Costas Panayotakis: Greece should default and leave the Eurozone as current policies lead to a decade of depression
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington.
In Greece, class warfare intensifies. The Greek government has agreed to a series of new austerity measures they say are necessary to avoid what they call disorderly default and chaos.
Now joining us to discuss the situation in Greece is Costas Panayotakis. He’s a sociology professor at New York City College of Technology at CUNY, author of the recently released book Remaking Scarcity: From Capitalist Inefficiency to Economic Democracy. Thanks for joining us, Costas.
COSTAS PANAYOTAKIS, PROF. SOCIOLOGY, CUNY: Good to be on your show, Paul.
JAY: So, first of all, outline the main features of what the Greek government on behalf of the Greek people have agreed to.
PANAYOTAKIS: Yeah. Basically, we’re talking a further round of cuts. We’re talking about cuts in the minimum wage of workers in the private sector that would bring wages of other workers down as well. And this is on top of, you know, wages that have already fallen by 15 percent over the last two years. We’re talking about pension cuts. We’re talking about deregulation of labor relations. So these are all measures that will further deepen the depression that the Greek economy is currently in, hence people’s growing opposition.
JAY: Yeah. One example, if I understand correctly, is the minimum wage is going to be reduced by, I think, 22 percent. What was the minimum wage?
PANAYOTAKIS: Well, the minimum salary was about â‚¬700 a month, which would be, like, $900 a month.
JAY: And that’s going to be reduced by 22 percent.
JAY: So, as you say, all of these measures, which include another massive round of privatizationsâ€”I think they’re talking about airports and seaports being privatized now. But as you said, all of this is going to deepen the depression, which obviously everybody knows. I mean, this is setting up a situation for a decade of deep depression. What is the objective here, then?
PANAYOTAKIS: Well, it’s a good question. The ostensible objective is to stabilize the fiscal picture in Greece. This is, of course, not happening. I mean, the reason we need, Greece needs another rescue package to avoid disorderly default is because the projections, the predictions regarding the first program have not worked out. And they have not worked out because when you basically throw the economy into a state of depression, the revenues, tax revenues will collapse, and what you have is a downward spiral. So some people would argue that this crisis is used as an opportunity to basically completely destroy labor rights and [incompr.] neoliberal restructuring of Greek society. This restructuring had been happening even before the current crisis, but now what we see with this crisis is this paradox of [crosstalk]
JAY: What’s been happening on the streets in the last few days, then?
PANAYOTAKIS: Well, people are basicallyâ€”the anger and the opposition to these measures is growing. The protest against the measures was very large on Sunday. And [incompr.] government used a lot of repression. Basically, downtown Athens was a gigantic gas chamber, because basically what youâ€”the political system is hanging on a thread and peopleâ€”the political elites are very afraid of the people, and they wanted to basically discourage them from continuing to demonstrate and put pressure on the deputies. And this pressure is being felt, because we’ve had a massive revolt from both major parties that support these austerity measures. More than 40 deputies revolted against their leadership, which is a relatively new phenomenon. We haven’t had revolts of that magnitude in the past.
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JAY: Now, people are describing that some of the people in the streets are protesters that have not protested before, that it’s not just the militants now, that the participation is far broader. What’s your sense of that?
PANAYOTAKIS: Yeah, I think that’s right, because everybody’s feeling the effects right now. The more these policies have had time to sort of work or not work, everybody is understanding what the impact will be. And people’s desperation grows. Unemployment has been skyrocketing. Poverty has skyrocketed. Homelessness, hunger. And all these phenomena affect even Greeks, who till very recently were solidly middle class. So, many of the people who used to support the two major parties, the conservatives and the Socialists, now are turning against them.
So the Socialist Party was elected two years ago with 43 percent of the vote. According to recent polls it only has 8 percent of the vote. So weâ€”and it’s not even a major party anymore. It’s, like, the fifth in terms of support. So you have a Parliament that no longer represents the wishes of Greek people basically pushing measures that will seal the fate of Greek citizens for the next decade, and doing so without letting Greek citizens have a say on the matter.
JAY: Now, there was a debate even on the left months ago about whether to push for default or not. Even, you know, on the left itself there were people saying that it would be so disruptive that there needed to be some kind of negotiations. But has that changed? What is your view? And what’s your sense of what the opposition is saying about default?
PANAYOTAKIS: Well, I think there is a growing sort of belief in the need for Greece to basically default or say no to this package. And the debate, of course, is whether Greece should get out of the eurozone or whether it should default and stay within the eurozone. And so I think the argument for defaulting and exiting the eurozone would be that this would allow Greece to devalue its currency and to gain competitiveness. The argument of, you know, defaulting and staying in the eurozone is that even though Europeans are threatening Greece to eject it from the eurozone, there is no legal mechanism that would allow them to do so. And the fact that this would have huge repercussions on the rest of Europe would basically force Europeans to reconsider their strategy, which is obviously not working and is affecting negatively not just Greece but other countries in Europe as well.
JAY: You’d think that would give Greece some leverage. But the technocrats that have taken over the Greek governmentâ€”and it seems most of the parties, you know, traditional parties, don’t want to use that leverage, I mean, the leverage being that the default would sendâ€”have big repercussions for Europe. And if Greece was to get out of the eurozone, it would have big repercussions. But they don’t seem to want to use that leverage. Why is that?
PANAYOTAKIS: Yeah, I think what you’re saying is exactly right. And, I mean, even foreign commentatorsâ€”there was an article in The New York Timesâ€”you know, hardly a leftist paperâ€”that they basically made the exact same point, that Greeceâ€”it seems like Greece is going to, you know, give up its last bargaining chip if it agrees to the European terms. And I think what you have, it’s a matter of balance of forces, social forces, within Greek society. Clearly the two, the Socialists and the conservatives, they’re not siding with the interests of ordinary Greeks. They’re siding with the interest of, you know, Greek banks and, you know, the Greek employers who benefit from all this neoliberal restructuring, and they have chosen to prioritize the interest of Greek and European capital and to basically do the bidding of European political and economic elites.
JAY: Now, just for people that aren’t following this story too closely, the party that calls itself socialist I don’t think most Greeks would think has much to do with what most people think of as socialism. But that kind of leads to a question. One of the reasons why the Greek government is agreeing to all this is because the left seems so divided. And there doesn’t seem to be a credible political party or force with a different vision for Greece that can gain popular support. Is that right? And, if so, is there anything changing on that? Is there some sense that there’s more of a united front developing?
PANAYOTAKIS: No. I mean, the left is divided. One of the interesting developments, of course, is that as the political system disintegrates, you have three major parties of the left now, according to the polls. There is the Communist Party. There is the partyâ€”another party of the left that have been around for a long time and goes back to theâ€”it’s a party of the non-Stalinist left. And then there is a new party that is closer to social democracy, and it is committed to staying in Europe, but it has been voting against the austerity measures. And this new third party is becoming, you know, pretty powerful, according to recent polls. I mean, it remains to be seen whether this will remain the case, but they have about 20 percent of the vote, and some people are thinking that perhaps it could become the main representative of the center-left, basically replacing the Socialist Party that is, you know, disintegrating before our eyes.
JAY: And what is your view? Should Greece default and pull out of the eurozone?
PANAYOTAKIS: Yeah. I think, you know, Greece is insolvent. It cannot repay its debts. It doesn’t make sense to continue these policies. These policies make the situation worse. And, you know, Greece should basically say, we cannot pay these debts, and we’re not going to agree to this rescue package under those terms. And I think if it does that and uses its leverage over the Europeans, it may very well force the Europeans to rethink their strategy, which is not working for Greece, and it’s not working for other European countries either.
JAY: Thanks very much for joining us, Costas.
PANAYOTAKIS: Thank you.
JAY: And thank you for joining us on The Real News Network.
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