The Greek referendum: a peculiar situation and an infamous act

Eurogroup president Dijsselbloem meets Greece's finance minister,Jan.'15. Demotix/ Angeliki Panagiotou. All rights reserved.
Rees Jeannotte, acTVism Munich. (RJ): James Galbraith – thank you for joining us!

James
Galbraith (JG): My pleasure

RJ: So
Sunday, July 5, was a very big day in Europe and an extremely important one for
Greece. The people of Greece voted overwhelmingly to reject the bailout terms
set by ‘the institutions’. They voted ‘NO’ in a bid to end 5 years of painful
austerity.Can you give
us a quick synopsis of the lead-up to the referendum and your thoughts on these
past 5 days since the referendum. There has been some major happenings with
Yanis Varoufakis stepping back, Samaras stepping back and I think something
that will be on a lot of peoples minds is: Why was the referendum necessary?
Since it appears that they have accepted most of the austerity that Greece
voted against.

JG: Well it was a very peculiar situation. The referendum became
necessary because Alexis Tsipras realized, I think in some way, on the June 26
that the institutions were not prepared to give him anything that he could
bring back to the Greek parliament that would be acceptable. Greece had come up
with a proposal which made really drastic concessions to the enforced austerity
that they’ve been under. They simply wished to do that in a different by
increasing taxes on high income individuals and on business profits of a
certain level. The institutions refused to accept that and insisted on cuts to
low-income pensions and on increases in the value-added tax, especially out in
the Islands where it is very destructive to the tourist trade.

So that was
an impasse that had to be resolved somehow. I think it is fair to say that the
expectations on a part of the Greek government was that, given the alternative
of a ‘NO’, which they recommended and a ‘YES’, which would avoid a closure of
the banking system and given the extreme campaign of intimidation that was
pursued in Greece, they expected that the Greek population would vote ‘YES’ and
that the government would then be under an obligation by basically the mandate
of the people to sign onto the terms and to put an end to the crisis even on
terms that they themselves regarded as being very damaging and unacceptable.

That was the
extent to which they were backed into a corner, interestingly, and very much to
their credit the Greek population said ‘NO’ and they stood up and they were
very brave about it, in the face of a week of fantastic media intimidation and
efforts to instil fear and anxiety into the population, which the population
simply refused to buckle under and so you got the referendum results that we
saw on Sunday night.

However that
did not change the underlying situation which was that the government had no
options short of taking Greece of the Euro which they were not prepared to do
and did not feel they had the political mandate for. So they were faced again
with the necessity of coming back and attempting to extract at least the cover
of some debt restructuring and refinancing as the price for accepting most of
what the Institutions and what creditors countries were demanding.

And that’s
what happened. Obviously, Yanis Varoufakis departed in good order because that
would have been something extremely difficult for him to take responsibility
for as Finance Minister.

RJ: So, there
has been a lot of criticism especially from the Left regarding Syriza’s
strategic approach to the negotiations, with some saying perhaps it was a bit
naive to assume that the so-called “European partners” were willing to
negotiate in good faith. Can you respond to that criticism? Would there have
been some other strategy they could have adopted that would have been any more
successful?

JG: Well the
Greek government, and particularly the part of it that I spoke to and happened
to be speaking to all the way through, were not under any illusion about the
hard line that the creditors were going to take at the end of January. That was
stated both publicly by them and in private by Wolfgang Schäuble. So the fact
that the creditors were not going to give any thing short of the original
memorandum was something that was imminently clear to insiders from the very
beginning.

But that’s
something that you have to demonstrate to the larger public. It is not obvious
to the wider world that this intransigence is the case, particularly when the
European institutions who have a very powerful media machine, kept talking about how flexible they were. The
IMF kept saying how flexible they were and basically spreading an entirely
different cover story to the world. So the Greeks had to stick with the
negotiations up to the very end basically in order to establish what the true
terms of the discussions were. I think that’s now clear to the world (unclear
closing sentence).

RJ: You
assisted former Greek finance minister, Yanis Varoufakis, in the negotiations.
Something that I think a lot of people might find interesting is how these
negotiations actually function. There is not a lot of transparency on what goes
on except for when the European Union decides to leak strategically whatever it
feels like leaking. I think it will be interesting for people to understand the
reactions to Syriza – this left-wing government coming into European politics –
at that level.

JG: Well
there are many things that one can say about that. One that comes to mind I
think is that the European institutions, the collection of finance ministers
known as the ‘Eurogroup’, were plainly unprepared for and quite shocked by the
audacity of a government coming in with a well-articulated critique of the
entire policy structure under which Europe has been labouring for the last 5
years. And that created a very considerable amount of tension because that was
something to which they had no credible response. So the response that they
chose was to go after Yanis Varoufakis particularly, personally, and to make
him out in the press to be something quite different from what he actually is
and that you know is a reflection of their raw power with respect to the media
and also to the complete lack of scruple in dealing with this government that
was difficult by virtue of the fact that it was expressing ideas that they not
want to hear, that were plainly well argued, well grounded in fact, and plainly
very difficult for people who were committed to contrary ideas to accept.

RJ: Yes you
have this rhetoric with this idea that Syriza is inexperienced, and quite a lot
of condescending talk, with Christine Lagarde saying that they need “adults in
the room” and such talk. So it seems apparent at least from that one side. Was
this basically a one-sided assault. From our view it didn’t seem to come from
the Greek side.

JG: Well
there is no question that the whole process was extremely one-sided. You had
the representatives of one small country, who admittedly were new to government
and did not have the staffing that would be required to go up against the establishment
that they were facing; and on the other side you have an enormously entrenched
bureaucracy and all of the powers of Europe behind them.

So yes, it
was extremely one-sided and the approach the other side took, the European side
and the IMF took with every Greek proposal was just simply to say, “Go back and
do it again, not acceptable”. They never gave any ground on of their own. They
never came back and said, “Here is a concessions we are prepared to make.” They
weren’t prepared to make any concessions. They simply said, and toward the end
they were utterly blatant in the threats that they made, that if the Greeks did
not come to terms on the “precise terms” specified by the institutions, then
the European Central Bank would act in such a way as to destroy the Greek
banking system and to seize the deposits of the Greek citizens and that is a
very powerful threat. Because once your banking system is gone your economy
cannot function.

So what we
have here is an agreement at the end of the day, that is not an agreement. It
is a contract that is being signed under force
majeure, under coercion. It is a contract which will I think be considered
in history as a very infamous act of, well really, blackmail.

RJ: Yes okay,
so I think we will stop there and we will continue our conversation in part 2.
Thanks for joining us!

Part one of a two-part interview first published
here by acTVIsm Munich on July 23, 2015.