reality. So I can understand, it’s basically practical politics. It’s basically practical politics. JAY: Now, you’re a member of parliament. You’ve been writing columns in the Guardian. What are you advocating now? In this moment, what should Syriza’s next steps be? LAPAVITSAS: Let’s think here about a number of things. The strategy of Syriza before the election, and for most of its time in government, has been to achieve radical change in Greece and a new relationship with the lenders, solving the macroeconomic problems of the country within the Eurozone. The argument was if we negotiate hard, if we use democratic weapons that we’ve got in our hands, we will achieve a better settlement for the Greek people. This strategy has come to an end. I don’t think the lenders will take a step back. I think they’ll actually do [inaud.] Syriza needs a new strategy very quickly, and I think the realization will come upon it equally quickly in the coming days and weeks. It’s a dead end. I don’t think the European Central Bank will provide the country with more liquidity. I don’t think the lenders will make a better offer. Syriza will have to face a tough reality in the coming period. And that means making do. Relying on the strength of the Greek people, and only that, to see them in the crisis. JAY: I heard on BBC last night a member of Merkel’s party, a right-wing member of Merkel’s party–I mean, the whole party’s pretty right-wing. But at any rate, a right-wing of a right-wing party. He says it’s time for the Greeks to take their lesson. LAPAVITSAS: The Greeks have shown, they’ve shown yesterday, that they are ready to face up to whatever will come their way from the lenders. The lenders must not forget that. Yes, they will show very clearly the Greek people are ready for it. So that’s the first thing to say. Beyond that, there is no liquidity in the country. The economy hardly functions. Syriza can make an attempt to get a better deal with the lenders. If that doesn’t come true, Syriza needs to take radical measures quickly. It needs to put the knife in. It needs to sort the problem of the banks out. Banks need to be nationalized and run centrally very quickly. It needs to do something about the mass media. The mass media in this country this week went absolutely crazy, tried to push for the yes vote. Syriza needs to do something about big business. Big business–. JAY: Back up, what is do something about the mass media? What’s the something? LAPAVITSAS: The mass media, the private companies that own the mass media in Greece owe the state enormous amounts of money. They’ve been operating on very favorable terms. They don’t–it’s an incredible regime. It needs to be tightened, and very quickly. It’s completely unacceptable that a few oligarchs can run the mass media in this country, wage war against the government, and still owe the state enormous amounts of money. Enough of that. The Greek people don’t want any more. JAY: And is there a public broadcaster of any scale in Greece? LAPAVITSAS: There is a public broadcaster. It’s been reopened, because the previous government shut it down. That needs to be strengthened, and it needs to be, to become fully operational. So that action is needed. And then action is also needed with regard to big business. This country is run in the interests of a small group of very powerful, very rich, and very corrupt people. The Greek people are up in arms about that. They want action. Syriza has been delinquent in this respect, very slow. We need action quickly. So all these things have to happen in the next few days, or they have to start happening in the next few days. And in addition to that, obviously, the country needs to deal in a decisive way with the lenders. Enough–enough is enough. If this means devising new ways of creating liquidity, then we will devise new ways of creating liquidity. JAY: That means back to the drachma. LAPAVITSAS: Not necessarily. Not in the first instance. There are ways of doing it. We are just one step from extraordinary economic measures taken in Greece. Measures that haven’t been taken in Europe for a long time. But then, the situation imposed on Greece is extraordinary. The lenders–. JAY: What kind of measures are you talking about? LAPAVITSAS: There are ways of creating liquidity. There are ways in which the state can pay for its obligations, for its purchases. Even in Euros, but without going through the banks in the usual way. JAY: How does that work? I thought the country’s running out of Euros. LAPAVITSAS: Yeah, the country’s running out of Euros, but the state can issue [means] of payment in Euros. JAY: You mean, actually print its own Euros. LAPAVITSAS: No. Print IOUs, for instance. I’m not suggesting that this is what’s going to happen, but I’m saying that there are options, and the country should use them because blackmail will not work. I argued some time ago in the Guardian, [inaud.] happens which you mentioned previously, that Greece will not be blackmailed. Well, I was right. Greece will not be blackmailed. Those who think that the Greek people will be blackmailed don’t understand the Greek people. Enough is enough. JAY: Now, I know you and I know each other, and I’ve interviewed you many times. It was kind of known, this, if one wanted to know, that this is where this all was going to end up. In the sense that, to think that the European finance capitalists are going, were going to make a fair deal for Greece was hard to understand why anyone would think that, given who they are. There doesn’t seem to have been real planning for this moment. Like, you would have thought it would have been even a good negotiating leverage to create all kinds of mechanisms for this moment. And even if that isn’t what you were aiming for, at least you’d have them in place. LAPAVITSAS: Paul, this is Greece, okay. Planning and preparation, basically, this is not what the Greeks are known for, whether they blow to the left or to the right. But that’s where they are and that’s what it is. And that’s how history moves. Those who understand political economy and those who understand the politics of Europe knew that if there was a Syriza government it could expect the hostility of the lenders, who are very conservative reactionaries, essentially. We knew that. But the Greek people didn’t necessarily understand it in the way in which those involved in politics understand it. People have to understand what’s happening in their own way. And that’s what’s happened the last few months. People have understood it in their own way. That also means national identity. The Greeks feel deeply affronted. They feel that they’ve done everything that was asked of them. They feel that they’ve bent over backwards to come to a sensible deal with the lenders. And they feel that the lenders have been ruthless, arrogant, overweening, you name it. And people are very, very angry. Very annoyed. Enough. You know, that’s what they’re saying. Enough. JAY: Okay. Thanks very much for joining us, Costas. We’re going to do a second part with Costas, so please have a look for that. And thank you for joining us. Thanks, Costas. LAPAVITSAS: Thank you very much. JAY: And thank you for joining us on the Real News Network.
JAY: We’re continuing our discussion with Costas Lapavitsas about the crisis in Greece post-referendum, where 61 percent of Greeks who voted said no to the austerity package proposed by Europe. And joining us again now from his constituency in Greek Macedonia, that’s northern Greece, is Costas Lapavitsas. He’s a professor of economics, University of London’s School of Oriental and African Studies. And he co-authored the book Against the Troika with Heiner Flassbeck. Thanks for joining us again, Costas. LAPAVITSAS: Nice to be with you. JAY: The stock markets are not going crazy. At least, not as of the moment we’re doing this interview. We hear talk, the effect on the Euro has been factored in already. There doesn’t seem to be a great alarm about possible contagion, as they call it, the ripple effect across finance around the world. What do you make of the significance of the default, and if there is no deal? And do you think part of this–and I know it, it doesn’t seem to have had that much attention. But I can’t imagine the U.S. government and the Fed are just sitting there. Has the Fed decided they’re simply going to back the Euro and let Greece take its punishment, or its lesson? LAPAVITSAS: I don’t know what the Fed are doing. But the U.S. government certainly have been very heavily involved because they’re worried about the economic consequences, but also the geopolitical consequences. They’re very concerned about that. There is a lot of geopolitics in this to do with Russia, to do with China, to do with the Eastern Mediterranean generally. And obviously the U.S. government is deeply concerned about this. Now, in terms of the markets, I–you know, I’ve never said that Greek cares, or Greek unrest, was likely to cause a disaster in global markets. Now, this would have happened in 2010. That was the time where Greece could really have [inaud.] in its interests, because the global banks were exposed to Greece because the European Union was not prepared for a crisis, and so on. But Greece didn’t, it imposed the terrible situation on its own people, and it allowed the lenders to strengthen their own position. So things are very different now. The Greek banks are not connected to the European banking system very heavily. European banks are not exposed to Greek debt. So even if Greece defaults or even if it exits the Euro, the immediate impact will not be that dramatic. But the moral impact will be very great. Because don’t forget, the Euro is supposed to be an irreversible currency. If Greece defaults and makes its way to the exit eventually, it will have been shown that the Euro is very much reversible. Considering that the Euro is a [sick] currency, the European monetary union is a diseased union, then that would be a very powerful event with demonstration effects down the line. JAY: So in this moment now, the negotiations presumably start again I think on Tuesday, which is tomorrow, given when we’re doing this interview. Or I think there’s going to be a new proposal. The Greek government’s going to make a new proposal on Tuesday. And I guess that begins more negotiations. Assuming that the Troika, European finance doesn’t back up significantly, it seems there really is only this, two choices. Either major concessions on the part of the Greek government in spite of this vote. But given that vote it seems that if the European finance doesn’t move–and I don’t see why they’re going to now. As I said in part one, some of the people in those circles are saying it’s time to teach Greece its lesson. Then what else is there except to start at least a parallel currency, if not get out altogether, of the Euro? LAPAVITSAS: Not much. I don’t expect the lenders to back down. Because there’s very little that’s new on the table. The lenders don’t respect democracy anyway. And the lenders will find themselves in a very weak political position if they, if they’re seen to back down to Greek demands now. The Portuguese might want a better deal then, the Spaniards, and so on. So I don’t expect the lenders to show much flexibility now. The Greek government will find it very hard to back down, because the very strong vote for the no creates its own dynamic. No government will be able to renege on that. So draw your own conclusions. We’re heading towards major events in Greek and European history. JAY: Just to flesh out some of the things you said in part one of this interview, you had three things, sort of radical measures, the Syriza government should do. It started with nationalizing the banks. Just flesh that out a bit, what does that look like? LAPAVITSAS: Greek banks at the moment have got a majority public ownership, share ownership. But their shares are not common stock. Therefore they haven’t got voting rights. So we’ve got the [inaud.] here, a sham. Whereby the capital in the banks is owned by the public overwhelmingly, but the management is basically private, and the people who run the banks are basically the people who ruined the banks, by and large. These people don’t see eye-to-eye with the government. And they’re not making it easier for the government to be able to make its own policy. So what we need immediately is intervention, and a normalization of the operations of the banks to the degree to which it can be normalized. Obviously there’s very little liquidity, but there’s no reason why the banks could not start doing more banking transactions even behind closed doors. There is no reason why the banks could not facilitate some fairly normal economic activity even if there are capital controls and banking controls. So we need to nationalize the banks, effectively, and we need to operate very quickly to start having some banking activity in the economy once again to unblock the markets. JAY: And what do they do–what happens in the short term? I heard on the radio last night that some of the ATM machines at the banks where people are supposed to be able to get their 60 Euros a day out are out of Euros. The banks, the actual machines and banks are running out of actual cash. LAPAVITSAS: Yeah, cash is a big problem. It’s unfortunate. The state and Syriza should have been better prepared. But such is life. This was done when the banknote stock within the banks was very low. The European Union is not providing new banknotes. Who will know what Mr. Draghi will do today, of the European Central Bank. If that’s the situation, then the state needs to start paying with other means of payment. Denominated in Euros, maybe. Not banknotes, which we cannot create. But other means of payment. That’s an option. JAY: But will people–I mean, people have to have faith in whatever the document is. And if it’s in Euros and people think, well, there won’t be any more Euros, then what effect will the documents have? LAPAVITSAS: Obviously that’s a problematic situation. That’s exactly why you need to nationalize the banks, and that’s why you need to prepare the economy for a difficult ride. That’s what I’m telling you. This is not an easy time. The Greek people have said no. That means that they’re ready for whatever is going to come their way. Well, that’s what’s going to come their way, probably. They’ve got to be ready for that. JAY: Well, again–so that comes back to the second point, which is the media. There’s been such a propaganda war, and it’s really remarkable how ineffective the private media was in swaying the vote over to the yes side. It’s really remarkable, as I don’t know, another country where you’ve had such a media barrage and people were not taken in by it. But from what you said last time, one, there’s the issue of the money the private media owes the government. Does that mean if they don’t pay that you would then close them down? LAPAVITSAS: What I do know for sure is that the Greek people want a settlement of the media situation at the moment. They detest the current regime. They detest the fact that the media is in the hands of a small group of oligarchs who are, who want the old regime to come back. They are desperate for a change. And the anger is palpable. So there are ways of dealing with the legal issues, and they should be mobilized very quickly. That doesn’t mean shutting down these stations. But if they’ve got obligations they should be called upon to pay them. JAY: I mean, and one thing you could do with the payments I suppose is strengthen the public broadcaster. LAPAVITSAS: That goes without saying. The public broadcaster must be strengthened immediately. The public broadcaster is very important right now. But in addition to that, the Greek people want action to be taken with regard to the oligarchs, the small band of rich people who control big business in Greece. Who are perceived to be corrupt, very closely connected to the state, taking advantage of public procurement, and enriching themselves in all sorts of devious ways. The Greek people want action there, and Syriza has been very slow. JAY: Do you or does the Greek government know how many Euros the Greek elite is sitting on? I mean, in Greek banks one would think there’s a lot of Euros that belong to the oligarchs that you’re talking about. LAPAVITSAS: I don’t know. The oligarchs will have moved a lot of their money out of the country. They’ve been very prudent at that. But my sense is that if one started probing into the banking system properly, with a good group of civil servants with a lot of power to open the bank books, because that’s what’s missing. That’s what proper nationalization means. I am sure that we will discover hidden banknotes. Hidden banknotes that are not used. And therefore we’d be able to put them in the ATMs for a period. We need to take over the banks as quickly as possible, that’s priority. Take over the banks, open the books, see what the bankers have been doing. Because I’m sure that the bankers are the enemy of this government, and I’m sure they’re not telling the truth. That’s absolute priority, and we need to move quickly in the coming days. It’s a matter of survival now. JAY: Thanks very much for joining us, Costas. LAPAVITSAS: Thank you very much, Paul, and I hope to be able to talk to you again with better news from Greece. JAY: And thank you for joining us on the Real News Network.
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