Why has the new Greek government failed to accomplish so much of what it had promised? And where does that leave the Greek labor movement? The government’s and the labor movement’s problems stem from the same fact, which has endured since the February 2012 signing of the second bailout agreement: Greece is no longer a sovereign nation state. It cannot implement any fiscal policy without the troika’s support, backed principally by the German government, and since the terms of Greece’s bailout agreement require austerity, any deviation threatens the financial assistance that enables Greece to avoid defaulting on its debts. For Greece’s trade unions, the situation is comparably bleak. Changes to Greek industrial relations law, when combined with general economic collapse, have rendered the unions powerless to stop the degradation of the Greek workforce. The situation in Greece provides powerful evidence for the argument that the late scholar of contentious politics Charles Tilly made twenty years ago: “globalization threatens established rights of labor through its undermining of state capacity to guarantee those rights.” Although the forces at play in Greece are at least as much about regionalization as globalization, the basic logic of Tilly’s argument applies. Europe’s constitutional settlement, with monetary union at its heart, has compromised the Greek state’s capacity to regulate its internal affairs, further blurring the boundary between domestic politics and international relations. Greece’s labor unions can adjust to this new reality or resist it, but as long as it persists, their capacity to protect Greek workers’ rights will be meager.

Syriza’s Divisions and Its Policies

Since its inception as an outcome of a split within the Communist movement, Syriza has been a contested space for the Greek left. The split happened during the dictatorship (1967-1973) and was a result of an ideological cleavage between the cadres that operated illegally in Greece, advocating a broad coalition of communist and non-communist progressive forces, and those that operated in East European exile, advocating a narrowly Stalinist line. This divide persisted after democratization, manifest in the gap between the Stalinist Greek Communist Party (KKE) and the more ideologically diverse KKE-es. By the end of the Cold War, the KKE-es had committed to refounding itself as a non-Communist left party, and they formed Synaspismos in 1992 along with a group of KKE dissidents. Synaspismos was a catch-call organization of the left, emphasizing Greece’s new social movements for feminism, environmentalism, and participatory democracy. A decade later, this group became Syriza a loose-knit organization of many small party and non-party organizations committed to broadly leftist principles and participatory democracy.

Syriza’s internal divisions, some of which date back to divisions within Synaspismos, persist today. Its largest grouping is Left Unity, to which current Prime Minister Alexis Tsipras and his closest allies belong. It is derived from the catch-all Synaspismos and, as such, it is one of the more heterogeneous groupings of the party and the least revolutionary in its ideology. Most of Syriza’s Communists are part of Left Platform, an umbrella organization comprised principally of a small Trotskyite group and a larger, more powerful body called the Left Current which was one of Synaspismos’ leading groupings prior to the formation of Syriza. Left Platform, with Left Current in the forefront, has been the principal challenger to Tsipras’ Left Unity since 2013. The clearest area of disagreement between Left Unity and Left Platform is on the Eurozone question: the former argues for staying in, the latter is committed to getting out. Another disagreement pertains to the relationship between the party and the voters. More so than Left Unity, Left Platform views the party’s role as one of social mobilization. As Left Unity has steered the party toward electoral politics since the end of 2012, newer Syriza supporters and Left Unity adherents unhappy with Tsipras’ leadership have gravitated to Left Platform. Even as the party’s electoral appeal has increased, so too have the party’s adherents who are more committed to direct action tactics than electoral politics. Compared to the KKE, however, Syriza’s connections to the union movement are quite weak. I return to this final point, below.

The government’s policy program was a product of Left Unity’s influence within Syriza. There has been neither a push for an exit from the Eurozone, nor an effort to mobilize Greek people (either as workers or as citizens) to engage in social movement activism. Instead, the major planks of the platform were a reversal of years of fiscal austerity, pushing for a cancellation of so-called “odious” debt, and an end to the troika-negotiated bailout of 2012. The government called for increasing the minimum wage from €580 to €751 per month, increasing state pensions, and providing assistance to the country’s neediest citizens: food and energy provision, along with protection against foreclosures for homeowners behind in their mortgages. It also called for a crackdown on tax evasion and the halting of privatization schemes—including those of the Public Power Corporation of Greece and the Piraeus Port Authority—although the previous government’s completed privatization contracts were to be maintained. On foreign policy, the government sought closer relations with Russia and maintained the previous government’s support for Turkish membership of the EU. It also reached out to China almost immediately, seeking to reassure one of Greece’s most important investors that its interests in Greece would not be compromised.

The Dilemmas

Three factors—the structure of Greece’s debt obligations, the post-election collapse of the Greek economy, and the intransigence of Greece’s European “partners,” Germany above all—foiled the new government’s anti-austerity agenda. Only about a third of Greece’s enormous public debt was owed to the public sector in 2012, but in 2015, this figure had risen to 85%. The holders include the IMF, the ECB, and the ECB’s European Financial Stability Fund (EFSF), an institution built in 2010 specifically to resolve financial crises in EU member states. In practice, then, it is the countries that finance these bodies who would take a loss, if Greek debt was written off. At least, that is the argument of the German, French, Italian, and Spanish governments who have contributed the most to the EFSF. Given that most of the money lent to Greece since 2010 has gone to banks, not to the Greek government to spend, this rationale is suspect to say the least. But it is rhetorically powerful.

Furthermore, the election of so radical a regime accelerated the pace of bank withdrawals, thereby renewing Greece’s liquidity crisis. A confidence crisis followed closely behind, as interest rates returned to 2012 levels. The economic fallout from the new government’s first month in office created a need for supplementary financing, which the ECB granted by way of so-called “emergency liquidity assistance” (ELA), as fears that Greece would not be able to fulfill its obligations to its creditors became regular headlines in the European press. Finance Minister Yannis Varoufakis’ efforts to rally European governments (outside of Germany) to Greece’s position were doomed to failure.  They were undone first, by the reality that a debt write-down would look too much like wasted money from the perspective of European tax payers. Moreover, there was the reluctance of heavily indebted countries that had not received bailouts to grant Greece what they had not themselves been granted.  Finally, there was no ideologically sympathetic government to deal with. Thus did the circumstances of Greece’s 2012 bailout and the protracted crisis that followed confine the political possibilities of the new government.

The agreement of February 20th to extend the bailout triggered a shift from an offensive posture, by which the government sought to overturn the terms of its subjugation to the troika, to a defensive posture, by which the government sought to see what it could get away with while remaining a protectorate of the troika. The government’s initial efforts to shift the bargaining ground appears to have been based on two beliefs on the part of government negotiators that turned out to be wrong: first, that Germany was willing to give some ground and, second, that other countries would offer more than rhetorical support for Greece. Costas Lapavitsas and Stathis Kouvelakis—former college professors, members of Syriza’s Left Platform, and among the most strident advocates of Greece’s withdrawal from the Eurozone (or, “Grexit”)—have suggested that Tsipras and Varoufakis entered the negotiations under the assumption that Germany would be willing to compromise. The reality, however, is that Germany had little incentive to do so. Without a Greek threat of leaving the Eurozone, the Merkel government could easily play to its domestic supporters, who did not want to make any more sacrifices for the sake of Greece, however important such assistance might be for the future of the Eurozone. Furthermore, many analysts have quietly suggested that, unlike in 2012, a Greek default and even a withdrawal from the Eurozone, while damaging, would be easy to withstand. Had another anti-austerity party been in power in an important Eurozone player, such as Podemos in Spain, or had there been substantial electoral pressures from such a party in some other Eurozone countries, it is conceivable that Syriza might have found a sympathetic partner. But in fact, the opposite has been the case: the current Spanish government is hostile to Syriza, while the new Finnish government’s junior coalition partner is a far right party that rejects any further assistance to Greece. Absent short-term political incentives to cooperate with Greece, supporting a proposal for a debt write-off would bolster already-salient populist fear-mongering across the rest of the Eurozone.

The Grexit option

If the new government had sought to use Grexit as a bargaining chip, it is possible that the Merkel government would have been more willing to negotiate. However, such a strategy faced two obstacles. First, public opinion polls have shown for some time that a sizable majority of Greek citizens wants to keep the single currency. A more important problem is that publically announcing a willingness to leave the Eurozone almost certainly would have accelerated depositors’ abandonment of Greek banks. The renewed economic decline of 2015 surely would have accelerated in the face of such a panic. Merkel may have understood that, in which case the bargaining chip would have lost value. The immediate economic damage triggered by such a decision made it a highly risky one.

In the face of that uncertainty, however, is the certainty of further misery if the country adheres to the current course. Hence, the possibility of Grexit remains a topic of serious discussion within Syriza. One of the important differences that makes Grexit more conceivable now than several years ago, when it first seemed possible (if unlikely), is the huge shift in the balance of debt holdings from private to public sectors, mentioned above. Private sector interests would not be affected as profoundly in 2015, and the losses taken by sovereigns and international institutions would be quite small relative to national GDPs and asset holdings. In Greece itself, the logic in favor of Eurozone withdrawal now differs little from the logic in 2011-2012. This maneuver would trigger a default of government debts that have built up to even higher levels (as a percentage of GDP) since then. While Greece would be shut out of the long-term capital markets, that has been more or less the case in practice ever since mid-2010. The short-term cash shortage would eventually be made up for by more competitive exports, a more attractive tourism sector, and newly thriving small and medium sized enterprises geared toward domestic consumption. Greece’s usual foreign lenders in Europe would not return anytime soon, but Greece could find other lenders, perhaps in China or Russia.

Observers who claim that Greece should follow the path that Argentina took—intentionally defaulting on its debts and triggering massive currency devaluation—ought not to neglect three differences between the two cases. First, Greece’s export potential is simply not what Argentina’s was in 2001. While currency devaluation creates the potential for more competitive exports in theory, in practice it is unlikely to do so for Greece, because there are relatively few productive resources to be transformed into exportable goods. Hence, economic recovery would have to be geared toward domestic markets. Domestic markets require domestic consumption, which means that, even after a reversion to the drachma, subsequent asset devaluation would be necessary in order to make up for the decline in purchasing power over the previous five years. In essence, this would simply be austerity by other means.

Second, while Argentina’s peso was pegged to the US dollar, Greece is in fact part of a currency union; the drachma is gone. This means that a default as a first step toward Eurozone withdrawal would generate enormous problems unknown to Argentina. Even with the best of preparations, there would inevitably be a temporal gap between stocking banks and electronic ATMs with the new currency. Demonetizing a country’s economy, even for a short space of time, would spark enormous social discord, particularly in a country as politically polarized as Greece. A separate problem would emerge with regard to what might be called the financial patterning of the new currency holders. The massive bank withdrawals that have already taken place mean that depositors have either offshored their euro savings or are stockpiling them in their homes. A return to the drachma would therefore generate an enormous gap between flows of money (incomes and transfers), denominated in drachmas, and stocks of money (savings), dominated in euros. Back in 2012, observers who were worried about the Greexit scenario estimated a drachma-to-euro exchange rate of close to 1000-to-1. Today, given the massive internal devaluation generated by over three years of austerity, the exchange rate would likely be even steeper. A new currency would plunge in value very quickly, destroying whatever economic gains that might have been won.

The third difference between the two cases is that Greece is part of the EU, and its fate is bound up with its European “partners” in a way not comparable to anything Argentina faced in 2001. Rejecting the euro would jeopardize Greece’s future in the EU. Printing drachmas and trying to pay back loans in the new currency would very likely precipitate lawsuits before the European Court of Justice (ECJ). The ECJ would surely rule that all debts and bank deposits issued in euros must be repaid in euros. Given the state of government finances today, there is no way that the government could afford to pay out all of the euro-denominated deposits in Greek banks. Greece’s departure from the Eurozone could thereby result in defaults not only against foreign lenders and the Greek government, but also against the Greek citizenry.

A different interpretation of this third point is that the more deposits flow out of Greece, the more powerful Greece’s bargaining position becomes. The logic here is that the monies that Greek citizens and firms have withdrawn from their local banks and sent abroad have been made possible by the ECB’s all-too-generous ELA, mentioned above. This means that these private depositors are essentially moving public funds out of Greece. Eurozone withdrawal would yield a drachma-using Greek central bank on which the central banks of euro-using countries would place claims to fill the orders of Greek citizens who want to withdraw their money from banks outside of Greece. Since the new Greek bank would surely default on these claims, the banks of other Eurozone countries holding Greek citizens’ and firms’ deposits would take big losses. Hence, the longer the liquidity lifeline the ECB extends to Greece, the more damage would be done to private sector actors outside of Greece in the event of Eurozone withdrawal.

For Grexit advocates, the costs of Eurozone withdrawal constitute an investment in the future. In the medium and long term, Greek citizens would be better able to provide for themselves if the government had control over its own currency. The harm done to Greece’s EU partners would be the price of adjustment to a more internally coherent Eurozone. However, there are also noneconomic arguments for this path. Regaining responsibility for monetary policy would provide Greek governments with a crucial policy tool not only to bolster the economy but, perhaps more importantly, to restore national dignity. In a country with so long a history of foreign intervention—from subjugation to the Ottoman Empire to Nazi occupation to an authoritarian regime ably assisted by the US government—such a rationale is politically potent. Europe’s constitutional settlement looks to many Greek citizens like the latest version of this sequence, particularly now that Greece’s place in this settlement has generated such pernicious material consequences. A renewed economic crisis would be the price for an economically marginal country that insists on sovereignty by disembedding itself from the world’s most politically integrated region.

The Greek labor movement and the crisis

Syriza’s connection to the labor movement was quite weak prior to the 2012 elections. It created a group called Autonomous Intervention in 2002, designed to nurture connections in the executive boards of the two major union federations, ADEDY and GSEE, as well as a separate union federation called the Network of Trade Unionists in 2007. Neither of these groups was particularly successful. Since the 2012 elections, Syriza has attracted many former supporters of PASOK, the mainstream left since the 1970s whose fortunes deteriorated rapidly since 2010, who are repelled by the KKE’s radical sectarianism. While the union federation executive boards are typically staffed by PASOK members, PASOK’s decline has created space in the union movement for new political forces to assert themselves.

The Syriza victory contains contradictory trends for the Greek labor movement. On the one hand, the initial goodwill expressed toward the government has begun to evaporate, as the hopes and dreams of January 25th gave way to the harsh wake-up call of February 20th. The KKE-affiliated PAME, which primarily represents private sector works in the construction, textile, and shipping industries, has been on hand to lead workers’ protests since then, including those in front of the labor ministry to restore worker protections, in solidarity with American fast food workers on April 15th, and in support of the cleaning women that Syriza had promised to rehire but remained unemployed until early May. The civil servants’ union federation, ADEDY, has also led protests against the government’s willingness to pay its IMF creditors. It advocates immediate default, even if such an action leads to ejection from the Eurozone. The smaller private sector union federation, GSEE, advocates dealing with the troika, even if an agreement were to accommodate the troika’s demands. On the other hand, to the extent that the Greek unions have wielded any power over the past three years, it has been as resistors to the most far-reaching structural reforms that the bailout agreement stipulates for Greece. Now, the pressure is on Syriza to implement those very reforms that the previous coalition government, led by the conservative Antonis Samaras, was unable to implement for fear of alienating a huge segment of Greek society.

An alliance between Syriza and the KKE could be a politically powerful force, given the KKE’s influence in the labor movement. But the KKE’s sectarianism is intrinsic to its identity. It sees itself as the vanguard of a proletarian revolution, arguing that capitalism is Greece’s problem and that its role is to mobilize the working class through the union movement. Ever since an ill-fated effort to participate in a “united front” government in 1990, it has steadfastly refused to work with other parties. It sees Syriza as a political competitor just as surely as the other “bourgeois” parties. And it disparages the European Social Fora that have anchored Europe’s anti-globalization activism for the last 15 years, the Greek Indignados movement that models itself after the Spanish movement of the same name, and all other forms of protest that have emerged outside the union movement since the spring of 2012 as contrary to the interests and identity of the Greek working class. In any case, it is unclear how a more unified left might improve Greece’s bargaining position in negotiations with its creditors. Given the magnitude of the structural constraints facing the government of a non-sovereign state, a unified far left would generate contradictory impulses in Greece: on the one hand it might generate a militant collective identity that could restore hope and social coherence in a demoralized population; however, it might at the same time produce a combination of radicalization and polarization that could precipitate a return to sustained political violence, of which Greece has a long history.

Looking Ahead

Whatever mistakes the new government may have made—an ill-timed demand for war reparations from Germany, accusing Italy of having unsustainable debt on the eve of meeting with Italian officials for help, and so forth—the political options have been quite limited. The economic consequences of the government’s initial rejection of the troika were so dire that it retrenched rather than face a chaotic default and possible Eurozone ejection. But if it cooperates too much with the troika, it will be forced to either call for new elections or hold referenda if it wants to avoid a government collapse or reignite the street politics that have characterized anti-austerity campaigning prior to the election. Furthermore, it is unclear how cooperation with the troika helps Greece, since it simply means preserving the status quo ex ante whose destructiveness is what brought Syriza to power in the first place. The labor movement can adjust to the troika’s new regime or resist it. Currently, however, the unions are divided, with GSEE being more accommodating to the government’s current path than ADEDY, which advocates default, while PAME continues to chart its own, KKE-inspired path. Without solidarity among these forces, a trade union movement from below lacks the power it needs to galvanize Greek citizens into a coherent resistance movement. And without a Greek state capable of generating sustainable material change for a workforce degraded by years of austerity, Syriza’s populism lacks enough power to legitimate its calls for unity.