Costas Lapavitsas was professor of economics at SOAS before his election as Syriza MP. Here he poses five urgent questions for the Syriza leadership following Friday’s deal with the Eurogroup
The agreement of the Eurogroup is not completed, partly because we do not know yet what ‘reforms’ will be proposed by the Greek government today (Monday, February 23) and which of them will be accepted. But those who have been elected on the basis of the Syriza program, and believe the promises of Thessaloniki as our commitment to the Greek people, have deep concerns. It is our obligation to record them.
The general outline of the agreement is as follows:
1Greece asks for extension of the current credit support agreement, which is based on a series of commitments.
1The aim of opening is to enable the completion of the evaluation of the current agreement and to give time for a possible new agreement.
3Greece will immediately submit a list of ‘reforms’ which will be assessed by ‘institutions’ and finally agreed in April. If the evaluation is positive, will be released the money not given even the current agreement plus reimbursements from the ECB profits.
4;The existing funds of the Financial Stability Fund will be used exclusively for the needs of banks and will be out of Greek control.
5Greece is committed to fully and timely meet all its financial obligations to its partners.
6Greece is committed to ensuring ‘appropriate’ primary surpluses to guarantee the sustainability of the debt on the basis of the Eurogroup decision of November 2012. The surplus for 2015 will take into account the economic conditions of 2015.
7Greece will not revoke measures, or make unilateral changes that can have a negative impact on the budgetary targets, the economic recovery, or financial stability, as will be appreciated by those institutions’.
On this basis, the Eurogroup will start national processes for a four-month extension of the current agreement and urges the Greek authorities to immediately start the process for the successful completion of its evaluation.
It is difficult to see how, through this agreement, the ‘Thessaloniki’ announcements will be implemented, involving the deletion of most of the debt and the immediate replacement of memoranda with the National Reconstruction Plan. Those who were elected with Syriza pledged to move forward in the implementation of the National Plan regardless of the negotiations on the debt, because we need to restart the economy and relieve society. It is necessary therefore to now explain how these will be implemented and how will the new government to change the tragic situation it inherited.
To be more specific, the National Plan included four pillars at a cost for the first year as follows:
I Addressing the humanitarian crisis (1.9 billion).
II Restart the economy with tax cuts, setting “red loans” establishment Development Bank, reset the minimum wage to 751 euros (total 6.5 billion).
IIIPublic Employment Programme for 300,000 jobs (3 billion in the first year and another 2 billion in the second).
IVTransformation of the political system with interventions in local government and in parliament.
The sources of funding again for the first time planned as follows:
ISettlement of debts to the tax office (3 billion)
IICombating fraud and smuggling (3 billion)
IIIFinancial Stability Fund (3 billion)
IVNSRF and other European programs (3 billion)
Given therefore the release of Eurogroup, I ask:
National Reconstruction Plan
How will we fund the National Reconstruction Plan, where 3 billion of the Financial Stability Fund is now outside Greek control? The removal of these funds makes even more pressing the collection of large amounts of tax avoidance and settlement of tax debts in a very short time. How feasible is this prospect?
Remission
How can we gain debt cancellation, when Greece is committed to fully and in timely fashion fulfil all financial obligations to its partners?
Austerity waiver
How can we end austerity, when Greece is bound to produce ‘appropriate’ primary surpluses to make the existing, huge, debt ‘sustainable’? The ‘sustainability’ debt – as estimated by the Troika – was exactly the reason for the irrational hunting of primary surpluses. As the debt is not reduced significantly, how will ever end the primary surpluses that are catastrophic for the Greek economy and the essence of austerity?
Supervision and financial cost
How to proceed with any progressive change in the country, when the ‘institutions’ will exert strict supervision and prohibit unilateral actions? How will the ‘institutions’ allow implementation of the ‘Thessaloniki’ pillars, with their direct or indirect financial costs?
The future negotiation
What exactly will change in the next four months of ‘extension’, so that the new negotiation with our partners will lead us to better places? What will prevent the deterioration of the political, economic and social situation of the country?
These moments are absolutely critical to society, the nation and of course the Left. The democratic legitimacy of the government rests on Syriza’s programme. The minimum requirement is to have an open discussion amongst party members and the Parliamentary Group. The key is to keep the great support and momentum the Greek people have given us. The answers we find in the next period will determine the future of our country and society.
