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Alex Tsipras-- restoring dignity to Greek working families

With Greece and the EU planning for an orderly default and split-up, Greece's political parties, unable to form a coalition government, are getting ready for new elections next month. Polls show that Syriza, the new, left-leaning anti-Austerity coalition that came in second last month, would come in first if the elections were held today.

Anti-austerity Syriza would receive 22% of the vote if elections were held today, more than five percentage points higher than its May 6 result, according to a survey by the Pulse polling agency published in the To Pontiki weekly newspaper.

Support for the two formerly dominant parties--the conservative New Democracy and the socialist Pasok--which together comprised the previous coalition government, has also grown slightly, the poll showed, with New Democracy garnering 19.5% compared with 18.85% in the elections, while Pasok would receive 14%, up from 13.2%.

And Alexis Tsipras, the charismatic head of Syriza is warning Germany that if it cuts off funding to Greece, Greece will repudiate its debts, which is probably inevitable anyway. He's urging the E.U. to "consider a more growth-oriented policy to arrest Greece's spiraling recession and address what he calls a growing "humanitarian crisis" facing the country." Yesterday's G-8 summit at Camp David was all about growth and stimulus, not about austerity and stagnation. Presidents Obama and Hollane came out on top, successfully watering down "the German-led position that the best way to deal with a debt crisis is to quickly pay down debt by shifting the consensus to an acceptance that austerity is a means, not an end." Still German Finance Minister Wolfgang Schäuble said cash-strapped Greece needed to implement EU and IMF-imposed austerity measures as European solidarity was "not a one-way street... To tell the Greeks that they need not apply austerity deals to which they have agreed is to lie to them," Schäuble told the weekly Bild am Sonntag.

"Our first choice is to convince our European partners that, in their own interest, financing must not be stopped," Tsipras said in an interview with the Wall Street Journal Thursday. "If we can't convince them-- because we don't have the intention to take unilateral action-- but if they proceed with unilateral action on their side, in other words they cut off our funding, then we will be forced to stop paying our creditors, to go to a suspension in payments to our creditors."

...With Tsipras poised to win pole position in the upcoming vote and possibly becoming the country's next prime minister, Greece appears headed for a showdown with its European partners over the country's contentious-- and failing-- reform program, which the leftist leader wants to annul.

In the past few weeks, European leaders ranging from the continent's central banker to Germany's chancellor have made clear that reform program is a quid pro quo for receiving further payouts from Greece's latest 130 billion euro aid package, without which Greece will not have enough money to pay for basic services like schools and hospitals.

The high-stakes confrontation could determine within weeks whether Greece is cut off from international rescue loans and forced to print its own currency, or whether Europe blinks and lets Greece run bigger fiscal deficits longer, to prevent the spillover of financial panic to other indebted euro-zone nations, such as Portugal and Spain.

But Tsipras says that, if push comes to shove, Greece can manage on its own. By not paying its debts, the country will have enough cash to pay its workers and retirees. He also proposes cuts in defense spending, cracking down on waste and corruption, and tackling widespread tax evasion by the rich.

"Whatever we do, things will be difficult. But it will also be difficult at the same time for all of Europe because the euro will collapse," says Tsipras.

But he adds that both sides should step back "before we reach that point" and find a "European solution."

Greece's economy is now in a fifth year of recession and is officially expected to shrink by a further 4.7% this year-some private economists say the contraction could reach more than 7%-- while unemployment is close to record highs and more than half of all young people are out of work.

Tsipras, an engineer by training, recommends a stimulus package to boost the Greek economy and has called for tearing up the country's existing austerity-for-loan program.

He has suggested scrapping plans to lay off 150,00 public sector workers by 2015-which Greece has promised its European partners-and repealing recent measures to force down private sector wages. He also favors nationalizing the banking system so as to better direct lending policies, and speaks favorably of Franklin Delano Roosevelt's Depression-era New Deal program and U.S. President Barack Obama's growth measures-something which is lacking in Europe.

Recent public opinion polls show that Tsipras' message has gained traction with a crisis-weary Greek public who blame the country's two establishment parties-the conservative New Democracy and Socialist Pasok party-for leading the country into crisis.

Yesterday's Guardian portrayed Tsipras as thge kind of firebrand populist that makes Europeans, particularly conservative Europeans, very very nervous. Their headline uses It's a war between people and capitalism.

"I don't believe in heroes or saviours," says Alexis Tsipras, "but I do believe in fighting for rights … no one has the right to reduce a proud people to such a state of wretchedness and indignity."

The man who holds the fate of the euro in his hands-- as the leader of the Greek party willing to tear up the country's €130bn (£100bn) bailout agreement-- says Greece is on the frontline of a war that is engulfing Europe.

A long bombardment of "neo-liberal shock"-- draconian tax rises and remorseless spending cuts-- has left immense collateral damage. "We have never been in such a bad place," he says, sleeves rolled up, staring hard into the middle distance, from behind the desk that he shares in his small parliamentary office. "After two and a half years of catastrophe, Greeks are on their knees. The social state has collapsed, one in two youngsters is out of work, there are people leaving en masse, the climate psychologically is one of pessimism, depression, mass suicides."

But while exhausted and battle weary, the nation at the forefront of Europe's escalating debt crisis and teetering on the edge of bankruptcy is also hardened. And, increasingly, they are looking towards Tsipras to lead their fight.

"Defeat is the battle that isn't waged," says the young politician who almost overnight has seen his radical left coalition party, Syriza, jump from representing fewer than 5% of Greeks to enjoying ratings of more than 25% in polls.

"You ask me if I am afraid. I'd be afraid if we continued on this path, a path to social hell … when someone fights there is a big chance that he will win and we are fighting this to win."

...Tsipras, who turns 38 in July, wants me to know that the war is not personal. The enemy is not Berlin, until now the biggest provider of the monumental rescue funds keeping the debt-stricken economy afloat. "It is not between nations and peoples," he says. "On the one side there are workers and a majority of people and on the other are global capitalists, bankers, profiteers on stock exchanges, the big funds. It's a war between peoples and capitalism … and as in each war what happens on the frontline defines the battle. It will be decisive for the war elsewhere."

Greece, he says, has become a model for the rest of Europe because it was the first country to fall victim to the enforcement of hard-hitting "growth through austerity" policies pursued in the name of resolving the crisis.

"It was chosen as the experiment for the enforcement of neo-liberal shock [policies] and Greek people were the guinea pigs," he insists.

"If the experiment continues, it will be considered successful and the policies will be applied in other countries. That's why it is so important to stop the experiment. It will not just be a victory for Greece but for all of Europe."

Europe has to get this right because Portugal, Spain, Italy and possible Ireland are right behind Greece in line. There are 17 countries in the eurozone and Greece only accounts for 2% of the union's economy but an exit from the euro could undermine the entire edifice. Estimates are that financial losses for European governments and banks could be well beyond a trillion dollars, enough to not just accelerate the deterioration of the economies in the other peripheral EU nations but to bring on a global economic collapse equal or greater to what followed the Lehman Brothers collapse in 2008. Is the nation of Greece as too big to fail as the Wall Street banks were? Germany and its agents are demanding Greece adhere to "its" commitments under the inhuman austerity program its people have already rejected. Tsipras says that will not happen. “Syriza will not rot, it will never compromise, it will not betray anyone, it will never participate in a salvation government to rescue the bailout agreement.'' Friday Paul Krugman wasn't optimistic that Germany and its agents would do the right thing to stave off disaster or, as he so quaintly put it, Apocalypse.

[T]he euro (or at least most of it) could still be saved. But this will require that European leaders, especially in Germany and at the European Central Bank, start acting very differently from the way they’ve acted these past few years. They need to stop moralizing and deal with reality; they need to stop temporizing and, for once, get ahead of the curve... [W]ith the financial crisis of 2008, the flood dried up, causing severe slumps in the very nations that had boomed before.

At that point, Europe’s lack of political union became a severe liability. Florida and Spain both had housing bubbles, but when Florida’s bubble burst, retirees could still count on getting their Social Security and Medicare checks from Washington. Spain receives no comparable support. So the burst bubble turned into a fiscal crisis, too.

Europe’s answer has been austerity: savage spending cuts in an attempt to reassure bond markets. Yet as any sensible economist could have told you (and we did, we did), these cuts deepened the depression in Europe’s troubled economies, which both further undermined investor confidence and led to growing political instability.

And now comes the moment of truth.

Greece is, for the moment, the focal point. Voters who are understandably angry at policies that have produced 22 percent unemployment-- more than 50 percent among the young-- turned on the parties enforcing those policies. And because the entire Greek political establishment was, in effect, bullied into endorsing a doomed economic orthodoxy, the result of voter revulsion has been rising power for extremists. Even if the polls are wrong and the governing coalition somehow ekes out a majority in the next round of voting, this game is basically up: Greece won’t, can’t pursue the policies that Germany and the European Central Bank are demanding.

So now what? Right now, Greece is experiencing what’s being called a “bank jog”-- a somewhat slow-motion bank run, as more and more depositors pull out their cash in anticipation of a possible Greek exit from the euro. Europe’s central bank is, in effect, financing this bank run by lending Greece the necessary euros; if and (probably) when the central bank decides it can lend no more, Greece will be forced to abandon the euro and issue its own currency again.

This demonstration that the euro is, in fact, reversible would lead, in turn, to runs on Spanish and Italian banks. Once again the European Central Bank would have to choose whether to provide open-ended financing; if it were to say no, the euro as a whole would blow up.

Yet financing isn’t enough. Italy and, in particular, Spain must be offered hope-- an economic environment in which they have some reasonable prospect of emerging from austerity and depression. Realistically, the only way to provide such an environment would be for the central bank to drop its obsession with price stability, to accept and indeed encourage several years of 3 percent or 4 percent inflation in Europe (and more than that in Germany).

Both the central bankers and the Germans hate this idea, but it’s the only plausible way the euro might be saved. For the past two-and-a-half years, European leaders have responded to crisis with half-measures that buy time, yet they have made no use of that time. Now time has run out.

Greek vacations are likely to cost a lot less... and probably pretty soon.