Dimitri Lascaris of The Real News interivews Syriza MP Costas Lapavitsas
DIMITRI LASCARIS: This is Dimitri Lascaris for the Real News. On July 13 in the early morning Alexis Tsipras, the prime minister of Greece, entered into a deal in principle with the creditors of Greece which will involve the opposition of what are arguably harsher austerity measures than those that were rejected on July 5 overwhelmingly by the Greek people in a referendum. The Real News has sent a team to Athens to cover the aftermath of that development and to explore the consequences for the future of Greece of this new bailout agreement. Moments ago beside the parliament I interviewed Costas Lapavitsas, a member of the parliament for Syriza, about these very developments. Costas is a professor of finance at the University of London. He is a Guardian columnist, and he has written extensively on the causes and consequences of the Eurozone crisis.
LASCARIS: So Costas, on July 5 the Greek people voted 62 percent against the ultimatum that had been put to them by the creditors of Greece. And this was done in the face of intense pressure, both from outside of the country and within the country. In particular on behalf of the–by the media. The deal that was subsequently struck is viewed by many as having been a capitulation. Do you believe that the terms of that deal are fundamentally consistent with the mandate that was given by the Greek people in the referendum? COSTAS LAPAVITSAS: They are not consistent in the slightest. The terms of the deal completely contradictory to the vote at the referendum, which was strongly in favor of no, rejecting austerity. And also in complete contradiction to the electoral vote that allowed us to form government six months ago. They represent the complete capitulation on the part of the government. LASCARIS: And prior to the election in January of this year the government had formulated a platform, an electoral platform, that became known as the Thessaloniki program. Does any element of that program survive in the face of this most recent agreement with Greece’s creditors? LAPAVITSAS: No. None. When the Thessaloniki program was formulated, that was some time ago, towards the end of last year. And it was circulated with great fanfare, and it obviously had a lot of positive impact on the Greek people. I wrote an extensive critique of it in my blog that was widely read in Greece and abroad, saying that this is full of good intentions. And who could disagree with the kind of mild Keynesianism that it represents. Greece obviously needs it. But it’s unlikely that it will be implemented, because the funding of it is completely up in the air because it assumes that the money will come from the European Union, essentially, and that’s not going to happen. I got a lot of flack at that time. But obviously I was completely right because none of it has been implemented. And now it’s been shelved completely. The deal that has been signed by the government is the complete opposite of the Thessaloniki program. LASCARIS: The party and your support for the party going forward? LAPAVITSAS: First of all, there was no real debate at all. The proceedings were [urgent]. Just about every corner was shaved off. And everything was done at the speed of lightning. The deal was passed, the prior actions were passed, basically setting the terms for a new bailout agreement that will come later in full detail. It was passed with the votes of a good proportion of Syriza MPs. Perhaps two-thirds of the sitting members of parliament for Syriza. And the opposition. The right and the discredited parties from the past. They voted for it. There was never much doubt that they would vote for it. But the composition indicates what really happened. Those who had implemented bailout policies in the past five years and basically ruined the country, with us who provided the clear backing needed for this deal to go through. This is another bailout in the mold of the old bailouts. For us, roughly 40 MPs from Syriza who voted no or abstained, effectively it’s the same thing when it comes to parliamentary procedure. This represents an unacceptable path. We were elected and we promised the Greek people that we would abandon the road of bailouts. We cannot accept that. We argued and we were right to argue that this road is ruinous for Greece. We cannot possibly consent to another bailout. So we want the government to withdraw it and go back. We don’t want the government to fall. We’re not against the government of the left. We’re against the policies of the bailouts, we want to stick to our original program. LASCARIS: In Jacobin magazine two days ago, an extensive interview with Stathis Kouvelakis, who is an important member of Syriza’s Left Platform, was published. And in it he spoke about what he described as a constitutional principle, not necessarily a binding, written rule, but one that reflects historical practice. And I believe he called it [inaud.]. And according to this principle as he described it, if the government cannot muster from its own ranks a majority to support a legislative initiative then it is obliged, according to historical practice, to call an election. And you mentioned that 40 members of Syriza did not support the prior actions, and 36 of them I believe, or certainly in excess of 30, actually voted against them. Which means that the government did not succeed in mustering a majority from its own ranks to support the prior actions. Is it your view that the government is now obliged according to historical practice to call an election imminently? LAPAVITSAS: That’s not really what’s at issue here. We don’t want the government to fall. And we don’t want elections. We want the government to go back to its programming. We want the government to go back to what the original election committed it to and to what the referendum committed it to. The people have spoken twice in good numbers and they’ve said they don’t want bailouts. We want the government to comply with the people’s wish. And to implement the policy that’s away from bailouts, a different policy. That’s what we want. Elections, parliamentary principles, these are all very important. Parliamentary practices, these are all very important things and they have a role to play. But that is not the substance of the matter. The real question here is for Syriza as a party to have a real debate, for the people to understand what’s happening, and for the government to go back. We don’t want the government to fall. We want it to change course. LASCARIS: Now, you’ve been very clear that in order for the government to be able to implement its program, the Thessaloniki program, to be able to alleviate the rigors of the austerity program that had been inflicted on the Greek people, the government is going to have to take Greece out of the Eurozone. This was a view that you expressed quite clearly in a March 2015 op-ed in the Guardian, for example. In the Stathis Kouvelakis interview that was published two days ago he was asked whether you had recently backtracked from that position by expressing your concerns about whether Greece from a practical perspective, was ready for a Grexit. What today is your view as to whether or not it is necessary for Greece to withdraw from the monetary union in order for the government to implement an anti-austerity program? LAPAVITSAS: I would like first of all to urge some caution, because Greece is the original field of disinformation and misinformation. Much of it unfortunately emanating from within Syriza. Syriza has been particularly remiss in this regard. And some people, including me, are the focus of this. Whatever we say tends to get spun in ways that favor certain views, and so on. So let me be clear. If the question is, can Greece exit tomorrow morning without preparation of the people, of the institutions, of the mechanisms of power, of the banking system, a child could understand that this would have very severe implications and very negative implications. This question doesn’t exist. It’s a rhetorical question posed to instill fear. Of course, no country can change its monetary regime in 12 hours from a standing start. Of course. The real question here is, why did we come to this position? Why did this government, the Syriza government, bring us this position, if we are in this position? And that’s a big if, and I’d like to discuss it later. But why did they bring us to this position? Is it because no one warned it? Not at all. I personally and many others had warned time and time and time again. The number of times I’d said you need, we need a plan B, dozens. This was consistently ignored. Consistently ignored. LASCARIS: Well, let’s talk about why the government is not in a position at this particular moment in time to Grexit in a manner that will minimize the suffering to the population. Mr. Kouvelakis indicated that some within the leadership–and he specifically identified the deputy prime minister, Dragasakis–effectively burned that bridge by putting a stop to preliminary efforts to prepare for a Grexit. Is that a view that you share? LAPAVITSAS: I don’t think personal–I don’t level personal criticisms when it comes to this. What is beyond dispute is that the economic commission of Syriza has been a total failure. That is self evident, is the economic commission that formulated the Thessaloniki program, no part of which has been implemented or is implementable. So it is self evident. So the critique is actually reading the obvious. So insofar as people who have been associated with the economic commission, yes, well, they’ve got to–they’ve got to take their fair share of responsibility of what is happening and what has happened. So clearly someone hasn’t been doing their work at all. Someone didn’t read the situation properly. Didn’t prepare the party, didn’t prepare the people, and failed abysmally. Yes. LASCARIS: Now, recently the IMF for the second time–someone within the IMF leaked the research department’s assessment of the sustainability of Greek debt. The most recent leak indicates that staff of the IMF believe in the years ahead the debt to GDP ratio is going to peak at 200 percent. I think it’s currently around 180 percent. And that forms of debt relief that are far beyond anything envisioned by the deal struck on July 13 will be necessary, including up to a 30-year grace period and perhaps deep discounts in the face amount of the debt. The IMF historically clearly has underestimated the severity of the effects of austerity on the Greek economy. Do you believe that this too constitutes an understatement of what is likely to happen to the sustainability of Greek debt going forward? And if so, what do you think the magnitude of the debt relief is that would be required in order to render that debt sustainable? LAPAVITSAS: I think that what’s been happening with Greek debt is a scandal. And the damage it has caused to society and the nation is atrocious. It was obvious five years ago that Greece was bankrupt and it would never be able to pay its debt. Obvious anyone with the slightest association with the financial markets or with even passing acquaintance with monetary economics and banking theory would have been able to work it out in a weekend. He was clear. And yet the powers of the Eurozone refused debt relief, and the Greek elite refused to go ahead and unilaterally go for nonpayment, default, and so on. The result has been a catastrophic situation for the economy, which has made the debt worse in a pattern, in a process that we now understand very well. This is unfortunately continuing now. The new agreement will continue along those lines. And the reason is the bulk of Greek debt now is official debt, owed to other European powers through institutions. And therefore there’s a political problem in writing it off. Greece needs a substantial debt writeoff. But more than a substantial debt writeoff. I don’t know how big it’s going to be. We need to recalculate it, 50 percent, something in that region. But more than that, the real problem there is not so much the writeoff, per se. The writeoff is important because it would allow Greece to follow different policies. And that’s what people don’t understand. The problem with the debt is not that it imposes a major burden every year to service the debt. That’s bad enough. The real problem is because the debt becomes the focus of economic policy, everything in the country becomes geared to servicing the debt. And that, following the logic of the lenders, means austerity. And that is to shoot yourself in the foot. The real import of writing the debt off is that it would allow the country to follow a different path, the path that it needs. The path of expansion of demand. The path of rising incomes. The path that would free the country from these shackles and allow it to make the debt payable. This is so obvious, so manifestly clear from any economic perspective, it’s astounding that it hasn’t prevailed. The reason why it hasn’t prevailed is of course naked interest, economic interest on the part of the lenders and political interest on the part of Germany, fundamentally. LASCARIS: And given those political interests–and let’s talk specifically about Germany. Wolfgang Schauble, the finance minister, has stated quite clearly–at least up until recently was stating quite clearly that a debt writedown, a reduction in the face amount of the debt, was out of the question. And this is something that was echoed by the chancellor, Angela Merkel. More recently he has said, Schauble, that if Greece were to exit the Eurozone then legally from his perspective a writedown is something that could be accommodated. In your view is there any realistic prospect of the German government and the other governments of the Eurozone agreeing to the types of debt relief that will be necessary to render Greece’s debt sustainable and to allow it to pursue the humanitarian programs and the socially progressive programs that it sought to pursue? LAPAVITSAS: That is not possible within the Eurozone. I don’t believe for a moment that Greece can remain within the Eurozone and be given the type of debt relief that it needs, or be allowed to change its policies. That is manifest–it’s so clear. Again, the reason why the government was forced to capitulate a few days ago is because of membership, of Greek membership of the Eurozone. It’s because of the naked blackmail that Mr. Draghi of the European Central Bank exercised on Greece by basically turning liquidity off and bringing the banks to the point of collapsed. They used this blackmail and it was very effective, and Greece had to capitulate because it didn’t want to contemplate leaving the Eurozone. So I don’t think that if Greece remains in the Eurozone it will be offered significant debt relief, nor will it be given any other policy. That is the sad truth of it, and that must be understood even in this moment by Syriza, the rest of political organizations, and the Greek people. But let me say something else about Mr. Schauble. Because there’s a lot of talk in Greece at the moment, and talk emanating from Syriza as well with bad intentions on this. There are people who are trying to make out that the proposal for exiting the Eurozone is really Schauble’s proposal. Anybody who argues that Greece must exit is doing the work for Mr. Schauble, is making his bidding. This is not true, this is false. It’s a manifest falsehood. Manifest falsehood. The reason is clear. Mr. Schauble did offer a dilemma. A choice, a dilemma, to the Greek government. And that said very clearly on the one hand you can have a bailout, which will be very harsh and which would include creating a new fund to sell off your public property and which would include severe monitoring of every action by the government and so on. It is essentially a neocolonial arrangement. It offered Greece this path. It also offered Greece the path of temporary exit that as you mentioned previously, that would allow some kind of writeoff along the terms of the [inaud.] and both possibly some support for the new exchange rate. That’s what Schauble offered. The second part of his offer, the second part of the dilemma, is not what we’re advocating when we’re advocating radical exit, progressive exit. We want to nationalize the banks, we want to change the structure of the economy. We want to have an effective writeoff and so on. At least, it’s not the same thing. But let’s be clear about what Schauble offered. He offered these two things. And the Greek government went for the first. The bailout is Schauble’s policy. It’s just that the Greek government, Syriza government, opted consciously to go for that instead of the temporary exit that Schauble was offering. I wonder why. I want that to be discussed. And I want Syriza members to think deeply about that. What it says about the decision that was made and about the values and real, real beliefs behind this dilemma. LASCARIS: And if it is indisputable that Greece’s debt is unsustainable–and in fact Mario Draghi perhaps somewhat disingenuously said two days ago or yesterday that no one has ever disputed the unsustainability of Greece’s debt. But if it is in fact indisputable, and now the leadership of the Eurozone is openly acknowledging that fact, and if there’s no realistic prospect of the Eurozone agreeing so long as Greece remains within the monetary union to the types of debt relief that would be necessary to render that debt sustainable, then isn’t it in fact inevitable that despite this agreement and perhaps even moreso with this agreement there will be a default on all of Greece’s debt, and that that will precipitate a Grexit eventually? And isn’t the government now engaged in the very game of extend and pretend that it so eloquently denounced prior to the election? LAPAVITSAS: That’s exactly what the government engages in, and it’s a tragedy. Let me be absolutely clear. The Eurozone is a failed monetary union. I mean, whichever way you examine it, measure it, analyze it, this is one of the most failed monetary unions in the history of monetary unions. It’s just failed. And it’s causing enormous damage to Europe, it’s causing frictions, political unrest. It’s basically undone all the good that had been done to Europe the last four decades. The Eurozone has undone it. In the case of Greece the Eurozone is an unmitigated disaster. Greece basically doesn’t belong in the Eurozone. If you weren’t Greek and you weren’t subject to the culture and so on, the everyday life here, it would be so obvious again looking at it from the outside. This is a country that’s been thrashed by the Eurozone. It’s clinging on to the union tooth and nail, I mean, whatever the cost for its population, because of the decisions of its political and economic elite. It’s a tragedy. So Greece doesn’t belong in the Eurozone and monetary theory and experience tells us that when this is the case then countries will leave the monetary union. Greece exiting the monetary union is the natural and inevitable end of this, because the union has failed and Greece doesn’t belong in it. What’s happening now is that the torture is being protracted and an enormous cost is heaped on Greek society. And the cost now, as you indicated, adopting a third bailout. Not obtaining proper debt relief but possibly obtaining some cosmetic adjustments to the debt by extending its period or lowering the interest rate, which will not significantly affect the situation. No change in policies, but sticking with austerity. And in creating a dramatic situation for the country. No growth. Poverty. Emigration of its trained, skilled youth. Withering away of its industries and of its agriculture. A sad, peripheral little country in the fringes of Europe. That would be the price of clinging on to this failed monetary union, and the eventual outcome would be exit, yes. LASCARIS: Well thank you very much, Costas, for taking the time to speak to us today. And I hope we’ll have the opportunity to explore developments in the future with you. LAPAVITSAS: I thank you. LASCARIS: And thank you for joining us. Dimitri Lascaris for the Real News.
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