Category Archives: Capitalist Restoration and Counterrevolution

Isaac Asimov Reviews ‘1984’

Originally published in The New York Times.

REVIEW OF 1984

By Isaac Asimov

I’ve been writing a four-part article for Field Newspaper Syndicate at the beginning of each year for several years now and in 1980, mindful of the approach of the year 1984, FNS asked me to write a thorough critique of George Orwell’s novel 1984.

I was reluctant. I remembered almost nothing of the book and said so – but Denison Demac, the lovely young woman who is my contact at FNS, simply sent me a copy of it and said, ‘Read it.’

So I read it and found myself absolutely astonished at what I read. I wondered how many people who talked about the novel so glibly had ever read it; or if they had, whether they remembered it at all.

I felt I would have to write the critique if only to set people straight. (I’m sorry; I love setting people straight.)

A. THE WRITING OF 1984

In 1949, a book entitled 1984 was published. It was written by Eric Arthur Blair under the pseudonym of George Orwell.

The book attempted to show what life would be like in a world of total evil, in which those controlling the government kept themselves in power by brute force, by distorting the truth, by continually rewriting history, by mesmerising the people generally.

This evil world was placed only thirty-five years in the future so that even men who were already in their early middle age at the time the book was published might live to see it if they lived out a normal lifetime.

I, for instance, was already a married man when the book appeared and yet here we are less than four years away from that apocalyptic year (for ‘1984’ has become a year that is associated with dread because of Orwell’s book), and I am very likely to live to see it.

In this chapter, I will discuss the book, but first: Who was Blair/Orwell and why was the book written?

Blair was born in 1903 into the status of a British gentleman. His father was in the Indian civil service and Blair himself lived the life of a British Imperial official. He went to Eton, served in Burma, and so on. However, he lacked the money to be an English gentleman to the full. Then, too, he didn’t want to spend his time at dull desk jobs; he wanted to be a writer. Thirdly, he felt guilty about his status in the upper class. So he did in the late 1920s what so many well-to-do American young people in the 1960s did. In short, he became what we would have called a ‘hippie’ at a later time. He lived under slum conditions in London and Paris, consorted with and identified with slum dwellers and vagrants, managed to ease his conscience and, at the same time, to gather material for his earliest books.

He also turned left wing and became a socialist, fighting with the loyalists in Spain in the 1930s. There he found himself caught up in the sectarian struggles between the various left-wing factions, and since he believed in a gentlemanly English form of socialism, he was inevitably on the losing side. Opposed to him were passionate Spanish anarchists, syndicalists, and communists, who bitterly resented the fact that the necessities of fighting the Franco fascists got in the way of their fighting each other.

The communists, who were the best organised, won out and Orwell had to leave Spain, for he was convinced that if he did not, he would be killed From then on, to the end of his life, he carried on a private literary war with the communists, determined to win in words the battle he had lost in action.

During World War II, in which he was rejected for military service, he was associated with the left wing of the British Labour party, but didn’t much sympathise with their views, for even their reckless version of socialism seemed too well organised for him. He wasn’t much affected, apparently, by the Nazi brand of totalitarianism, for there was no room within him except for his private war with Stalinist communism. Consequently, when Great Britain was fighting for its life against Nazism, and the Soviet Union fought as an ally in the struggle and contributed rather more than its share in lives lost and in resolute courage, Orwell wrote Animal Farm which was a satire of the Russian Revolution and what followed, picturing it in terms of a revolt of barnyard animals against human masters.

He completed Animal Farm in 1944 and had trouble finding a publisher since it wasn’t a particularly good time for upsetting the Soviets. As soon as the war came to an end, however, the Soviet Union was fair game and Animal Farm was published. It was greeted with much acclaim and Orwell became sufficiently prosperous to retire and devote himself to his masterpiece, 1984.

That book described society as a vast world-wide extension of Stalinist Russia in the 1930s, pictured with the venom of a rival left-wing sectarian. Other forms of totalitarianism play a small role. There are one or two mentions of the Nazis and of the Inquisition. At the very start, there is a reference or two to Jews, almost as though they were going to prove the objects of persecution, but that vanishes almost at once, as though Orwell didn’t want readers to mistake the villains for Nazis. The picture is of Stalinism, and Stalinism only.

By the time the book came out in 1949, the Cold War was at its height. The book therefore proved popular. It was almost a matter of patriotism in the West to buy it and talk about it, and perhaps even to read parts of it, although it is my opinion that more people bought it and talked about it than read it, for it is a dreadfully dull book – didactic, repetitious, and all but motionless.

It was most popular at first with people who leaned towards the conservative side of the political spectrum, for it was clearly an anti-Soviet polemic, and the picture of life it projected in the London of 1984 was very much as conservatives imagined life in the Moscow of 1949 to be.

During the McCarthy era in the United States, 1984 became increasingly popular with those who leaned towards the liberal side of the political spectrum, for it seemed to them that the United States of the early 1950s was beginning to move in the direction of thought-control and that all the viciousness Orwell had depicted was on its way towards us.

Thus, in an afterword to an edition published in paperback by New American Library in 1961, the liberal psychoanalyst and philosopher Erich Fromm concluded as follows:

‘Books like Orwell’s are powerful warnings, and it would be most unfortunate if the reader smugly interpreted 1984 as another description of Stalinist barbarism, and if he does not see that it means us, too.’

Even if Stalinism and McCarthyism are disregarded, however, more and more Americans were becoming aware of just how ‘big’ the government was getting; how high taxes were; how increasingly rules and regulations permeated business and even ordinary life; how information concerning every facet of private life was entering the files not only of government bureaux but of private credit systems.

1984, therefore, came to stand not for Stalinism, or even for dictatorship in general – but merely for government. Even governmental paternalism seemed ‘1984ish’ and the catch phrase ‘Big Brother is watching you’ came to mean everything that was too big for the individual to control. It was not only big government and big business that was a symptom of 1984 but big science, big labour, big anything.

In fact, so thoroughly has 1984-ophobia penetrated the consciousness of many who have not read the book and have no notion of what it contains, that one wonders what will happen to us after 31 December 1984. When New Year’s Day of 1985 arrives and the United States is still in existence and facing very much the problems it faces today, how will we express our fears of whatever aspect of life fills us with apprehension? What new date can we invent to take the place of 1984?

Orwell did not live to see his book become the success it did. He did not witness the way in which he made 1984 into a year that would haunt a whole generation of Americans. Orwell died of tuberculosis in a London hospital in January 1950, just a few months after the book was published, at the age of forty-six. His awareness of imminent death may have added to the bitterness of the book.

B. THE SCIENCE FICTION OF 1984

Many people think of 1984 as a science fiction novel, but almost the only item about 1984 that would lead one to suppose this is the fact that it is purportedly laid in the future. Not so! Orwell had no feel for the future, and the displacement of the story is much more geographical than temporal.

The London in which the story is placed is not so much moved thirty-five years forward in time, from 1949 to 1984, as it is moved a thousand miles east in space to Moscow. Orwell imagines Great Britain to have gone through a revolution similar to the Russian Revolution and to have gone through all the stages that Soviet development did. He can think of almost no variations on the theme. The Soviets had a series of purges in the 1930s, so the Ingsoc (English Socialism) had a series of purges in the 1950s. The Soviets converted one of their revolutionaries, Leon Trotsky, into a villain, leaving his opponent, Joseph Stalin, as a hero. The Ingsoc, therefore, convert one of their revolutionaries, Emmanuel Goldstein, into a villain, leaving his opponent, with a moustache like Stalin, as a hero.

There is no ability to make minor changes, even. Goldstein, like Trotsky, has ‘a lean Jewish face, with a great fuzzy aureole of white hair and a small goatee beard’. Orwell apparently does not want to confuse the issue by giving Stalin a different name so he calls him merely ‘Big Brother’.

At the very beginning of the story, it is made clear that television (which was coming into existence at the time the book was written) served as a continuous means of indoctrination of the people, for sets cannot be turned off. (And, apparently, in a deteriorating London in which nothing works, these sets never fail.)

The great Orwellian contribution to future technology is that the television set is two-way, and that the people who are forced to hear and see the television screen can themselves be heard and seen at all times and are under constant supervision even while sleeping or in the bathroom. Hence, the meaning of the phrase ‘Big Brother is watching you’.

This is an extraordinarily inefficient system of keeping everyone under control. To have a person being watched at all times means that some other person must be doing the watching at all times (at least in the Orwellian society) and must be doing so very narrowly, for there is a great development of the art of interpreting gesture and facial expression. One person cannot watch more than one person in full concentration, and can only do so for a comparatively short time before attention begins to wander. I should guess, in short, that there may have to be five watchers for every person watched. And then, of course, the watchers must themselves be watched since no one in the Orwellian world is suspicion-free. Consequently, the system of oppression by two-way television simply will not work.

Orwell himself realised this by limiting its workings to the Party members. The ‘proles’ (proletariat), for whom Orwell cannot hide his British upper-class contempt, are left largely to themselves as subhuman. (At one point in the book, he says that any prole that shows ability is killed – a leaf taken out of the Spartan treatment of their helots twenty-five hundred years ago.)

Furthermore, he has a system of volunteer spies in which children report on their parents, and neighbours on each other. This cannot possibly work well since eventually everyone reports everyone else and it all has to be abandoned.

Orwell was unable to conceive of computers or robots, or he would have placed everyone under non-human surveillance. Our own computers to some extent do this in the IRS, in credit files, and so on, but that does not take us towards 1984, except in fevered imaginations. Computers and tyranny do not necessarily go hand in hand. Tyrannies have worked very well without computers (consider the Nazis) and the most computerised nations in today’s world are also the least tyrannical.

Orwell lacks the capacity to see (or invent) small changes. His hero finds it difficult in his world of 1984 to get shoelaces or razor blades. So would I in the real world of the 1980s, for so many people use slip-on shoes and electric razors.

Then, too, Orwell had the technophobic fixation that every technological advance is a slide downhill. Thus, when his hero writes, he ‘fitted a nib into the penholder and sucked it to get the grease off. He does so ‘because of a feeling that the beautiful creamy paper deserved to be written on with a real nib instead of being scratched with an ink-pencil’.

Presumably, the ‘ink-pencil’ is the ball-point pen that was coming into use at the time that 1984 was being written. This means that Orwell describes something as being written’ with a real nib but being ‘scratched’ with a ball-point. This is, however, precisely the reverse of the truth. If you are old enough to remember steel pens, you will remember that they scratched fearsomely, and you know ball-points don’t. This is not science fiction, but a distorted nostalgia for a past that never was. I am surprised that Orwell stopped with the steel pen and that he didn’t have Winston writing with a neat goose quill.

Nor was Orwell particularly prescient in the strictly social aspects of the future he was presenting, with the result that the Orwellian world of 1984 is incredibly old-fashioned when compared with the real world of the 1980s.

Orwell imagines no new vices, for instance. His characters are all gin hounds and tobacco addicts, and part of the horror of his picture of 1984 is his eloquent description of the low quality of the gin and tobacco. He foresees no new drugs, no marijuana, no synthetic hallucinogens. No one expects an s.f. writer to be precise and exact in his forecasts, but surely one would expect him to invent some differences.

In his despair (or anger), Orwell forgets the virtues human beings have. All his characters are, in one way or another, weak or sadistic, or sleazy, or stupid, or repellent. This may be how most people are, or how Orwell wants to indicate they will all be under tyranny, but it seems to me that under even the worst tyrannies, so far, there have been brave men and women who have withstood the tyrants to the death and whose personal histories are luminous flames in the surrounding darkness. If only because there is no hint of this in 1984, it does not resemble the real world of the 1980s.

Nor did he foresee any difference in the role of women or any weakening of the feminine stereotype of 1949. There are only two female characters of importance. One is a strong, brainless ‘prole’ woman who is an endless washerwoman, endlessly singing a popular song with words of the type familiar in the 1930s and 1940s (at which Orwell shudders fastidiously as ‘trashy’, in blissful non-anticipation of hard rock).

The other is the heroine, Julia, who is sexually promiscuous (but is at least driven to courage by her interest in sex) and is otherwise brainless. When the hero, Winston, reads to her the book within a book that explains the nature of the Orwellian world, she responds by falling asleep – but then since the treatise Winston reads is stupefyingly soporific, this may be an indication of Julia’s good sense rather than the reverse. In short, if 1984 must be considered science fiction, then it is very bad science fiction.

C. THE GOVERNMENT OF 1984

Orwell’s 1984 is a picture of all-powerful government, and it has helped make the notion of ‘big government’ a very frightening one.

We have to remember, though, that the world of the late 1940s, during which Orwell was writing his book, was one in which there had been, and still were, big governments with true tyrants – individuals whose every wish, however unjust, cruel or vicious, was law. What’s more, it seemed as though such tyrants were irremovable except by the chance of outside force. Benito Mussolini of Italy, after twenty-one years of absolute rule, was overthrown, but that was only because his country was suffering defeat in war.

Adolf Hitler of Germany, a far stronger and more brutal tyrant, ruled with a steel hand for twelve years, yet even defeat did not, in itself, bring about his overthrow. Though the area over which he ruled shrank and shrank and shrank, and even though overwhelming armies of his adversaries closed in from the east and west, he remained absolute tyrant over whatever area he controlled – even when it was only over the bunker in which he committed suicide. Until he removed himself, no one dared remove him. (There were plots against him, to be sure, but they never worked, sometimes through quirks of fate that seemed explainable only by supposing that someone down there liked him.)

Orwell, however, had no time for either Mussolini or Hitler. His enemy was Stalin, and at the time that 1984 was published, Stalin had ruled the Soviet Union in a ribbreaking bear hug for twenty-five years, had survived a terrible war in which his nation suffered enormous losses and yet was now stronger than ever. To Orwell, it must have seemed that neither time nor fortune could budge Stalin, but that he would live on forever with ever increasing strength. – And that was how Orwell pictured Big Brother.

Of course, that was not the way it really was. Orwell didn’t live long enough to see it but Stalin died only three years after 1984 was published, and it was not long after that that his regime was denounced as a tyranny by – guess who – the Soviet leadership.

The Soviet Union is still the Soviet Union, but it is not Stalinist, and the enemies of the state are no longer liquidated (Orwell uses ‘vaporised’ instead, such small changes being all he can manage) with quite such abandon.

Again, Mao Tse-tung died in China, and while he himself has not been openly denounced, his close associates, as ‘the Gang of Four’, were promptly demoted from Divinity, and while China is still China, it is not Maoist any longer.

Franco of Spain died in his bed and while, to his very last breath, he remained the unquestioned leader he had been for nearly forty years, immediately after that last breath, Fascism abruptly dwindled in Spain, as it had in Portugal after Salazar’s death.

In short, Big Brothers do die, or at least they have so far, and when they die, the government changes, always for the milder.

This is not to say that new tyrants may not make themselves felt, but they will die, too. At least in the real 1980s we have every confidence they will and the undying Big Brother is not yet a real threat.

If anything, in fact, governments of the 1980s seem dangerously weak. The advance of technology has put powerful weapons – explosives, machine guns, fast cars into the hands of urban terrorists who can and do kidnap, hijack, gun down, and take hostages with impunity while governments stand by more or less helplessly.

In addition to the immortality of Big Brother, Orwell presents two other ways of maintaining an eternal tyranny.

First -,present someone or something to hate. In the Orwellian world it was Emmanuel Goldstein for whom hate was built up and orchestrated in a robotized mass function.

This is nothing new, of course. Every nation in the world has used various neighbours for the purpose of hate. This sort of thing is so easily handled and comes as such second nature to humanity that one wonders why there have to be the organised hate drives in the Orwellian world.

It needs scarcely any clever psychological mass movements to make Arabs hate Israelis and Greeks hate Turks and Catholic Irish hate Protestant Irish – and vice versa in each case. To be sure, the Nazis organised mass meetings of delirium that every participant seemed to enjoy, but it had no permanent effect. Once the war moved on to German soil, the Germans surrendered as meekly as though they had never Sieg-Heiled in their lives.

Second – rewrite history. Almost every one of the few individuals we meet in 1984 has, as his job, the rapid rewriting of the past, the readjustment of statistics, the overhauling of newspapers – as though anyone is going to take the trouble to pay attention to the past anyway.

This Orwellian preoccupation with the minutiae of ‘historical proof’ is typical of the political sectarian who is always quoting what has been said and done in the past to prove a point to someone on the other side who is always quoting something to the opposite effect that has been said and done.

As any politician knows, no evidence of any kind is ever required. It is only necessary to make a statement – any statement – forcefully enough to have an audience believe it. No one will check the lie against the facts, and, if they do, they will disbelieve the facts. Do you think the German people in 1939 pretended that the Poles had attacked them and started World War II? No! Since they were told that was so, they believed it as seriously as you and I believe that they attacked the Poles.

To be sure, the Soviets put out new editions of their Encyclopaedia in which politicians rating a long biography in earlier editions are suddenly omitted entirely, and this is no doubt the germ of the Orwellian notion, but the chances of carrying it as far as is described in 1984 seem to me to be nil – not because it is beyond human wickedness, but because it is totally unnecessary.

Orwell makes much of ‘Newspeak’ as an organ of repression – the conversion of the English language into so limited and abbreviated an instrument that the very vocabulary of dissent vanishes. Partly he got the notion from the undoubted habit of abbreviation. He gives examples of ‘Communist International’ becoming ‘Comintern’ and ‘Geheime Staatspolizei’ becoming ‘Gestapo’, but that is not a modern totalitarian invention. ‘Vulgus mobile’ became ‘mob’; ‘taxi cabriolet’ became ‘cab’; ‘quasi-stellar radio source’ became ‘quasar’; ‘light amplification by stimulated emission of radiation’ became ‘laser’ and so on. There is no sign that such compressions of the language have ever weakened it as a mode of expression.

As a matter of fact, political obfuscation has tended to use many words rather than few, long words rather than short, to extend rather than to reduce. Every leader of inadequate education or limited intelligence hides behind exuberant inebriation of loquacity.

Thus, when Winston Churchill suggested the development of ‘Basic English’ as an international language (something which undoubtedly also contributed to ‘Newspeak’), the suggestion was stillborn. We are therefore in no way approaching Newspeak in its condensed form, though we have always had Newspeak in its extended form and always will have.

We also have a group of young people among us who say things like ‘Right on, man, you know. It’s like he’s got it all together, you know, man. I mean, like you know -‘ and so on for five minutes when the word that the young people are groping for is ‘Huh?’

That, however, is not Newspeak, and it has always been with us, too. It is something which in Oldspeak is called ‘inarticulacy’ and it is not what Orwell had in mind.

D. THE INTERNATIONAL SITUATION OF 1984

Although Orwell seemed, by and large, to be helplessly stuck in the world of 1949, in one respect at least he showed himself to be remarkably prescient, and that was in foreseeing the tripartite split of the world of the 1980s.

The international world of 1984 is a world of three superpowers: Oceania, Eurasia, and Eastasia – and that fits in, very roughly, with the three actual superpowers of the 1980s: the United States, the Soviet Union, and China.

Oceania is a combination of the United States and the British Empire. Orwell, who was an old Imperial civil servant, did not seem to notice that the British Empire was in its last throes in the late 1940s and was about to dissolve. He seems to suppose, in fact, that the British Empire is the dominant member of the British-American combination.

At least, the entire action takes place in London and phrases such as ‘the United States’ and ‘Americans’ are rarely, if ever, mentioned. But then, this is very much in the fashion of the British spy novel in which, ever since World War II, Great Britain (currently about the eighteenth strongest military and economic power in the world) is set up as the great adversary of the Soviet Union, or of China, or of some invented international conspiracy, with the United States either never mentioned or reduced to the small courtesy appearance of an occasional CIA agent.

Eurasia is, of course, the Soviet Union, which Orwell assumes will have absorbed the whole European continent. Eurasia, therefore, includes all of Europe, plus Siberia, and its population is 95 per cent European by any standard.

Nevertheless, Orwell describes the Eurasians as ‘solid-looking men with expressionless Asiatic faces’. Since Orwell still lives in a time when ‘European’ and ‘Asiatic’ are equivalent to ‘ ‘hero’ and ‘villain’, it is impossible to inveigh against the Soviet Union with the proper emotion if it is not thought of as ‘Asiatic’. This comes under the heading of what Orwellian Newspeak calls ‘double-think’, something that Orwell, like any human being, is good at.

It may be, of course, that Orwell is thinking not of Eurasia, or the Soviet Union, but of his great bête noire, Stalin. Stalin is a Georgian, and Georgia, lying south of the Caucasus mountains, is, by strict geographic considerations, part of Asia.

Eastasia is, of course, China and various dependent nations. Here is prescience. At the time Orwell was writing 1984, the Chinese communists had not yet won control of the country and many (in the United States, in particular) were doing their best to see that the anti-Communist, Chiang Kai-shek, retained control. Once the communists won, it became part of the accepted credo of the West that the Chinese would be under thorough Soviet control and that China and the Soviet Union would form a monolithic communist power.

Orwell not only foresaw the communist victory (he saw that victory everywhere, in fact) but also foresaw that Russia and China would not form a monolithic bloc but would be deadly enemies.

There, his own experience as a Leftist sectarian may have helped him. He had no Rightist superstitions concerning Leftists as unified and indistinguishable villains. He knew they would fight each other as fiercely over the most trifling points of doctrine as would the most pious of Christians.

He also foresaw a permanent state of war among the three; a condition of permanent stalemate with the alliances ever-shifting, but always two against the strongest. This was the old-fashioned ‘balance of power’ system which was used in ancient Greece, in medieval Italy, and in early modern Europe. Orwell’s mistake lay in thinking there had to be actual war to keep the merry-go-round of the balance of power in being. In fact, in one of the more laughable parts of the book, he goes on and on concerning the necessity of permanent war as a means of consuming the world’s production of resources and thus keeping the social stratification of upper, middle, and lower classes in being. (This sounds like a very Leftist explanation of war as the result of a conspiracy worked out with great difficulty.)

In actual fact, the decades since 1945 have been remarkably war-free as compared with the decades before it. There have been local wars in profusion, but no general war. But then, war is not required as a desperate device to consume the world’s resources. That can be done by such other devices as endless increase in population and in energy use, neither of which Orwell considers.

Orwell did not foresee any of the significant economic changes that have taken place since World War II. He did not foresee the role of oil or its declining availability or its increasing price, or the escalating power of those nations who control it. I don’t recall his mentioning the word ‘oil’.

But perhaps it is close enough to mark Orwellian prescience here, if we substitute ‘cold war’ for ‘war’. There has been, in fact, a more or less continual ‘cold war’ that has served to keep employment high and solve some short-term economic problems (at the cost of creating long-term greater ones). And this cold war is enough to deplete resources.

Furthermore, the alliances shifted as Orwell foresaw and very nearly as suddenly. When the United States seemed all-powerful, the Soviet Union and China were both vociferously anti-American and in a kind of alliance. As American power decreased, the Soviet Union and China fell apart and, for a while, each of the three powers inveighed against the other two equally. Then, when the Soviet Union came to seem particularly powerful, a kind of alliance sprang up between the United States and China, as they co-operated in vilifying the Soviet Union, and spoke softly of each other.

In 1984 every shift of alliance involved an orgy of history rewriting. In real life, no such folly is necessary. The public swings from side to side easily, accepting the change in circumstance with no concern for the past at all. For instance, the Japanese, by the 1950s, had changed from unspeakable villains to friends, while the Chinese moved in the opposite direction with no one bothering to wipe out Pearl Harbour. No one cared, for goodness’ sake.

Orwell has his three great powers voluntarily forgo the use of nuclear bombs, and to be sure such bombs have not been used in war since 1945. That, however, may be because the only powers with large nuclear arsenals, the United States and the Soviet Union, have avoided war with each other. Were there actual war, it is extremely doubtful that one side or the other would not finally feel it necessary to push the button. In that respect, Orwell perhaps falls short of reality.

London does, however, occasionally suffer a missile strike, which sounds very much like a V-1 or V-2 weapon of 1944, and the city is in a 1945-type shambles. Orwell cannot make 1984 very different from 1944 in this respect. Orwell, in fact, makes it clear that by 1984, the universal communism of the three superpowers has choked science and reduced it to uselessness except in those areas where it is needed for war. There is no question but that the nations are more eager to invest in science where war applications are in clear view but, alas, there is no way of separating war from peace where applications are in question.

Science is a unit, and everything in it could conceivably be related to war and destruction. Science has therefore not been choked off but continues not only in the United States and Western Europe and Japan, but also in the Soviet Union and in China. The advances of science are too numerous to attempt to list, but think of lasers and computers as ‘war weapons’ with infinite peaceful applications.

To summarise, then: George Orwell in 1984 was, in my opinion, engaging in a private feud with Stalinism, rather that attempting to forecast the future. He did not have the science fictional knack of foreseeing a plausible future and, in actual fact, in almost all cases, the world of 1984 bears no relation to the real world of the 1980s.

The world may go communist, if not by 1984, then by some not very much later date; or it may see civilisation destroyed. If this happens, however, it will happen in a fashion quite different from that depicted in 1984 and if we try to prevent either eventuality by imagining that 1984 is accurate, then we will be defending ourselves against assaults from the wrong direction and we will lose.

Source

Stalin & the Myth of the ”Old Bolsheviks”

Introduction

One often hears Trotskyists, Anarchists and bourgeois propagandists accuse Joseph Stalin of killing all or at least most of the so-called ”Old Bolsheviks” and thus being able to allegedly distort the true meaning behind Bolshevism/Leninism. Here I won’t be getting into a thorough debate about what is or is not the real core ideology of Bolshevism but I would like to examine the accusation that Stalin ”killed the Old Bolsheviks”.

1. Who were the so-called ”Old Bolsheviks”?

According to the groups mentioned above, i.e. left-communists, Trotskyists, Anarchists and Right-Wingers the term ”Old Bolshevik” typically refers to people such as Zinoviev, Kamenev, Bukharin, Rykov etc.

They allege that these people represented ”real Bolshevism” and that Stalin killed them to implement his ”Stalinist distortion of Bolshevism”.

But what makes these people ”Old Bolsheviks”? Sure enough some of them such as Zinoviev were long standing members of the Bolshevik party, but is that all that we’re talking about? Zinoviev, Kamenev & co. had numerous disagreements with Lenin, the founder and leader of Bolshevism so can they truly be called Bolsheviks at all? Second of all, there are many people who were also longtime members of the Bolshevik Party yet they don’t get the same status of being called ”Old Bolsheviks”.

We can only conclude that the Right-Winger, Trotskyist and their ilk define ”Old Bolsheviks” merely as people who were killed by Stalin. That is their only qualification.

2. The Real Old Bolsheviks

Interestingly Right and ”Left” critics of Stalin don’t seem to consider the following group of people Old Bolsheviks despite the fact that they obviously were – or at least ignore them when arguing that ”Stalin killed the Old Bolsheviks”.

Note: The Bolshevik faction ”RSDLP(B)” emerged in 1903-1907. The RSDLP itself was founded in 1898.

Stalin             (joined the RSDLP in 1899. Bolshevik as early as 1903)
Kalinin          (joined the party in 1898. Bolshevik at least as early as 1905)
Voroshilov    (joined the RSDLP(B) in 1903)
Orjonikidze   (joined the RSDLP(B) in 1903)
Sverdlov       (joined the RSDLP in 1902. Bolshevik as early as 1903)
Molotov        (joined the RSDLP(B) in 1906)
Kaganovich   (joined the RSDLP(B) in 1911)

These people were not killed by Stalin, in fact they were his allies and I would argue much better Bolsheviks then Zinoviev & co. However for some reason they do not seem to count.

3. Were Zinoviev, Kamenev & Bukharin really such good Bolsheviks?

I think it can be demonstrated rather easily that Zinoviev, Kamenev, Bukharin, Trotsky & co. were not particularly good Bolsheviks and for that reason calling them ”Old Bolsheviks” (that Stalin ’murdered’ to distort bolshevism) seems dubious.

Zinoviev & Kamenev:
Lenin himself wanted Z. & K. expelled from the Bolshevik party altogether due to their treachery on the eve of the October Revolution. Z. & K. opposed the revolution and criticized it in a bourgeois newspaper, thus revealing the Bolsheviks plan to overthrow the government to the class-enemy.

”When the full text of Kamenev’s and Zinoviev’s statement in the non-Party paper Novaya Zhizn was transmitted to me by telephone, I refused to believe it… I no longer consider either of them comrades and that I will fight with all my might, both in the Central Committee and at the Congress, to secure the expulsion of both of them from the Party… Let Mr. Zinoviev and Mr. Kamenev found their own party”
–LENIN, ”Letter to Bolshevik Party Members” (18th Oct. 1917)

Bukharin:
Despite being known as a Right-Winger for his views on economic policy, Bukharinists used to be thought of as a Left-Communist faction in the party. This is in the main due to their adventurism and opposition to the Brest-Litovsk peace-treaty.

Lenin slammed the actions of Bukharin & the ”Left”-communists in ”Peace or War?”

”…he who is against an immediate, even though extremely onerous peace, is endangering Soviet power.”

He also attacked Bukharin on the economic front in 1921 in his work ”Once Again On the Trade Unions: On the Mistakes of Trotsky and Bukharin”.

Trotsky:
Mentioning Trotsky in this context is perhaps superfluous but I will do it for the sake of thoroughness. He joined the party only in 1917 and cannot be called an Old Bolshevik in any case. Initially he was a Menshevik (1903-1905), then a member of the ultra-opportunist August Bloch (1907-1913) which Lenin ridiculed, opponent of the Zimmerwald Left that Lenin supported (1914-1916) and finally the semi-Menshevik Mezhraiontsy which ceased to exist in 1917. His disagreements with Lenin are too numerous to mention.

He was a longtime enemy of Lenin prompting Lenin to refer to him as a ”Judas”, ”Swine”, ”Scoundrel”, “bureaucratic” helper of the liberal bourgeois and calling his theory of Permanent Revolution both ”absurd” and half-menshevik. Instead of providing quotations sources for the claims will be at the end or otherwise this section would be too lengthy.

Lenin also attacked Trotsky for his flip flopping on the Brest peace deal and his ridiculous economic policy & poor handling of the trade unions together with Bukharin.

4. The Bloc of Rights & Trotskyites

In 1921 at the 10th congress of the RCP Lenin argued for the banning of factional cliques in the Bolshevik party. This was accepted and factions were either expelled or they capitulated. However after his death various factional groups sprung up. In 1927 Trotsky, Zinoviev & Kamenev were expelled from the party for factionalism after organizing an anti-party demonstration, though Z & K. later capitulated to Stalin.

Trotsky was exiled from the USSR, while Zinoviev & Kamenev were marginalized. The Bukharinists also lost the debate against Stalin & the majority. By 1932 Trotsky, Zinoviev, Kamenev & Bukharin had all lost their legitimate political power. Trotsky created a secret conspiratorial anti-soviet group which was joined by Z. & K. and later various Bukharinites. This group became known in the Soviet media as ”The Bloc of Rights & Trotskyites”.

This is the real reason for which these people were later arrested & executed. They wished to carry out destabilization against the Soviet government which was already worried about foreign Fascist invasions. All of this was denied by anti-soviet elements for decades but the discovery of various letters from Trotsky and his associates has proven it without a shadow of a doubt.                     

”…The proposal for a bloc seems to me to be completely acceptable.”
Trotsky to Sedov

”The bloc is organised, it includes the Zinovievists, the Sten–Lominadze Group and the Trotskyists…”
Sedov to Trotsky

One fights repression by means of anonymity and conspiracy…”
–Trotsky to Sedov

”As far as the illegal organisation of the Bolshevik-Leninists in the USSR is concerned, only the first steps have been taken towards its re-organisation.”
Trotsky (Dec. 16 1932)

Source: Library of Harvard College 13905c, 1010, 4782 quoted in Pierre Broué’s The “Bloc” of the Oppositions against Stalin

Whether or not you believe the actions of Trotsky & co. to be justified it is dishonest to claim they were framed or unjustly murdered for their so-called Bolshevism. They fought against the Soviet government and lost.

5. Conclusions: Will the Real Old Bolsheviks please Stand up?

Stalin did not in fact kill the Old Bolsheviks, he killed anti-Soviet renegades whose Bolshevik credentials were questionable at best. The real Old Bolsheviks were people like Kalinin and Voroshilov who supported Lenin since the beginning through thick and thin, not flip-flopping opportunists like Zinoviev who stabbed Lenin in the back when ever it was advantageous.

LENIN QUOTES ON TROTSKY:

”…Trotsky’s (the scoundrel… this swindler … pays lip-service to the Party and behaves worse than any other of the factionalists.”
–LENIN CW 34 p. 400 (1909)

”At the Plenary Meeting Judas Trotsky made a big show of fighting liquidationism…”
–LENIN ”Judas Trotsky’s Blush of Shame” (1911)

Trotsky… proclaiming his absurdly Left ‘permanent revolution’ theory.”

–LENIN ”Disruption of Unity Under Cover of Outcries for Unity” (1914)

Trotsky’s… theory has borrowed… from the Mensheviks…”
–LENIN ”On the Two Lines in the Revolution” (1915)

”The Bolsheviks helped the proletariat consciously to follow the first line… liberal bourgeoisie was the second… Trotsky is in fact helping the liberal-labour politicians in Russia…”
– LENIN, Ibid.

”What a swine this Trotsky is—Left phrases, and a bloc with the Right…”
–LENIN ”Letter to Alexandra Kollontai” (1917)

”It is Trotsky who is in “ideological confusion”… There you have an example of the real bureaucratic approach: Trotsky… Trotsky’s “theses” are politically harmful…”
–LENIN ”The Trade Unions, The Present Situation And Trotsky’s Mistakes” (1920)

”Comrade Trotsky is essentially wrong on all his new points… Trotsky and Bukharin have produced a hodgepodge of political mistakes”
–LENIN ”Once Again On The Trade Unions: The Current Situation and the Mistakes of Trotsky and Buhkarin” (1921)

Source

John Callaghan on Rajani Palme Dutt and Evidence for the Moscow Trials and Anti-Soviet Conspiracies

On pages 279-280 of the book Rajani Palme Dutt: A Study in British Stalinism by John Callaghan (Lawrence & Wishart 1993), the author writes the following:

“… the evidence points overwhelmingly to Dutt’s satisfaction with the Communist record. In preparing his book on The Internationale, for example, he had considered the inclusion of an anecdote to illustrate the ‘basic guilt of the accused’ [in the Moscow Trials]. Fortunately, although Dutt changed his mind about publication, this curious fragment survives and acquires an especially sinister light today in view of the fact that the Soviet state itself eventually admitted the falsity of the charges brought against the leading Bolsheviks in question. Dutt’s ‘evidence’ concerns ‘a lengthy day’s visit to the village at some distance from Moscow’ where Bukharin and Radek were at work in the summer of 1935. Here ‘under the seal of absolute secrecy’ they apparently ‘gave him a serious and alarming account… of the net in which they had become involved and of the dilemmas with which they were faced’. Dutt was told in very general terms, with no names mentioned, of how ‘opposition to the party, however much it might be felt to be justified at a given moment, can lead by its own logic step by step into the camp of counter-revolution’. He was accordingly advised to never enter this ‘fatal path of conflict with the party’ and retired with ‘the memory of this talk… like a nightmare’ weighing on his mind during the ensuing period. At first Dutt tried to convince himself that these old ‘friends and comrades’ had presented ‘an allegory to test him’ but he had ‘a lurking suspicion’ that their confessions of guilt were true and only failed to report them to the party by taking refuge in the ‘cowardly evasion’ that he had no grounds for certainty concerning their sins. Thus ‘when the trials followed, of Radek, and subsequently of Bukharin, it was as if a weight were lifted from the writer’s [Dutt’s] consciousness that, however terrible, the facts at last were out’. Dutt now read the trial statements of both men and as he did so ‘he felt as if he were reading the same story a second time, since their narrative corresponded so closely with what they had told him on that summer’s day and evening in 1935, even with many of the same phrases.'”

The source given is: Dutt, ‘Radek-Bukharin conversations ommitted from The Internationale’, 11 March 1964, CPGB archive.

DPRK: Death of Fidel Castro Ruz Is Great Loss to Korean People

The death of Fidel Castro Ruz, an outstanding leader of the Cuban revolution, is a great loss to not only the Cuban people but also the Korean people fighting on the same front against the imperialists.

The Korean people have highly respected Fidel Castro Ruz as a national hero of Cuba, outstanding leader of the Cuban people and a prominent anti-imperialist fighter.

He was a close friend of the Korean people and an eternal revolutionary comrade-in-arms who had always kept in his mind the comradely relations with President Kim Il Sung and leader Kim Jong Il and made all efforts to develop the friendly and cooperative relations between the parties, governments and peoples of the two countries and extended firm support and encouragement to Korea’s reunification and the cause of justice with invariable revolutionary principle and obligation.

He was an indomitable revolutionary fighter who defended the banner of socialism in the Western Hemisphere at a time when the red flags of socialism were lowered in different counties at the end of the 1980s and early in the 1990s and the U.S. imperialists escalated their moves to isolate and stifle Cuba.

During those days of hardship, the two countries stood firm in the same trench for socialism under the leadership of the great leaders and Fidel Castro Ruz, and the friendly and cooperative relations between the two parties, two governments and two peoples grew stronger.

Though he passed away, the precious feats he performed in developing the DPRK-Cuba friendship and the cause of socialism will be kept in the hearts of the two peoples and the progressives of the world forever.

The army and people of the DPRK will as ever invariably hold fast to the banner of socialism and get firmly united with the fraternal Cuban people and make all efforts to develop the friendly and cooperative relations between the two countries.

Ra Myong Song

Grover Furr on Archival Evidence for the Bloc of Rights and Trotskyites

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“Shortly after the Leon Trotsky Archive at Harvard’s Houghton Library was opened in January 1980, Trotskyist historian Pierre Broué discovered letters between Leon Sedov and his father Trotsky that proved the existence of a bloc between Trotskyites and other opposition groups within the USSR. Sometime in the middle of 1932 Sedov informed his father as follows:

“[The bloc] is organized. In it have entered the Zinovievites, the Sten-Lominadze group and the Trotskyites (former ‘[capitulators]’). The group of Safar. Tarkhkan has not formally entered yet – they stand on too extreme a position; they will enter in a very short time. – The declaration of Z. and K. concerning their enormous mistake in ’27 was made during negotiations with our people concerning the bloc, immediately before the exile of Z and K.” [70]

About the same time American historian Arch Getty was discovering that Trotsky had secretly sent letters to at least Radek, Sokol’nikov, Preobrazhenskii, Kollontai, and Litvinov. The first three had been Trotskyites before publicly recanting their views. Getty did not find the letters – only the certified mail receipts for them. Getty realized this meant that the Trotsky Archive has been ‘purged.’ These letters had been removed. Other materials had undoubtedly been purged as well. [71]

The only reason to “purge” the archives would have been to remove materials that would have seemed incriminating – that would have negatively impacted Trotsky’s reputation.As an examination of the question of the letter to Radek shows, the letters that we know were removed proved, at the very least, that Trotsky lied during the 1930s by claiming he never maintained contact with oppositionists inside the USSR when, in reality, he was doing so, and by claiming that he would never agree to a secret bloc between his supporters and other oppositionist groups in act he had done precisely that.

Evidently Broué found the implications of this fact very disturbing. He never mentioned Getty’s discoveries of Trotsky’s letters to his supporters and others inside the USSR or the purging of the Trotsky archive, even though Broué cites the same Getty publications (an article and a book) in a very positive manner. [72]

Therefore it has been well established by scholars by the mid-1980s that a Trotskyite-Zinovievite bloc did in fact exist and that it was formed in 1932 and that Zinoviev and Kamenev were personally involved. Sedov also foresaw the entry into the group of Safarov, who in any case had a group of his own.

In an interview with the Dutch social-democratic newspaper Het Volk during the second half of January 1937, at the time of the Second Moscow Trial, Sedov stated, in a slip of the tongue, that “the Trotskyists” had been in contact with the defendents at the First Moscow Trial of August 1936. [73] Sedov specifically named Zinoviev, Kamenev and Smirnov. Concerning Radek and Piatakov Sedov went on to say that “[t]he Trotskyists have had much less contact with them than with the others. To be exact: no contact at all.” That is, Sedov tried to withdraw his “slip” about Radek and Piatakov.

But Sedov did not even try and retract the information that preceded it: that “the Trotskyists” had indeed been in contact with “the other”: Smirnov, Zinoviev, and Kamenev. This interview, “slip of the tongue” included, was published in a provincial edition of Het Volk on January 28, 1937. It was noticed by the Communist press, which called attention to Sedov’s “slip of the tongue.” (Arbeideren, Oslo, February 5, 1937; Abejderbladet, Copenhagen, February 12, 1937.) Thanks to Getty we now know that the Communist press was correct. Sedov’s remark really was a “slip of the tongue.” We know that Sedov was lying because Getty had found evidence of Trotsky’s letter to Radek. Trotsky has indeed been in touch with Radek. Sedov’s first remark, about “much less contact,” was accurate.

Therefore we have good, non-Soviet evidence, confirmed by the Trotsky Archive, of the following:

  • A “bloc” of Zinovievites, Trotskyites, and others including at least the Sten-Lominadze and, perhaps, the Safarov-Tarkhanov group (with whom they were in any case in touch) and involving Zinoviev and Kamenev themselves, was indeed formed in 1932.
  • Trotsky had indeed been in touch with Zinoviev and Kamenev, as well as others, probably through his son and chief representative Sedov.
  • Trotsky was indeed in touch with at least Radek and Piatakov.
  • Trotsky really did send a letter to Radek, who was in Geneva at the time, in the Spring of 1932, just as Radek testified in the January 1932 Moscow Trial.
  • There is no reason to accept Trotskyist historian Pierre Broué’s conclusion that thus bloc was “ephemeral” and died out shortly after it was formed, because we know the Trotsky Archive was purged at some time, while Broué had no evidence to support that statement.

[….]

The Harvard Trotsky archive yielded to Broué and Getty unmistakable evidence that the “bloc” did exist; that Trotsky was in contact with the bloc’s members and his own supporters inside the USSR, and that Trotsky lied consistently about all these matters both in the Bulletin of the Opposition and to the Dewey Commission. No scholar today denies this. Kirilina, Lenoe, and Egge simply ignore the whole matter.

The NKVD of the 1930s termed the complexly-interlocking set of oppositional conspiracies the “klubok,” or “tangle.” If any of these conspiracies were acknowledged to have existed, it would be hard to deny the existence of the rest, since all the defendants implicated others in a chant that, directly or indirectly, connected them all. Admitting that the bloc of Trotskyites and Zinovievites did in fact exist would present the danger of a “slippery slope” to any historian who wanted to deny the validity of the other conspiracies. For once it is conceded that the first alleged underground opposition conspiracy really did exist, and therefore that both the Khrushchev and Gorbachev official reports, rehabilitations, and official historians were lying, it logically follows that other conspiracies, which these same sources also denied, might have existed too.

 – Grover Furr, “The Murder of Sergei Kirov: History, Scholarship and the Anti-Stalin Paradigm,” pages 131-133, 136.

Footnotes

[70] Harvard, Trotsky Archive 4782 p. 1; see Broué in Cahiers Leon Trotsky 1980 p. 36; Broué, “Party Opposition to Stalin…” p. 100.

[71] Other materials were certainly removed – “purged” – with traces of their removal remaining. For example, excerpts from a discussion between Trotsky and Sedov concerning the slogan “remove Stalin” (‘ubrat Stalina’) remain in the archive, but the full letters from which the excerpts were made are not there.

[72] We will examine this whole question in detail in a forthcoming work.

[73] “Het process te Moskou. Wie niet wil bekennen al doodgeschoten?” Het Volk 28 Jan. 1937 pp. 1 and 5. My sincere thanks to Sven-Eric Holmstrom for tracking down this article and generously providing me with a copy.

Michael Parenti: The Costs of Counterrevolution: Must We Ignore Imperialism?

Frente_Sur_Contras_1987

The following are excerpts from the book “The Sword and the Dollar: Imperialism, Revolution, and the Arms Race” by Michael Parenti, published by St. Martin’s Press, 1989.

The Costs of Counterrevolution

Throughout the 1980s, the counterrevolutionary mercenaries who have waged war against such countries as Nicaragua, Angola, and Mozambique, were described as “guerrillas.” In fact, they won little support from the people of those countries, which explains why they remained so utterly dependent upon aid from the United States and South Africa. In an attempt to destroy the revolutionary economy and thus increase popular distress and discontent, these counterrevolutionaries attacked farms, health workers, technicians, schools, and civilians. Unlike a guerrilla army that works with and draws support from the people, the counterrevolutionary mercenaries kidnap, rape, kill and in other ways terrorize the civilian population. These tactics have been termed “self-defeating,” but they have a logic symptomatic of the underlying class politics. Since the intent of the counterrevolutionaries is to destroy the revolution, and since the bulk of the people support the revolution, then the mercenaries target the people.

In Mozambique, for example, over a period of eight years the South African-financed rebels laid waste to croplands, reducing the nation’s cereal production enough to put almost 4 million people in danger of starvation. The rebels destroyed factories, rail and road links, and marketing posts, causing a sharp drop in Mozambique’s production and exports. They destroyed 40 percent of the rural schools and over 500 of the 1,222 rural health clinics built by the Marxist government. And they killed hundreds of unarmed men, women, and children. But they set up no “liberated” areas and introduced no program for the country; nor did they purport to have any ideology or social goals.

Likewise, the mercenary rebel force in Angola, financially supported throughout the 1980s by the apartheid regime in South Africa and looked favorably upon by the Reagan administration, devastated much of the Angolan economy, kidnapping and killing innocent civilians, displacing about 600,000 persons and causing widespread hunger and malnutrition. Assisted by White South African troops, the rebels destroyed at least half of Angola’s hospitals and clinics. White South African military forces, aided by jet fighters, engaged in direct combat on the side of the counterrevolutionaries. The rebel leader, Jonas Savimbi, offered no social program for Angola but was lavish in his praise of the apartheid rulers in Pretoria and critical of Black South African leaders.

So with the contra forces that repeatedly attacked Nicaragua from Honduras for some seven years. In all that time they were unable to secure a “liberated” zone nor any substantial support from the people. They represented a mercenary army that amounted to nothing much without US money-and nothing much with it, having failed to launch a significant military offensive for years at a time. Like other counterrevolutionary “guerrillas” they were quite good at trying to destabilize the existing system by hitting soft targets like schools and farm cooperatives and killing large numbers of civilians, including children. (While the US news media unfailingly reported that the Nicaraguans or Cubans had “Soviet-made weapons,” they said nothing about the American, British, and Israeli arms used by counterrevolutionaries to kill Angolans, Namibians, Black South Africans, Western Saharans, Nicaraguans, Guatemalans, and Salvadorans.)

Like counterrevolutionaries in other countries, the Nicaraguan contras put forth no economic innovations or social programs other than some vague slogans. As the New York Times reported, when asked about “the importance of political action in the insurgency” the contra leaders “did not seem to assign this element of revolutionary warfare a high priority.” They did not because they were not waging a “revolution” but a counterrevolution. What kind of a program can counterrevolutionaries present? If they publicize their real agenda, which is to open the country once more to the domination of foreign investors and rich owners, they would reveal their imperialist hand.

Like most of the Third World, Nicaragua during the Somoza dictatorship was one of imperialism’s ecological disasters, with its unrestricted industrial and agribusiness pollution and deforestation. Upon coming to power, the Sandinistas initiated rain forest and wildlife conservation measures and alternative energy programs. The new government also adopted methods of cutting pesticides to a minimum, prohibiting the use of the deadlier organochlorides commonly applied in other countries. Nicaragua’s environmental efforts stand in marked contrast to its neighboring states. But throughout the 1980s, the program was severely hampered by contra attacks that killed more than thirty employees of Nicaragua’s environmental and state forestry agencies, and destroyed agricultural centers and reclamation projects.

The US government is ready to accept just about anyone who emigrates from a Communist country. In contrast, the hundreds of millions of Third World refugees from capitalism, who would like to come to this country because the conditions of their lives are so hopeless, are not allowed to come in …

*

Must We Ignore Imperialism?

Woodrow Wilson, 1907

Since trade ignores national boundaries and the manufacturer insists on having the world as a market, the flag of his nation must follow him, and the doors of the nations which are closed against him must be battered down. Concessions obtained by financiers must be safeguarded by ministers of state, even if the sovereignty of unwilling nations be outraged in the process. Colonies must be obtained or planted, in order that no useful corner of the world may be overlooked or left unused.

Ronald Reagan

What I want to see above all else is that this country remains a country where someone can always be rich. That’s the thing we have that must be preserved.

Jeff McMahan

U.S. reasons for wanting to control the third world are to some extent circular. Thus third world resources are required in part to guarantee military production, and increased military production is required in part to maintain and expand U.S. control over third world resources …. Instrumental goals eventually come to be seen as ends in themselves. Initially the pursuit of overseas bases is justified by the need to maintain stability, defend friendly countries from communist aggression, and so on-in other words, to subjugate and control the third world; but eventually the need to establish and maintain overseas bases becomes one of the reasons for wanting to subjugate and control the third world.

Henry Kissinger, June 27, 1970 about Chile

I don’t see why we need to stand by and watch a country go Communist because of the irresponsibility of its own people.

*

Against Imperialism

The people who make US foreign policy are known to us – and they are well known to each other. Top policymakers and advisors are drawn predominantly from the major corporations and from policy groups like the Council on Foreign Relations, the Committee for Economic Development, the Trilateral Commission, the Business Roundtable, and the Business Council. Membership in these groups consists of financiers, business executives, and corporate lawyers. Some also have a sprinkling of foundation directors, news editors, university presidents, and academicians.

Most prominent is the Council on Foreign Relations (CFR). Incorporated in 1921, the CFR numbered among its founders big financiers such as John D. Rockefeller, Nelson Aldrich, and J. P. Morgan. Since World War II, CFR members have included David Rockefeller, chairman of Chase Manhattan Bank (and erstwhile CFR president); Allen Dulles, Wall Street lawyer and longtime director of the CIA; and, in the 1970s, all the directors of Morgan Guaranty Trust; nine directors of Banker’s Trust; five directors of Tri-Continental holding company; eight directors of Chase Manhattan; and directors from each of the following: Mellon National Bank, Bank of America, General Motors, Ford, Chrysler, Standard Oil of New Jersey, General Electric, General Dynamics, Union Carbide, IBM, AT&T, ITT, and the New York Times (a partial listing).

One member of the Kennedy administration, Arthur Schlesinger, Jr., described the decision-making establishment as “an arsenal of talent which had so long furnished a steady supply of always orthodox and often able people to Democratic as well as Republican administrations. President Kennedy’s secretary of state was Dean Rusk, president of the Rockefeller Foundation and member of the CFR; his secretary of defense was Robert McNamara, president of Ford Motor Company; his secretary of the treasury was C. Douglas Dillon, head of a prominent Wall Street banking firm and member of the CFR. Nixon’s secretary of state was Henry Kissinger, a Nelson Rockefeller protégé who also served as President Ford’s secretary of state. Ford appointed fourteen CFR members to his administration. Seventeen top members of Carter’s administration were participants of the Rockefeller-created Trilateral Commission, including Carter himself and Vice President Walter Mondale. Carter’s secretary of state was Cyrus Vance, Wall Street lawyer, director of several corporations, trustee of the Rockefeller Foundation, and member of the CFR.

Reagan’s first secretary of state was Alexander Haig, former general and aide to President Nixon, president of United Technologies, director of several corporations including Rockefeller’s Chase Manhattan Bank, and member of the CFR. Reagan’s next secretary of state was George Shultz, president of Bechtel Corporation, director of Morgan Guaranty Trust, director of the CFR, and advisor of the Committee for Economic Development (CED). Reagan’s secretary of defense was Caspar Weinberger, vice president of Bechtel, director of other large corporations, and member of the Trilateral Commission. The secretary of treasury and later chief of staff was Donald Regan, chief executive officer of Merrill, Lynch, trustee of the CED, member of the CFR and of the Business Roundtable. Reagan’s CIA director, William Casey, was director of the ExportImport Bank, head of the Securities and Exchange Commission under Nixon, and partner in a prominent Wall Street law firm. At least a dozen of Reagan’s top administrators and some thirty advisors were CFR members.

Members of groups like the Council on Foreign Relations and the Trilateral Commission have served in just about every top executive position, including most cabinet and subcabinet slots, and have at times virtually monopolized the membership of the National Security Council, the nation’s highest official policymaking body.’ The reader can decide whether they compose (1) a conspiratorial elite, (2) the politically active members of a ruling class, or (3) a selection of policy experts and specialists in the service of pluralistic democracy.

These policymakers are drawn from overlapping corporate circles and policy groups that have a capacity unmatched by any other interest groups in the United States to fill top government posts with persons from their ranks. While supposedly selected to serve in government because they are experts and specialists, they really are usually amateurs and “generalists.” Being president of a giant construction firm and director of a bank did not qualify George Shultz to be Nixon’s secretary of labor nor his secretary of the treasury. Nor did Shultz bring years of expert experience in foreign affairs to his subsequent position as Reagan’s secretary of state. But he did bring a proven capacity to serve well the common interests of corporate America.

Rather than acting as special-interest lobbies for particular firms, policy groups look after the class-wide concerns of the capitalist system. This is in keeping with the function of the capitalist state itself. While not indifferent to the fate of the overseas operations of particular US firms, the state’s primary task is to protect capitalism as a system, bolstering client states and opposing revolutionary or radically reformist ones.

Far from being powerless, the pressure of democratic opinion in this country and abroad has been about the only thing that has restrained US leaders from using nuclear weapons in Vietnam, and intervening with US forces in Angola, Nicaragua, and elsewhere. How best to pursue policies that lack popular support is a constant preoccupation of White House policymakers. President Reagan’s refusal to negotiate with the Soviets in the early 1980s provoked the largest peace demonstrations in the history of the United States. Eventually he had to offer an appearance of peace by agreeing to negotiate. To give this appearance credibility, he actually had to negotiate and even reluctantly arrive at unavoidable agreement on some issues, including the 1987 INF treaty.

Evidence of the importance of mass democratic opinion is found in the remarkable fact that the United States has not invaded Nicaragua. Even though the US had a firepower and striking force many times more powerful than the ones used in the previous eleven invasions of Nicaragua, and a president (Reagan) more eager than any previous president to invade, the invasion did not happen. Not because it would have been too costly in lives but because it would have been politically too costly. President Reagan would not have balked at killing tens of thousands of Nicaraguans and losing say 5,000 Americans to smash the Red Menace in Central America. When Marines were blown away in one afternoon in Lebanon, Reagan was ready to escalate his involvement in that country. Only the pressure of democratic forces in the USA and elsewhere caused him to leave Lebanon and refrain from invading Nicaragua. He did not have the political support to do otherwise. Invasion was politically too costly because it was militarily too costly even though logistically possible. It would have caused too much of an uproar at home and throughout Latin America and would have lost him, his party, and his policies I too much support.

The policies pursued by US leaders have delivered misfortune upon countless innocents, generating wrongs more horrendous than any they allegedly combat. The people of this country and other nations are becoming increasingly aware of this. The people know that nuclear weapons bring no security to anyone and that interventions on the side of privileged autocracies and reactionary governments bring no justice. They also seem to know that they pay most of the costs of the arms race and many of the costs of imperialism. From South Korea to South Africa, from Central America to the Western Sahara, from Europe to North America, people are fighting back, some because they have no choice, others because they would choose no other course but the one that leads to peace and justice.

Source

The Deindustrialisation of Contemporary Russia

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Tahir Asghar

The USSR, over the period of its tumultuous history, had built up a massive industrial, R&D and scientific potential so as to not only build a socialist society and defend it but also to secure its economic independence and growth and the full development of intellectual and material capacities of its population. Not only did the old industrial and scientific centres like Moscow and Leningrad witness massive expansion but many new such centres were set up in all the republics.

Moscow and its surrounding region continued to be the major economic region of the USSR, where the most diverse sectors beginning from aeronautic and cosmonautic, high tech defence industries and research institutions to linen and textiles factories were situated. The process and trends of economic and technological decline of the country in the period of restoration of capitalism find their particular reflection in the decline of these former centres of industrial and scientific excellence and their transformation into service hubs. What has happened there and is continuing to take place can be considered as a typical case of the overall trend of the shift in the emphasis towards the service sector on the rather flimsy ‘scientific’ hypothesis that all advanced economies are characterised by dominance of the service sector, totally contrary to the Marxist-Leninist position of the primacy of the sector of production of means of production as the foundation not only of the national economy but also as a determining condition for the real, not just formal, independence of a nation.

In the preceding 25 years, capitalism has expanded to become a truly globalised economic system. And during this period global capitalism has experienced a number of crises in many parts of the world – the South Asian crisis of 1997, the Russian crisis of 1998, the bursting of the tech bubble and finally the crisis of 2007 in the United States of America and then the crisis in the Euro zone. However, in the 1980s capitalism was being prescribed as the only system capable of providing sustained growth not only in the advanced capitalist countries, in the countries of the so-called Third World, but also in the countries of the socialist bloc. It was argued that only a market system based on private entrepreneurship produces optimal use of resources, minimises waste and maximises economic growth.

In the late 1970s the West experienced the information revolution. The spread of computer and information technology first to the corporate (manufacturing, small and medium businesses, retail, banking) sector and then to the households for personal use led to a sharp increase in labour productivity. At the same time the USA and UK saw the rise of right-wing political forces to power – Ronald Reagan in the USA and Margaret Thatcher in UK. Using the power of the mass media, prejudices of the middle class and above all the full force of the coercive apparatus of the state, they mounted a ruthless and ferocious assault on the working class in their respective countries and succeeded to a large extent in crushing the organised working class and trade union movement, from which it has yet to fully recover. They managed to convince large sections of the population that all the problems of capitalism can be resolved on the basis of the free play of market forces only if the ‘lazy’ and ‘pampered’ working class with its permanently increasing irrational demands was shown its place and the weak State that always gave in to their demands be withdrawn from active economic participation through the public sector, which needs to be privatised. So they argued and promptly proceeded to implement maximum deregulation of the production, distribution and exchange, withdrawal of the state from direct economic activity and curtailment of the power of workers organisations and trade unions.

Subsequently, policies based on these principles were not only sought to be promoted in, but also actively forced upon the developing countries of Latin America, Asia and Africa.

At about the same time that these changes were taking place in the UK and USA, the USSR, after a prolonged period of annual growth rates ranging between 4.5 and 6 percent, began to show signs of slowing down. The distortions in the economy that were in the making for a long time and serious shortcomings in the planning process unresolved since the Liberman reforms of the late 1960s began to manifest themselves with increasing severity, leading to serious shortfalls of many essential commodities and foodstuffs and deteriorating quality of social services all over the country. Further, the country found itself bogged down in an expensive, unexpectedly protracted and seemingly endless war in Afghanistan, putting additional pressure on government expenditure. This was also a time of political indecision as the ageing politburo and the Party leadership was proving to be increasingly incapable of asserting central control. This period from the late-1970s to 1985 is now generally referred to as the “stagnation” period.

The result was that the USSR appeared to be falling behind the West in economic development and increasingly unable to provide consistent growth in the living standard of the population. After a period in which three party secretaries came to power in quick succession, it was finally Gorbachev who was appointed the general secretary of the Communist Party of the USSR.

It was under his stewardship that the policy of Perestroika and democratisation was initiated. It appears that by this time the party leadership had factually come to the conclusion that the system of centralised planning has outlived its original role and is not capable any more on its own to provide the population with a growing standard of living, and needs to be supplemented, if not totally replaced (a view that was to become the official policy in just a few years time) by a non-state sector based on market principles. And thus with the passing of the bill on cooperatives and individual businesses, the foundation for private owned enterprises was laid. The passing of another Law on Enterprises also allowed management much more autonomy and freedom in decision-making, thereby diminishing further the power and capacity of the central authorities to control the enterprises. These measures and the political instability taken together led to a precipitous drop in the growth rate of the economy and plunged the country into a full-fledged economic crisis by 1989. Finally, the unsuccessful coup against Gorbachev and subsequent events leading to the dismantling of the CPSU and the Soviet Union imposed by Yeltsin, marked the end of the socialist world system.

Yeltsin and his group of advisers, all erstwhile high level functionaries of the CPSU, helped by their new found well-wishing ‘experts’ from the IMF and other financial institutions of the West, began, with all the zeal of the newly converted, to dismantle the whole structure and intricate network of the centrally planned economic system and replace it with an economy based on market mechanism and private property, i.e. capitalism. With this in mind a policy of stabilisation, liberalisation, privatisation and free foreign trade, already tried out in many other countries with disastrous consequences for most of them, nevertheless began to be carried out immediately in Russia. This policy came to be known as “shock therapy”. It was the beginning of the restoration of capitalism in Russia by Khrushchev’s ideological progenies.

The consequences in Russia of this transition to capitalism have been really shocking, especially in terms of its social costs. It still continues to exact its price – economic, social and (geo) political.

From a superpower, the country has been reduced to the status of a middle-order nation along with countries like India. From the second most powerful economy, just behind the United States, the country has been reduced to the status where it now stands alongside developing countries like Brazil and India. On many indicators of social development the country is now ranked alongside the least developed countries of the world.

The two books under review give a fairly complete and comprehensive picture of the decline of a country that was once one of the only two military and economic superpowers in the world and adequately describe the process and government policies resulting in this rather sorry state of affairs for a country endowed with all the wealth – intellectual and material – that no other country, with the exception of USA, can boast of.

The most striking feature of economic decline of the Russian Federation since 1991 has been the ‘de-industrialisation’ of the country accompanied by loss of its R&D and scientific leadership.

The book ‘Moscow City from an Industrial and Scientific Centre to a Collection of Shops and Offices’, by G.V. Krainev (Moscow, 2009), is a testimony to this process. It is a collection of articles describing and analysing the policy of reforms undertaken in the city of Moscow which has led to the destruction of the most organised and self-conscious section of the Moscow proletariat as the author says of both physical and intellectual labour. The book is divided into a number of themes which look at different aspects of the policy of capitalist reforms.

The ruling class of Russia, having concentrated in its hands unrestricted power following the dissolution of the CPSU, began to systematically undermine the very base of socialist production – large scale industrial production and its R&D and scientific support consisting of hundreds of scientific organisations and institutes employing hundreds of thousands of highly qualified personnel. This was done deliberately as part of the policy of converting socialist enterprises into capitalist undertakings of various forms. The industrial enterprises were first deprived of preferential access to financing their operations, by devaluing their assets, both old and new, through hyper-inflation and devaluation of the currency, by pushing these enterprises deep into debt and then letting them face international competition without any state support, and all this in the wake of disruption, following the collapse of the USSR, of the traditional ties with the other enterprises of the country that were suppliers of inputs or consumers for their products, by depriving the enterprises of new entrants of qualified and trained workers from the professional schools that were being hurriedly closed down and converted into play areas or shops and beauty salons, and lastly, declaring these enterprises insolvent, which then was used to demonstrate the ‘uncompetitiveness’ of the majority of enterprises built in the Soviet era.

It is also worth noting that these large-scale industrial enterprises were being carved up into innumerable small and medium joint stock and private companies, which appropriate from a fine-tuned production cycle the most valuable assets and resort to selling or liquidating the rest. The state also started to sell these enterprises to foreign buyers under the pretext of the need to increase the effectiveness of these enterprises. Such reorganisations, liquidations and bankruptcies of enterprises and factories have with time assumed massive proportions. In Moscow alone by the beginning of 2002 about 7000 were already liquidated and another 8000 were in the line (Krainev, p. 7). Thus already by 1999, as a consequence of the market reforms, the socio-economic structure of Moscow underwent a radical change. Moscow became centre of finance, business, trade and administration and the significance of industries as a factor of urban development has diminished drastically (Krainev, p. 8).

Industries are also increasingly becoming victims of speculation in land and real estate. The new Land Code of the country allows the owner of the factory to buy the land on which the factory is situated. This law has set in motion speculative activity related to land. The wealthier ‘entrepreneurs’ went on the offensive, buying out the workers’ shares of so-called unprofitable factories so as to take over the land, then close down the factories and build on this land offices, casinos, markets or malls and other such modern commercial units. Subsequently, this has become an epidemic affecting not only unproductive enterprises but also efficiently functioning and profitable ones (Krainev, p. 14).

Such processes on a national scale have brought about a radical change in the structure of the economy of the country as whole. Now, contrary to the situation earlier, the largest share in the growth of GDP is contributed by the export of fuel and energy resources and raw material and also because of high prices of these commodities on the international market. Only 2% of the growth in GDP can be attributed to the genuinely competitive sectors that have managed to counter imports and increase their own production. This has led to the degradation of critical sectors like manufacturing and agriculture, and over a period of15-20 years turn Russia from a producer country to an importer country especially of machines, equipment and food products and a country living off revenues largely from its oil exports. This is also reflected in the structure  imports that shows growing rates of import of machines and equipment between the years 2000 and 2006. Their share in the total imports grew from 31.1% in 2000 to 47.7% in 2006 (Krainev, p. 76). If in the period of market reforms and the spread and growth of capitalism in Russia, the industrial sector as a whole was the biggest victim; the situation of the manufacturing sector, especially that of machine building and engineering sectors, producing means of production can be described as disastrous.

This situation finds its reflection as in a mirror in the economic structure of Moscow. Since 1991 the structure of industrial production in Moscow has witnessed similar and significant change. Once the hub of production of modern machinery and engineering equipment, of sectors at the forefront industrial development, today the picture can only be termed as dismal. The leading industrial sector in the city is the food processing industry, both in terms of rates of growth and scale of production. The enterprises of the food industry account for a third of all the realised produce of the city, between 28 and 32% in monetary terms. During the reforms of the industrial sector of the city, the machine-building and metal-working industries have completely lost their former leading positions and now occupy a subordinate position, constituting only about 25% in total volume of industrial production. Thus even according to official statistics the real fact is that the these two sectors of industry, the very core of industrial production, now together constitute only 2% of the Gross Regional Product of Moscow (Krainev, p. 82). “Machine building industry, which forms the technological foundation of all industry, and which under the Soviet Union effectively satisfied the requirements of all the branches of heavy, light and other industries, the requirement of the colossal national economy of the USSR, has been liquidated for all practical purposes” (Krainev, p. 92). Only the production of consumer goods and control systems is increasing and the production of the means of production is significantly on a decline. In this way a slow ticking bomb is being placed under the ground of national industries that will ensure dependence on supplies of technology from abroad for many years to come (Krainev, p. 93).

The Gross Regional Product also depends on the scale of investments in the economy of the region. The data of the Russian Statistical Committee differentiates between investments in fixed capital and foreign investments. Though investment in fixed capital shows growth in absolute terms in roubles, its share in the Gross Regional Product of Moscow has stagnated at around 11% and only towards the mid-2000s began to outstrip inflation. According to official data, one third of the investments is directed to overhauling of machines, equipment and means of transport. However, reports in the media suggest that not more than 6% of fixed equipment, much less than the required 8%, does not even ensure simple reproduction. In many enterprises equipment that was installed during the Stalin period is still in use. If we look at the sector-wise structure of investments, the largest share of investments flows into the transport and housing sectors (26% and 25% respectively) while only slightly more than 7% flows into the industrial sector, even less than in communications which stands at about 11%. These facts show that renewal of fixed capital in the industrial sector is not a priority for the authorities (Krainev, pp. 95-96).

The volume of foreign investments has been rising consistently since 2000. If in 2000 it was around US $4 billion then in 2006 it was approximately US $24 billion. According to the city authorities the most attractive areas of foreign investments in the economy of Moscow are trade, hotels, eateries and restaurant business, transport and reconstruction of large buildings. According to official statistics foreign investment in the industrial sector of the city is just a meagre part of the overall flows with a major part going into trade and food services (Krainev, pp. 98-99). Retail trade (malls, showrooms, boutiques), wholesale trade, production of beer, hotel business, all those areas that bring in quick and relatively high returns, have turned out to be the most attractive destinations for foreign direct investments. It is widely commented that sectors like machine building and the engineering industry, high technology, processing industry have not been able to attract any significant amount of foreign investments. Both Russian and foreign investors so far have shown interest primarily in areas that ensure high profits in the short term with a minimum of risks.

All these factors find their reflection in official economic data for Moscow: growth has been significant in production of electrical and optical equipment, means of transport, production of rubber and plastic goods, wood processing and wooden items and leather goods. Growth rates have declined in production of chemicals, metallurgy and metal items, machines and equipment (heavy and light), textiles and garments. The last two have seen in significant and consistent decline (Krainev, p. 111).

These radical changes in the structure of the national economy as exemplified by the experience of the erstwhile most powerful economic, scientific and R&D hub of the country – the city and region of Moscow – have negatively affected the technology and technical institutions, scientific research institutes and R&D organisations in the city and, consequently, the status and conditions of living of hundreds of thousands of workers and highly qualified scientists and technicians.

O.A. Mazur’s book ‘Development of the Workforce of Contemporary Russia’, (St. Petersburg University Publication, St. Petersburg, 2009) analyses the factors behind the Russian Federation’s relative social and technological backwardness and attempts to identify the contradictions in the development of social capital. He too highlights the decline of the industrial sector in Russia in general and of manufacturing in particular which now employs significantly fewer employees than during the Soviet period. There has been a 36% decline in the number of employees in industries (38.2% in machine-building sector) and a simultaneous ‘catastrophic’ decline in the number employed in science and R&D – 50%. Trade and finance sectors witnessed a high growth in the number of employees. According to him, industry continues to remain in a state of stagnation and only the best part of it has regained the levels of the late 1980s, a period that itself was one of negative growth (p. 42). Within industry too regressive shifts can be observed in the structure of employment – increase in the share of extracting industries accompanied by a decreasing share of employment in machine-building and light industries, i.e. exactly those industries that together account for the largest share in value addition.

These shifts are ultimately responsible for the terrible conditions that have resulted in extremely grim social development indicators: high rates of mortality in the working age group of the population and fall in the educational and skill levels of the workforce, food consumption and living conditions. Mortality in Russia is almost double that of the USA, France and Netherlands. The average life span for the whole population is 67 years, while it is 72 years for women and only 56 for men. This is about 10-15 years lower than in the West. Only 58% of the young men of the age of16 presently are expected to live until 60 years. The number of deaths in the working age group is catastrophically high and exceeds the levels in advanced countries by a factor of 1.5 – 2. Diseases related to the blood circulatory system are the main causes of this decline in the average life span of men and unnatural deaths among women, pointing towards deterioration of social conditions. Consumption of tobacco, generously supplied by the multinationals, along with alcohol consumption is also among the leading factors of high mortality rates in Russia (Mazur, p. 31).

A steep fall in the real wages of the majority of the population resulted in the decline of living conditions: food consumption, housing, fewer opportunities for recreational activities. All these also have been a major factor in the low life-span of the Russian population (Mazur, p. 30).

According to this author no fewer than 25% of men in the working age group are either totally or partially unfit to work. These and other factors of high mortality and incapacity to work in the Russian Federation have yet to be overcome, but now exert a cumulative affect (Mazur, p. 32). A comparison of the same indicators of health in the Russian Federation and UK shows that if in 1965 they had a broadly similar level of mortality due to curable diseases then by the end of 1990s in Russia it was about 3 times more than in UK. Mortality due to diseases related to blood circulatory system and infectious diseases in the Russian Federation is 3-4 times higher than in the USA, Norway and France.

The trend of decreasing employment in the industrial sector of Moscow observed by Krainev is also characteristic of the country as a whole, as shown by Mazur. In the 1990s according to Mazur the sectoral structure of the Russian economy changed dramatically and looked more like the structure of a pre-industrial economy. Since then not much change has occurred. The tendencies of the 1990s continue to dominate. The industrial sector has witnessed a 36% fall in the number of employed, agriculture – 20%, and construction – 23%, while there has been an 103% increase in the number of employed in the finance sector, in trade – 85%, and in State administration – 85%. Maximum loss of employment has occurred among the less-skilled workers of industry and construction sectors.

Regressive shifts can also be observed within the industrial structure of employment. There has been an increase in the share of employed in the extracting industries (from 12.5% in 1990 to 24% in 2005) while the share of machine-building and engineering sector in the total number of employed in industry declined from 38.2% to 26.4%, and of light industry from 11% to 6% over the same period of time (Mazur, p. 43). The changes thus have occurred in sectors that have the potential to add maximum value and in the case of machine-building and engineering sector, in addition, the ability to provide technological progress.

Thus, looking at the decline of the sectors that form the very basis of technological progress, it is hard to imagine how Russia can regain its position as a world leader in production and science and R&D. Manufacturing sector of industry, and more particularly machine-building and engineering sectors (Department A in Soviet terminology) are the crucial sectors that produce means of production for production of means of production and constitute the backbone, the basis of its security, independence, power and the future of scientific and technological development. Ignoring this fact would lead to colossal material and territorial losses, lagging behind in the development of the productive forces of the country and would give rise to serious problems in maintaining the military- defensive capabilities of the state.

Machine-building and engineering are foundational branches of industry and determine the course and nature of future industrial development, as it is in this sector that almost all the breakthrough discoveries and innovations take place. Having lost our own industries we lose everything: science, a highly-skilled work force, modern defence production, war-ready army and in the final count our economic and political independence.

It is clear that the real economic and political sovereignty of the state is determined by whether or not the state is capable of independently producing the crucial means of production for all other type of production. To put it simply, whether or not the state can produce in sufficient quantity machines and equipment needed for the core branches of the industry. From this perspective, the future of sovereignty of the Russian Federation is quite bleak (Mazur, p. 112).

Source

William Blum on the “Death of Socialism” in the 20th Century

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“The boys of Capital, they also chortle in their martinis about the death of socialism. The word has been banned from polite conversation. And they hope no one will notice that every socialist experiment of any significance in the twentieth century — without exception — was either overthrown, invaded, corrupted, perverted, subverted, destabilized, or otherwise had life made impossible for it, by the United States and its allies. Not one socialist government or movement — from the Russian Revolution to the Sandinistas in Nicaragua, from Communist China to the FMLN in El Salvador — not one was permitted to rise or fall solely on its own merits; not one was left secure enough to drop its guard against the all-powerful enemy abroad and freely and fully relax control at home. It’s as if the Wright brothers’ first experiments with flying machines all failed because the automobile interests sabotaged each test flight. And then the good and god-fearing folk of the world looked upon these catastrophes, nodded their heads wisely, and intoned solemnly: Humankind shall never fly.”

— William Blum, “Killing Hope: US Military And CIA Interventions Since World War II.”

The Greek Debt Crisis: A Misnomer for the European Imperialist Crisis

Anti-austerity demonstration before the Greek Parliament, July 3, 2015

Anti-austerity demonstration before the Greek Parliament, July 3, 2015

August 2015
Hari Kumar

1. An Introduction to Greece
2. The Truman Doctrine – Greece becomes dependent upon the USA after the Second World War
3. The Greek Junta – Greece by now fully a client state of the USA
4. Capitalist Class of Greece Moves to “Democracy” and Europe
5. The USA Makes Its Move to Become the World Imperialist Leader – The Character of the European Union – from pro-USA states to anti-USA coalition
6. The Greek Economic Crisis 2009-2015
7. The Marxist View of “National Debt” under capitalism
8. The Debt Crisis leads to increasing struggle of the growing Greek working class and gives rise to The United Front of Syriza – the political parties of the left
9. What was the elected programme of Syriza?
10. Elections of 2015 and Negotiations with the Troika
11. Conclusion
APPENDIX: Select Chronology 1975 to 2015

Synopsis:
After the Second World War, Greece was a client state in the Mediterranean of the USA. The revisionist collapse of the Yugoslav communists in the neighbouring state of Yugoslavia was key in this development. Tito’s degeneration into revisionism deprived the minority of the Marxist-Leninist forces in the Communist Party of Greece (KKE) of crucial support. We describe this in a subsequent more detailed article.

This article is restricted to the post Second World War development of Greece, up to the present-day debt crisis. It argues that the entire post-war history of Greece was effectively that of a neo-colonial state serving initially the interests of USA imperialism and British imperialism. The Greek people did not have a non-revisionist proletarian leadership that could develop an independent democratic path. The Junta and the imperialist machinations in Cyprus of the island further retarded the people of Greece. Both Greece and Cyprus – endured military oligarchic dictatorships sponsored by the USA.

The later history of Greece became inextricably entwined with the slow but sure evolution of the European imperialist bloc. This bloc took multiple only slowly coalesced, and eventually it later became the European Community. However during its coming into being, it took several class forms. The post-Marshall Plan in Europe had ushered in a dominant USA which fostered the first steps towards a federal Europe. In its hopes to control the European content as a market, the USA was at first successful. During this period the elements of a united Europe adopted a pro-USA comprador position.

This is also characterised the initial European Economic Union (EEC). But the Euronationlists finally, and haltingly, moved to release Europe to some extent, from the USA embrace. Following the fall of the former Comecon countries, Germany was able to move into a new market itself. This began a new phase. Now the rising German imperialists used their industrial superiority and new market share to re-vitalise their hegemonic ambitions.

Such events were milestones on the road to today’s debacle in Greece. They were the pre-history of the chronic indebtedness of the Greek state.

After the Junta “democratised” itself, Greece swopped the USA master for that of the EU. The EU progressed to be firmly dominated by the unified single unitary state of Germany, where German capitalists became the dominant faction. German capital exported both capital and industrial exports, including… to Greece. Over-riding the total market share of Greece accruing to Germany, are the huge debts of Italy and France to Germany – both at risk of potential default. This underlies the harshness of the German ruling class towards the Greek capitalist representatives in Greece today. Finally, current differences between the International Monetary Fund leader Christine Lagard (representing the USA interests) and the German leaders Angela Merkel and Schauble, show the continuing inter-imperial contradictions. This has engulfed Greece today.

1. An Introduction to Greece

Greece is set in the Eastern corner of the Mediterranean Sea and surrounded by the Aegean Sea:

“Greece has more than 2,000 islands, of which about 170 are inhabited; some of the easternmost Aegean islands lie just a few miles off the Turkish coast. The country’s capital is Athens, which expanded rapidly in the second half of the 20th century. Attikí (ancient Greek: Attica), the area around the capital, is now home to about one-third of the country’s entire population.

(http://www.britannica.com/place/Greece)”

In the modern era industrialisation has been slow, leaving Greece dependent upon agriculture, fishing and tourism. The only segment of industry that could be considered substantial is shipbuilding and related industries:

“The manufacturing sector in Greece is weak. …. In the 1960s and ’70s Greek shipowners took advantage of an investment regime that benefited from foreign capital by investing in such sectors as oil refining and shipbuilding. Shipping continues to be a key industrial sector—the merchant fleet being one of the largest in the world—(but) are extremely vulnerable to downturns in international economic activity, as they are principally engaged in carrying cargoes between developing countries.”

(http://www.britannica.com/place/Greece/Demographic-trends#toc26455)

As far as agriculture is concerned, produce is hampered by small peasant holdings, resulting from an early restriction on large land holdings:

“large landowners appeared relatively late (with the annexation of Thessaly in 1881) and only lasted till the agrarian reforms of 1917, which abolished big landed property in Greece irreversibly.”

(Mouzelis, Nicols. ‘Capitalism and Dictatorship in Post-war Greece”; New Left Review; I/96, March-April 1976).

In addition dry conditions and poor soil make agriculture at times tenuous.
In recent years the European Community has helped with various grant subsidies. Overfishing has hampered that other resource:

“Greece’s agricultural potential is hampered by poor soil, inadequate levels of “precipitation, a landholding system that has served to increase the number of unproductive smallholdings, and population migration from the countryside to cities and towns. Less than one-third of the land area is cultivable, with the remainder consisting of pasture, scrub, and forest. Only in the plains of Thessalía, Makedonía, and Thráki is cultivation possible on a reasonably large scale. There corn (maize), wheat, barley, sugar beets, peaches, tomatoes, cotton (of which Greece is the only EU producer), and tobacco are grown. Other crops grown in considerable quantities are olives (for olive oil), grapes, melons, potatoes, and oranges, all of which are exported to other EU countries. … Although inefficient, Greek agriculture has benefited substantially from EU subsidies… In general, however, the importance of the agricultural sector to the economy is diminishing…
Greece’s extensive coastline and numerous islands have always supported intensive fishing activity. However, overfishing and the failure to conserve fish stocks properly, a problem throughout the Mediterranean, have reduced the contribution of fishing to the economy.
Greece has few natural resources. Its only substantial mineral deposits are of nonferrous metals, notably bauxite.”

(http://www.britannica.com/place/Greece/Demographic-trends#toc26455) (http://www.britannica.com/place/Greece/Agriculture-forestry-and-fishing)

The early development of modern-day Greek capitalism was that of a merchant capital that weaved itself into the matrix of the Ottoman Empire. Both these traders and arising shipping magnates, were based outside of Greece. Being non-resident they could not transfer easily all their capital resources for later industrialisation needed to keep pace with the rest of the European economies:

“The development of the Greek bourgeoisie must be traced back to the sixteenth century when Greece was under Ottoman rule…. Greek merchants… accumulated vast fortunes and control (over) Balkan trade and most of the Ottoman empire’s commercial transactions with the industrialising West. …..
With the decline of the Ottoman empire in the eighteenth and nineteenth centuries, the Greek bourgeoisie….contributed to the development of Balkan nationalism. It thus played a crucial role in the Greek war of independence against the Turks (1821). For while the Greek peasantry constituted the main revolutionary force in the war, the bourgeoisie and the intellectuals managed to direct this force towards nationalist goals. ….
The first Greek constitutions, for instance, were inspired by the French experience; and although Capo d’Istria and later King Otto tried to implement an absolutist model of government, their efforts were ultimately frustrated.
Of course, it is true that in the nineteenth century the autochthonous merchant class was rather weak. But its counterpart living abroad, the Greek diaspora merchants and ship-owners, with their formidable financial power, greatly influenced the shaping of most institutions in nineteenth-century Greece itself… .. these (Greek) merchant communities.. were flourishing both in colonial centres (Alexandria, Cairo, Khartoum, etc.), in the major capitals of ninteenth- century Europe and in Constantinople and Asia Minor.”

(Mouzelis, Nicols. ‘Capitalism and Dictatorship in Post-war Greece”; New Left Review; I/96, March-April 1976).

This large overseas Greek bourgeoisie was already prone to comprador positions. Although it helped transfer some capital to Greece itself, this was largely in the mercantile and finance sectors:

“Although relatively small by international standards, the Greek diaspora bourgeoisie, by exploiting inter-imperialist rivalries and playing the role of intermediary between metropolitan and colonial centres, managed to master formidable financial resources, some of which were channelled into mainland Greece. However, given its cosmopolitan and mercantile character, as well as the weakness of the indigenous bourgeoisie, these resources contributed to the development of a top-heavy state and a parasitic tertiary sector, geared to support a mercantile and finance capital, rather than to the development of industry and agriculture.”

(Mouzelis, Nicols. ‘Capitalism and Dictatorship in Post-war Greece”; New Left Review; I/96, March-April 1976).

By the end of the Second World War, the population of Greece can be characterised in the following break-down:

  • A very small working class, of whom the most militant were in the tobacco industry; also some in shipping (often overseas for long periods) and fishing;
  • A substantial number of small to medium petit-bourgeoisie in the urban areas (artisans, small businesses) and an even larger number of small peasants in the rural areas
  • A small but dominant comprador bourgeoisie with significant financial overseas capital – based in the shipping industry and in bank capital – with many connections to foreign traders
  • A much smaller but ambitious section of industrial capital anxious to develop their ‘home’ base of Greek production.

The first two sections of society in particular, had suffered enormous losses and hardships under the Italian-German fascist occupation; and then in the ravages of the Civil War. A good summary of the position of the Greek people following the Second World War can be taken from Enver Hoxha:

“When our people are rebuilding their country which was devastated during the war, when our country is working with all its might to strengthen the people’s democracy and advance on its peaceful and progressive course, Greek monarcho-fascism is employing a thousand and one of the basest methods to inflict harm on our people. You know what a terrible tragedy is occurring in Greece. The unfortunate but heroic Greek people are fighting against monarcho- fascists and the foreign intervention. The progressive and democratic world is profoundly indignant when it sees the great tragedy of that people who deserve to live free and sovereign, but who, unfortunately, are being mercilessly oppressed and killed by collaborators of Italo-German fascism who are now under the direct orders of Anglo-American reaction.”

(Hoxha, Enver; “We Sympathize With the Efforts of the Greek People for Freedom and Democracy.” Speech 3 October 1947; In: “Two Friendly Peoples
Excerpts from the political diary and other documents on Albanian—Greek relations
1941 — 1984”. Marx, Engels, Lenin, Stalin Institute Toronto, 1985; pp. 47-48. http://www.enverhoxha.ru/Archive_of_books/English/enver_hoxha_two_friendly_peoples_eng.pdf

2. The Truman Doctrine – Greece becomes dependent upon the USA after the Second World War

The USA implemented an overall strategy known as ‘The Truman Doctrine’ – to counter the ideological threat of the USSR after the victories led by the Marxist-Leninists had inspired the world proletariat. In the Aegean the Truman Doctrine aimed to:

“Prevent Greece and Turkey from passing under Soviet Control.”

(Woodhouse C.M. “Modern Greece, A Short History”; London 3rd Edition
1984; p. 258).

Both the USA Marshall Plan and the creation of NATO, were tactical instruments of the Truman Doctrine. They were used in Greece to build and develop a modern capitalist state structure. But before they were deployed, first the potential proletarian victory of the Greek Civil War had to be stopped.

While the British General Scopus and his forces had defeated the combined forces of the Greek Communist Party (KKE) and their military wing (ELAS), significant distrust remained in the population against British imperialism. So, after the battle of Athens (Dec 3rd 1949) was won by the British, a democratic façade was placed onto the imperialist proceedings. By this stage all leftist opposition had been essentially neutralized and no longer posed any threat to the Greek capitalist class.

When the British imperial chief Winston Churchill understood the degree of Greek popular distrust – he reversed his prior opposition to a plebiscite. The plebiscite following the defeat of left forces enabled the return. The ensuing Plebiscite supported the return of King George II to Greece. (Woodhouse C.M. “Modern Greece” Ibid; p. 254).

The Americans also dropped their previous support of the King, and become “ostentatiously neutral” (Woodhouse C.M Ibid; p. 254) – they tacitly supported the British crushing of the communist forces. Archibishop Damaskinos was appointed a Regent in the King’s stead and General Plasitiras (head of EDS) was appointed Prime Minister and head of government in lieu of George Papandreuou. Papandreuou had previously “approved” the British suppression of the mutiny of 1944 (Woodhouse C.M Ibid; p. 252).

Both the American covert support, and the British repudiation of the King’s intent – enabled the predominantly capitulationist ELAS some pretext to accede to British overlordship. Accordingly ELAS now agreed to the infamous Varizka Agreement of February 1945. Only Aris Veloukhiotis and the Political Committee of National Liberation (PEEA) had resisted Varizka – and these forces were simply hunted down and eliminated.

A succession of shaky governments was capped by the first post-war General Election of March 1946. The Communist Party of Greece (KKE) abstained and the Populist party of Constantine Taldaris, formed a government. This election:

“Marked a watershed in Greece’s foreign relations. For the first time the Government of the USA was directly involved in Greek affairs alongside Britain, though occupation in the Allied Mission for observing the Greek elections. It was a first step towards the Truman Doctrine”. (Woodhouse C.M Ibid; p. 257).

The defeat of left and communist forces at Athens had decimated left resistance.
Behind both the King and the Parliament lay the Army, and the most right-wing section of the army – the group known as IDEA (Sacred Bond of Greek Officers):

“After 1949, the ruling class was no longer threatened. … their enemies had been effectively destroyed for a generation.…..
After its victory, the Right imposed a quasi-parliamentary régime on the country: a régime with ‘open’ franchise, but systematic class exclusions. The Communist Party was outlawed and an intricate set of legal and illegal mechanisms of repression institutionalized to exclude left-wing forces from political activity. The job of guaranteeing this régime fell to the agency which created it: the army. The state was nominally headed by the monarchy and political power was supposedly vested in parliament. In reality, however, the army, and more specifically a powerful group of anti-communist officers within it, played the key role in maintaining the whole structurally repressive apparatus… in particular IDEA (Sacred Bond of Greek Officers), which was to play a key role in post-war politics.”

(Mouzelis, Nicols. ‘Capitalism and Dictatorship in Post-war Greece”; New Left Review; I/96, March-April 1976).

The Tsildardis government gave way to the more right wing Demetrios Maiximos with General Zervas (Formerly of EEDS) as Minister of Public Order. Brutal repressions of left forces continued despite both international protests and the presence of a United Nations observership. We will examine the Civil war and the Varzika Agreement in detail in a subsequent article.

By October 1948, martial law was imposed. Under this direct attack by the right-wing forces, and the simultaneous Yugoslav revisionist turn and exposure by the Marxist-Leninist Cominform of 1948:

“The rebel leaders admitted defeat by proclaiming a ‘temporary cessation of hostilities’… a caretaker government.. lifting of martial law, .. withdrawal of the British service missions and the renewal of friendly relations with Yugoslavia.”

(Woodhouse C.M Ibid p. 260)

The Greek government joined NATO in 1951, as well as the Council of Europe; and the Security Council of the UN.

Although throughout this period numerous governments based on varying participation of right-wing forces were only able to hold power for brief periods. The National Progressive Union of the Center (EPEK) – led by General Plastiras and Emmanuel Tsouderous held power until displaced by the virulently anti-communist General Papagos leading the Greek Rally:

“The days of Plastiras’ government were clearly numbered when not only the Greek public but also the US authorities became impatient … Under pressure from the US Embassy the government resigned in 1952… (leading) to electoral overwhelming victory for the Greek Rally.”

(Woodhouse C.M Ibid pp.261-263).

Army vicious actions purged all state structures – which was key to the state through the immediate post-War period:

“Military reaction established firm control over the whole of Greek territory and consolidated a system of ‘repressive parliamentarism’ or ‘guided democracy’. This was controlled by a triarchy of throne, army and bourgeois parliament. Within this power bloc it was the army, the victor of the civil war, which played the dominant role.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976)

Industrial Policy of the Greek Capitalists in this Period

For the next 11 years, both the Army (Marshall Papagos) representatives, or parliamentary figures (George Papandreou before the coup and later Constantine Karamanlis) wanted to consolidate the neo-colonial status to the USA. This started with an economy based on agriculture, tourism and a small manufacturing base.

“the country was far from self-sufficient. .. the chief market for tobacco was revived (West Germany).. expenditure of tourists which came to take second place only to agricultural products as a source of foreign exchange. The development of manufacturing industry and mining with indigenous capital, in place of foreign concessions, (was) a healthy trend. But the lack of home produced source of energy was a severe handicap. It remained true that Greece was still dependent upon foreign aid and there was no end to this condition in sight.”

(Woodhouse C.M Ibid p. 267)

Five special features of the Greek state’s path to modernisation, can be seen:

1. The political and organisational strength of the working class and peasantry was weak, having been decimated during the second world war and after by the brutality of the state. The KKE was almost devoid of leadership, with key leaders in exile.
2. The small native capitalist class was out-numbered by the many Greek capitalist who were based overseas (shipping) – and did not have the necessary local capital to invest. Hence the small resident Greek capitalists used the State machinery to develop. This state machinery swelled the size of the bureaucracy who became a large state dependent stratum. They aspired to ‘middle-class’ status but were objectively privileged sections of a growing working class.
3. The state still needed the heavy investment of the overseas imperialists. They first aligned themselves to the USA, and then by the 1970s to Europe.
4. These strategies effectively left Greece a dependent state with the beginnings of large overseas debt.
5. An immiseration – poverty and desperation – of the working peoples, led to increasing emigrations to both the USA, Canada and Europe

After the devastation of the Second World War there had been an impressive return to Greek per-war levels of production:

“The Second World War and the civil war had devastating effects on the Greek economy. For instance, at the end of the Second World War, 9,000 villages and 23 per cent of all buildings had been destroyed. It was partially a sign of the vitality of Greek capitalism that by the middle fifties, pre-war levels of output had been reached again and the economy was growing at a fast rate (the average rate of growth in the fifties was 6 per cent).”

(Mouzelis, Nicols. ‘Capitalism and Dictatorship in Post-war Greece”; New Left Review; I/96, March-April 1976).

However, despite this growth, manufacturing industry remained undeveloped. Nor did the rise of the shipping industry enable Greek capitalists to retain revenues within Greece to more easily enable a home manufacturing base to be built up:

“the Greek economy of the fifties did not manage to overcome a major feature of its underdevelopment: its weak manufacturing sector. Greek capital, whether in its mercantile, industrial or finance form, was unable to orient itself towards the manufacturing sector—especially in those key branches (chemicals, metallurgy) which, through their multiplying effects and their great transformative powers, can contribute most to a rapid growth of the industrial sector”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

“shipping… assumed colossal proportions in the post-war period. …..Greek seamen helped the economy by reducing unemployment and by providing valuable foreign currency through their remittances home. On the other hand, since shipping capital lies outside the effective control of the Greek state (it can always move elsewhere if the state bothers it with heavy taxes or other restrictions), it becomes increasingly an avenue of escape for Greek merchant capital. In this way, if migration robs Greece of its most valuable human resources, shipping plays a similar role with respect to the country’s financial resources..”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

“Greece’s age-old specialization within the inter- national economy had gradually given rise to a spectacular concentration of capital among a handful of shipping magnates, mainly based in London or New York, whose aggregate holdings are widely reckoned to exceed the GNP of Greece.”

(Petras, James. “The Contradictions of Greek Socialism“: New Left Review; I/163, May-June 1987)

In conclusion, Greece did not break out of the strait-jacket of a dependent economy. Despite large state structure support, Greek capitalists did not establish an effective manufacturing base:

“from a ‘under-developed’ economy: i.e. a fast-growing, highly parasitic tertiary sector, a weak and more or less stagnant manufacturing sector with a low labour absorption capacity, and a large but inefficient agricultural sector……Whereas in 1938 manufacturing output amounted to 85·6 per cent of all industrial output, it declined to 79·7 per cent in 1948–9 and to 73 per cent during the 1959–60 period.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

“Thus in the late fifties more than half the labour force was still employed in agriculture, whereas the contribution of the industrial sector to the GNP was only around 25 per cent.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Correspondingly foreign investors ensured that favourable legislation was passed in 1953, and by the 1960s a large scale influx of foreign capital flowed in. This was concentrated in the heaviest key sectors, and by the mid 60’s the industrial development had qualitatively changed with heavy industry capital making goods predominating:

TABLE 1 Flow of Foreign Capital into Greece (Dollars)

1960 11,683,700
1961 13,509,809
1962 16,764,758
1963 50,026,290
1964 59,716,887
1965 111,596,368
1966 157,606,242
1967 32,265,000
1969 64,000,000
1970 70,000,000

By the end of 1973, foreign capital invested in Greece had risen to a total of approximately $725 million…. not very impressive if one takes into account that in a single year (1969) $2,504 million went to the gross formation of fixed capital in the Greek economy.

Nevertheless, as foreign capital was mainly directed to-wards the key manufacturing sectors, its impact on the economy was much greater than its relatively small size would suggest. In fact, especially during and after the years 1962–3, when the metallurgical, chemical and metal construction industries experienced a great boost due to foreign investments, one can speak of a qualitative break in the growth of Greek industry. Not only did the industrial sector start expanding at a much faster rate, but there was an important shift in investment from light consumer goods to capital goods and durables.

Whereas in the period 1948–50 light industry represented 77·5 per cent of total manufacturing output, its share went down to 60·9 per cent in 1963–70.31 This important shift is clearly reflected in the changing structure of the Greek export trade.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Correspondingly, there was shift away from agriculture in the economy. And by the 1970s the economy had become qualitatively industrialised:

“In 1960 agricultural products constituted 80 per cent of the country’s exports, but this figure went down to 54 per cent in 1966 and to 42 per cent in 1971, as Greece was more able to export industrial goods. … Despite the dramatic decrease of the agricultural population during the fifties and sixties, the agrarian structure does not show any signs of basic change: there is no marked tendency towards land concentration or the emergence of large-scale capitalist enterprises in agriculture.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

There was a major qualitative change by the 60s, towards industrial development. But it did not eliminate ‘under-development’:

“Thus the sixties saw a qualitative advance in the industrialization of modern Greece. There can be little doubt that the ability of the Greek economy to reap the benefits from concentrated foreign investment in manufacturing was due to its own pre-existing capitalist development. This was not able to generate a significant industrial sector autonomously, but it could adapt itself to, and consolidate one with exceptional rapidity. Yet this type of capitalist development not only failed to eliminate some fundamental aspects of Greek under-development, but on the contrary accentuated them, creating disruptions and dislocations which are directly relevant to an understanding of developments in the political superstructure.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

There ensued an enormous state monopoly centralized economy in the industrial sector:

“The intrusion of foreign capital, in close collaboration with Greek capital and the Greek state, reinforced the already impressive degree of capital concentration in the economy. A first rough intimation of this is conveyed by the enormous size (in terms of assets) of such giants as ESSO-Pappas or Pechiney, or the fact that out of the 200 largest companies in terms of fixed capital, seventeen were fully foreign-owned and in another thirty-nine foreign capital had a degree of participation varying from 10 to 90 per cent. As the share of foreign capital in the GNP steadily increased (from 2·15 per cent in 1962 to 8·15 per cent in 1972), the monopolistic tendencies of the Greek economy were markedly accentuated. If in the fifties monopoly or oligopoly were due mainly to indiscriminate and nepotistic state protectionism, in the sixties they were due rather to the capital intensive nature of the new industries and the small size of the Greek market.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

But the working class was still small. This is reflected in the predominance of small artisanal or petit-bourgeois production:

“This impressive concentration of industrial capital did not eliminate the plethora of small industrial units, which for the most part have a family-oriented, artisanal character. Indeed, one of the most striking characteristics of Greek industry is the persistence, especially in the more traditional sectors of the economy (footwear, clothing, leather, wood products), of small, low-productivity units side by side with large firms that exercise a quasi-monopolistic control of the market. The extent to which small firms persisted in the Greek manufacturing sector can be seen by the fact that whereas in 1930 93·2 per cent of manufacturing establishments were employing fewer than five persons, by 1958 this percentage had only gone down to 84·9 per cent. In 1958 the percentage of firms employing more than twenty persons was 2·1 per cent.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

The working class and peasantry of Greece became progressively more squeezed:

“Gross per capita in- come, approximately $500 at the beginning of the sixties, had reached the $1,000 level by the end of the decade.38 But the few rough calculations which have been made in the absence of complete data leave us in no doubt as to the inequities which disfigure this spectacular gain. For instance, according to a relatively recent estimate, 40
per cent of the lowest income groups receive 9·5 per cent of the national income (after deduction of taxes and social security benefits), whereas the 17 per cent in the top income brackets receive 58 per cent. From 1954 to 1966, when the national income approximately doubled, profits tripled (banking profits between 1966 and 1971 quadrupled).
Obviously, as the relative share of big capital increases, the relative share of all other income decreases. Those engaged in agriculture are, as usual, the worst off. Thus in 1951 agricultural income amounted to 83·3 per cent of the average national income; the proportion dropped to 60·3 per cent in 1962 and 51·1 per cent in 1971… in 1950 independent cultivators and their working family-members constituted 92·39 per cent of the agricultural labour force.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

In summary, there was an unusual dual character to the industrial landscape in Greece. It was one of a state sponsored heavy industry tied into foreign capital, while the petit-bourgeois remained very active:

“the capitalist mode of production, dominant in the Greek social formation, is linked to the mode of simple commodity production (agriculture, artisanal industry) in such a way as to keep growing continuously at the expense of the latter—neither destroying it completely, nor helping it to develop. And it is precisely here that the most crucial difference lies between the western European and the Greek models of industrialization. The former involved either the destruction of simple commodity production in agriculture and industry, or its articulated incorporation into the capitalist mode of production through a specialization which established a positive complementarity with big industry. As a result, the effects of technical progress, which originated in the dynamic sectors, spread fairly quickly to the rest of the economy, with beneficial consequences for income distribution, the expansion of internal markets and so on. In the Greek social formation, by contrast, capital intensive industrial production has taken an ‘enclave’ form. Despite its rapid growth in the sixties, it has not succeeded in expanding or even transferring its dynamism and high productivity to the backward sectors of the economy. Thus simple commodity production looms large within the Greek economy. It gives a lot (directly and indirectly) to the capitalist mode of production, but takes very little in return—just enough to reproduce itself. As a consequence, inequalities in Greece are much greater than those found in the West. For in addition to the usual inequalities between labour and capital in the sectors where the capitalist mode is dominant, Greece has inequalities resulting from the persistence of vast productivity differentials between ‘modern’ and ‘backward’ sectors of the economy.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

As the Greek countryside was becoming depopulated, many peasants emigrated. This deprived the Right wing forces in the countryside of support. The on-going immiseration-depression of the living standards of the working people led to a resurgence of left support. After some electoral gains of the left, the RIght wing army faction decided to set aside the triarchy of Army, parliamentary forces and Monarchy – and to become the sole power base.

How Cyprus Became the Focus of Imperialism and Heated Up Greek Battles

During this time, the relations between the Greek and Turkish pro-USA client states became strained with the Cyprus crisis. The Cyprus struggle had initially started as a war of liberation against the Ottoman Empire and Turkish oppression. It now pitched a small weak Cypriot national bourgeoisie against both the pro-Greek compradors and the pro-Turk compradors.

“The movement for liberation began under Turkish rule among the Greek Cypriots, who suffered particular oppression, and its main demand was for “Hellenic unity”, for “enosis” (that is, union with Greece). The movement continued to develop under British rule, and with the development of a weak Cypriot national bourgeoisie this class came to lead the liberation struggle. The effective leader of the movement was the Ethnarch of the Greek Orthodox Church, Mihail Mouskos — Archbishop Makarios — and embraced two organization
1) the National Organisation for Cypriot Struggle (EOKA), a right-wing body sponsored by the Greek government and led for many years by Greek General Georgios Grivas; and by

2) the Progressive Party of the Working People of Cyprus (AKEL) a body representing more directly the interests of the Cypriot national bourgeoisie, and presenting a left-wing image to appeal to the workers, peasants and urban petty bourgeoisie; it was led by Ezekias Papaioannou.”

(Marxist Leninist Organisation of Britain (MLOB) “THE CARVE-UP OF CYPRUS” “Class Against Class”; No.7, 1974. (http://ml-review.ca/aml/MLOB/CYPRUS_Fin.htm)

The fortunes of the Cyprus liberation movement were inextricably tied to the turn of events in Greece. Here the US imperialists held dominant sway:

“By 1966 Greece had become a semi-colony of US imperialism, and this position of dependence was reinforced by the military coup of 1967 which established a military dictatorship in Greece subservient to US imperialism. From now on the demand of the Cypriot national bourgeoisie (represented by the Makarios government) for national independence had the overwhelming 
support of the mass of the Greek Cypriots, while enosis became the demand only of the pro-imperialist Greek Cypriot comprador bourgeoisie.“

(MLOB, “The carve-up of Cyprus” Ibid)

What was the character of the ‘Independent’ state of Cyrus? In reality it was a neo-colony of Britain:

“In December 1959, prior to the granting of “independence”, elections were held for a Provisional President of Cyprus, Makarios stood on a platform of acceptance, with reservations, of the British imperialists’ plan and was elected by a large majority.
Despite the fact that Makarios represented the interests of the Cypriot national bourgeoisie, the British imperialists felt it safe to hand over “power” to a government headed by him by reason of the antagonisms artificially built up between the Greek Cypriot and Turkish Cypriot communities on the island, believing that these antagonisms and other “safeguards” could be effective in preventing the Makarios government from taking any steps to end the neo-colonial status of the island.
The “independent” Republic of Cyprus which came into being on August l6th, 1960 was, in reality a neo-colony of British imperialism.”

(MLOB “The carve-up of Cyprus” Ibid)

While Archbishop Makarios was a representative of the Cypriot national bourgeois, he was unwilling to launch a struggle that unleashed the power of the working class and peasantry. Thus he was left to resort to intrigue and maneuvers aimed at “seeking advantage of the contradictions between various powers” (MLOB). However this was ineffective as the USA blocked shipped arms from the USSR.

3. The Greek Junta – Greece by now fully a client state of the USA

As noted, the 1967 Greek military dictatorship was established by a coup backed by the USA. It was precipitated by the increasing working class struggles against the poor economic situation of the neo-colonial state of Greece, whereby:

“US civil aid came to an end in 1962; Greece was admitted as an Associate to the European Economic Community; and partial settlement was reached of Greece’s long-standing indebtedness to creditors in the USA and to private creditors in Britain. In each case the result was to add to the strain on the balance of payments..…. nearly one third of the budget was still devoted to defence… The stringency of the economic state of the country led to a number of ugly demonstrations. Strikes became increasingly frequent..”

Woodhouse C.M Ibid p. 282-283.

The then King, Constantine II was the Commander-in-chief of the army.
That the right wing forces were loosing support became clear from the 1958 electoral gains by left wing party EDA. The right wing section of the army – IDEA – launched the “Pericles” Plan:

“devised for the purpose of neutralizing the communists in case of war, this was used instead by the Right to achieve victory in the 1961 elections.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

This move by the extreme right-wing of the army, prompted George Papandreou
to start “Anendotos” — a “fight against the repressive policies of the Right.” His party was the “Center Union.”

“In the 1964 elections, Papandreou’s Centre Union successfully challenged the electoral dominance of reaction. In the elections of the following year, it further consolidated its position by gaining an unprecedented 53 per cent majority. Meanwhile, a strong left wing emerged within the Centre Union, under the leadership of Papandreou’s son Andreas.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Although George Papandreou tried to move against IDEA. He also tried to improve some aspects of working peoples lives. Together this prompted the Army and the Monarchy to plot against Center Union by slandering his son Andreas, as a traitor who shared state secrets. An interim coalition government of centrists was formed but fell quickly. Panagiotis Kanellopoulos formed a ‘Service Government’, prior to an election. However, the Army remained determined to sweep away any opposition:

“In 1967, the Greek military seized power in a coup d’état, overthrew the centre right government of Panagiotis Kanellopoulos. It established the Greek military junta of 1967-1974 which became known as the Régime of the Colonels.”
https://en.wikipedia.org/wiki/History_of_Greece

The Colonels did not change the economic direction of Greece, they made it simpler – they suppressed both workers, peasants and small petit-bourgeoisie – in support of the capitalists:

“The colonels, by following the logic of the economic model they had inherited, gave their unlimited support to big capital, foreign and indigenous. They made sure through repression that the ensuing growing inequalities would be accepted unconditionally, without protests or strikes to frighten capital away. After a short period of hesitation… private investment rose again and foreign capital continued its penetration of the Greek economy. The rate of growth soon surpassed pre-dictatorial levels and sustained an impressive acceleration. This achievement was a clear indication of the ‘fit’ between rapid capital accumulation and the dictatorship. Moreover… despite growing inequalities, the standard of living grew steadily during the period of the dictatorship. The colonels brought to fruition a process of dependent industrialization that had started before them. They did not initiate it, they merely pursued it with vigour and consistency.”

(Mouzelis, Nicols. Ibid; New Left Review; 1976).

Although Mouzelis is sceptical that the USA supported the coup, it most likely they did. Much later on, USA President Clinton – admitted that the USA had backed the Junta:

“When US President Clinton visited Greece in 1999, he obliquely offered what sounded like an apology when talking about a “painful” aspect of their recent history.
“When the junta took over in 1967 here, the United States allowed its interests in prosecuting the Cold War to prevail over its interests — I should say, its obligation — to support democracy, which was, after all, the cause for which we fought the Cold War.” Clinton said in his conciliatory remark,
“It’s important that we acknowledge that.”

Remarks By President Bill Clinton and Prime Minister Simitis of Greece to the Government of Greece, Business and Community leaders. Inter-Continental Hotel Athens, Greece – November 20, 1999.
Anti-Revisionism in Greece ‘The Rule of the Colonels’
– the military Junta 1967-1974 https://www.marxists.org/history//erol/greece/junta-note.pdf

But there was never any serious threat to the Parliamentary section of the Triarchy. The working class had simply been resisting the economic pressures.

They had not been organised into a meaningful communist resistance.

The Junta soon became led by George Papadopoulos, who instituted a reign of terror against leftists and communists. The King tried in 1967 to establish himself as a sole dictator, but was rebuffed and fled to exile.

As Prime Minister, Papadopoulos continued a brutal dictatorship overseen by the dreaded Military Service Police (ESA) of Ioannides. The crude overthrow of any democratic norms even led the Council of Europe to demand Greece’s resignation. But:

“The Western Alliance as a whole continued to tolerate the dictatorship, on the grounds that Greece formed an essential part of NATO….. The US went still further.. American policy became one of active support. American and Soviet strategists were engaged in a duel in the eastern Mediterranean. It became even more intense after the ‘Six-Day War’ of June 1967 between Israel and the Arab states… In September 1972, an agreement was signed by which the US Sixth Fleet would enjoy home-port facilities at Piraeus.”

(Woodhouse C.M Ibid pp.298-99)

Repressions continued and provoked even a Mutiny in the Navy in 1973. In an infamous incident, the students at Athens Polytechnic were brutally assaulted in November 1973. Using tanks to suppress a sit-in, more than 20 students died. This allowed Brigadier Ioannidis to seize power for himself, behind a puppet General Grivkas (Woodhouse Ibid p. 305). Formal martial law was again installed.

Ioannidis now also moved to oust Archbishop Makarios from Cyprus in a coup d’etat. Moreover this was coordinated with the imperialists in order to ensure the partition of Cyprus into a ‘Greek” area and a “Turkish” area. Events unfolded as follows:

“The pretext for action was a note from Makarios to Greek President Phaedon Gizikis on July 2nd., demanding the recall of the Greek officers of the National Guard on the grounds that they had been collaborating with EOKA-B (the terrorist Organisation formed by Grivas following his return to Cyprus in 1979 and continuing in existence after Grivas’s death in January 1974) in attempts to assassinate him and overthrow the government. The note set the deadline of July 20th. for compliance with the demand.

So, on July 16th, on the orders of their Greek officers, units of the (Greek Cypriot)–National Guard, in full collaboration with EOKA-B and with the Greek troops stationed on the island, staged a military coup and established a military dictatorship over the part of the island outside the enclaves under the control of the Turkish Cypriot comprador bourgeoisie’s “Transitional Administration”. A new puppet “President” was installed, one Nicos Sampson, a curfew imposed and thousands of supporters of the Makarios government arrested.

The Greek government recognised its puppet regime almost immediately. while the Turkish government threatened that unless the situation in Cyprus were reversed it would order its troops to invade Cyprus under the Treaty of Guarantee.

For four days the US imperialists and their allies in London, not only took no action, they deliberately obstructed the calling of the Security Council of the United Nations which could have taken some action. As Lord Caradon put it bluntly in a letter to the press:

“Due to the deliberate delay of the United States and the United Kingdom, it was not until after the invasion (i.e. of Cyprus by Turkish troops — Ed.) that the Security Council passed any resolution at all.”

(Lord Caradon: Letter to “The Guardian” 11 July 31st, 1974; p. 12).

Meanwhile, Makarios had managed to escape from Cyprus. He was received by the British government with formal, but non-committal, protocol, but the United States government talked with him only in his ecclesiastical capacity”:

“The President (i.e., Makarios — Ed.) had been given the chilly US reception of — in Dr. Kissinger’s terms — ‘a loser’, without hope of a comeback”.
(“The Observer”, July 28th.9 1974; p. 9).

On July 20th., therefore, some thousands of Turkish troops invaded northern Cyprus according to plan, occupying the principal area inhabited by Turkish Cypriots from the port of Kyrenia to the outskirts of the capital, Nicosia.

Later the same day, the US and British imperialists brought the Security Council into action, and it passed a resolution calling for an immediate cease-fire on Cyprus. And Greece and Turkey — despite being, according to the world press “on the verge of war” – dutifully obeyed.”

(MLOB; Ibid).

As Woodhouse rightly comments:

“The US was legitimately suspected of having backed Ioannidis”

(Woodhouse Ibid p.305)

4. Capitalist Class of Greece Moves to “democracy” and Europe

The work of the overt and now discredited dictatorship of the generals was done, they had suppressed any internal left opposition. The stage was set for the partition of Cyprus. Now under an international odium, the Colonels “took off their uniforms” – again under pressure again from the USA imperialists. As the MLOB put it:

“The Colonels Take Off Their Uniforms

On July 23rd 1967. The military junta that had exercised a military dictatorship suddenly stepped into the background over the people of Greece since 1967, and announced that they had invited civilian politician Konstantinos Karamanlis to form a civilian Cabinet.

Karamanlis is mainly remembered for his role as Prime Minister in arranging the murder (and its subsequent cover-up) of rival politician Gregori Lambrakis (portrayed in the film “Z“). While in exile in Paris, he was in June 1965 voted into Karamanlis’ party ‘New Democracy’. He was committed for trial by an investigating committee of the Greek Parliament for “bribery, dereliction of duty and maladministration”.

Due to an unfortunate error, the “democratic revolution” in Athens was announced by US Secretary of State Henry Kissinger the day before it actually happened. Even the capitalist press was compelled to treat the “revolution” with some cynicism:

“Dr. Kissinger and his emissary Mr. Joseph Sisco have played a key role in promoting governmental change in Gioecell.”

(“The Guardian”, July 24th., 1974; p. 2).

And in fact, little fundamental in Athens seemed to be changed. True, a considerable number of political prisoners were released (a necessary step in order to obtain enough politicians to form a government). But Brigadier-General Dimtrios Ioannides remained in office as head of the hated military police, martial law continued and in his Message to the Nation Karamanlis was careful not to mention the word “democratisation.”

(Marxist Leninist Organisation of Britain (MLOB) “THE CARVE-UP OF CYPRUS” “Class Against Class”; No.7, 1974. (http://ml-review.ca/aml/MLOB/CYPRUS_Fin.htm)

Nonetheless Karamanlis did restore the Constitution of 1952 (making it again a monarchy) and released all political prisoners and “legalised the CP for the first time since 1947”. (Woodhouse; Ibid; p. 305). In actual fact he had no real choice as the prior alliance that had formed the Triarchy (Army, right-wing parliamentarians, and Monarchy) had been totally discredited.

“When Constantinos Karamanlis, the grand old man of the Greek Right, stepped into the breech and formed the first post-junta government in 1974, it was immediately apparent that there could be no simple reversion to the old model of repressive parliamentarism… (But) his freshly formed New Democracy party retained and expanded the electoral support that had previously gone to the parties of the Right. But the political discrediting of both the army and the throne—which had, in any case, regarded with suspicion Karamanlis’s sixties project of modernizing the monarchy—left him with little choice but to seek the consolidation of right-wing hegemony through a populist inflection of internal and external policy… Within months of coming to power, the National Unity Government headed by Karamanlis had withdrawn from NATO’s military command structures, legalized the Communist Party for the first time since the civil war, organized relatively free general elections, and called a referendum that produced a 69 per cent majority in favour of the republic. Subsequent trials of junta leaders—in some cases leading to sentences of life imprisonment—underlined the subordination of the officer caste in ‘normal’ political activity…”

(Petras, James. “The Contradictions of Greek Socialism“: New Left Review; I/163, May-June 1987)

By November 1974, elections had elected Karamanlis’ ‘New Democracy’ party. A further plebiscite confirmed a popular rejection of the monarchy. Karamanlis tellingly revealed his government’s objective nature:

“Karamanlis once remarked that he was himself the Americans’ only friend in Greece, and he dared not admit it.”

(Woodhouse Ibid p. 308).

Where was the economic development of Greece by now?
The hopes of the Greek capitalists had in fact not been fulfilled:

“In Greece… the early seventies already witnessed a rise in the specific weight of food, clothing and construction industries, and in the latter half of the decade manufacturing as a whole was contributing less than fifteen per cent of the annual increase in GDP, while fully three-quarters of GNP growth came from the inflated services sector. Manufacturing exports, given the small size of the internal market, had originally been conceived as one of the principal keys to success, and at first a number of important openings were found in this area. However, the recessionary tides of the seventies, together with the intense competition of low-wage economies precisely in textiles and other such goods, led to a loss of Greece’s market share everywhere except in the Middle East. By 1980, when PASOK was preparing to take over the reins of government, it was possible to talk of an actual tendency of deindustrialization, as the import/export ratio of manufacturing goods had risen to 3.2:1 from 2.5:1 in 1974.”

(Petras, James. “The Contradictions of Greek Socialism“: New Left Review; I/163, May-June 1987)

While Karamanlis was not anti-American, he was moving Greece towards Europe. Relations with Europe, in order to join the European Economic Community (EEC), became the focus. Karamanlis had spent 15 years as an exile in France, and the French government had sent him back to Greece on a government plane.

On 1 January 1981, Greece joined the EEC becoming its tenth member.
But Karamanlis was struggling to withstand the growing resistance as inflation drove a left shift. The by now openly revisionist Communist party of Greece (KKE) had begun to capture a portion of the electorate:

“At the left end of the spectrum, the Communist Party of Greece (KKE) rapidly consolidated a strong position in industry and a ten-per-cent bloc of the electorate”;

(Petras Ibid New Left Review 1987)

A new façade to divert the masses was urgently needed. The prior ‘centrist’ party of George Papandreou had been the ‘Centre Union’. After the Junta dissolved itself, this won 20% in the first elections, and supported Karamanlis in government. Consequently it soon disintegrated. George’s son, Andreas Papandreou had been trained as an economist in the USA. He had been instrumental in the pre-Junta parliamentary government, in attempting to curb the most right-wing elements of the Army (IDEA). He had fled into exile after the coup, and from there organised a resistance grouping – Pan-Hellenic Liberation Movement (PAK).

After the Karamanlis return to parliamentary rule, Papandreou organised the
Pan-Hellenic Socialist Movement (PASOK). Within 7 years it had won the in the Greek elections of 1981. It was an explicitly social-democratic formation proposing:

“full-scale nationalization and ‘an end to the exploitation of man by man’. …. And an all-round modernization of Greece’s productive system that would bring to the fore hi-tech industries employing local and expatriate skilled labour and producing for internal consumption and export. In foreign policy, Papandreou retained his reputation as an intransigent opponent of NATO and of any Greek involvement in the EEC .. All these themes came together in skillful and insistent propaganda centred on the need for comprehensive change or allaghi.”

(Petras Ibid New Left Review 1987)

By October, Andreas Papandreou was elected into power for the PASOK party.
It is true that early progressive moves were made during its government including early secularisation and improvements in the role of women:

“The more general secularization of Greek society, and the introduction of divorce by consent, civil marriage and equal rights for children born out of wedlock.. the Greek parliament has abolished various repressive laws from the fifties as well as some of the extreme powers given to the police, and although the military has largely remained a world apart, subject to no fundamental restructuring or parliamentary scrutiny, it has been deprived of the means of direct intervention that used to be provided by its own radio station. .. the EAM/ELAS Resistance was officially rehabilitated.”

(Petras Ibid New Left Review 1987)

However PASOK retreated quickly upon attempts to tax urban real estate, and did not try seriously to ever move on this front again. Industry remained at a comparatively low level against other countries of Europe. PASOK did not base itself on the working class, and thus never proposed any resolve to deal with either the Greek capitalists, or the petit-bourgeois small business. Corruption was a real problem and Petras proposes the term ‘kleptocrats’ to describe a stratum of especially corrupt business:

“Most of the ‘industrialists’ continued to accumulate wealth by borrowing huge amounts of capital from the state banks, investing a fraction and diverting the rest to overseas bank accounts. The debt/ capital-investment ratio remained one of the highest in the world because industry was directed not by the usual kind of entrepreneur but by a highly distinctive stratum of kleptocrats. Agriculture too suffered from underinvestment, irrational and costly marketing systems, with a multiplicity of small farms divorced from organized credits or from productive systems capable of providing cheap inputs or processing outputs.”

(Petras Ibid New Left Review 1987)

The preponderance of petit-bourgeois ownership of small businesses had bred its brand of tax evasion and corruption:

“In Greece, …the pervasiveness of petty-bourgeois ideology and the ability of the non-productive classes to evade taxes and acquire multiple sources of income. Until Greek society recognizes the working class as its most valuable asset in the drive for industrialization, it will be doomed to stagnation and crisis.”

(Petras Ibid New Left Review 1987)

PASOK would not move against the capitalist class. Instead it resorted to short term loans to head off worker and petit bourgeois discontent. PASOK rule led to inflation and the start of the debt. At the same time debt increased. Meanwhile
The financial sectors were bolstered whilst manufacturing was neglected:

“PASOK’s early spending spree… increase(d) the consumption of nearly all sections of the population without creating any new industrial capacity to meet that demand. The government raised wage income, partially offsetting the inflationary erosion in Karamanlis’s final two years; private capital responded by slowing investment to the merest trickle. Exports stagnated, while imports mushroomed and invisible earnings (the mainstay of the external sector) began a sharp decline. To secure the populist compromise the regime had turned to foreign loans, fiscal deficits and EEC subsidies; ….

Public sector borrowing soared from 12–1 per cent of GDP in 1983 to 17–1 per cent in 1985, without having any effect on domestic output; and particularly in the run-up to the June 1985 elections it was increasingly used to finance current expenditures, which rose from 39 per cent of GDP in 1984 to 41 percent in 1985. As one study has noted:

‘The fastest-growing category was employment in services, almost exclusively led by continuing substantial increases at around 3 per cent per annum in employment in the public sector and in banks . . . In the three years to 1985 employment in manufacturing declined by around 2–1 per cent.’ Table Two (below) sets out the still sharper fall in output during
the first PASOK term.

Table 2: Greek Industry, 1981–1984: 1970 =100

                                         1981 1982 1983 1984
Consumer goods 195     191      188      192
Capital goods        180     163      167      172
Source: OECD Report on Greece, 1985/86.”

(Petras Ibid New Left Review 1987)

Agriculture also saw falling production:

“Agricultural growth for its first term was as follows:
_1.6, 1981; _2.4, 1982; _6.8, 1983; _6.4, 1984; _0.5, 1985.
The reason for these meagre results was that only a small part of the funds were actually used in agriculture. The remainder were employed to ‘finance consumption, to be redeposited with banks at much higher rates, and to be used for the acquisition of real estate in urban areas.’”

(Petras Ibid New Left Review 1987)

In fact, while the now infamous external Debt of Greece, became a ballooning problem under PASOK. Petras cites figures from the OECD:

“PASOK has also increased Greece’s role as a subordinate debtor nation beyond the worst period of the old Right… (See Table 3 Below.) The foreign debt stands at 45 per cent of GDP and payments account for close to a quarter of export earnings. Given the phasing- out of EEC balance of payments assistance, commercial borrowing will soon have to increase more than twofold, on terms dictated by the foreign banks: namely, the closure of unprofitable public enterprises; greater freedom for employers to hire and fire workers; tough anti- strike legislation, relaxation of price controls, an expansion of public– private ventures, and an open door to foreign investment.

Table 3:

Greece’s External Debt (in billions of $)
                       1981 1982 1983 1984 1985 1986
Total Debt         7.9      9.5      10.6   12.3    14.8    17.0”

(Petras Ibid New Left Review 1987)”

In fact – all this is very similar to today, and the same demands for ‘austerity’ were raised then by the European banks.

This social-democratic party, now more openly objectively played the role of a pro-European comprador:

“Papandreou .. freely engaged in anti-American rhetoric… contending that the American imperialism was the most serious threat to humanity, Papandreou unnecessarily antagonised Washington.”

(Kofas JV; “Under the Eagle’s Claw – Exceptionalism in Postwar US-Greek Relations”; Westport 2003; p.184)

Meanwhile Papandreou was moving Greece firmly into dependency to the EEC:

“Dependency results from the growing EEC domination of the Greek economy. While the EEC has increased the transfer of loans and grants to Greece, this has been more than offset by the takeover of internal markets and the displacement of Greek manufacturers and farmers. To quote again from the OECD report: ‘Whereas Greek manufacturing output has remained broadly stagnant in the three years to 1985, import volume of manufactures may have risen by roughly one fourth in the same period.”

(Petras Ibid New Left Review 1987)”

Neither PASOK nor the party New Democracy (Led by Kostas Karamanlis, the nephew of the former President) – differed substantially in their political orientation towards Europe. Both were realigning from the USA to Europe:

“Greece evolved from a client-patron relationship with the US to being an EU member, subordinating its national sovereignty to the community….
With increased competition of the regional economic blocs.. after the Cold War Greece drifted further from the US, because Europe was drifting as it strengthened and expanded its own sphere economically financially, politically, and militarily…”

(Kofas JV; “Under the Eagle’s Claw – Exceptionalism in Postwar US-Greek Relations”; Westport 2003; p.248)

Greece’s leaders also did not appreciate the USA more overtly favouring Turkey as its vassal state of choice in the Aegean and Mediterranean. But in fact, Papandreou was posturing – and perhaps to the populist base that PASOK had bult, that he was ant-USA. After all, Papanadreous signaled to the USA that were better terms given to Greece, that this re-orientation could be re-visited. Correspondingly during the 1984-1985 year, the total US military aid to Greece actually went up (Kofas, p.200 Ibid). Moreover he renewed Greece’s allegiance to NATO, and enabled the US fleet continued facilities.

This hesitation of Greece’s capitalist leader to completely cut the USA off as their pay-master, reflects that of the European powers themselves (see below). The determination of the EEC to sharply diverge, reject its subordinate status and openly challenge the USA, was still to come.

By 1985, PASOK reversed all its earlier progressive steps for workers wages and trade unions. It increased unemployment to doubled its rate (it was now above 10%). It enabled employers to revert to arbitrary practices of hiring and firing, and empowered them to break strikes.

Greece’s path was set by the refusal to tackle the core problem: Refusing an independent path and adopting a pro-European comprador path – just as before it had been a pro-USA comprador path. What did this mean? Essentially it mean chronic indebtedness with no possible release. Warnings that were later to be echoed in 2014 – began to sound:

“Interest payments on the external debt have been undergoing a geometric progression (up from $466 million in 1980 to $1.1 billion in 1984), while exports have fallen from $4.7 billion in 1981 to $4.4 billion in 1984. … Capital flight has increased significantly in the 1980s, as it has done in other indebted rentier states. ….. a positive $15 million balance of payments in 1980 became a negative $312 million in 1984. For these reasons—together with the overwhelming predominance of speculative over entrepreneurial capital—it is clear that the financing of further growth is virtually excluded. Far from inducing the inflow of new resources for development, Greece’s ‘opening to the outside’ or ‘liberalization of the economy’ will facilitate the outflow of resources, thereby deepening underdevelopment. Nor will the device of lowering wages make Greek capital competitive, so long as industrial capital acts principally as a financial intermediary and fails to innovate and invent.”

(Petras Ibid New Left Review 1987)

The details of individual governmental changes up to the 2010 financial crisis in Greece, are beyond the scope of this article. In fact, they do not substantially alter the analysis. The trajectory of Greece was now set. While the political leaders were acting in the interests of the dependent capitalists (in essence all of Greek capital) – the compact with foreign imperialism would ensure the Greece crisis became a financial chain-reaction.

We must briefly examine the politics of the European coalition at this point.

The Appendix carries a detailed chronology describing the history of Greece from 1981 up to 2010.

5. The USA Moves to Become the World Imperialist Leader – The Character of the European Union – from pro-USA states to anti-USA coalition

Moving to a meaningful trans-national coalition of European capitalist states – took several steps and forms. The coalition morphed from a post-war Europe wish to re-build, through to the European Economic Community (EEC) and then to the European Union (EU):

“The Community’s initial aim was to bring about economic integration, including a common market and customs union, among its six founding members: Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. It gained a common set of institutions along with the European Coal and Steel Community (ECSC) and the European Atomic Energy Community (EURATOM) as one of the European Communities under the 1965 Merger Treaty (Treaty of Brussels). In 1993, a complete single market was achieved allowing for the free movement of goods, capital, services, and people within the EEC…

Upon the entry into force of the Maastricht Treaty in 1993, the EEC was renamed the European Community to reflect that it covered a wider range than economic policy. This was also when the three European Communities, including the EC, were collectively made to constitute the first of the three pillars of the European Union, which the treaty also founded. The EC existed in this form until it was abolished by the 2009 Treaty of Lisbon, which incorporated the EC’s institutions into the EU’s wider framework and provided that the EU would “replace and succeed the European Community.”

(Wikipedia: https://en.wikipedia.org/wiki/European_Economic_Community)

Through these steps, the class alliances of the countries of the European alliance changed in its essential character.

Immediately post-Second World War, the European countries, were formed into a pro-USA formation. However over time they became anxious to attain autonomy from the USA. This fight-back reached a climax after the USA launched its financial attack in launching the Dollar Hegemony in the Plaza Agreement of Richard Nixon in August 1971. This act finally precipitated the formation of the Eurozone. This section traces the course of the changing class character of Europe in the post-Second World War decades.

At the end of the Second World War, the USA planned to rebuild European capitalism through the USA Marshall Plan for its own ends. This was facilitated by the fact that the Second World War had physically devastated Europe, and that many countries were in debt to the USA. Britain, for example was now completely beholden to its major competitor – the USA:

“When sales of foreign investments and of gold and dollars are added in, the net change on capital account between the outbreak of war and the end of 1945 amounted to no less than Pounds Sterling 4,700 million. The United Kingdom ended the war with the largest debt in history.”

(A.Cairncross. Years of Recovery, British Economic Policy. 1945-51. London, 1985. p.7). 

American imperialists recognised that Europe needed to be re-built as a bulwark against further socialist upheavals. Especially as the USSR successful battles, had become an inspiration across the world. The USA imperialists – as personified by James Warburg (part owner of the House of Morgan, a controller of USA international finance and industrial and utility trusts) – remarked:

“Germany was the hub of the weak German economy ‘the largest single compact mass of skilled labour on the Continent’, it should be transformed from ‘the present poor-house and plague-center’.. ‘into a powerhouse for a rapid reconstruction of Europe, without letting the powerhouse acquire too broad a permanent franchise and – above all – without letting the powerhouse ever again become an arsenal’…. ‘The Westward thrusting of communism will not be stopped by an physical frontier. It can be only stopped only a planned, US-Aided reconstruction so liberal and even revolutionary as to meet the challenge on its own grounds, and to strike the meaning from the accusation of American “dollar diplomacy.”

(Van Der Pijl, K. ‘The making of an Atlantic ruling class”; pp. 42-43,146; London 2012).

As time would show, once Europe had been rebuilt as a bulwark, the USA could not restrain European capitalists wanting their own dominance.

In postwar Europe – the Marshall Plan was one of the three trade and economic tactical instruments by which the USA imperialists wished to take advantage of the post-Second World War crippling of the European powers. The other two were the creation of the International Monetary Fund (IMF) and the creation of the General Agreement of Trades and Tariffs (GATT). The military instrument to back these up was of course the North Atlantic Treaty Organization (NATO). The Marshall Plan was conceived as an anti-communist and anti-nationalist weapon and a means to erode European independence:

“The establishment of American hegemony in the North Atlantic area was directed simultaneously against the spread of planned economy and social revolution beyond the Soviet-controlled area in Europe and against the national, self-contained reconstruction programs pursued by most West European states in the immediate post-war period. These programs in which local Communists parties participated, were judged unsuited for maintaining capitalist rule in the long run. ‘Europe would have been Communistic if it had not been for the Marshall Plan, Marshall Aid administrator Paul Hoffman claimed in February 1950.”

(Van Der Pijl, K. Ibid; p.148-9)

Van Pijil summarises that:

“Through the Marshall offensive, the Pax American was imposed on the economic ruins of the defunct Pax Britannica in Europe.”

(van Pijl Ibid p. 167) .

But the formation of the IMF was another key strand of the USA design.

“Bretton Woods.. Shorthand for the system, designed by the US and Britain, that governed international monetary and economic relations in the decades following the Second World War. … (It was) the launch of the post-war phase of super-dominance of the US and the dollar. .. All member countries pledged themselves to play by an internationally agreed set of rules…these rules were quite strict, and enforced by a new world economic policeman, the International Monetary Fund (IMF). Countries had to declare a ‘par value’ – an exchange rate – of their currency in terms of the American dollar and/or gold, and change it only in consultation with the IMF. Various forms of currency manipulation were named … to prevent a return to the competitive devaluations and currency chaos of the 1930s. While countries could keep some controls on movements of capital, they basically undertook gradually to dismantle the wartime systems of exchange and trade controls and to move towards the free convertibility of their currencies… they also pledged themselves to adhere to the rules of the multilateral trades and payments scheme”;

(Dean, Marjorie & Pringle, Robert “The Central Banks”; London 1994 p.75).

In return for this agreement, the USA agreed to take over the position as “lender of last resort” – whereby it would honour those creditors who wished to remove gold in exchange for dollar. It would:

“Submit to discipline by its agreement to convert into gold any dollar balances presented to it by overseas central banks at the fixed price of $35 an ounce. The US was the only country to accept such a gold convertibility obligation and the only one in a position to do so, having ended the war owning about two-fifths of the world’s stock of monetary gold”;

Dean and Pringle; Ibid p. 76.

This in effect took over the dominant position of lender of last resort that the British government had previously held from 1924 to September 1931 (Dean and Pringle Ibid p. 63). The US was anxious to see this agreement effected as it would enable the USA to control international monetary policy:

“In these countries (Ed -ie. those agreeing to join the IMF) national central banks of countries other than the US had little influence on policy decisions. Domestic and economic policy came to be dominated by one objective – the maintenance of the fixed exchange rate against the dollar – and exchange rate policy, was of course entirely a matter for government…. For the most part, a government would respond to an impending payments deficit by tightening fiscal policy (Ed-i.e. dropping the printing of money) or putting up interest rates; and a country with a surplus would ease fiscal policy or lower interest rates. Of the major countries only France resorted regularly to devaluation as way of maintaining its export competitiveness and growth.”

(Dean and Pringle; Ibid p. 76).

This meant that the USA did not need to try to maintain its currency value. All countries had to acquire the dollar; there was no need for the dollar to be defended at any particular rate of exchange. By 1949 the US had acquired 72 % of the world’s gold. The Bretton Woods Proposal had been resisted by Lord Maynard Keynes of Britain, but to no avail. This Agreement eased the post war period for the USA, because all other Central Banks had to have a dollar reserve:

“Making the dollar a reserve currency meant that central bankers round the world had to have dollars. They had to buy dollars in the marketplace which pushed up the price of the dollar up, threatening the parity of the currency with the dollar. Thus they could only buy when the dollar was weak… This suited the US and the US Federal Reserve which could follow a very lax monetary policy to make sure that there were always dollars to go around. It worked wonders for post-war US domestic policy, helping promote the wartime dream of full employment.”

(Bose, Mihir “The Crash” London, 1988. p.135).

The USA was in an unusual position of dominance. It had funded the war for the Western capitalist allies, detonated the Atom bomb thereby showing its military dominance, and had a home base that was unaffected to a large extent by the war. It proceeded to further dictate terms, to ensure its vote in the IMF on decisions, was a veto:

“In order to finance European and other foreign purchases from America, that is to ensure adequate financial resources to sustain US exports, (“world trade”) the US Government had taken the lead in 1944 at Bretton Woods to establish the International Monetary Fund (IMF) and the World Bank. Loans were provided by the U.S. Government and US credit markets via the World Bank to European governments, which used them mainly to pay for goods supplied by American exporters. The source of the original loan funds provided by the IMF came from foreign currency and gold subscriptions by the participating nations. America’s subscription amounted to almost $3 billion and entitled it to nearly 30% of the voting power. The member nations agreed that an 80% majority vote would be required for most rulings, thus conceding unique veto power to the US… Europe was fully aware that it was ceding to America the option of determining its own currency values and tariffs. The US was the only nation with sufficient foreign exchange to finance a program of overseas investments, long term financing and foreign aid…”

(Hudson, Michael. Global Fracture, the new international Economic Order. New York, 1977. p.11-12).

Such a ceding of power to the USA was self-evident as any debts to the USA were only made payable in dollars or gold. The Bretton Woods Agreement had after all made the dollar “as good as gold.” The USA actively hoarded gold. Until 1958 and the Korean war the gold stocks of the USA remained exceedingly high, in correspondence with the USA stipulations on repayment). The USA also ensured that the major European powers joined the Gold Pool. This served:

“To ensure that the gold parity of the dollar would be supported by the central banks, the European ones mainly, who would thus have to sell central bank’s stocks of gold as the occasion demanded. The price of gold was kept artificially low at a time when the price of goods was rising. The dollar thus stayed as good as gold and the US was freed from the threat of having to support the gold parity of the dollar by itself, or of seeing gold overtake the dollar as an international reserve instrument which remained a theoretical possibility in the framework of the Bretton Woods Agreement. The US spared no efforts in its campaign to impose and maintain the Gold Standard.”

(Fiit,Yann, Faire, Alexandre, and Vigier, Jean-Pierre; (“The World Economic Crisis, US imperialism at Bay”; London, 1980; p.76.;p.83).

Britain was being firmly eclipsed by the USA as the foremost imperialist. The pivotal point forcing even the most stubborn British imperialists to recognise this, came in the Suez disaster of 1956 (these events were described in “The Gulf war – the USA Imperialists Bid To Recapture World Supremacy” at
http://ml-review.ca/aml/allianceissues/alliance2-gulfwar.htm)

Meanwhile the other European capitalists searched for ways to move into more independence. This was a slow process. The USA continued to exert major obstruction to real independence for some time. Within each of the major European states, some elements were more inclined towards the USA (i.e. compradors – the so-called pro-‘Atlantic’ bourgeoisie), some were more interested in maintaining an independent sovereignty (the so-called ’Euro-nationalists’). These tensions played out over decades, spanning three “waves” of USA offensives:

“Three successive strategies of Atlantic unity .. corresponded to the different offensives periods of American capitalism. The first was Roosevelt’s concept of Atlantic universalism, which derived its specific Atlantic dimension from the American focus of World War Two and the key position of the British Empire in the world America wanted to expand into. The second version of Atlantic unity was the Atlantic Union idea, which surfaced at the time of the Marshall Plan and combined a status quo approach to control of the periphery with a high-pitched Cold War unity against the Soviet Union. The third Atlantic strategy was the Atlantic partnership scheme promulgated by President Kennedy in an attempt to restore unity of purpose to an Atlantic world in which the establishment of a restrictive EEC demonstrated the degree to which Western European capital had emancipated itself from American tutelage and was intent on carving out a sphere-of-interest of its own.”

(Van Der Pijl, K; Ibid; p.xxxiv; London 2012).

The so-called Atlanticists (the comprador bourgeoisie for the USA – a term usually reserved for countries of colonial or semi-colonial status) were largely representatives of finance capital. These were interested in the freedom of shipping capital reserves freely across international boundaries. They are also termed “liberal internationalists” by van der Pijil.

In contrast the “Euro-nationalists” represented industrial capital – and were interested in ensuring reinvestment in and redeveloping a European heavy industrial base. They supported single ‘sovereign’ or independent, state funding of heavy industry and can be termed state monopolists .

As an internal intra-European battle between these two segments of capital occurred, the USA imperialists initially favoured steps to a pan-European supra-national state. Of course this single supra-national state, has still not been achieved. However between 1945-1998 – there were periods where the European Euronationalist capitalist powers waxed and waned, as USA imperialism counter attacked.

Regardless of whose interests it served, the overall tendency was towards a move for unity of the smaller European countries. Only later was directed against the USA hegemony. The class character of the European coalescing would shift form a pro-USA vassal coalition to an anti-USA coalition. Ultimately this would end up being dominated by the German bourgeoisie.

Through this period, the fading British imperialists continued to rely and favour USA imperialism. In fact it was actually Ernest Bevin, British Foreign Secretary who first proposed the NATO alliance:

“The actual initiative to found a North Atlantic military alliance was taken by Ernest Bevin in 1948 following a series of defence treaties between Western European states… Bevin .. in early 1948, urged … formal Atlantic cohesion of a political nature.. to USA Ambassador Lew Douglas.. the treaty establishing the NATO was concluded in April 1949”

(Van Pijl Ibid p. 157).

Early on French imperialism, as represented by General De Gaulle, wished to utilise USA strength to stand against the USA. The early events were summarised as below:

“The war encouraged a proliferation of new schemes for European regional organisation. De Gaulle for instance repeatedly voiced the idea that European unity might be a bulwark against both the Soviet Union and the United States, and comparable arguments were heard in various segments of the German, Italian, and Dutch bourgeoisie Resistances….

Churchill’s proposal for a Council of Europe provides probably the best example of the (Atlanticist) concept of European unity… coupled to Britain’s desire to maintain its special link with the Commonwealth and the United States.. “

(Van Der Pijl, K. Ibid; p26; London 2012).

In contrast:

“The Euronational concept combined a number of state-monopolisitic attributes like a strong emphasis on a “European” economic policy with a distinct rejection of Atlantic unity” ;

(Van Der Pijl, K. Ibid; p26; London 2012).

The first USA steps to infiltrate Europe were actually before the Second World War. In most accounts, Jean Monnet the post-war Finance Minster of France figures prominently:

“Jean Monnet… was perhaps one of the foremost in the European postwar leaders to see the necessity of a coalition of European countries…. As early as 1921 Monnet had advised Eduard Benes: To address the problem of the weakness of Central European economic by establishing a “federation because of the region formed a “natural economic unit.”

(James Laxer. “Inventing Europe”; Toronto, 1991.p. 27).

Later in the Second World War: 


“Writing on behalf of the French Committee of National Liberation, Monnet for the first time advocated the formation of a federation of European states to be established following the conflict..”

(Laxer, Ibid, p. 27).

But Jean Monnet was in reality, a pro-USA comprador. He had spent many years working in banking in the USA and had married a scion of the US ruling classes. Ultimately he saw not a rivalry between the USA and pan-Europe, but a partnership, which later USA President Kennedy was also to espouse (van Pijl p. 29):

“The most important representative of the Atlantic Partnership, or Euramerican concept in France was Jean Monnet. 1962 was Monnet’s year of triumph, in which he thought the partnership of equals between the US and the EEC, by which the Soviet union could be effectively checked, was actually materializing. In Monnet’s view this would entail European military autonomy as well. ‘Equal partnership must also apply to the responsibilities of common defense, it requires amongst other things, the organisation of a European atomic force including Britain and in partnership with the US.”

(Van der Pijl: Ibid; P. 225).

Monnet’s relationship with the USA ruling class representatives of capital was close at even a personal level:

“There is no doubt.. Monnet’s initiatives .. owed much to American encouragement. His decisive advantage was the closeness of his association with the USA political elite.. the Dulles brothers, Acheson, Harriman, McCloy, Ball and Brice and others.. he was to become widely distrusted in his own country because of it..”

(Anderson, Perry. “The New Old World”; London 2009 p.15)

“Monnet’s strength as an architect of integration (i.e. of Europe – ed) did not lie in any particular leverage with European cabinets… but in his direct line to Washington.”

(Anderson, Perry. Ibid; p. 17)

By May 1949, the first concrete post-war steps for uniting Europe into a pro-Atlantic (i.e. pro-USA) bloc led to the Statute of the Council of Europe.

On 9 May 1950, the French Foreign Minister Robert Schuman proposed to integrate the coal and steel industries of Europe. The Schumann Proposal for the European Iron and Steel Community, was designed to form a competitive market in iron and steel, using substantial public sector capital. Britain refused to join at that stage. By 1958, trade in the ECSC in steel had increased by 157% and steel output by 65% (Laxer, p. 38).

In “Alliance Marxist-Leninist” of October 1992, the Schumann Plan was portrayed as an anti-American move; and Jean Monnet as a Euronationalist. Alliance was incorrect in this analysis. (Alliance Marxist-Leninist ALLIANCE (MARXIST-LENINIST (Number 3, October 1992) “Crisis In Capital And Their Solution – Free Trade And Protectionism In Developed Countries” http://ml-review.ca/aml/AllianceIssues/ALLIANCE3ECONOMICS.html

The reality was far more complex. In fact the USA had argued that the Schumann Plan was of use since:

“Secretary of State Acheson in 1951 estimated that the Schumann Plan was useful.. since it would “pull Germany, certainly Western Germany into economic relationship with Europe. It will tie it in and lay a foundation which will ally fears the Germany might come loose and go off on an independent or pro-Russian policy.”

(van Pijl Ibid p. 157) .

The USA imperialists with their European stooges – and even with the Euro-nationalists – at this stage all continued to agree that Europe needed to unite. The vision of many planners of USA strategy, was akin to that of Paul Hoffman – leading member of the Committee headed by Averell Harriman secretary of Commerce – speaking to the Senate Foreign Relations Committee in 1950:

“We know that there is no possibility of Europe becoming the kind of an economy that will make it a great force of strength in the Atlantic community unless we break down the barriers between those 17 political subdivisions with which we are working… so that you have a single market, or something close to it, in which you will have large-scale manufacturing because you have a large market in which to sell it.”

(Van Pijl Ibid p. 197)

Britain and France after Suez, had to accept that in the immediate future, their only role on the world stage would be as a junior partner to USA imperialism. They threw their lot in with the Americans. The USA used their influence with the British to disrupt attempts at a defence force independent of the US.

But as the USA became ever more hegemonic in Europe, De Gaulle and others turned to resist USA incursion. This was forseen by J.V.Stalin:

“Britain and France .. are imperialist countries.. Can it be assumed that they will endlessly tolerate the present situation in which.. Americans are penetrating into the economies of Britain and France and trying to convert them into adjuncts of the USA economy?

…Would it not be truer to say that capitalist Britain and France will be 
compelled in the end to break from the embrace of the USA and enter into conflict with it in order to secure an independent position and of course high profits?”

(J.V. Stalin, “Economic problems of the Socialism in the USSR”; Moscow, 1952. p. 38).

The loosening of the dependency chains on European nations formed by the credit of the USA Marshall Plan would take several interim steps.

By 1957, the Treaty of Rome was signed which established the European Economic Community (EEC). Consistent with its overall European strategy, the formation of the EEC was supported by the USA. In fact:

Eisenhower (said) .. that the Treaty of Rome would be one of the finest days in the history of the free world, perhaps even more so than winning the war”;

(Anderson; Ibid; p. 18).

There was now a dramatic opening of the European market for financial penetration – to take over European industries, as well as their markets:

“The shift from commercial to financial penetration (ie of Europe – by the USA -ed) was confirmed by the formation of the EEC. The Common Market dramatically changed American prospects for expansion in this respect.“

(Van der Pijil; Ibid, p.193)

In reply to De Gaulle, the USA attempted to weaken the development of the future European Union, by using its stooge the weak British imperialists. Thereupon French General De Gaulle later on vetoed the entry of Great Britain into the EEC for precisely this reason.

By the time of Nixon and Kissinger, the situation had shifted. Now the USA perceived the threat in the now built up European Community:

“(they) started to perceive the potential for a rival great power in Western Europe”;

(Anderson Ibid p. 21).

How had things changed so dramatically? The balance of power between the Euronationalists and the pro-US Atlanticists had changed after the rise of the dollar hegemony. To recap, the Bretton Woods Agreement of 1944 to stay on a gold convertibility was simply put aside by the USA. By the 1960s, under USA President Johnson, inflation was created by printing more dollars. This enabled the USA to fund the Vietnam War and its limited social reforms of the so-called ‘Great Society” (Dean & Pringle Ibid p.80; Palmer Ibid p.61). This had dire consequences:

“The net result in the succeeding decades was a scale of Federal domestic budget deficit and increasingly, balance of payments deficit without precedent in US history. At first the deficits and consequential outflow of dollars into the world economy had been regarded as benign.. The deficits initially helped to finance the mutual economic recovery of Americans’ allied (and client) economies. But as the outflow of dollars turned into a might flood, American control over banks grew by leaps and bounds, Between 1970 and 1975 the assets of overseas branches of US banks grew from $47 billion to $166 billion. The over-valued US dollar came to be seen as the means by which European industry was being acquired cheaply by US interests… fears were expressed that Western Europe was being turned into a fiefdom of US multinationals.. By the late 1960s the gap between the US dollar’s internal purchasing power and its international value had widened alarmingly. The Europeans were faced with the choice of either accepting these depreciating dollars (and thus, in effect, of subsidizing the American economy and worldwide military and political commitments) or exploiting America’s Bretton Woods commitment to swap dollars for gold at the fixed prices.”

(Palmer Ibid p. 62).

De Gaulle remarked early on, that this was a USA attack using dollarization of the world economy, and warned that:

“The Americans only used the atom device twice on Asia. … but they use the dollar on Europe every day”

(Cited Palmer, John: “Europe without America? The crisis in Atlantic Relations”; Oxford; 1988; p.62)

Essentially the USA was pursuing a policy of financial export to drive acquisition of European industrial and financial companies. Simultaneously it unwittingly began the financialization driving world inflation – from ‘hot money’. European nationalist leaders of many countries objected. As well as De Gaulle, French President Giscard d’Estaing objected:

“It is rather remarkable that the war in Vietnam, a localized conflict of a very special nature involving a great power and a small power could have such a far reaching effects on world economic equilibrium.. Any other country that was faced with a balance-of-payment deficit of this magnitude would have been obliged to take steps to restore balance whereas the US was not obliged to do so; the method of financing its deficit exempted it from having to restore equilibrium and it was therefore a system which caused considerable inequality in the interplay of monetary power…”

(Hudson, Michael, Global Fracture, the new international Economic Order. New York, 1977; p.31).

In another more serious threat to USA hegemony, the German state had become more pro-independent. Earlier leaders (Konrad Ardenauer Chancellor [1949-1962] and Ludwig Erhard [Chancellor 1963-1965]) of post-war West Germany had been resolutely pro-USA. The attitude of later German leaders can be gauged from a remark made by Chancellor Helmut Schmidt (Chancellor 1974-1982) when he decried:

“The misuse of the dollar as an instrument of US foreign policy.”

(Cited Palmer John: “Europe without America? The crisis in Atlantic Relations”; Oxford; 1988; p. 10)

This reaction against the USA had its counterpart in Britain in the Westland Helicopter crisis, where Defence Minister Michael Hesletine revolted against Mrs Thatcher. He was soon despatched by the stalwart pro-USA Mrs Thatcher. This was pointed out by the Communist League at the time.

The salient point is that the USA fiscal policies prompted the Euronationalists to move towards the European Monetary System (EMS) and before that the Snake. This then became the European Monetary Union (EMU):

“European Community alarm at the misuse of the dollar’s privileged position in the world currency system encouraged the EEC states to distance themselves in monetary policy from the US in the late 1970’s. President Valery Giscard D’Estaing of France led – despite British opposition – to the creation of … the EMS.. the breakup of the dollar-dominated monetary system also marked the end of the earlier Atlantic consensus enshrined in the Bretton Woods Agreement of 1944”;

(Palmer J ibid p. 11).

In Alliance Marxist-Leninist Number 3, 1992, we traced the rise of the European Union and the emerging hegemonic role of the unified single German State – after the disintegration of the Comecon states including former East Germany.

We concluded Alliance 3 by characterising the then inter-imperial rivalries as follows:

The current crisis of capital forces formation of blocs.

The current epoch is one of a disintegration of the power of the USA imperialists and an increase in power of the German and thereby European imperialists and the Japanese imperialists. Each of these competitors strive to create a super trading bloc; within whose borders free trade (or ‘ freer trade’) occurs. Outside of the bloc, protectionism is the policy.

These policies result from the major crisis of over-production that the world is experiencing. The final rupture of the Comecon capitalist block offers the only untapped market; and so the Blocs are trying to extend themselves into the ex-Comecon markets.

In the case of the USA Free Trade Bloc being set up between Mexico, the USA and Canada; the Block is clearly under the domination of the USA. Here there is no effective balance between opposing international imperialism. The differences between the European imperialists do allow for a certain balance; this is not achievable between the USA and Canada; and less so between USA and Mexico.

….. The European Economic Community is more delicately balanced between the competing imperialists. Of the nations within the fold, only Britain (now a junior partner) has significant allegiance to the USA. The others are far more committed to the EEC; even risking domination by Germany.

In the Far East, it is likely that a massive trading bloc between Japan and China is going to make it impossible for many of the Pacific basin nations not to enter an alliance dominated by the Japanese imperialists.

These maneuvers are the first salvoes of the next World War.”

(Alliance 3: Ibid: http://ml-review.ca/aml/AllianceIssues/ALLIANCE3ECONOMICS.html)

We believe that these assessments – overall – remain correct. They are also, consistent with Stalin’s famous prediction that under capitalism competitive wars for markets were inevitable, and that sooner or later – Europe would chafe under USA domination:

“Inevitability of Wars between Capitalist Countries”; Some comrades think that owing to the development of new international conditions since the Second World War, wars between capitalist countries have ceased to be inevitable. These comrades are mistaken. Outwardly everything would seem to be going well; the USA has put Western Europe, Japan, and other capitalist countries on rations; Germany (Western), Britain, France, Italy & Japan have fallen into the clutches of the USA and are meekly obeying its commands. But it would be mistaken to think that things can continue to “go well” for ” all eternity”, that these countries will tolerate the domination and oppression of the United States endlessly, that they will not endeavor to tear loose from American bondage and take the part of independent development.”

(Stalin; ‘Economic Problems of the USSR”: Peking; p.33).

Now in 2015, as we update the picture in 2015, the basic rhythm of inter-imperialist struggle has not changed dramatically but become even more intense. The final crumbling of the ex-Comecon countries postponed the ‘final reckoning’ of the European and USA rivalries. And yet rivalries have sharpened with the entry of China into the leading echelons of imperialist rivalry. In this period:

i) Germany has benefited the most and now become the leading (if not yet quite hegemonic) partner of the imperialist coalition of the EU.

ii) The EU has expanded enormously to now include the so-called Southern fringe (including Greece, Portugal, Spain, with continuing discussion with Turkey); and the ex-Comecon countries.

iii) There has been a renewed attempt of the Russian bourgeoisie led by Putin to recreate its own imperial zone.

iv) China has dramatically enhanced its imperial might and come to near logger-heads with the neighboring Pacific Oceanic states – in particular those nations most tied to the USA (Japan, Philippines).

v) The most advanced of the former under-developed colonised world (Brazil, India) have been organized by the renewed Chinese imperialists into conglomerates that pose increasing challenges to both the USA and EU hegemony. Namely BRIC (Brazil, Russia, India, China) and the newly created International Bank.

The still unresolved contradiction at the heart of the European Community

Of course the EU has a major problem: Even now, it is not a unitary state with unitary fiscal policies. Although the leaders of the EU wish to concentrate power against the USA, they are unwilling to cede complete national autonomy to a Supra-European force – (namely the European Union based at Brussels). However while EU leaders can attempt to combine the monetary resources, unless there is a complete political unity – there are centrifugal forces they cannot control. For this would require to be overcome, a single unitary Bank.

This is far from a new realisation. The insoluble contradiction was pointed out by astute economists long ago such as Lord Nicholas Kaldor (1908-1986). Kaldor was a Keynesian, who polemicized against both Milton Friedman and Mrs. Thatcher’s worship of monetarism. He cited Keynes to say:

“Keynes (a pamphlet far ahead of the times and ahead of much of his own future writing on the subject), in which he branded monetary policy as ‘simply a campaign against the standard of life of the working classes’, operating through the ‘deliberate intensification of unemployment . . . by using the weapon of economic necessity against individuals and against particular industries — a policy which the country would never permit if it knew what was being done’.

(J. M. Keynes, The Economic Consequences of Mr. Churchill (London, 1925), reprinted in the Collected Writings of John Maynard Keynes Vol. IX (London, 1972), pp. 207-30; Cited Foreword Second edition; Kaldor, N: The Scourge of Monetarism”; Oxford 1986. https://www.questia.com/read/13674203/the-scourge-of-monetarism

In 1971, Kaldor pointed out that in the proposed Eurozone, there would be a tendency for some countries “to acquire increasing (and unwanted surpluses) in their trade with other members, whilst others face increasing deficits”. This could only be overcome he foresaw, by fuller political union:

“The events of the last few years … have demonstrated that the Community is not viable with its present degree of economic integration. The system presupposes full currency convertibility and fixed exchange rates among the members, whilst leaving monetary and fiscal policy to the discretion of the individual member countries. Under this system, as events have shown, some countries will tend to acquire increasing (and unwanted surpluses) in their trade with other members, whist others face increasing deficits. This has two unwelcome effects. It transmits inflationary pressures emanating from some members to other members; and it causes the surplus countries to provide automatic finance on an increasing scale to the deficit countries.

Since exchange-rate adjustments or “floating rates” between members are held to be incompatible with the basic aim of economic integration (and are incompatible also with the present system of common agricultural prices fixed in international units) the governments of the Six, at their Summit meeting in The Hague in December 1969, agreed in principle to the creation of a full economic and monetary union, and appointed a high-level committee (the so-called “Werner Committee”) to work out a concrete programme of action..”

(Nicholas Kaldor On European Political Union Cited by Ramanan, 6 November 2012; in The Case For Concerted Action Post-Keynesian Ideas For A Crisis That Conventional Remedies Cannot Resolve; at http://www.concertedaction.com/2012/11/06/nicholas-kaldor-on-european-political-union/)

Those planning a momentary union explicitly recognised that in the ultimate “third phase” the “individual central beings (being) would be abolished altogether, or reduced to the state of the old colonial “Currency Boards”:

“The realisation of economic and monetary union, as recommended in the Werner Report, involves three kinds of measures, each introduced in stages: monetary union, tax harmonisation, and central community control over national budgets.  It envisages a three-stage programme, with each stage lasting about three years, so that the whole plan is designed to be brought into operation by 1978-80.

In the monetary field in the first stage the interest and credit policy of each central bank is increasingly brought under common Community surveillance and permitted margins of variations between exchange rates are reduced or eliminated. In the second stage exchange rates are made immutable and “autonomous parity adjustments” are totally excluded. In the third stage the individual central banks are abolished altogether, or reduced to the status of the old colonial “Currency Boards” without any credit creating power.”

(Nicholas Kaldor Ibid)

Other political issues would also pose problems including the harmonisation of tax differences and differing budget polices requiring “fiscal standardisation” between countries:

“In the field of tax harmonisation it is envisaged that each country’s system should be increasingly aligned to that of other countries, and that there should be “fiscal standardisation” to permit the complete abolition of fiscal frontiers, which means not only identical forms but also identical rates of taxation, particularly in regard to the value added tax and excise duties.

In the field of budgetary control the Werner Report says “the essential elements of the whole of the public budgets, and in particular variations in their volume, the size of balances and the methods of financing or utilizing them, will be decided at the Community level.”

(Nicholas Kaldor Ibid)

However, ominously for the proponents of a single currency – responsibilities to have individual country Budgets and tax polices set centrally – were not envisaged as necessary. This was according to Kaldor, “the basic contradiction”:

“What is not envisaged is that the main responsibility for public expenditure and taxation should be transferred from the national Governments to the Community. Each member will continue to be responsible for raising the revenue for its own expenditure (apart from the special taxes which are paid to finance the Community’s own budget but which will remain a relatively small proportion of total public expenditure and mainly serve the purposes of the Agriculture Fund and other development aid).

And herein lies the basic contradiction of the whole plan.”

(Nicholas Kaldor Ibid)

Kaldor argued this had to have harsh implications for inequity in the well-being of the peoples of different countries. It was clear that unless “harmonisation” of country provision of benefits paid through by taxation – was ensured, there would be rising inequity:

“For the Community also envisages that the scale of provision of public services (such as the social services) should be “harmonised” – i.e., that each country should provide such benefits on the same scale as the others and be responsible for financing them by taxation raised from its own citizens. This clearly cannot be done with equal rates of taxation unless all Community members are equally prosperous and increase their prosperity at the same rate as the other members. Otherwise the taxation of the less prosperous and/or the slower-growing countries is bound to be higher (or rise faster) than that of the more prosperous (or faster-growing) areas.”

(Nicholas Kaldor Ibid)

In turn, this rising inequity in the poorer countries would likely need to be countered by spiraling taxes, in order to maintain a “fiscal balance” with the remained of “the Community.” But this would then become the source of “vicious circle” as these higher taxes would lead to a further compromise of the less “competitive” countries. Worsening of the inter-country inequity would need for distributing relief funds from the center:

“The Community will control each member country’s fiscal balance – i.e., it will ensure that each country will raise enough in taxation to prevent it from getting into imbalance with other members on account of its fiscal deficit. To ensure this the taxes in the slow growing areas are bound to be increased faster; this in itself will generate a vicious circle, since with rising taxation they become less competitive and fall behind even more, thereby necessitating higher social expenditures (on unemployment benefits, etc.) and more restrictive fiscal policies. A system on these lines would create rapidly growing inequalities between the different countries, and is bound to break down in a relatively short time. …

This is only another way of saying that the objective of a full monetary and economic union is unattainable without a political union; and the latter pre-supposes fiscal integration, and not just fiscal harmonisation. It requires the creation of a Community Government and Parliament which takes over the responsibility for at least the major part of the expenditure now provided by national governments and finances it by taxes raised at uniform rates throughout the Community. With an integrated system of this kind, the prosperous areas automatically subside the poorer areas; and the areas whose exports are declining obtain automatic relief by paying in less, and receiving more, from the central Exchequer. The cumulative tendencies to progress and decline are thus held in check by a “built-in” fiscal stabiliser which makes the “surplus” areas provide automatic fiscal aid to the “deficit” areas.

(Kaldor, Nicholas “On European Political Union Ibid)

Kaldor concluded that the Community’s present plan was like the house which “divided against itself cannot stand” and that “it was “dangerous error: to have a “full economic and monetary union” preceding a political union”:

“The Community’s present plan on the other hand is like the house which “divided against itself cannot stand.” Monetary union and Community control over budgets will prevent a member country from pursuing full employment policies on its own – from taking steps to offset any sharp decline in the level of its production and employment, but without the benefit of a strong Community government which would shield its inhabitants from its worst consequences.

Some day the nations of Europe may be ready to merge their national identities and create a new European Union – the United States of Europe. If and when they do, a European Government will take over all the functions which the Federal government now provides in the U.S., or in Canada or Australia. This will involve the creation of a “full economic and monetary union”. But it is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) “as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without”. For if the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system it will prevent the development of a political union, not promote it.”

(Nicholas Kaldor Ibid)

We believe that the current crisis in Greece, fully confirms these warning. However Kaldor being a representative of the ruling capitalist class in Britain, could hardly envisage a political solution of benefit to the goals of achieving a socialist Europe. It is in this backdrop, that the Greek Crisis plays out.

6. The Greek Economic Crisis 2009-2015 – How did it get to this stage?

Throughout the turn towards Europe, the ruling class of Greece faced the hostility of the Greek working class and the rural small peasants. Nonetheless the ruling class allied itself firmly to the European imperialist bloc of the European Union (Previously the EEC). To recap: the Greek state opened the doors to foreign debt. From the viewpoint of a small capitalist class, who were not about to enter a left policy – there was no alternative. In doing so they also built a bureaucratic state machine, packed with protégés of the states. In addition the overwhelming strength of petit-bourgeois production – combined to allow a nepotistic and corrupt state. In this period, the Greek capitalist economy did not do very well.

In reality profits for the leading elite of the Greek capitalist class were immense. While the international financial capitalists are a giant leech on the back of the people, the main enemy of working people, remains the Greek capitalist class.

A common complaint from European bankers is that the Greek people are lazy and inherently corrupt. This propaganda has found resonance in otherwise progressive and people – who are themselves hard-pressed by capital. It is therefore important to refute the slander on “the lazy Greek people” – and attach the charge of laziness and parasitism to where it belongs – to the ruling capitalist class of Greece. The propaganda often cites the “lax tax laws” and the ‘pampered pension clauses’. Let us examine these aspects first.

i) Tax and Pensions in Greece

The capitalist class structured the tax system to its advantage, and also enabled the petit-bourgeois:

“Greek taxation is a mess (there are six different bands and the wealthiest band of shipping is often referred to as a “tax-free zone”) and over 133 separate pension funds.” Buchanan, Rose T; “Greece debt crisis explained: A history of just how the country landed itself in such a mess”; The Independent 4 July 2015; http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-how-the-country-landed-itself-in-such-a-mess-10365798.html

“Data from one of Greece’s ten largest banks, (allowed) economists Nikolaos Artavanis, Adair Morse and Margarita Tsoutsoura..to (estimate lost tax revenue)…. The economists’ conservatively estimate that in 2009 some €28 billion in income went unreported. Taxed at 40%, that equates to €11.2 billion — nearly a third of Greece’s budget deficit.
Why hasn’t Greece done more to stop tax evasion? The economists were also able to identify the top tax-evading occupations — doctors and engineers ranked highest — and found they were heavily represented in Parliament”.

“Greeks Hide Tens of Billions From Tax Man”; Wall St Journal 9 July 2012.

http://blogs.wsj.com/economics/2012/07/09/greeks-hide-tens-of-billions-from-tax-man/?mod=WSJBlog&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Feconomics%2Ffeed+%28WSJ.com%3A+Real+Time+Economics+Blog%29

The scandal of refusal to take action on the “Lagarde List”, makes the responsibility of the Greek ruling class for the “tax imbroglio” even more clear:

“The Greek government has not completed an investigation of a list of 1,991 persons purported to hold accounts with Swiss bank HSBC that it received in 2010 from former French finance minister Christine Lagarde. Initially, officials claimed at various times to have lost or misplaced the information. On 29 October 2012 the government changed its position saying it would not use stolen information to prosecute suspected offenders. Instead, Greek authorities arrested Kostas Vaxevanis, journalist and editor of the weekly magazine Hot Doc, who published the “Lagarde list.”

The list includes an advisor to former Greek prime minister Antonis Samaras, as well as a former minister and a member of Samaras’ New Democracy political party. The list also contains the names of officials in the finance ministry.
Mr. Vaxevanis said he thought the government had not acted on the list because it included friends of ministers, businessmen and powerful publishers.

(https://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_Greece)

ii) Pensions

First if examined by unadjusted numbers it does appear that the Greek pension system is the most expensive in the OECD countries. We follow the Wall Street Journal analysis of February 2015 (Dalton, Matthew: “Greece’s Pension System Isn’t That Generous After All”; February 27 2015; http://blogs.wsj.com/brussels/2015/02/27/greeces-pension-system-isnt-that-generous-after-all/):

Graphs 1-3 on Pensions In Greece
“First, how much does Greece spend as percentage of GDP on pensions? The data from Eurostat looks like this as of 2012, with Greece expenditure easily highest in the eurozone as a percentage of GDP:

Greece2

However – the Wall Street Journal goes on to break this down, first as a percent of GDP and then by the proportion of pensioners over the age of 65 years:

“But part of that is due to the collapse in GDP suffered by Greece during the crisis… look at pension expenditure as a percentage of potential GDP, the level of economic output were eurozone economies running at full capacity:

Greece3

“Greece is still near the top, though it’s not so far from the eurozone average. Moreover, Greece’s high spending is largely the result of bad demographics: 20% of Greeks are over age 65, one of the highest percentages in the eurozone. What if instead you attempt to adjust for that by looking at pension spending per person over 65 (graph below). Adjusting for the fact that Greece has a lot of older people, its pension spending is below the eurozone average.”

Greece4

And finally a large proportion of the population are pensioners over 65 and many households depend on the pension:

“First, demographics. About 20.5% of Greeks are over 65 – behind only Italy and Germany in the EU when it comes to an ageing population. And with the country’s youth unemployment rate still above 50%, its young people are not going to be able to pay for their grandparents pensions any time soon.

Second, Greek society has a dependency on pensioners. One in two households rely on pensions to make ends meet and the country has an old-age dependancy ratio above 30%, which means that for every 100 people of working age in Greece there are 30 people aged 65 or over.

Third, Greek pensions aren’t so generous. About 45% of pensioners receive pensions below what is considered the poverty limit of €665 per month.
Looking at the actual expenditure on beneficiaries, Greece’s figures don’t stand out as exceptional and are instead on par with the EU average.”

(Nardelli, Alberto: “ Unsustainable futures? The Greek pensions dilemma explained“; Guardian, 15 June 2015; at http://www.theguardian.com/business/2015/jun/15/unsustainable-futures-greece-pensions-dilemma-explained-financial-crisis-default-eurozone)

There is no doubt a large financial burden form the pension schemes – but they provide at an individual level a very modest income:

“What makes the country’s pension system unsustainable is not the specific size of each individual pension, but the overall cost of a grossly inefficient and badly funded system (yes, mainly due to of decades of endemic tax evasion that means as much tax revenue slips through Athens’ fingers as it collects). According to analysis by Macropolis, the average pension in Greece is roughly €700 per month, while the supplementary one is €169.
The same analysis also shows that nearly 90% (€2.07bn) of the total monthly expenditure (€2.35bn) on pensions in March went towards the main pension.
It also reveals that only 0.6% of supplementary pensions were above €500 a month.
For 60% of pensioners the total gross monthly intake is below €800. In addition, many retirees in Greece have already seen their pensions cut. Some by a third, others by nearly 50%.

(Nardelli,; Guardian, 15 June 2015; Ibid)

Moreover, although cutting them might shave off some debt – not only is this unable to repair the basic financial problem of a dependent economy:

“In 2012, pension funds, which were obliged under a law introduced in 1950 by the then king of Greece, Paul I, to keep a minimum of 77% of their assets in government bonds, took an €8.3bn hit following the restructuring of sovereign debt.
Nearly a third of what pension funds have lost since then is due to a fall in contributions on the back of surging unemployment. The unemployment rate is still painfully high (26.6%, while in 2009 it was 9.5%), and nearly eight out of 10 of the country’s jobless have been out of work for 12 months or more.
Any saving brought about by simply purging early retirees’ benefits, cutting supplementary pensions horizontally across the board, or revenue raised by squeezing a drastically depleted pool of taxpayers, would in the short-term allow Greece to unlock the €7bn tranche of bailout funds it needs to carry on servicing its debt (and not default).
However, it would do little to solve the underlying challenges in the longer term.”

(Nardelli,; Guardian, 15 June 2015; Ibid)

Debt and printing money drive Greek Inflation

As discussed in prior sections, the ruling class used inflationary funding to enable it to fool and quieten the working classes. The scale of this is shown below.

“Greece has had a tricky time with its finances. In the 1990s it consistently ran significant budget deficits while using the Drachma. As a result of this economic mismanagement it joined the Euro in 2001, rather than 1999 like many other EU nations.” (Buchanan, Rose T; “Greece debt crisis explained: A history of just how the country landed itself in such a mess”; The Independent 4 July 2015; http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-how-the-country-landed-itself-in-such-a-mess-10365798.html)

The following Graph 4, from the ‘Michael Roberts Blog,” tracks the inflation to the deflation tipping point, after the debt crisis became evident:

Greece5

(Roberts M; ‘Greece Cannot Escape”; 2nd Nov 2014: https://thenextrecession.wordpress.com/2014/02/11/greece-cannot-escape/)

However, once it was in the Eurozone, Greece’s government could no longer so easily use inflationary economics to easily boost living standards, as it was bound by the Eurozone and the single currency.

The alternative of devaluing its currency to boost its exports was also not possible. This left only loans. Since it was now the era of financial ‘hot money’ and rampant money-speculation had become standard, this was easy at first, and the inflation graph shows that even the loan-injection money fueled a degree of inflation. But the spigot was soon to be turned off with the Wall Street crash:

“Shortly after joining the single currency, Greece enjoyed a period of growth (2001-2007). However, economist and analysts have retrospectively labeled this boom as “unsustainable,” pointing out that Greece (very broadly speaking) profited off the cheap loans available from the EU. This house of cards came tumbling down with the financial crash of 2008. Like many other countries in the EU Greece was seriously affected, but it was unable to climb out of the hole as it had in the past by printing more currency (thus boosting the economy) as the Euro was controlled by the European Central Bank (ECB). Unemployment spiraled to 28 per cent.”

(Buchanan, Rose T; “Greece debt crisis explained: A history of just how the country landed itself in such a mess”; The Independent 4 July 2015; http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-how-the-country-landed-itself-in-such-a-mess-10365798.html)

Greece’s relationship to the EU was as a dependent colony to the leading capitalist countries of the EU. These were of course Germany and also France.
International agencies progressively lent Greek governments large amounts of money. Consequently, Greece progressively developed an external debt of gigantic proportions as seen below in the brown/dark red line (Graph 5):

Greece6

What is the nature of these debt burdens that the Greek government faces?
The German locomotive pushing the EU economy – needed markets. The “under-developed” Southern perimeter of the EU was one of the natural “new” markets:

“Economist Paul Krugman wrote in February 2012:

“What we’re basically looking at…is a balance of payments problem, in which capital flooded south after the creation of the euro, leading to overvaluation in southern Europe.”

He continued in June 2015:

“In truth, this has never been a fiscal crisis at its root; it has always been a balance of payments crisis that manifests itself in part in budget problems, which have then been pushed onto the center of the stage by ideology.”

The translation of trade deficits to budget deficits works through sectoral balances. Greece ran current account (trade) deficits averaging 9.1% GDP from 2000–2011. By definition, a trade deficit requires capital inflow (mainly borrowing) to fund; this is referred to as a capital surplus or foreign financial surplus. This can drive higher levels of government budget deficits, if the private sector maintains relatively even amounts of savings and investment, as the three financial sectors (foreign, government, and private) by definition must balance to zero.
While Greece was running a large foreign financial surplus, it funded this by running a large budget deficit. As the inflow of money stopped during the crisis, reducing the foreign financial surplus, Greece was forced to reduce its budget deficit substantially. Countries facing such a sudden reversal in capital flows typically devalue their currencies to resume the inflow of capital; however, Greece cannot do this, and has suffered significant income (GDP) reduction, another form of devaluation.”

(https://en.wikipedia.org/wiki/Greek_government-debt_crisis#/media/File:HellenicOeconomy(inCurrentEuros).png)

Lord Kaldor’s warnings about this developing were discussed above.

Who owns this debt?

Graph 6: Current account imbalances in the European Union (1997–2014)

The graph below (from Wikipedia at: https://en.wikipedia.org/wiki/File:Current_account_imbalances_EN_(3D).svg)
shows that one of the major owners is Germany. In more detail, the ‘Economist Online” of October 2011 described the major ownership of the Greek debt. The main institutions owning the Greek debt are the IMF, the European Central Bank (ECB) and various European governments:

“Greece has total debts of €346.4bn. About a third of this debt is in public hands (34.8% is attributable to the IMF, ECB and European governments), roughly another third is in Greek hands (28.8%, essentially for banks) with the remainder (36.4%) held by non-Greek private investors.
(http://economistonline.muogao.com/2011/10/who-owns-greek-debt.html)

Greece7

And the New York Times Business news cites similar data:

“Almost two-thirds of Greece’s debt, about 200 billion euros, is owed to the eurozone bailout fund or other eurozone countries. Greece does not have to make any payments on that debt until 2023”. (Editor: Graph 7: below graphically displays the ownership of the debt.)

Greece8

Greece’s debt crisis explained” – International Business; New York Times updated July 27, 2015 http://www.nytimes.com/interactive/2015/business/international/greece-debt-crisis-euro.html?_r=0

During this period, Greece’s finances were monitored by external agencies, largely those who had loaned monies to Greece. These were the International Monetary Fund (IMF), the European Community (EU) and the European Central Bank (ECB). These formed the so-called Troika. The Troika was to become hated by the Greek peoples as they plunged Greece into major social chaos and forced the living standards of the Greek people down.

As the New York Times comments, in many ways the “crisis” can be considered as a manufactured one as only a portion of debt is coming due in the short term:

“The International Monetary Fund has proposed extending the grace period until mid-century. So while Greece’s total debt is big—as much as double the country’s annual economic output—it might not matter much if the government did not need to make payments for decades to come. By the time the money came due, the Greek economy could have grown enough that the sum no longer seemed daunting.
In the short term, though, Greece has a problem making payments due on loans from the International Monetary Fund and on bonds held by the European Central Bank. Those obligations amount to more than 24 billion euros through the middle of 2018, and it is unlikely that either institution would agree to long delays in repayment.”
Greece’s debt crisis explained” – International Business; New York Times updated July 27, 2015 http://www.nytimes.com/interactive/2015/business/international/greece-debt-crisis-euro.html?_r=0

Two additional problems have conspired to make the “original sin” of debt – of even more enormous consequence.
Firstly, quite early on during this crisis, it was clear to the Troika lenders that the Greek government was in trouble in repaying any significant fraction of this debt. However this was ignored. In fact the IMF – despite its own rules and despite the worries about “default” – continued to fuel the fire of debt by giving more loans.

Then secondly, to worsen matters, the Greek government falsified data about the extent of its debt, and was helped by the greed of USA banking capital.

As early as 2004, in its negotiations with the EU, the ruling class of Greece falsified the degree of its debt. Goldman Sachs – the giant stockbroker and trader bank of Wall Street, aided the Greek government in doing this:

“In 2001, Greece was looking for ways to disguise its mounting financial troubles. The Maastricht Treaty required all Eurozone member states to show improvement in their public finances, but Greece was heading in the wrong direction. Then Goldman Sachs came to the rescue, arranging a secret loan of 2.8 billion euros for Greece, disguised as an off-the-books “cross-currency swap”—a complicated transaction in which Greece’s foreign-currency debt was converted into a domestic-currency obligation using a fictitious market exchange rate.

As a result, about 2 percent of Greece’s debt magically disappeared from its national accounts. Christoforos Sardelis, then head of Greece’s Public Debt Management Agency, later described the deal to Bloomberg Business as “a very sexy story between two sinners.” For its services, Goldman received a whopping 600 million euros ($793 million), according to Spyros Papanicolaou, who took over from Sardelis in 2005. That came to about 12 percent of Goldman’s revenue from its giant trading and principal-investments unit in 2001—which posted record sales that year. The unit was run by Blankfein.

Then the deal turned sour. After the 9/11 attacks, bond yields plunged, resulting in a big loss for Greece because of the formula Goldman had used to compute the country’s debt repayments under the swap. By 2005, Greece owed almost double what it had put into the deal, pushing its off-the-books debt from 2.8 billion euros to 5.1 billion. In 2005, the deal was restructured and that 5.1 billion euros in debt locked in. Perhaps not incidentally, Mario Draghi, now head of the European Central Bank and a major player in the current Greek drama, was then managing director of Goldman’s international division.”

(Robert B. Reich ‘How Goldman Sachs Profited From the Greek Debt Crisis”; The Nation16th July 2015; http://www.thenation.com/article/goldmans-greek-gambit/)

Such was the pervasive greed, that of course such ‘creative’ financing’ was standard, as explained by Robert Reich:

“Greece wasn’t the only sinner. Until 2008, European Union accounting rules allowed member nations to manage their debt with so-called off-market rates in swaps, pushed by Goldman and other Wall Street banks. In the late 1990s, J.P.Morgan enabled Italy to hide its debt by swapping currency at a favorable exchange rate, thereby committing Italy to future payments that didn’t appear on its national accounts as future liabilities. But Greece was in the worst shape, and Goldman was the biggest enabler. Undoubtedly, Greece suffers from years of corruption and tax avoidance by its wealthy. But Goldman wasn’t an innocent bystander: It padded its profits by leveraging Greece to the hilt—along with much of the rest of the global economy. Other Wall Street banks did the same. When the bubble burst, all that leveraging pulled the world economy to its knees.”

(Robert B. Reich ‘How Goldman Sachs Profited From the Greek Debt Crisis”; The Nation16th July 2015; http://www.thenation.com/article/goldmans-greek-gambit/)

Of course such greed driven lying enabled the Greek Government to gain more loans. This was of itself a problem since the country was developing intractable recession.

The Crisis heats up and the infamous Troika Memorandum

By 2009, significant fears that Greece would default on its loans prompted alarm. The Troika made moves to yet another loan – this time of $110 billion – but only if there were significant “austerity measures.” Of course this was intended to be an “austerity” for the working classes and not for the ruling classes:

“From late 2009, fears of a sovereign debt crisis developed among investors concerning Greece’s ability to meet its debt obligations due to strong increase in government debt levels. This led to a crisis of confidence, indicated by a widening of bond yield spreads and risk insurance on credit default swaps compared to other countries, most importantly Germany. Downgrading of Greek government debt to junk bonds created alarm in financial markets.

“On 2 May 2010, the Eurozone countries and the International Monetary Fund agreed on a €110 billion loan for Greece, conditional on the implementation of harsh austerity measures. In October 2011, Eurozone leaders also agreed on a proposal to write off 50% of Greek debt owed to private creditors, increasing the EFSF to about €1 trillion and requiring European banks to achieve 9% capitalization to reduce the risk of contagion to other countries. These austerity measures have proved extremely unpopular with the Greek public, precipitating demonstrations and civil unrest.”

(https://en.wikipedia.org/wiki/Greek_government-debt_crisis#/media/File:HellenicOeconomy(inCurrentEuros).png)

It was the collapse of the international financial and banking industries from the USA sub-prime crisis which rapidly became an international financial crisis, that mushroomed the Greek situation into a crisis. Greece had no choice but to reveal a truer picture of its deficit financing to the world’s creditors to seek more credit:

“Greece became the epicenter of Europe’s debt crisis after Wall Street imploded in 2008. With global financial markets still reeling, Greece announced in October 2009 that it had been understating its deficit figures for years, raising alarms about the soundness of Greek finances. Suddenly, Greece was shut out from borrowing in the financial markets. By the spring of 2010, it was veering toward bankruptcy, which threatened to set off a new financial crisis.”

“Greece’s debt crisis explained” – International Business; New York Times updated July 27, 2015 http://www.nytimes.com/interactive/2015/business/international/greece-debt-crisis-euro.html?_r=0

Up to around 2011, the loan monies in Greece continued to drive an inflation.
But then a sharp deflation began, as the Troika turned the screw on Greece. The Troika insisted on marked cuts in the living standards of the Greek people the working lass and peasantry. Not the standard of the ruling class of course who has moved its savings out of reach of the Greek state or the Troika. The Troika’s conditions are noted here:

“The so-called troika — the International Monetary Fund, the European Central Bank and the European Commission — issued the first of two international bailouts for Greece, which would eventually total more than 240 billion euros, or about $264 billion at today’s exchange rates. The bailouts came with conditions. Lenders imposed harsh austerity terms, requiring deep budget cuts and steep tax increases. They also required Greece to overhaul its economy by streamlining the government, ending tax evasion and making Greece an easier place to do business.”

“Greece’s debt crisis explained” – International Business; New York Times updated July 27, 2015 http://www.nytimes.com/interactive/2015/business/international/greece-debt-crisis-euro.html?_r=0

Of course the Greek capitalists complied, and drove down and depressed the wage rates of the Greek people:

“It’s true that the crushing of the living standards and wage earnings of Greek households is making Greek industry more ‘competitive’ – labour costs per unit of (falling) production have dropped 30% since 2010 (See Graph 8 below).

Greece9

((Roberts M; ‘Greece Cannot Escape”; 2nd Nov 2014: https://thenextrecession.wordpress.com/2014/02/11/greece-cannot-escape/)

Again – the burden of ‘austerity’ – was laid only on the working class of Greece:

“When Greece did cut some of its spending, the EU and ECB asked for a reduction in wages rather than a cut in spending. So – for example – while the military budget remains intact, soldiers have seen their wages fall by 40 per cent. Their experience is replicated across other public sector fields – notably in nurses and doctors”. Buchanan, Rose T; “Greece debt crisis explained: A history of just how the country landed itself in such a mess”; The Independent 4 July 2015; http://www.independent.co.uk/news/world/europe/greece-debt-crisis-explainer-a-history-of-how-the-country-landed-itself-in-such-a-mess-10365798.html

An external – German – research agency found that indeed, it was the poor that had suffered disproportionate cuts as compared to the rich:

“The poorest households in the debt-ridden country lost nearly 86% of their income, while the richest lost only 17-20%.  The tax burden on the poor increased by 337% while the burden on upper-income classes increased by only 9% This is the result of a study that has analyzed 260.000 tax and income data from the years 2008 – 2012.
– The nominal gross income of Greek households decreased by almost a quarter in only four years.
– The wages cuts caused nearly half of the decline.
– The net income fell further by almost 9 percent, because the tax burden was significantly increased
–  While all social classes suffered income losses due to cuts, tax increases and the economic crisis, particularly strongly affected were households of low- and middle-income. This was due to sharp increase in unemployment and tax increases, that were partially regressive.
– The total number of employees in the private sector suffered significantly greater loss of income, and they were more likely to be unemployed than those employed in the public sector.
-From 2009 to 2013 wages and salaries in the private sector declined in several stages at around 19 percent. Among other things, because the minimum wage was lowered and collective bargaining structures were weakened. Employees in the public sector lost around a quarter of their income.

Unemployment & Early Retirement
Unemployment surged from 7.3% in the Q2 2008 to 26.6% in the Q2 2014. among youth aged 15-24, unemployment had an average of 44%.
Early retirement in the Private Sector increased by 14%.
Early retirement in the Public Sector* increased by 48%
The researchers see here a clear link to the austerity policy, that’s is the Greek government managed to fulfill the Troika requirements for smaller public sector. However, this trend caused a burden to the social security funds.
* Much to KTG’s knowledge public servants with 25 years in the public administration rushed to early retirement in 2010 out of fear of further cuts in their wages and consequently to their pension rights.

Taxes
Taxes were greatly increased, but they had a regressive effect.
Since beginning of the austerity, direct taxes increased by nearly 53%, while indirect taxes increased by 22 percent.
The taxation policy has indeed contributed significantly to the consolidation of the public budget, but by doing so the social imbalance was magnified.

Little has been done against tax avoidance and tax evasion, however, the tax base was actually extended “downwards” with the effect that households with low-income and assets were strongly burdened.
Particularly poorer households paid disproportionately more in taxes and the tax burden to lower-income rose by 337%. In comparison, the tax burden to upper-income households rose by only 9%.
In absolute euro amounts, the annual tax burden of many poorer households increased “only” by a few hundred euros. However, with regards to the rapidly declining of incomes and rampant unemployment, this social class was over-burdened with taxes.

The Poor suffered more
On average, the annual income of Greek households before taxes fell from €23,100 euros in 2008 to just below €17,900 euros in 2012. This represents a loss of nearly 23 percent.
The losses were significantly different to each income class with the poorest households to have suffered the biggest losses.
Almost one in three Greek household had to make it through 2012 with an annual income below €7,000”.
(Research of the “German Institute for Macroeconomic Research (IMK) affiliated with the Hans Böckler Foundation”; given blog ‘Keep Talking Greece’; by 20 March 2015; at http://www.keeptalkinggreece.com/2015/03/20/shocking-austerity-greeces-poor-lost-86-of-income-but-rich-only-17-20/

Both the Greek ruling class and the Troika saw that this squeeze on the poor and working class, was creating such a social upheaval, as to be potentially pre-revolutionary. Yet they were caught, since the alternatives were dismal for the international capitalist. Even the IMF’s own rules were flouted. In 2010 the situation was as follows in Michael Roberts telling:

“The irony is that while austerity in Greece continues to be applied mercilessly, the IMF recently issued a report that concluded that the Troika’s approach was mistaken in imposing severe fiscal retrenchment back in May 2010 when Greece could no longer finance its spending through borrowing in bond markets (http://www.imf.org/external/pubs/ft/scr/2013/cr13156.pdf).

Back then, the Troika had three options. First, it could have provided a massive fiscal transfer to the Greek government to tide it over without demanding massive cuts in public spending that eventually led to a fall in Greek real GDP of nearly 20%, unemployment of over 25% and government debt to GDP of 170%, with economic depression likely to continue out to the end of the decade.  Or it could have allowed the Greek government to ‘default’ on its debts to the banks, pension funds and hedge funds and negotiate an ‘orderly haircut’ on those debts.  But the Troika did neither and opted instead for a third way.  It insisted that in return for bailout funds the Greek government meet its obligations in full to all its creditors by switching all its available revenues to paying its debts at the expense of jobs, health, education and other public services.

The Troika insisted on this because it reckoned 1) that austerity would be shortlived and economic growth would quickly return and 2) if the banks and others took a huge hit on their balance sheets from a Greek default it would put European banks in danger of going bust (Greek banks first).  There could be ‘contagion’ if other distressed Eurozone governments also opted not to pay their debts, using Greece as the precedent.  Of course, economic growth has not returned and despite huge efforts on the part of Greek governments to meet fiscal targets through unprecedented austerity, government debt has increased rather than fallen and the economy has nosedived.

Eventually, the Troika had to agree that the private sector took a ‘haircut’ after all, massaged as it was with cash sweeteners and new bonds with high yields.  Now the IMF in its report admits that austerity was too severe and debt ‘restructuring’ should have happened from the beginning.  The IMF, now in its semi-Keynesian mode, tries to put the blame for the failure to do this on the EU leaders and the ECB, which has not made the latter too happy, especially as the current IMF chief, Lagarde was strongly in favour of the austerity plan when she was French finance minister in 2010.

“If Greeks had defaulted back in 2010, that could have led to other defaults and Europe’s banks were in no state to absorb such losses.  As a recent study shows http://www.voxeu.org/article/ez-banking-union-sovereign-virus), German banks were heavily overleveraged back in 2010 and they are not much better even now.  There was no way the German government was going to put German banks in jeopardy and allow the ‘profligate’ Greeks to get a huge handout of German taxpayers money to boot.  No, the Greeks had to pay their debts, just as the Germans had to pay their reparations to the French after 1918, even if it meant Germany was plunged into permanent depression.  Ironically, the Germans did not and have not paid promised billions in reparations to the Greeks after 1945 – something the Greeks are pursuing in negotiations!”

(Michael Roberts Blog: “Greece, the IMF and debt default; 16th June 2013;“https://thenextrecession.wordpress.com/2013/06/16/greece-the-imf-and-debt-default/)

As noted before, this fueling of the debt by new loans, was against even the principles of the International Monetary Fund (IMF), and senior strategists in the IMF warned that the polices of the IMF in regards to Greece were seriously in error, from the year 2010.

As stated above, one underlying reason on insisting that the Greek Government paid its debt fully, was simply the usurer’s wish to ensure that debts owed by Greece to both France and Germany would be honoured. German and French banks had become vulnerable by over-leveraging themselves. (i.e they had loaned so much money that their actual capital holdings were unable to support them if there was a “run” on their deposits). The Eurozone banks had become very vulnerable:

“The Table below shows the degree of ‘domestic leverage’ of the systemically important banks in major Eurozone countries .. in most countries the domestic banking system would not survive a Greek-style ‘haircut’ on public debt. (In March 2012, holders of Greek bonds had to accept a nominal haircut of over 50%, and on a mark-to-market basis the haircut was over 80%. It is apparent that no bank that has a sovereign exposure worth over 100% of its capital would survive such a loss).

Table 4: Domestic sovereign debt leverage (sovereign exposure/capital)

Greece Table

Source: CEPS database. (From Roberts 16 June 2013; “Greece, the IMF and debt default ibid) Michael Roberts Blog: “Greece, the IMF and debt default; 16th June 2013; https://thenextrecession.wordpress.com/2013/06/16/greece-the-imf-and-debt-default/)

Amazingly, the IMF policy remained unchanged – new loans were issued to Greece – at least up till May 2015:

“Greece’s onerous obligations to the IMF, the European Central Bank and European governments can be traced back to April 2010, when they made a fateful mistake. Instead of allowing Greece to default on its insurmountable debts to private creditors, they chose to lend it the money to pay in full.
At the time, many called for immediately restructuring privately held debt, thus imposing losses on the banks and investors who had lent money to Greece. Among them were several members of the IMF’s board and Karl Otto Pohl, a former president of the Bundesbank and a key architect of the euro. The IMF and European authorities responded that restructuring would cause global financial mayhem. As Pohl candidly noted, that was merely a cover for bailing out German and French banks, which had been among the largest enablers of Greek profligacy.

Ultimately, the authorities’ approach merely replaced one problem with another: IMF and official European loans were used to repay private creditors. Thus, despite a belated restructuring in 2012, Greece’s obligations remain unbearable — only now they are owed almost entirely to official creditors.

Five years after the crisis started, government debt has jumped from 130 percent of gross domestic product to almost 180 percent. Meanwhile, a deep economic slump and deflation have severely impaired the government’s ability to repay.
Almost everyone now agrees that pushing Greece to pay its private creditors was a bad idea. The required fiscal austerity was simply too great, causing the economy to collapse. The IMF acknowledged the error in a 2013 report on Greece. In a recent staff paper, the fund said that when a crisis threatens to spread, it should seek a collective global solution rather than forcing the distressed economy to bear the entire burden. The IMF’s chief economist, Olivier Blanchard, has warned that more austerity will crush growth.

Oddly, the IMF’s proposed way forward for Greece remains unchanged: Borrow more money (this time from the European authorities) to repay one group of creditors (the IMF) and stay focused on austerity. The fund’s latest projections assume that the government’s budget surplus (other than interest payments) will reach 4.5 percent of GDP, a level of belt-tightening that few governments have ever sustained for any significant period of time.

Following Germany’s lead, IMF officials have placed their faith in so-called structural reforms — changes in labor and other markets that are supposed to improve the Greek economy’s longer-term growth potential. They should know better. The fund’s latest World Economic Outlook throws cold water on the notion that such reforms will address the Greek debt problem in a reliable and timely manner. The most valuable measures encourage research and development and help spur high-technology sectors. All this is to the good, but such gains are irrelevant for the next five years. The priority must be to prevent Greece from sinking deeper into a debt-deflation spiral. Unfortunately, some reforms will actually accelerate the spiral by weakening demand.

On April 9, Greece repaid 450 million euros ($480 million) to the IMF, and must pay another 2 billion in May and June. The IMF’s managing director, Christine Lagarde, has made clear that delays in repayments will not be tolerated.

“I would, certainly for myself, not support it,” she told Bloomberg Television.”

Ashoka Mody; Bloomberg 81 April 21 2015; The IMF’s Big Greek Mistake; http://www.bloombergview.com/articles/2015-04-21/imf-needs-to-correct-its-big-greek-bailout-mistake

Recall – Lagarde was once the Minister of Finance for France:

Graph number 5 (see above) displays that it is not only Greece in
hock” to Germany, but there are several leading Eurozone states in debt to Germany. In especial note the deficits of France and of Italy.

This is the second reason – at least for German imperialism – on insisting that the Greek Government paid its debt fully.
If the Greeks are allowed to default, what happens to the other loans that are outstanding? It has long been recognised that Germany has been running a huge trade surplus, and it has been under pressure to alleviate this for some time:

“For years, Germany has been running a large current account surplus, meaning that it sells a lot more than it buys. The gap has only grown since the start of the crisis, reaching a new record of 215.3 billion euros ($244 billion) in 2014. Such insufficient German demand weakens world growth, which is why the U.S. Treasury and the International Monetary Fund have long prodded the country to buy more. Even the European Commission has concluded that Germany’s current-account imbalance is “excessive.”

(Ashoka Mody, Bloomberg188 July 17, 2015, ‘Germany, Not Greece, Should Exit the Euro’)

Any lifting of the restrictions upon Greece will lead to repercussions as to what happens to the debts of these other leading countries. It is no doubt, for this reason, that both Italy and France have been trying to ease pressures from Germany, arguing that there must be a debt restructuring.

This fits with the later 2015 U-Turn of Cristine Lagarde and the IMF (Discussed in section 9 below) – who are now at the last moment – urging the German government to reduce the obligations of the Greek government of Tsipras. We believe also, that this U-Turn supports the USA wish to attack the German government’s current rising economic strength.

Moreover, the USA government itself – suffers from an astronomical debt.

7. The Marxist View of ‘National Debt’ under capitalism

What do Marxists and other informed economists make of the notion of a national Debt? Falling into debt of a country – or large institutions – has been a historical feature of the growth of capital. Karl Marx pointed this out in ‘Capital’, saying that the “only part of the so-called national wealth that actually enters the possession of modern people is their national debt.” In full:

“The system of public credit, i.e., of national debts, whose origin we discover in Genoa and Venice as early as the Middle Ages, took possession of Europe generally during the manufacturing period. The colonial system with its maritime trade and commercial wars served as a forcing-house for it. … National debts, i.e., the alienation of the state – whether despotic, constitutional or republican – marked with its stamp the capitalistic era. The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt. Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven.

The public debt becomes one of the most powerful levers of primitive accumulation. As with the stroke of an enchanter’s wand, it endows barren money with the power of breeding and thus turns it into capital, without the necessity of its exposing itself to the troubles and risks inseparable from its employment in industry or even in usury. The state creditors actually give nothing away, for the sum lent is transformed into public bonds, easily negotiable, which go on functioning in their hands just as so much hard cash would. But further, apart from the class of lazy annuitants thus created, and from the improvised wealth of the financiers, middlemen between the government and the nation – as also apart from the tax-farmers, merchants, private manufacturers, to whom a good part of every national loan renders the service of a capital fallen from heaven – the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy.

At their birth the great banks, decorated with national titles, were only associations of private speculators, who placed themselves by the side of governments, and, thanks to the privileges they received, were in a position to advance money to the State. Hence the accumulation of the national debt has no more infallible measure than the successive rise in the stock of these banks, whose full development dates from the founding of the Bank of England in 1694. The Bank of England began with lending its money to the Government at 8%; at the same time it was empowered by Parliament to coin money out of the same capital, by lending it again to the public in the form of banknotes. It was allowed to use these notes for discounting bills, making advances on commodities, and for buying the precious metals. It was not long ere this credit-money, made by the bank itself, became. The coin in which the Bank of England made its loans to the State, and paid, on account of the State, the interest on the public debt. It was not enough that the bank gave with one hand and took back more with the other; it remained, even whilst receiving, the eternal creditor of the nation down to the last shilling advanced. Gradually it became inevitably the receptacle of the metallic hoard of the country, and the centre of gravity of all commercial credit. What effect was produced on their contemporaries by the sudden uprising of this brood of bankocrats, financiers, rentiers, brokers, stock-jobbers, &c., is proved by the writings of that time, e.g., by Bolingbroke’s”

(Marx, Karl: Capital Volume One Chapter Thirty-One: Genesis of the Industrial Capitalist; at: https://www.marxists.org/archive/marx/works/1867-c1/ch31.htm)

Not only is “National Debt” crucial for the capitalist, but it was coincident with the ‘credit system’, and this in turn was associated with an international trade of capital (i.e. money) and systems of “modern taxation”:

“With the national debt arose an international credit system, which often conceals one of the sources of primitive accumulation in this or that people. Thus the villainies of the Venetian thieving system formed one of the secret bases of the capital-wealth of Holland to whom Venice in her decadence lent large sums of money. So also was it with Holland and England. By the beginning of the 18th century the Dutch manufactures were far outstripped. Holland had ceased to be the nation preponderant in commerce and industry. One of its main lines of business, therefore, from 1701-1776, is the lending out of enormous amounts of capital, especially to its great rival England. The same thing is going on today between England and the United States. A great deal of capital, which appears today in the United States without any certificate of birth, was yesterday, in England, the capitalised blood of children.”

(Marx, Karl: Capital Volume One Chapter Thirty-One: Genesis of the Industrial Capitalist; at: https://www.marxists.org/archive/marx/works/1867-c1/ch31.htm)

Moreover, Marx points out that governments want loans for “extraordinary expenses”. This is because they do not want to tax the people too heavily lest it anger them. But eventually these loans will need an increase in taxes to pay the loan off. Then a vicious circle begins, where even more loans are needed to off-set the higher taxation burden:

“As the national debt finds its support in the public revenue, which must cover the yearly payments for interest, &c., the modern system of taxation was the necessary complement of the system of national loans. The loans enable the government to meet extraordinary expenses, without the tax-payers feeling it immediately, but they necessitate, as a consequence, increased taxes. On the other hand, the raising of taxation caused by the accumulation of debts contracted one after another, compels the government always to have recourse to new loans for new extraordinary expenses. Modern fiscality, whose pivot is formed by taxes on the most necessary means of subsistence (thereby increasing their price), thus contains within itself the germ of automatic progression. Overtaxation is not an incident, but rather a principle. In Holland, therefore, where this system was first inaugurated, the great patriot, DeWitt, has in his “Maxims” extolled it as the best system for making the wage labourer submissive, frugal, industrious, and overburdened with labour. The destructive influence that it exercises on the condition of the wage labourer concerns us less however, here, than the forcible expropriation, resulting from it, of peasants, artisans, and in a word, all elements of the lower middle class. On this there are not two opinions, even among the bourgeois economists. Its expropriating efficacy is still further heightened by the system of protection, which forms one of its integral parts.

(Marx, Karl: Capital Volume One Chapter Thirty-One: Genesis of the Industrial Capitalist; at: https://www.marxists.org/archive/marx/works/1867-c1/ch31.htm)

What were these “extraordinary expenditures” the state wished to fund? Even bourgeois economists recognise that wars were one key such expenditures:

“The Bank of England was created… explicitly,, to finance wars, in its case the Nine Years War with France which started in 1688……The Bank of France .. having been started with that name in 1800 specifically to satisfy Napoleon’s wartime financial needs”. (Dean and Pringle Ibid; ‘Central banks”; pp38; p. 42).

Modern bourgeois economists have of course long supported the principle of national debts. Maynard Keynes recognised the utility of deficit financing for the capitalist control of the state, as he stated:

“’Loan expenditure.. may .. enrich the community on balance”; ref 31: (Cited Van Der Pijl, K. ‘The making of an Atlantic ruling class”; p.17; London 2012).

While we cannot dwell further on the subject in this article, the amount of the USA current debt is astonishingly large. So there is nothing reprehensible about the Greek Debt per se. What is at issue is an international lack of confidence that the Greek state would be able to pay it back. There is no underlying manufacturing or trading base to support the debt, and will not be. Unless – a complete break with the past – is offered. However thus far, a meaningful solution has never been on offer by the Greek or international merchants of capital, to the Greek working people.

8. The Debt Crisis leads to an increasing struggle of the growing Greek working class and gives rise to the United Front of Syriza – the political parties of the left

By the time of the current era in 2000-2015, the Greek social and class structure had changed dramatically. Despite the absence of a major manufacturing sector, unemployment was rising, and the urban-rural divide was widening – even before the austerity moves of the Troika:

“Greece is still low on competitiveness and this undermines self-sustaining growth, with low employment rates, low R&D, high levels of poverty, especially in rural and remote areas. The Greek economy grew by 0.7 per cent in the 1980s, compared with 2.4 per cent in other EU states. Demographically, the number of over 65-year-olds, set to increase by 30 per cent between 2010 and 2050, with fewer people in employment, will create a massive dependency on social security and health care. Greece has the largest agricultural population in the EU, with a low capacity to attract foreign direct investment (FDI). The collapse of the Soviet Union and opening of markets in the Balkans means that many investors have relocated their activities in neighbouring countries.

Since 2004 there has been a drop in most manufacturing output (textiles, leather goods, paper, office equipment, furniture), steadily constant production of food, beverages, oil, with the only growth in tobacco, chemicals and plastic goods. Therefore, long-term stagnation in manufacturing has led the state to adopt ‘rescue’ interventions or public loans. Shipping and tourism contributes 17 per cent to gross domestic product (GDP) and employs 18 per cent of the working population. The uneven rural/urban divide is particularly acute as some areas, notably the islands and the farming communities, benefited more from Euro-funds for tourism or agridevelopment than others. Athens, in particular has had massive infrastructure developed.”

(Liddle, Joyce. “Regeneration and Economic Development in Greece:
De-industrialisation and Uneven Development “p.340; Local Government Studies; Vol. 35, No. 3, 335–354, June 2009)

Nonetheless, the weight of the working class had risen between 1991 and 2011, as had a class polarisation:

“Based on the Greek Statistic Service data for the fourth trimester of 2011 in comparison to those of 1991 consists in
1. an increase of the bourgeois class (3.4% from 1.4%) and of the rich rural strata (0.6% from 0.3%),
2. a huge decline of the traditional petit-bourgeois class (15.2% from 13.2%), and of the middle rural strata (2.2% from 3%),
3. a small increase of the new petit-bourgeois class (15.2% from 13.2%), due to the increasing demand of their abilities for the achievement of capital profitability, in parallel to an effort of their submission to the most direct capital exploitation and domination,
4. An important increase of the working class (62.2% from 47.5%), and
an important decrease of the poor rural strata (6% from 47.5%).
*In any case, what is clear is the tendency of intensification of class polarisation, which leads to the adoption of a social structure akin to that of other European countries (small number of farmers and of the traditional petit-bourgeois class, stable presence of the new petit-bourgeois class as the executive organizer of the productive process, broader bourgeoisie and heterogeneous uneven but
numerous working class”.

(Eirini Gaitanou. An examination of class structure in Greece, its tendencies of transformation amid the crisis, and its impacts on the organisational forms and structures of the social movement. At: http://www.academia.edu/9400998/An_examination_of_class_structure_in_Greece_its_tendencies_of_transformation_amid_the_crisis_and_its_impacts_on_the_organisational_forms_and_structures_of_the_social_movement).

Under these enormous burdens, the now sizeable working classes of Greece mounted serious struggles to resist “austerity.” The ruling classes struggled to implement their commitments to the EU and the IMF. Consequently a series of short lived coalition governments took power.

“Following the May 2012 legislative election where the New Democracy party became the largest party in the Hellenic Parliament, Samaras, leader of ND, was asked by Greek President Karolos Papoulias to try to form a government. However, after a day of hard negotiations with the other parties in Parliament, Samaras officially announced he was giving up the mandate to form a government. The task passed to Alexis Tsipras, leader of the SYRIZA (the second largest party) who was also unable to form a government. After PASOK also failed to negotiate a successful agreement to form a government, emergency talks with the President ended with a new election being called while Panagiotis Pikrammenos was appointed as Prime Minister in a caretaker government.
Voters once again took to the polls in the widely-watched June 2012 election. New Democracy came out on top in a stronger position with 129 seats, compared to 108 in the May election. On 20 June 2012, Samaras successfully formed a coalition with PASOK (now lead by former Finance Minister Evangelos Venizelos) and DIMAR. The new government would have a majority of 58, with SYRIZA, Independent Greeks (ANEL), Golden Dawn (XA) and the Communist Party (KKE) comprising the opposition. PASOK and DIMAR chose to take a limited role in Samaras’ Cabinet, being represented by party officials and independent technocrats instead of MPs.”

(https://en.wikipedia.org/wiki/Antonis_Samaras)

We discuss these parties below. The coalition government led by Samaras, proved to be another short lived and contentious government, as it toed the line of Troika conditions. As such it was unable to disguise its nature from the increasingly militant and impoverished working class of Greece.

By the time of the January 2015 elections, the situation had become even more parlous for Greece’s working people:

“Greece saw official unemployment rising up to 27% – and youth unemployment up to 50% – suffered a cumulative contraction of almost 25%, saw a massive reduction in wages and pensions, and witnessed the passage of massive legislation oriented towards privatizations, labor market liberalization, and neoliberal university reform.”

(Panagiotis Sotiris; https://viewpointmag.com/2015/01/28/a-strategy-of-ruptures-ten-theses-on-the-greek-future/)

A more credible “left” bulwark against the masses was necessary for the Greek ruling class. This coincided with a reformation of the Greek left. At this point we must discuss Syriza in more detail.

As seen, PASOK had fallen into rank opportunism and open betrayal of the working class. After ensuing scandals of corruption implicated the leader, Andreas Papandreou, its appeal to the workers and poor of Greece was falling fast:

“The socialist Prime Minister Andreas Papandreou and his key associates were under accusation of scandal, which involved party funding from illicit sources and revealed the extensive clientelistic linkages between business interests and politics which had been built up under PASOK’s eight-year rule.”

(Tsakatika, Myrto and Eleftheriou, Costas: “The Radical Left’s Turn towards Civil Society in Greece: One Strategy, Two Paths”; South European Society and Politics, 2013; p.3; http://dx.doi.org/10.1080/13608746.2012.757455)

The space on the left had opened up again. Who was there to fill it?
We reprise the main outlines of events, focusing on analyses by Syriza, the revisionist KKE, and the pro-Hoxha Anasintaxi.

After the destruction of many of its cadre after the Battle of Athens in 1949, the KKE slowly reformed, after having adopted some mistaken sectarian paths during the Second World War. The KKE went through several splits, summarized below:

“There have been a series of splits throughout the party’s history, the earliest one being the Trotskyist Organisation of Internationalist Communists of Greece.
In 1956, after the 20th Congress of the Communist Party of the USSR….
a faction created the Group of Marxist-Leninists of Greece (OMLE), which split from party in 1964, becoming the Organisation of Marxists-Leninists of Greece. In 1968, amidst the Greek military junta of 1967–1974 and the Soviet invasion of Czechoslovakia, a relatively big group split from KKE, forming KKE Interior, a Greek Nationalist Communist Party claiming to be directed from within Greece rather than from the Soviet Union.
In 1988 KKE and Greek Left (the former KKE Interior), along with other left parties and organisations, formed the Coalition of the Left and Progress.
Also in 1988, the vast majority of members and officials from Communist Youth of Greece (KNE), the KKE’s youth wing, split to form the New Left Current (NAR), drawing mainly youth in major cities, especially in Thessaloniki.
In the early 2000s, a small group of major party officials such as Mitsos Kostopoulos left the party and formed the Movement for the United in Action Left (KEDA), which in the 2007 legislative election participated in the Coalition of the Radical Left, which was to win the 2015 national elections with a plurality.”

(https://en.wikipedia.org/wiki/Communist_Party_of_Greece) and also see Tsakatika, Myrto and Eleftheriou, Costas: “The Radical Left’s Turn towards Civil Society in Greece: One Strategy, Two Paths”; South European Society and Politics, 2013; p.3; http://dx.doi.org/10.1080/13608746.2012.757455)

The Marxist Leninist party supporting Hoxha in Greece is ‘Αναρτήθηκε από’ or ‘Anasintaxi Organization’ (reorganization). They are also known as “The Movement for the Reorganization of the Communist Party of Greece 1918–55” – or KKE 1918-55. They characterize the KKE disintegration post-war as follows:

“The old revolutionary KKE, under the leadership of the then General Sceretary Nikos Zachariadis, was the only communist party from a capitalist not to have accepted Krushchevian revisionism. For this reason, it was eliminated by the brutal intervention of the soviet Krushchevian revisionists in 1955-1956 and replaced by the Greek Krushchevian revisionist party (“K”KE), a bourgeois, party of social-democratic type. More than 90% of the party members led by Nikos Zachariadis opposed and fiercely resisted Krushchevian revisionism and many tens of cadres were sent to exile in Siberia including Nikos Zachariadis himself who has murdered by the social-fascist clique of Brezhnev (CPSU) – Florakis (“K”KE) in August of 1973, in Sorgut, Siberia after of 17 years of exile. In 1968, “K”KE was split into two parties: the euro-communist part known as “K”KE (interior) and the Krushchevian-Brezhnevite part known as “K”KE. SYRIZA originates from the first part and, consequently, is a social-democratic and reformist party guided by a right opportunist general line and characterized by petty bourgeois class features”

Αναρτήθηκε από Anasintaxi Organization ‘Some questions and answers about the current situation in Greece’; Article to be published in “Unity & Struggle” (Extended version of an interview given to the comrades of Iran); march 30; 2015; at http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-answers-about.html)

The revisionist KKE’s attitude to the European Union is characterised as follows:

“It is important to clarify that, despite its verbal attacks against EU and the Eurozone, “K”KE does not put forward (not even for the sake of demagogy) the question of Greece’s immediate exit neither from the EU nor the Eurozone. In relation to Euro, the leadership of “K”KE has stated: “A solution outside the euro and return to the drachma in the present circumstances would be catastrophic” (30/5/2011), i.e. a position that is similar to the one expressed by the president of the Union of Greek Industrialists (20/3/2012)…: “Europe or chaos” This is also evident in the party’s program that was approved by its last congress). Since some time now, “K”KE has expressed the view that “the term “national dependence” is not applicable in contemporary conditions” (1/2/2005). After the 19th Congress, it has openly adopted Trotskyite positions that mention “imperialist Greece”, “imperialist Second World War” etc and are evident in the “Program” approved in the last party Congress: “the capitalism in Greece is in the imperialist stage of development” (“K”KE Program, p. 12, Athens 2013). Concerning the character of the Second World War it is claimed that: “the problem was not only with KKE but the overall strategy of the international communist movement before and during the Second World War. In 1941, another negative point was added when the correct assessment of the war as imperialist – with respect to both sides of capitalist states – was replaced by the position that it was only anti-fascist” (“Rizospastis,” 21/12/2104)”

Αναρτήθηκε από Anasintaxi OrganizationSome questions and answers about the current situation in Greece’; Article to be published in “Unity & Struggle” (Extended version of an interview given to the comrades of Iran); march 30; 2015; at http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-answers-about.html)

As PASOK had been fully exposed, a general disillusion enabled the formation of Synaspismo (Coalition of the Left and Progress) in 1991:

“Synaspismos emerged initially as an electoral coalition at the late 1980s, with the pro-Soviet Communist Party of Greece (KKE) and the Greek Left, one of the successors of the eurocommunist KKE Interior, as its largest constituents. The Party of Democratic Socialism, a splinter from the Union of the Democratic Centre which occupied a similar position to PASOK, was the largest non-Communist member party.”

(https://en.wikipedia.org/wiki/Synaspismos).

The many parties of the left are displayed in the diagram below, which helps to show the umbrella nature of the Syriza United front. Beneath the figure itself (at the site “Lenin’s Tomb”) is a potted history of these factions. (Seymour, R. ‘Map of the Greek Radical Left’ February 9, 2015; http://www.leninology.co.uk/2015/02/map-of-greek-radical-left.html). However the figure does not explain include the currents of the Marxist-Leninist left. The OMLE was a pro-Maoist party. We further discuss at points, the positions of Αναρτήθηκε από Anasintaxi Organization, the pro-Hoxha Marxist-Leninists. Here we continue to trace the currents of Syriza.

The revisionist KKE joined Synaspismo, which contested three national elections (June 1989, November 1989, 1990). For a period they joined in Government alliances with mainstream centre-right New Democracy, ND under the premiership of Tzannis Tzannetakis. This collaboration was not viewed kindly by the increasingly politicised Greek working class and petit-bourgeois:

“The government’s official purpose was to send the former prime minister to trial and impose a clean-up of the corrupt clientelistic politics of the time… (But) leftist voters did not appreciate the decision of the left parties’ leaderships to engage in government cooperation with the centre-right; moreover, the stated aim of the Tzannetakis government was not achieved: after a long judicial process there was ultimately very little ‘cleaning up’.. the KKE pulled out of the coalition and lost 40 per cent of its cadres after a major party split in the party’s 13th Congress (February 1991). The former coalition was re-established as a unified party… In the first part of the 1990s, the Greek left as a whole was thus delegitimised in the eyes of its traditional electorate, bruised by participation in government with the centre-right and experienced internal strife and extensive demobilisation of party members, while the collapse of the Soviet Union (USSR) added an identity crisis to its woes”. (Tsakatika, and Eleftheriou, Ibid; 2013).

Greece10

The United Front of Synapsimos – or Syn as it is known – tried to appeal to a broad front, and one that explicitly crossed class lines:

“SYN.. in 2001… established a political and electoral alliance with a host of smaller parties, groups and networks of the extra-parliamentary left in the context of the Synaspismo Pizospastikh Aristra (Coalition of the Radical Left [SYRIZA])… SYN was and remained (until 2012) the largest party in the SYRIZA coalition, representing at least 80 per cent of its cadres, activists and voters. SYRIZA was one of the core choices of the party’s new leadership after 2000.. ”
(Tsakatika, and Eleftheriou, Ibid; 2013).

“SYN.. defined itself as a pluralist left party of democratic socialism, neither orthodox communist nor social democratic, supporting a mixed economy and placing a fresh emphasis on ‘new issues’, particularly feminism, democratic rights and the environment. SYN’s original core consisted of cadres whose political origins lay in the party of the Ellhnikh Aristra ́ (Greek Left [EAR]) founded in 1987 (in turn established after the KKE-es leadership’s decision to dissolve the party and contribute to the foundation of a non-communist left party) and a large group of dissidents who broke ranks with the KKE in 1991. It also incorporated a number of individuals and small groups coming from left social democracy, ecologism and the extra-parliamentary left, as well as independents.

The party’s founding document appealed to ‘the men and women of work and culture, the young and the excluded’. This was explicitly not a class appeal, since SYN effectively presented itself as a catch-all party throughout the 1990s, one that aimed to be present in ‘every nook and cranny of Greek society’. There was also an explicit trans-class appeal to groups affected by gender inequality and environmental degradation. In practice, most of its vote share, membership and cadres have mainly been from among the ranks of highly educated employees in the public sector, professionals and small employers. However, as a result of changes in internal factional dynamics, with the radical, protest-oriented

moderate (and sympathetic to government cooperation with PASOK) Anan vtikh ryga (Renewal Wing) in the party leadership after 2000, SYN shifted to a broadly defined class appeal aimed at targeting, primarily, younger cohorts and, secondarily, precariously employed workers in the services sector, social categories that were politically under-represented”
(Tsakatika, and Eleftheriou, Ibid; 2013).

The later creation of Syriza, was also a United Front. The word commonly means “coalition of the radical left”; or originally “coming from the roots” (Wikipedia):

“The Coalition of the Radical Left (Greek: Synaspismós Rizospastikís Aristerás), mostly known by its acronym, Syriza which signifies a Greek adjective meaning “from the roots”, is a left-wing political party in Greece, originally founded in 2004 as a coalition of left-wing and radical left parties. It is the largest party in the Hellenic Parliament…
The coalition originally comprised a broad array of groups (thirteen in total) and independent politicians, including social democrats, democratic socialists, left-wing patriots, feminists and green leftist groups, as well as Maoist, Trotskyist, Eurocommunist but also Eurosceptic components. Additionally, despite its secular ideology, many members are Christians who, like their atheistic fellow members, are opposed to the privileges of the state-sponsored Orthodox Church of Greece. From 2013 the coalition became a unitary party, although it retained its name with the addition of “United Social Front.”
http://en.wikipedia.org/wiki/Syriza

Syriza between 2004-8 was led by Alekos Alavanos. They created a vigorous youth movement in the driving force of the Ellhniko ́ Koinvniko ́ Foroym (Greek Social Forum [EKF]) which later organised the 4th European Social Forum (ESF) that took place in Athens in 2006. The Syriza United Front did undergo some splinters:

“In March 2009, some 10 small groups and parties formed another coalition, Antarsya (literally, the Anti-Capitalist Left Cooperation for the Overthrow). Composed primarily of university student activists in various communist organizations of orthodox Marxist, Trotskyist and Maoist backgrounds, as well of members of the relatively new rank-and-file unions outside the established bureaucracies of the official union structure of the country, it proved effective for activism in a broad range of mobilizations, but it never managed to achieve anything more than 1.8 per cent in the regional or general elections.

(Spourdalakis, Michalis; “Left strategy in the Greek cauldron: explaining syriza’s success. Socialist Register 2013; p. 105)

By 2010, Alex Tspiras was leading the Syriza party, after a section (The Renewal Wing’) split to form DIMAR (‘Renewal Wing’):

“The exit of the ‘Renewal Wing’ faction from SYN (which evolved into DIMAR) in the summer of 2010 curtailed political disagreement and factional infighting within SYN and resulted in the effective dominance of Alexis Tsipras’s leadership in both SYN and SYRIZA.”
(Tsakatika, and Eleftheriou, Ibid; 2013).

“The “social democratic” wing of Synaspismos definitely lost control of the party in 2006 when Alekos Alavanos was elected its president. This right wing, led by Fotis Kouvelis, almost exclusively originating in the Eurocommunist right group coming from EAR, ultimately left Synaspismos and set up another party called Democratic Left (Dimar): a formation that claims to be a sort of halfway house between Pasok and the radical left.”

(Stathis Kouvelakis interview with Sebastien Budgen: Greece: Phase One https://www.jacobinmag.com/2015/01/phase-one/)

But the revisionist KKE left Syn early on, and adopted a sectarian approach. Later on the KKE did not join the Greek Social Forum (EKF). Much of the KKE’s broad front work was instead performed through a Trade Union organisation – “Panrgatiko Agvnistiko Mtvpo (All Workers’ Militant Front, PAME) formed in the late 1990s. Insisting on this tactic, the KKE lost ground amongst much of the youth. For example those joining the ‘Indignants’ movement – who rejected all parties.

“Also indicative of the qualitative new dimension of the Greek people’s resistance were the now famous mobilizations of the ‘aganaktismeni’, i.e. the ‘frustrated or indignant in the squares’. These movements, which appeared in almost every major city nationwide, used new means of political mobilization (including the internet) and developed a political language which was clearly hostile to the previously existing patronizing practices of the party system. In fact this hostility was frequently displayed by spontaneous verbal and even physical attacks on politicians of the governmental parties, which at times extended to representatives of the established trade unions and the KKE.”

(Spourdalakis, Michalis;“Left strategy in the Greek cauldron: explaining syriza’s success. Socialist Register 2013; p. 108)

Stathis Kouvelakis, is a member of the central committee of Syriza and a leading member of its Left Platform. Kouvelakis pointed to the post-1968 divisions of the Greek left as “two poles.” Supposedly bridged by Syriza: the first bridge to factions of the KKE:

“Since 1968, the radical Left had been divided into two poles. The first was the Greek Communist Party (KKE), which (after splits)… (had) a rightist wing (that) constituted the Greek Left (EAR) and joined Synaspismos from the outset, and the leftist one reforming as the AKOA. The KKE that remained after these two splits was peculiarly traditionalist… It managed to win a relatively significant activist base among working-class and popular layers, as well as among the youth, particularly in the universities.” (Stathis Kouvelakis interview with Sebastien Budgen: Greece: Phase One https://www.jacobinmag.com/2015/01/phase-one/)

Kouvelakis describes Synaspsimos, as a second ‘pole’, seeding the later Syriza:

“The other pole, Synaspismos, opened out in 2004 with the creation of Syriza, which itself came from the joining together of the two previous splits from the KKE. Synaspismos has changed considerably over time. At the beginning of the 1990s, it was the kind of party that could vote for the Maastricht Treaty, and it was mainly of a moderate left coloration.” (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

Actually the Marxist-Leninist pro-Hoxha party – (Αναρτήθηκε από Anasintaxi Organization) – is more emphatic. It places Syriza as directly deriving from the revisionist KKE, and as having taken over the KKE “social-democratic and reformist” character. Although Syriza is “socially” anti-fascist, it has “contradictions” – that impede it:

“In 1968, “K”KE was split into two parties: the euro-communist part known as “K”KE (interior) and the Krushchevian-Brezhnevite part known as “K”KE. Syriza originates from the first part and, consequently, is a social-democratic and reformist party guided by a right opportunist general line and characterized by petty bourgeois class features.

Syriza has pledged to implement a kind of neo-Keynesian economic program with the aim, at best, of relieving the burden of the consequences coming from the economic crisis of over-production and extreme neo-liberal economic policy without, however, touching the capitalist system and the imperialist dependence of Greece. Nevertheless, the implementation of this program has met negative reactions from the representatives of the imperialist organizations Commission – ECB – IMF that continue to interfere in the internal affairs of the country provocatively and without any pretext. This attitude amounts to the annulment of the recent (editor: January 2105) elections in our country.

In the sphere of social questions, Syriza is an anti-fascist party suffering from inconsistencies and contradictions as it is evident from the fact that it formed an alliance with the bourgeois nationalist party of ANEL and the nomination of Prokopis Pavlopoulos for President of the Republic, a right-wing politician from Nea Demokratia who was responsible, as Minister of Public Order in the Karamanlis government, for the bloody police violence unleashed on the country’s school youth after the murder of Alexis Grigoropoulos in December of 2008.”

(Αναρτήθηκε από Anasintaxi OrganizationSome questions and answers about the current situation in Greece’; Article to be published in “Unity & Struggle” (Extended version of an interview given to the comrades of Iran); march 30; 2015. At http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-answers-about.html)

Syriza was always an electoral alliance:

“Syriza was set up by several different organizations in 2004, as an electoral alliance. Its biggest component was Alexis Tsipras’s party Synaspismos — initially the Coalition of the Left and Progress, and eventually renamed the Coalition of the Left and of the Movements …. It emerged from a series of splits in the Communist movement. Some (smaller parties also – Editor) came out of the old Greek far left. In particular, the Communist Organization of Greece (KOE), one of the country’s main Maoist groups. This organization had three members of parliament (MPs) elected in May 2012. That’s also true of the Internationalist Workers’ Left (DEA), which is from a Trotskyist tradition, as well as other groups mostly of a Communist background. For example, the Renewing Communist Ecological Left (AKOA), which came out of the old Communist Party (Interior).” (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

The United Front of Syriza, had almost electoral immediate success:

“It managed to get into parliament, overcoming the 3 percent minimum threshold.” (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

Syriza went on to replace PASOK as increasingly, Syriza candidates won in the ballot boxes. By this stage a number of other new parties had emerged, including a fascist party – Golden Dawn:

“After three years of political instability, the system collapsed in the dual elections of May and June 2012. New Democracy’s strength was halved and PASOK’s vote share diminished by 75 per cent. Three new political actors emerged, each winning around seven per cent of the vote, namely the party of the Dhmokratikh Aristra (Democratic Left, DIMAR), a recent split from SYN, Anya rthtoi Ellhn(Independent Greeks), a recent split from ND, and the extreme-right Xrysh Aygh (Golden Dawn). (Tsakatika, and Eleftheriou, Ibid; 2013).

A short lived coalition government in 2012 was formed by ND, PASOK and DIMAR in June 2012

What does Syriza represent? According to its own leaders it is an “anti-capitalist coalition” – as “class-struggle parties – but both emphasising “electoral alliances”:

“Syriza is an anti-capitalist coalition that addresses the question of power by emphasizing the dialectic of electoral alliances and success at the ballot box with struggle and mobilizations from below. That is, Syriza and Synaspismos see themselves as class-struggle parties, as formations that represent specific class interests.” (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

In another description, it is a “hybrid party”:

“That is, it is a political front, and even within Syriza there is a practical approach allowing the coexistence of different political cultures. I would say that Syriza is a hybrid party, a synthesis party, with one foot in the tradition of the Greek Communist movement and its other foot in the novel forms of radicalism that have emerged in this new period.” (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

In 2012 there were about 16,000 members in Synaspismos, and the Maoist KOE had about 1-1500 members. But in the ensuring period of a year, Syriza grew rapidly further – to 35,000–36,000. By May 2012, it became the second party in Greece with 16.7 percent of the vote, beating Pasok. It relied largely on a trade union base, and pulled its voters away from the KKE. There were 3 reasons why strategists feel they did so well in the 2012 elections:

“First, The violence of the social and economic crisis in Greece and the way it developed from 2010 onward, with the austere-ian purge .. inflicted under the infamous memorandums of understanding (the agreements the Greek government signed with the troika in order to secure the country’s ability to pay off its debts). The second factor resides in the fact that Greece — and now also Spain — are the only countries where this social and economic crisis has transformed into a political crisis. .. The third factor is popular mobilization.… The real breakthrough came when Tsipras focused his discourse on the theme of constituting an “anti-austerity government of the Left” now, which he presented as an alliance proposal reaching out to the KKE, the far left, the parliamentary left, and the small dissident elements of Pasok. “ (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

Within the United Front of Syriza itself, there are two main wings (See Diagram above): The Left Platform and the majority. The Left Platform is also a United Front – of the “Left Current” mainly influenced by the KKE and a Trotskyist component:

“The Left Platform has two components, the Left Current, which is a kind of traditional communist current — essentially constituted by trade unionists and controlling most of the trade union sector of Syriza. These people in their vast majority come from the KKE, so they are those who broke with the KKE in the last split of the party in 1991. And then there is the Trotskyist component (DEA and KOKKOINO, recently fused).” (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

In turn, this Left wing has formed a sub-group – the “Platform of the 53”:

“The left of the majority has coalesced around the “Platform of the Fifty-Three,” signed by fifty-three members of the central committee and some MPs in June 2014, immediately after the European elections. They strongly criticized Tsipras’s attempts to attract establishment politicians, and for leading a campaign that didn’t give a big enough role to social mobilizations and movements”. (Stathis Kouvelakis interview with Sebastien Budgen; Ibid).

From quite early on, Tsipras had been criticised from his Left – on charges along the lines of opportunism. What Programme did Syriza put forth?

9. What was the elected programme of Syriza?

The Thessalonika Conference is accepted as being the progaramme of the United Front of Syriza. (Syriza – The Thessalonika Programme” at http://www.syriza.gr/article/id/59907/SYRIZA—THE-THESSALONIKI-PROGRAMME.html#.VQSgEChOTdl

In broadest terms the Programme calls for cessation of “the Nazi Occupation forced loan from the Bank of Greece” – and lifting of the Greek Public Debt: A slogan “No sacrifice of the Euro” was often heard:

  • “Write-off the greater part of public debt’s nominal value so that it becomes sustainable in the context of a «European Debt Conference». It happened for Germany in 1953. It can also happen for the South of Europe and Greece.
  • Include a «growth clause» in the repayment of the remaining part so that it is growth-financed and not budget-financed.
  • Include a significant grace period («moratorium») in debt servicing to save funds for growth.
  • Exclude public investment from the restrictions of the Stability and Growth Pact.
  • A «European New Deal» of public investment financed by the European Investment Bank.
  • Quantitative easing by the European Central Bank with direct purchases of sovereign bonds.
  • Finally, we declare once again that the issue of the Nazi Occupation forced loan from the Bank of Greece is open for us. Our partners know it. It will become the country’s official position from our first days in power.
    On the basis of this plan, we will fight and secure a socially viable solution to Greece’s debt problem so that our country is able to pay off the remaining debt from the creation of new wealth and not from primary surpluses, which deprive society of income.
    With that plan, we will lead with security the country to recovery and productive reconstruction by:
  • Immediately increasing public investment by at least €4 billion.
  • Gradually reversing all the Memorandum injustices.
  • Gradually restoring salaries and pensions so as to increase consumption and demand.
  • Providing small and medium-sized enterprises with incentives for employment, and subsidizing the energy cost of industry in exchange for an employment and environmental clause.
  • Investing in knowledge, research, and new technology in order to have young scientists, who have been massively emigrating over the last years, back home.
  • Rebuilding the welfare state, restoring the rule of law and creating a meritocratic state.
    We are ready to negotiate and we are working towards building the broadest possible alliances in Europe.”

In this document it further says that “within our first days in power,” after “negotiations end” with the Troika (And on its Memorandum)– they will begin enacting the following “National Reconstruction Plan” What does this embody? There are Four Pillars to this, which we recap briefly.

The 1st Pillar is “Confronting the humanitarian crisis at an estimated Total estimated cost of €1,882 billion

“Our program…. amounts to a comprehensive grid of emergency interventions, so as to raise a shield of protection for the most vulnerable social strata. Free electricity (Total cost: €59,4 million).

  • Programme of meal subsidies to 300.000 families without income. Total cost: €756 million.
  • Programme of housing guarantee. The target is the provision of initially 30.000 apartments (30, 50, and 70 m²), by subsidizing rent at €3 per m². Total cost: €54 million.
  • Restitution of the Christmas bonus, as 13th pension, to 1.262.920 pensioners with a pension up to €700. Total cost: €543,06 million.
  • Free medical and pharmaceutical care for the uninsured unemployed. Total cost: €350 million.
  • Special public transport card for the long-term unemployed and those who are under the poverty line. Total cost: €120 million.
  • Repeal of the leveling of the special consumption tax on heating and automotive diesel. Bringing the starting price of heating fuel for households back to €0,90 per lt, instead of the current €1,20 per lt. Benefit is expected.”

The 2nd Pillar is “Restarting the economy and promoting tax justice” Total estimated cost: €6,5 billion; Total estimated benefit: €3,0 billion

“This second pillar is centered on measures to restart the economy. Priority is given to alleviating tax suppression on the real economy, relieving citizens of financial burdens, injecting liquidity and enhancing demand.

Excessive taxation on the middle class as well as on those who do not tax-evade has entrapped a great part of citizens in a situation which directly threatens their employment status, their private property, no matter how small, and even their physical existence, as proved by the unprecedented number in suicides.

  • Settlement of financial obligations to the state and social security funds in 84 installments. Estimated benefit: €3 billion

The revenue which we expect to collect on an annual basis (between 5% and 15% of the total owed) will be facilitated by the following measures:

  • The immediate cease of prosecution as well as of confiscation of bank accounts, primary residence, salaries, etc, and the issuance of tax clearance certificate to all those included in the settlement process.
  • A twelve-month suspension of prosecution and enforcement measures against debtors with an established zero income, included in the settlement process.
  • Repeal of the anti-constitutional treatment of outstanding financial obligations to the state as offence in the act (in flagrante delicto).
  • Abolition of the mandatory 50% down payment of the outstanding debt as a prerequisite to seek a court hearing. The down payment will be decided by a judge. It will be around 10%-20%, according to the financial circumstances of the debtor.
  • Immediate abolition of the current unified property tax (ENFIA). Introduction of a tax on large property. Immediate downward adjustment of property zone rates per m². Estimated cost: €2 billion.

That tax will be progressive with a high tax-free threshold. With the exception of luxurious homes, it will not apply on primary residence. In addition, it will not concern small and medium property.

  • Restitution of the €12000 annual income tax threshold. Increase in the number of tax brackets to ensure progressive taxation. Estimated cost: €1.5 billion.
  • Personal debt relief by restructuring non-performing loans («red loans») by individuals and enterprises.

This new relief legislation will include: the case-by-case partial write-off of debt incurred by people who now are under the poverty line, as well as the general principle of readjusting outstanding debt so that its total servicing to banks, the state, and the social security funds does not exceed ⅓ of a debtor’s income.

  • Establishment of a public development bank as well as of special-purpose banks: Starting capital at €1 billion.
  • Restoration of the minimum wage to €751. Zero cost.

The 3rd Pillar is “Regaining employment” Estimated cost: €3 billion

A net increase in jobs by 300,000 in all sectors of the economy – private, public, social – is expected to be the effect of our two-year plan to regain employment. …Restitution of the institutional framework to protect employment rights that was demolished by the Memoranda governments…. Restitution of the so-called «after-effect» of collective agreements; of the collective agreements themselves as well as of arbitration….. Abolition of all regulations allowing for massive and unjustifiable layoffs as well as for renting employees.

Zero cost: Employment programme for 300000 new jobs. Estimated first-year cost: €3 billion

The 4th Pillar is: “Transforming the political system to deepen democracy”

Total estimated cost: €0

From the first year of SYRIZA government, we set in motion the process for the institutional and democratic reconstruction of the state. We empower the institutions of representative democracy and we introduce new institutions of direct democracy.

Regional organization of the state. Enhancement of transparency, of the economic autonomy and the effective operation of municipalities and regions. We empower the institutions of direct democracy and introduce new ones.

Empowerment of citizens’ democratic participation. Introduction of new institutions, such as people’s legislative initiative, people’s veto and people’s initiative to call a referendum.

Empowerment of the Parliament, curtailment of parliamentary immunity, and repeal of the peculiar legal regime of MPs’ non-prosecution.

Regulation of the radio/television landscape by observing all legal preconditions and adhering to strict financial, tax, and social-security criteria. Re-establishment of ERT (Public Radio and Television) on a zero basis.”

(Thessalalonkia Programme; Ibid)

This is viewed by significant leaders of the Syriza as a “transitional programme,” as explained in an interview with Efklidis Tsakalotos, a member of Parliament with SYRIZA and responsible for the economic policy of Syriza. (An Interview With Syriza’s Efklidis Tsakalotos Syriza’s Moment; by E. AHMET TONAK” JANUARY 23-25, 2015; http://www.counterpunch.org/2015/01/23/syrizas-moment/) :

“Syriza’s programme is a transitional one. It wants to start the process of not only reversing the policies of austerity but also dismantling some of the central pillars of the neo-liberal order. As with all transitional programmes the goal is to open up fissures for more radical polices. Whether we in Europe can achieve this depends on the extent that social movements are inspired to make use of the opportunities that arise to broaden the agenda in favour of a more participatory, institutionally-diverse, and socially just economy. Left-wing governments can do only so much. Social transformations, especially in the modern era, need the active engagement of millions. Parties and governments of the Left must see their role as catalysts of these wider developments. What is certain is that we are living in interesting times!”

(Interview with Tsakalotos Ibid).

In truth, the programme that was put forward by Syriza entirely stays within the confines of the EU. Instead of breaking that mould, it attempts to lay a negotiating position to lessen the burdens that are being demanded of the Greek peoples. It is correct that Syriza has never claimed to be a Leninist type party. Nonetheless, this perspective put above, is the antithesis of Leninism. As explained by Lenin in ‘State and Revolution” “trasnational forms” are needed. Both Marx and Lenin certainly agreed that a “special stage” – or a stage of transition from capitalism to communism was needed:

“The first fact that has been established most accurately by the whole theory of development, by science as a whole–a fact that was ignored by the utopians, and is ignored by the present-day opportunists, who are afraid of the socialist revolution–is that, historically, there must undoubtedly be a special stage, or a special phase, of transition from capitalism to communism.” https://www.marxists.org/archive/lenin/works/1917/staterev/ch05.htm

However, crucially, this transition needed to be a revolutionary transition:

“Between capitalist and communist society lies the period of the revolutionary transformation of the one into the other. Corresponding to this is also a political transition period in which the state can be nothing but the revolutionary dictatorship of the proletariat.”

Previously the question was put as follows: to achieve its emancipation, the proletariat must overthrow the bourgeoisie, win political power and establish its revolutionary dictatorship.

Now the question is put somewhat differently: the transition from capitalist society–which is developing towards communism–to communist society is impossible without a “political transition period”, and the state in this period can only be the revolutionary dictatorship of the proletariat. What, then, is the relation of this dictatorship to democracy? We have seen that the Communist Manifesto simply places side by side the two concepts: “to raise the proletariat to the position of the ruling class” and “to win the battle of democracy”. On the basis of all that has been said above, it is possible to determine more precisely how democracy changes in the transition from capitalism to communism. In capitalist society, providing it develops under the most favourable conditions, we have a more or less complete democracy in the democratic republic. But this democracy is always hemmed in by the narrow limits set by capitalist exploitation, and consequently always remains, in effect, a democracy for the minority, only for the propertied classes, only for the rich. Freedom in capitalist society always remains about the same as it was in the ancient Greek republics: freedom for the slave-owners. Owing to the conditions of capitalist exploitation, the modern wage slaves are so crushed by want and poverty that “they cannot be bothered with democracy,” “cannot be bothered with politics”; in the ordinary, peaceful course of events, the majority of the population is debarred from participation in public and political life.”

Lenin State & Revolution: Experience of the Paris Commune of 1871. Marx’s Analysis (https://www.marxists.org/archive/lenin/works/1917/staterev/ch03.htm)

Lenin points out that there is a “hemming in by narrow limits” of democracy. How much “narrower” is it when not only the single state “hems it in” – but the imperialists of the EU also “hem it in?” The next period, following the January elections of 2015, would answer this question.

10. Elections of 2015 and Negotiations with the Troika

The short-lived governments could not maintain credibility, as they were always accomodating to the new Troika demands. The mass movement shifted to the left, as shown by the huge demonstrations in the central Square. The elections of January 25 2015, sealed the rise to power of Syriza:

“After the Hellenic Parliament failed to elect a new President of State by 29 December 2014, the parliament was dissolved and a snap 2015 legislative election was scheduled for 25 January 2015. Syriza had a lead in opinion polls, but its anti-austerity position worried investors and eurozone supporters. The party’s chief economic advisor, John Milios, has downplayed fears that Greece under a Syriza government would exit the eurozone, while shadow development minister George Stathakis disclosed the party’s intention to crack down on Greek oligarchs if it wins the election. In the election, Syriza defeated the incumbent New Democracy and went on to become the largest party in the Hellenic Parliament, receiving 36.3% of the vote and 149 out of 300 seats.”

http://en.wikipedia.org/wiki/Syriza

“January 25th marks a historic turning point in recent Greek history. After five years of devastating austerity, a social crisis without precedent in Europe, and a series of struggles that at some points, especially in 2010-2012, took an almost insurrectionary form, there has been a major political break. The parties that were responsible for putting Greek society under the disciplinary supervision of the so-called Troika (EU-ECB-IMF) suffered a humiliating defeat. PASOK, which in 2009 won almost 44% of the vote, now received only 4.68%; and the splinter party of Giorgos Papandreou, the PASOK Prime Minister who initiated the austerity programs, got 2.46%. New Democracy came in at 27.81%, almost 9% below SYRIZA. The electoral rise of the fascists of Golden Dawn has been halted, although they still maintain a worrying 6% of the vote. Another pro-austerity party, the RIVER, representing the neoliberal agenda (although nominally coming from the center-left) took only 6.05%, despite intensive media hype.”

(Panagiotis Sotiris; https://viewpointmag.com/2015/01/28/a-strategy-of-ruptures-ten-theses-on-the-greek-future/)

Rapidly, by 26 January 2015, Tsipras and Independent Greeks (ANEL) leader Panos Kammenos agreed on a coalition government between Syriza and ANEL. Tsipras would be the Prime Minister of Greece, with the academic economist Yanis Varoufakis as his Minister of Finance.

Yet, in a graphic display of its intended response to the rebuke that the Troika and especially the German imperialists had received, the official line was hard:

“German government official Hans-Peter Friedrich however said: “The Greeks have the right to vote for whom they want. We have the right to no longer finance Greek debt.” http://en.wikipedia.org/wiki/Syriza

The Greek pro-Hoxha Marxist-Leninist view is that the Greek people took a stand against both the Troika and the Greek capitalists:

“By voting for SYRIZA, the majority of the Greek people rejected and condemned the cruel economic measures that were imposed, the neoliberal economic policy, in general, and the great-bourgeois parties of ND and PASOK that implemented these measures with the outmost servility. The victory of SYRIZA is also explained by the people’s resentment towards the fascist re-modeling of social life promoted by the government of the fascist scoundrel Samaras”. (January 24, 2015; “BOYCOTT the elections–The elections do not solve the problem of imperialist DEPENDANCE (economic-political-military, NATO bases etc.), nor repel-cancel ongoing EU politics against the people http://anasintaxi-en.blogspot.ca/2015/01/boycott-electionsthe-elections-do-not_24.html)

However Anasintaxi also had called for abstention from the elections of 2015, arguing that:

“In contrary ALL the bourgeois parties are in favor of Greece’s STAY in imperialist European Union, and in EURO-EMU and propagate consciously, serve the interests of the EU imperialists with misleading MYTH-fantasies about “equal participation” (!) of the country in the “pit of lions” of the powerful European monopolies. At the same time they propagate that Greece leaving the Euro-EMU-EU will be a “major disaster” (!).

ALL the reformist social democratic parties (“K” KE-SYRIZA, etc.) and the extra-parliamentary organizations follow the same strategic choice of the EU monopolies and the local capital.

It is not only SYRIZA which supports the country STAY (in) EURO-EMU-EU, but also the “K” KE: “A solution outside the euro and return to the drachma in the present circumstances would be catastrophic” (A. Papariga, “Rizospastis” 31/5/2011, p.6) Moreover: the leaders of the “K” KE definitively renounced the anti-imperialist struggle for the overthrow of dependence”

(January 24, 2015; “BOYCOTT the elections–The elections do not solve the problem of imperialist DEPENDANCE (economic-political-military, NATO bases etc.), nor repel-cancel ongoing EU politics against the people http://anasintaxi-en.blogspot.ca/2015/01/boycott-electionsthe-elections-do-not_24.html)

After the election, Anasintaxi warned that Syriza had entered into coalition with right-wing ANEL. However early on, the government had taken some progressive steps:

“During the first three weeks following the elections, the SYRIZA government has taken a series of actions in order to implement its program that has won the support of wide popular strata, an attitude that is unfortunately accompanied by certain illusions. At the same time, the government’s actions have met a very negative reception from Commission – ECB – IMF whose pressure and constant interference in the country’s internal affairs is condemned by the Greek people. We think that, up to a certain extent, SYRIZA’s victory creates favorable conditions for the strengthening of class struggles. Whether this possibility becomes a reality depends, of course on many factors the most important of which is the organization of the majority of the working masses in independent and united trade unions and the influence exerted on these and, the society in general, by the consistent left-wing, anti-imperialist and revolutionary communists.”

(Αναρτήθηκε από Anasintaxi Organization ‘Some questions and answers about the current situation in Greece’; Article to be published in “Unity & Struggle” (Extended version of an interview given to the comrades of Iran); march 30; 2015. At http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-answers-about.html)

At this early point, both Tsipras and Varoufakis were apparently determined to negotiate hard, with the threat to leave the EU if the Troika did not back down:

“Greece’s finance minister Yanis Varoufakis has spelled out the negotiating strategy of the Syriza government with crystal clarity.
“Exit from the euro does not even enter into our plans, quite simply because the euro is fragile. It is like a house of cards. If you pull away the Greek card, they all come down,” he said.
“Do we really want Europe to break apart? Anybody who is tempted to think it possible to amputate Greece strategically from Europe should be careful. It is very dangerous. Who would be hit after us? Portugal? What would happen to Italy when it discovers that it is impossible to stay within the austerity straight-jacket?”
“There are Italian officials – I won’t say from which institution – who have approached me to say they support us, but they can’t say the truth because Italy is at risk of bankruptcy and they fear the consequence from Germany. A cloud of fear has been hanging over Europe over recent years. We are becoming worse than the Soviet Union,” he told the Italian TV station RAI.
This earned a stiff rebuke from the Italian finance minister, Pier Carlo Padoan. “These comments are out of place. Italy’s debt is solid and sustainable,” he said.
Yet the point remains. Deflationary conditions are causing interest costs to rise faster than nominal GDP in Italy, Spain, and Portugal, automatically pushing public debt ratios ever higher.
Berkeley economist Barry Eichengreen warns that Grexit would be “Lehman squared”, setting off a calamitous chain reaction with worldwide consequences. Syriza’s gamble is that the EU authorities know this, whatever officials may claim in public.
Premier Alexis Tsipras is pushing this to the wire. Rightly or wrongly, he calculates that Greece holds the trump card – the detonation of mutual assured destruction, to borrow from Cold War parlance – and that all the threats from EMU power centres are mere bluster.
His cool nerve has caught Brussels, Frankfurt, Berlin, and the markets off guard. They assumed that this 40-year neophyte would back away from exorbitant demands in his landmark policy speech to the Greek parliament on Sunday night. Instead they heard a declaration of war.
He vowed to implement every measure in Syriza’s pre-electoral Thessaloniki Programme “in their entirety” with no ifs and buts. This even includes a legal demand for €11bn of war reparations from Germany, a full 71 years after the last Wehrmacht soldier left Greek soil.
There is no possible extension of Greece’s bail-out programme with the EU-IMF Troika, for that would be an “extension of mistakes and disaster”, a perpetuation of the debt-deflation trap. “The People have abolished the Memorandum. We will not negotiate our sovereignty,” he said.
Macropolis said every item was in there: a pension rise for the poorest; no further rises in the retirement age; an increase in the minimum wage to €751 a month by 2016; a return to collective bargaining; an end to privatisation of utilities; cancellation of a new property tax (ENFIA); a rise in tax-free thresholds from €5,000 to €12,000; and a rehiring of 10,000 public workers fired “illegally.”

(Ambrose Evans-Pritchard. “Greece’s leaders stun Europe with escalating defiance”. ‘The Telegraph’; 09 Feb 2015; http://www.telegraph.co.uk/finance/economics/11400778/Greeces-leaders-stun-Europe-with-escalating-defiance.html)

However in a foretaste of the future intransigence of the German imperialists, led by Wolfang Schauble the German Finance Minister – Greece’s first counter-offer was rejected out of hand:

“Schauble continues to insist that Greece sticks to the bailout conditions agreed with previous governments under which financial support will be given only in exchange for substantial structural reforms.
The finance ministry’s position risks deepening splits within Europe over how to deal with Greece as an end of February deadline nears at which the previous bailout agreement with its creditors and the European Central Bank runs out, leaving Greece facing bankruptcy.
In contrast to Berlin, the EU commission president Jean-Claude Juncker welcomed the Greek application, saying in his opinion it could pave the way for a “sensible compromise in the interest of financial stability in the Eurozone as a whole”.
But experts said Greece was merely playing for time, and that its application had indeed contained no new commitments. “The Greeks have simply tried to pass the buck back to the middle,” Matthias Kullas from the Centre for European Politics in Freiburg told The Guardian.
He stressed the German reaction was not a rejection over reaching a compromise with Greece, but did mean that expectations of an agreement on Friday when finance ministers from the eurogroup meet again, were now “slim”.
“If an agreement is reached, it will be at the last minute,” he said. “It’s in the interest of both sides to stick to their guns. The earlier one of them diverts from his course, the weaker his position becomes and the more elbow room he leaves for the other.”

(Kate Connolly. “Germany rejects Greek bailout plan – as it happened”. The Guardian 19 February 2015; http://www.theguardian.com/business/blog/live/2015/feb/19/greece-to-seek-bailout-extension-after-33bn-lifeline)

A furious cycle of media reports and counter reports paralleled a back and forth between the European Union and the Greek negotiating team of Tsipras and Varoufakis. In essence no counter-offer by the Greek team was deemed acceptable. It is true that the initial efforts of the Greek team to counter the demands were insubstantial. However even when substantial retreats had been offered, they were humiliatingly rejected. While the European team was overall untied, strains emerged. It was apparent that the Germans were the most stout in the rejections. However both the French and the Italians were wavering. Nonetheless even the IMF initially firmly supported the German position:

“Last week Greece received a four-month extension of its $277 billion bailout program. The parliaments of Finland, Estonia and, most importantly, Germany, as well as Greece’s other EU partners, approved the bailout program that was agreed to Feb. 20, provided that Greece submit a list of planned reforms. Greece submitted six pages of reforms last Monday, but not all of Greece’s creditors think they are sufficient.

Christine Lagarde, managing director of the International Monetary Fund (IMF), wrote a letter to Dutch Finance Minster Jeroen Dijsselbloem, who is also president of the Eurogroup of eurozone finance ministers, expressing her concern that Greece’s proposed reforms were not specific enough, nor did they contain sufficient assurances on their design and implementation. The letter is the most recent, and public, indication of the IMF’s hesitancy toward Greece and its bailout program.

(Maria Savel. “IMF Stands Firm, Forcing Greece and Syriza to Accept Hard Concessions” Politics Review, March 3, 2015, http://www.worldpoliticsreview.com/trend-lines/15210/imf-stands-firm-forcing-greece-and-syriza-to-accept-hard-concessions)

By March, Tsipras was still assuming the EU would not want to have a member leave:

“SPIEGEL: Many experts now fear a “Graccident” — Greece’s accidental exit from the euro. If the ECB doesn’t agree to your T-Bills, that’s exactly what might happen.
Tspiras: I cannot imagine that. People won’t risk Europe’s disintegration over a T-Bill of almost €1.6 billion. There is a saying for this in Greece: A wet man does not fear the rain.”

(Der Spiegel Interview Conducted By Manfred Ertel, Katrin Kuntz and Mathieu von Rohr: Greek Prime Minister Tsipras: ‘We Don’t Want to Go on Borrowing Forever’; March 7 2015; at http://www.spiegel.de/international/europe/spiegel-interview-with-greek-prime-minister-tsipras-a-1022156.html)

As time went on, the Greek banks were forced to put restrictions on withdrawals. The EU allowed some further liquidity in Greece by allowing Greece to print more T-Bills, but purely for internal use. This was violated by Greece. More and more comments were heard that Greece might have to exit the EU – a so called Grexit or Greccident:

“The current money-go-round is unsustainable. Euro-region taxpayers fund their governments, which in turn bankroll the European Central Bank. Cash from the ECB’s Emergency Liquidity Scheme flows to the Greek banks; they buy treasury bills from their government, which uses the proceeds to … repay its International Monetary Fund debts! …
There’s blame on both sides for the current impasse. Euro-area leaders should be giving Greece breathing space to get its economic act together. But the Greek leadership has been cavalier in its treatment of its creditors. It’s been amateurish in expecting that a vague promise to collect more taxes would win over Germany and its allies. And it’s been unrealistic in expecting the ECB to plug a funding gap in the absence of a political agreement for getting back to solvency. ……Greece’s three-year bond yield is back above 20 percent, double what it was just before Alexis Tsipras was elected prime minister on an anti-austerity platform in January. At that level, there’s no way Greece can end its reliance on its bailout partners anytime soon.
German Finance Minister Wolfgang Schaeuble was scathing yesterday about Greece’s efforts to balance its election promises with its bailout obligations, and about its standing with international investors:
“None of my colleagues, or anyone in the international institutions, can tell me how this is supposed to work. Greece was able to sell those treasury bills only in Greece, with no foreign investor ready to invest. That means that all of the confidence was destroyed again.”
Every day’s delay in cutting a deal pushes Greece a little closer to leaving the common currency. That would be a shame, since it’s an outcome no one — apart from Schaeuble — seems to desire. The mutability of euro membership could also unleash contagion and a domino effect. But it looks increasingly inevitable.”

(Mark Gilbert; “Greece’s Euro Exit Seems Inevitable”: 17 March 2015; http://www.bloombergview.com/articles/2015-03-17/greece-s-euro-exit-seems-inevitable)

By April 2015, reports circulated that secret plans were being drawn up to revive the Drachma and go into default (Evans-Pritchard A, 2 April 2015; Telegraph at http://www.telegraph.co.uk/finance/economics/11513341/Greece-draws-up-drachma-plans-prepares-to-miss-IMF-payment.html).

On May 4th the BBC reported that Greek banks were not allowing pensioners to withdraw more than a small amount, and that public sector workers were nto being paid regularly (http://www.bbc.com/news/world-europe-32580919). However on May 6th however Greece paid back $200 million to the IMF and avoided insolvency. At that time the European Central Bank (ECB) granted further liquidity to Greece. (Phillip Inman and Helena Smith; 6 May, The Guardian; at http://www.theguardian.com/world/2015/may/06/greek-debt-default-avoided-after-200m-payment-to-imf)

By June the situation was still not resolved, and Greece’s peoples were in an even more precarious position. By this time, Syriza had retreated substantially more. Michael Roberts summarises to June:

“The IMF representative in the negotiations, Poul Thomsen, has “pushed the austerity agenda with a curious passion that shocks even officials in the European Commission, pussy cats by comparison” (here are the latest demands of the Troika Greece – Policy Commitments Demanded By EU etc Jun 2015). The IMF is demanding further sweeping measures of austerity at a time when the Greek government debt burden stands at 180% of GDP, when the Greeks have already applied the biggest swing in budget deficit to surplus by any government since the 1930s and when further austerity would only drive the Greek capitalist economy even deeper into its depression. As the Daily Telegraph summed it up: “six years of depression, a deflationary spiral, a 26pc fall GDP, 60pc youth unemployment, mass exodus of the young and the brightest, chronic hysteresis that will blight Greece’s prospects for a decade to come.”

The Syriza government has already made many and significant retreats from its election promises and wishes.  Many ‘red lines’ have been crossed already. It has dropped the demand for the cancellation of all or part of the government debt; it has agreed to carry through most of the privatisations imposed under the agreement reached with the previous conservative New Democracy government; it has agreed to increased taxation in various areas; it is willing to introduce ‘labour reforms’ and it has postponed the implementation of a higher minimum wage and the re-employment of thousands of sacked staff.

But the IMF and Eurogroup wanted even more. The Troika has agreed that the original targets for a budget surplus (before interest payments on debt) could be reduced from 3-4% of GDP a year up to 2020 to 1% this year, rising to 2% next etc. But this is no real concession because government tax revenues have collapsed during the negotiation period. At the end of 2014, the New Democracy government said that it would end the bailout package and take no more money because it could repay its debt obligations from then on as the government was running a primary surplus sufficient to do so. But that surplus has now disappeared as rich Greeks continue to hide their money and avoid tax payments and small businesses and employees hold back on paying in the uncertainty of what is going to happen. The general government primary cash surplus has narrowed by more than 59 percent to 651 million euros in the 4-month period of 2015 from 1.6 billion in the corresponding period last year
The Syriza government has only been able to pay its government employees their wages and meet state pension outgoings by stopping all payments of bills to suppliers in the health service, schools and other public services. The result is that the government has managed to scrape together just enough funds to meet IMF and ECB repayments in the last few months, while hospitals have no medicines and equipment and schools have no books and materials; and doctors and teachers leave the country.

Even Ashoka Mody, former chief of the IMF’s bail-out in Ireland, has criticised the attitude of his successor in the Greek negotiations: “Everything that we have learned over the last five years is that it is stunningly bad economics to enforce austerity on a country when it is in a deflationary cycle. Trauma patients have to heal their wounds before they can train for the 10K.”

The final red lines have been reached. What the Syriza leaders finally balked at was the demand by the IMF and the Eurogroup that the government raise VAT on electricity by 10 percentage points, directly hitting the fuel payments of the poorest; and also that the poorest state pensioners should have their pensions cuts so that the social security system could balance its books. Further down the road, the Troika wants major cuts in the pensions system by raising the retirement ages and increasing contributions. The Syriza leaders were even prepared to agree to some VAT rises and pension ‘reforms’, but the two specific demands of the Troika appear to have been just too much.”

(Roberts, Michael Blog; June 15, 2015;: “Ten minutes past midnight”; https://thenextrecession.wordpress.com/2015/06/06/ten-minutes-past-midnight/)

Increasingly leading economists including Nobel Laureates Joseph Stiglitz and Paul Krugman, Amartya Sen and others – warned about a new “Versailles moment”, and insisted that German stubbornness was actually bad for Europe as a whole, and that a “hair-cut” to the debt was necessary – i.e. a dramatic waiver-cut of the debt (Simon Wren-Lewis. “Why Amartya Sen Is Right About What Is Being Done To Greece”; 12 June 2015; in ‘Social Europe’ at http://www.socialeurope.eu/2015/06/why-amartya-sen-is-right-about-what-is-being-done-to-greece/). President Obama of the USA had already agreed that:

“”You cannot keep on squeezing countries that are in the midst of depression.”
“At some point, there has to be a growth strategy in order for them to pay off their debts to eliminate some of their deficits,” (Aurelia End; Obama joins ally list on Greek austerity relief http://news.yahoo.com/obama-joins-ally-list-greek-austerity-relief-033040983.html )

As the Left inside Syriza resisted Tsipras’s slippery slope of acceptance of new demands, they increasingly pointed to the example of Iceland who had defaulted on international debts in a similar situation. They got substantial agreement from even the ANSEL coalition party members also. (Ambrose Pritchard-Evans. “Syriza Left demands ‘Icelandic’ default as Greek defiance stiffens”.14 June ‘Daily Telegraph’; http://www.telegraph.co.uk/finance/11673989/Syriza-Left-demands-Icelandic-default-as-Greek-defiance-stiffens.html ).

In a twist to the pre-July series of negotiations, as even more demands were made of the package being offered by Tsipras and Varoufakis, Tsipras called a snap referendum, saying he needed to have a further mandate form the Greek people, in order to agree to the latest demands and obtain the new tranche of bail-out funds. Bizarrely however, he then wrote to the Imperialists saying he would accept – only to find that the imperialists had withdrawn their offer. Tsipras had to go on to the snap Referendum:

“Tsipras infuriated eurozone finance ministers by calling a snap referendum on proposals to agree a deal to release the €7.2bn in bailout funds it needed to meet an IMF repayment. His argument was that the concessions still being demanded by creditors, including VAT rises and rapid reform of the unaffordable pension system, and the lack of any serious prospect of debt relief, meant he could not sign up without a fresh public mandate – and, indeed, he and Varoufakis immediately urged their countrymen to vote “No”.

Yet it emerged that while publicly lambasting the troika, the very same Tsipras had dispatched a two-page letter to Brussels that caved into many of the demands he had angrily rejected a few days earlier – and continued to insist on putting to the public vote. It was too late: his exasperated creditors, and Germany in particular, in the person of Berlin’s implacable finance minister, Wolfgang Schäuble, decided enough was enough and the offer was no longer on the table. Amid the storm of political recriminations, the European Central Bank capped financial support to the Greek banking sector, forcing the government to impose capital controls, to stem the relentless slow-motion bank run that has been leaching the life out of the country’s financial system for months. And last Tuesday, as it warned it would, Athens defaulted on its payment to the IMF. To all intents and purposes, the country is bust.

So Greek voters now face trudging to the polls today, either to vote Yes to a set of proposals that are no longer on the table – presumably ushering in a new, more emollient government that would get straight back to the negotiating table – or to send a defiant no to further austerity. Tsipras and Varoufakis insist that “No” would not mean plunging out of the eurozone, let alone the EU. Instead, they say they would re-enter talks as if brandishing a petition. Yet last time they were handed a stock of political capital by the Greek public, in January’s general election, they quickly squandered it. Both Tsipras and Varoufakis have forged their political reputations by rejecting consensus and overturning the received wisdom. But international diplomacy means understanding that everyone at the table, whatever your grievances against them, has their own mandate and their own domestic audience to placate.

Instead of opening up ways for the troika to save face, Tsipras and Varoufakis have used every means available – from provocative tweets to spiky speeches in Syntagma Square – to heighten the divisions between Greece and its eurozone partners, accusing them of trying to blackmail and humiliate the Greek people into submission.”

(Observer Editorial. “The Observer view on Greece’s referendum “5 July 2015; http://www.theguardian.com/commentisfree/2015/jul/05/greece-let-down-by-partners-and-leaders).

In the midst of this circus, before the Referendum – the USA and the IMF (in the person of Christine Lagarde) exerted further pressure on the Germans to bend. Already calls had been made by many economists, that Germany had been granted a waiver on the demands at the end of the First Word war (the Versailles treaty). These had been firmly ignored by the German imperialists. Now the IMF threw a spanner into the erst-while United Front of the imperialists:

“The International Monetary Fund has electrified the referendum debate in Greece after it conceded that the crisis-ridden country needs up to €60bn (£42bn) of extra funds over the next three years and large-scale debt relief to create “a breathing space” and stabilise the economy.
With days to go before Sunday’s knife-edge referendum that the country’s creditors have cast as a vote on whether it wants to keep the euro, the IMF revealed a deep split with Europe as it warned that Greece’s debts were “unsustainable”.
Fund officials said they would not be prepared to put a proposal for a third Greek bailout to the Washington-based organisation’s board unless it included both a commitment to economic reform and debt relief.
According to the IMF, Greece should have a 20-year grace period before making any debt repayments and final payments should not take place until 2055. It would need €10bn to get through the next few months and a further €50bn after that.
The Greek prime minister Alexis Tsipras welcomed the IMF’s intervention saying in a TV interview that what the IMF said was never put to him during negotiations.”

(Philipp Inman, Larry Elliot, Alberto Nardelli; IMF says Greece needs extra €60bn in funds and debt relief”; The Guardian 2 July 2015; at http://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euro).

The Referendum was held on 5th July 2015. The result was a defiant “NO!” to the European imperialists:

“The final result in the referendum, published by the interior ministry, was 61.3% “No”, against 38.7% who voted “Yes.”
Greece’s governing Syriza party had campaigned for a “No”, saying the bailout terms were humiliating.
Their opponents warned that this could see Greece ejected from the eurozone, and a summit of eurozone heads of state has now been called for Tuesday.
Greek Prime Minister Alexis Tsipras said late on Sunday that Greeks had voted for a “Europe of solidarity and democracy”.
“As of tomorrow, Greece will go back to the negotiating table and our primary priority is to reinstate the financial stability of the country,” he said in a televised address.
“This time, the debt will be on the negotiating table,” he added, saying that an International Monetary Fund assessment published this week “confirms Greek views that restructuring the debt is necessary.”

(Mark Lowen; “Greece debt crisis: Greek voters reject bailout offer”; 6th July; BBC http://www.bbc.com/news/world-europe-33403665).

Strangely – Tsipras appeared not too happy. It became clear that he had been expecting a ‘Yes’ vote, which would enable him to cave in to the EU demands. He had relied on the often remarked on “wish of the Greek peoples to see themselves as European” and thus not to risk leaving the EU. But the Greek people had seen the callous manipulations of the EU leaders.

On the same day the results were announced, Yanis Varoufakis resigned – saying that this would help the negotiations going forward, but that this resignation had been essentially, at the request of Tsipras.

Proponents of the logical outcome of the “No” Vote – such as Yanis Varoufakis – were simply told to drop alternative plans. Varoufakis had been drawing up “Plan B” – whereby if the Troika did not retreat to any key extent – Greece would resurrect the pre-Euro currency of the Drachma.

Astonishingly, given this pledge by the Greek people to stand fast, in the final run of negotiations with the EU, Tsipras – then completely capitulated to Eurozone, primarily German imperialists. Unsurprisingly, in the renewed negotiations – the European leaders and most sections of banking capital – had simply turned their backs on the Greek populations views and demanded even harsher terms:

“The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday….Athens has put forward a 13-page document detailing reforms and public spending cuts worth €13bn with the aim of securing a third bailout from creditors that would raise €53.5bn and allow it to stay inside the currency union.
A cabinet meeting signed off the reform package after ministers agreed that the dire state of the economy and the debilitating closure of the country’s banks meant it had no option but to agree to almost all the creditors terms.”

(Phillip Inman, Graeme Wearden and Helena Smith: ”; 9 July 2015 Greece debt crisis: Athens accepts harsh austerity as bailout deal nears “Greek cabinet backs a 13-page package of reforms and spending cuts worth €13bn to secure third bailout and modest debt writeoff http://www.theguardian.com/business/2015/jul/09/greece-debt-crisis-athens-accepts-harsh-austerity-as-bailout-deal-nears)

As even the Guardian concluded: “Generally, Tsipras appears to have finally capitulated in the face of threats that Greece would be ejected from the eurozone:

“Greece and the rest of the eurozone have finally reached an agreement that could lead to a third bailout and keep the country in the eurozone.
Greek PM Alexis Tsipras conceded to a further swathe of austerity measures and economic reforms after more than 16 hours of negotiations in Brussels. He has agreed to immediately pass laws to further reform the tax and pension system, liberalise the labour market, and open up closed professions. Sunday trading laws will be relaxed, and even milk producers and bakers will be deregulated.
The Financial Times has dubbed it:
‘The most intrusive economic supervision programme ever mounted in the EU’.
Greece was forced to accept these measures after Germany piled intense pressure, as a price for a new deal. EU officials told us that Tsipras was subjected to “mental waterboarding” in closed-door meetings with Angela Merkel, Donald Tusk and Francois Hollande.
The plan must now be approved by the Athens parliament by Wednesday, and then voted through various national parliaments. If agreement is reached, talks can then begin towards a a new three-year bailout worth up to €86bn (£61bn), accompanied by further monitoring by Greece’s creditors.
The deal appears to end Greece’s five-month battle with its creditors, which has gripped the eurozone, dominated the political agenda and alarmed the markets.
Emerging from the summit, Tsipras admitted it had been tough – but insisted he had won concessions on debt relief (sometime in the future) as well as the medium-term funding plan.
He also managed to persuade the eurozone that a new investment fund, that will manage and sell off €50bn Greek assets, would be based in Athens not Luxembourg.
But generally, Tsipras appears to have finally capitulated in the face of threats that Greece would be ejected from the eurozone.”

(Graeme Wearden and Helen Davidson. “Greek debt crisis: deal reached after marathon all-night summit – as it happened”. The Guardian 13 July 2015;
http://www.theguardian.com/business/live/2015/jul/12/greek-debt-crisis-eu-leaders-meeting-cancelled-no-deal-live)

Yanis Varoufakis summed the story up to that point as a “coup”:

“The recent Euro Summit is indeed nothing short of the culmination of a coup. In 1967 it was the tanks that foreign powers used to end Greek democracy. In my interview with Philip Adams, on ABC Radio National’s LNL, I claimed that in 2015 another coup was staged by foreign powers using, instead of tanks, Greece’s banks. Perhaps the main economic difference is that, whereas in 1967 Greece’s public property was not targeted, in 2015 the powers behind the coup demanded the handing over of all remaining public assets, so that they would be put into the servicing of our un-payble, unsustainable debt.”

(Varoufakis, Y. “On the Euro Summit’s Statement on Greece: First thoughts”; 14 July 2015. http://yanisvaroufakis.eu/2015/07/14/on-the-euro-summits-statement-on-greece-first-thoughts/)

While the Referendum gave a clear signal that the Greek people had rejected the spirit of compromise being forced by the Western Banks – the questions had been framed deliberately imprecisely. It did not ask the Greek people to consider the option of leaving the Eurozone as such. This allowed the Tsipras government to posture it did “not have a mandate” to reject the harsh terms of the Troika and move Greece to leave the Eurozone.

Inevitably this will lead to a rupture of the Syriza United Front:

“…. Syriza, which is in coalition with the rightwing populist Independent party, is expected to meet huge opposition from within its own ranks and from trade unions and youth groups that viewed the referendum as a vote against any austerity.

Panagiotis Lafazanis, the energy minister and influential hard-leftist, who on Wednesday welcomed a deal for a new €2bn gas pipeline from Russia, has ruled out a new tough austerity package. Lafazanis represents around 70 Syriza MPs who have previously taken a hard line against further austerity measures and could yet wreck any top-level agreement.”

(Phillip Inman, Graeme Wearden and Helena Smith: Guardian Ibid; 9 July 2015)

The concession made by Greece in accepting the further round of “austerity” measures is huge:

“The new proposals include sweeping reforms to VAT to raise 1% of GDP and moving more items to the 23% top rate of tax, including restaurants – a key battleground before. Greece has also dropped its opposition to abolishing the lower VAT rate on its islands, starting with the most popular tourist attractions. Athens also appears to have made significant concessions on pensions, agreeing to phase out solidarity payments for the poorest pensioners by December 2019, a year earlier than planned. It would also raise the retirement age to 67 by 2022. And it has agreed to raise corporation tax to 28%, as the IMF wanted, not 29%, as previously targeted.
Greece is also proposing to cut military spending by €100m in 2015 and by €200m in 2016, and implement changes to reform and improve tax collection and fight tax evasion. It will also press on with privatisation of state assets including regional airports and ports. Some government MPs had vowed to reverse this.
In return, Greece appears to be seeking a three-year loan deal worth €53.5bn…….
Several EU leaders said the troika of creditors – the European commission, the International Monetary Fund and the European Central Bank – must also make concessions to secure Greece’s future inside the eurozone.
Donald Tusk, who chairs the EU summits, said European officials would make an effort to address Greece’s key request for a debt write-off. …
On Thursday, the German finance minister, Wolfgang Schäuble said the possibility of some kind of debt relief would be discussed over coming days, although he cautioned it may not provide much help.
“The room for manoeuvre through debt reprofiling or restructuring is very small,” he said.
Greece has long argued its debt is too high to be paid back and that the country requires some form of debt relief. The IMF agrees, but key European states such as Germany have resisted the idea…..
German ECB governing council member Jens Weidmann argued Greek banks should not get more emergency credit from the central bank unless a bailout deal is struck.
 He said it was up to eurozone governments and Greek leaders themselves to rescue Greece.
The central bank “has no mandate to safeguard the solvency of banks and governments,” he said in a speech.
The ECB capped emergency credit to Greek banks amid doubt over whether the country will win further rescue loans from other countries. The banks closed and limited cash withdrawals because they had no other way to replace deposits.
Weidmann said he welcomed the fact that central bank credit “is no longer being used to finance capital flight caused by the Greek government.”
http://www.theguardian.com/business/2015/jul/09/greece-debt-crisis-athens-accepts-harsh-austerity-as-bailout-deal-nears

11. CONCLUSION

At the time of writing the final scenes in the disintegrating Syriza “United Front’ parliament have yet to be played out.

However the shrewdest elements of the non-Marxist-Leninist left recognize that the time is long due, for Greece to exit the European Union to regain its own measure of independence. Many on the left agree that this will be hard.

The leading proponent of this has been Costas Lapavitas – a MP in the Greek Parliament but not a member of Syriza – and radical economist. His view has been put in several books and articles for example these cited here: ([1], Lapvitas, C. Interview with Sebastien Budgen: ‘Greece: Phase Two”; in Jacobin. At https://www.jacobinmag.com/2015/03/lapavitsas-varoufakis-grexit-syriza/ [2] Costas Lapavitsas: The Syriza strategy has come to an end’. Interview with Press Project and Der Spiegel; http://www.thepressproject.gr/details_en.php?aid=74530. [3[ The crisis of the Eurozone”, July 10, 2010 ; Greek Left Review. At https://greekleftreview.wordpress.com/2010/07/10/the-crisis-of-the-eurozone/)

Although this view has certainly been challenged (Bach, Paula. “Exit the Euro? Polemic with Greek Economist Costas Lapavitsas.” Left Voice News Project, at: http://leftvoice.org/Exit-the-Euro-Polemic-with-Greek-Economist-Costas-Lapavitsas).

Marxist-Leninists argue that leaving the imperialist bloc of the EU – would be the correct policy for the working class, peasantry and poor sections of Greece.

When asked on how the Anasintaxi Organization sees the future events, they replied:

“Both reformist parties (“K”KE and SYRIZA) have accepted the Greek capital’s present strategic choice to maintain the country in the EU and the Eurozone… In order to contribute to the growth of the working class struggles and the rise of the revolutionary movement, the Movement for Reorganization of KKE (1918-1955) is striving, under very unfavorable conditions, to achieve the following:

A) Together with the reorganization, the re-birth of KKE (1918-1955) and the ideological-political-organizational unity of the Greek communists on basis of Marxism-Leninism-Stalinism and the dissemination of the Marxist conception of socialism-communism;
it actively supports and participates in the struggle of the working class and all the toilers against the reduction of salaries and pensions, against the deterioration of their position in general and supports all demands that aim to defend their (economic, trade-union, social and political) class interests in opposition to the foreign and Greek capital and in particular, the EU monopolies which impose directly the current austerity measures.

B) The formation of united, massive and truly independent trade unions whose aim will be the resistance to the extreme neo-liberal policy of austerity and the further development of the workers’ and people’s struggles combined with the struggle against nationalism-racism-fascism-Nazism (all very dangerous enemies of the working class and the people) as well as “anti-Germanism” and “anti-Hellenism” (the two sides of the bourgeois nationalism) incited, during this period, by the nationalist circles of the two countries. At the same time, these new trade unions will put forward the demand for the exit of the country from the imperialist EU not only because of the increasing dependence and the deterioration of the Greece-EU relations at the expense of our country but also because of the fact that the economic policy and the hard, anti-popular measures are directly imposed by Brussels.

C) The cooperation between the consistent left-wing, anti-imperialist and anti-fascist forces that will aim at the formation of a massive, anti-fascist, popular, front that will fight against the dependence on imperialism, in general, and the exit of Greece from the EU, the Eurozone and NATO.”

(Αναρτήθηκε από Anasintaxi Organization ‘Some questions and answers about the current situation in Greece’; Article to be published in “Unity & Struggle” (Extended version of an interview given to the comrades of Iran); march 30; 2015. At http://anasintaxi-en.blogspot.ca/2015/02/some-questions-and-answers-about.html

APPENDIX: Select Chronology 1975 to 2015:
Amended from BBC version at: http://www.bbc.com/news/world-europe-17373216

1975 – New constitution declares Greece a parliamentary republic with some executive powers vested in a president.
1980 – Conservative Constantine Karamanlis elected president.
1981 – Greece joins EU. Andreas Papandreou’s Socialist Party (Pasok) wins elections.
1985 – President Karamanlis resigns in protest at government plans to reduce powers of president. Christos Sartzetakis becomes head of state.
1990 – Centre-right New Democracy party forms government under party leader Constantine Mitsotakis
1993 – Election returns Papandreou to power for PASOK.
2004 March – Conservative New Democracy party led by Costas Karamanlis wins general election, ending over a decade of Pasok government.
2005 April – Parliament ratifies EU constitution.
2005 December – Amid protest strikes by transport workers, parliament approves changes to labour laws, including an end to jobs for life in the public sector. The plans sparked industrial action in June.
2006 March – Public sector workers strike over pay and in protest at government plans to scrap job security laws and intensify privatisation.
2007 September – Minister Karamanlis wins a narrow majority in the poll. He says he now has a mandate for more reforms but also pledges to make national unity a priority.
2008 March – Parliament narrowly passes government’s controversial pension reform bill in face of general public sector strike and mass protests.
2008 December – Students and young people take to city streets in nationwide protests and riots over the police killing of a 15-year-old boy in Athens. Major public-sector strikes coincide to increase pressure on the government over its economic policies.

Economic meltdown
2002 January – Euro replaces drachma.
2004 December – European Commission issues formal warning after Greece found to have falsified budget deficit data in run-up to joining eurozone.
2009 October – Opposition Pasok socialist party wins snap election called by PM Karamanlis. George Papandreou takes over as new prime minister.

Debt crisis
2009 December – Greece’s credit rating is downgraded by one of world’s three leading rating agencies amid fears the government could default on its ballooning debt. PM Papandreou announces programme of tough public spending cuts.
2010 January- March – Government announces two more rounds of tough austerity measures, and faces mass protests and strikes.
2010 April/May – Fears of a possible default on Greece’s debts prompt eurozone countries to approve a $145bn (110bn euros; £91bn) rescue package for the country, in return for a round of even more stringent austerity measures. Trade unions call a general strike.
2011 June – 24-hour general strike. Tens of thousands of protesters march on parliament to oppose government efforts to pass new austerity laws.

Crisis deepens
2011 July – European Union leaders agree a major bailout for Greece over its debt crisis by channelling 109bn euros through the European Financial Stability Facility.
All three main credit ratings agencies cut Greece’s rating to a level associated with a substantial risk of default.
2011 October – Eurozone leaders agree a 50% debt write-off for Greece in return for further austerity measures. PM George Papandreou casts the deal into doubt by announcing a referendum on the rescue package.
2011 November – Faced with a storm of criticism over his referendum plan, Mr Papandreou withdraws it and then announces his resignation.
Lucas Papademos, a former head of the Bank of Greece, becomes interim prime minister of a New Democracy/Pasok coalition with the task of getting the country back on track in time for elections scheduled provisionally for the spring of 2012.

New bailout plan
2012 February – Against a background of violent protests on the streets of Athens, the Greek parliament approves a new package of tough austerity measures agreed with the EU as the price of a 130bn euro bailout.
2012 March – Greece reaches a “debt swap” deal with its private-sector lenders, enabling it to halve its massive debt load.
2012 May – Early parliamentary elections see support for coalition parties New Democracy and Pasok slump, with a increase in support for anti-austerity parties of the far left and right. The three top-ranking parties fail to form a working coalition and President Papoulias calls fresh elections for 17 June. The far-right Golden Dawn party based its 2012 election campaign on hostility towards immigrants
2012 June – Further parliamentary elections boost New Democracy, albeit leaving it without a majority. Leader Antonis Samaras assembles a coalition with third-placed Pasok and smaller groups to pursue the austerity programme.

Anti-austerity protests
2012 September – Trade unions stage 24-hour general strike against government austerity measures. Police fire tear gas to disperse anarchist rally outside parliament.
2012 October – Parliament passes a 13.5bn-euro austerity plan aimed at securing the next round of EU and IMF bailout loans; the package – the fourth in three years – includes tax rises and pension cuts.
2013 January – Unemployment rises to 26.8% – the highest rate in the EU.
2013 April – Youth unemployment climbs to almost 60%.
Public broadcaster closed
2013 June – The government announces without warning that it is suspending the state broadcaster ERT in a bid to save money. The decision gives rise to mass protests and a 24-hour strike.
2013 August – New state broadcaster EDT is launched.
2013 September – Government launches crackdown on far-right Golden Dawn party. Party leader Nikolaos Michaloliakos and five other Golden Dawn MPs are arrested on charges including assault, money laundering and belonging to a criminal organisation.
2013 December – Parliament passes 2014 budget, which is predicated on a return to growth after six years of recession. Prime Minister Samaras hails this as the first decisive step towards exiting the bailout.
2014 February – Greek unemployment reaches a record high of 28%.
2014 March – Parliament narrowly approves a big reform package that will open more retail sectors to competition, part of a deal between Greece and its international lenders.
2014 April – Eurozone finance ministers say they’ll release more than 8bn euros of further bailout funds to Greece.
Greece raises nearly four billion dollars from world financial markets in its first sale of long-term government bonds for four years, in a move seen as an important step in the country’s economic recovery.

Left in power
2014 May – Anti-austerity, radical leftist Syriza coalition wins European election with 26.6% of the vote.
2014 December – Parliament’s failure to elect a new president sparks a political crisis and prompts early elections.
2015 January – Alexis Tsipras of Syriza becomes prime minister after winning parliamentary elections, and forms a coalition with the nationalist Independent Greeks party.
2015 February – The government negotiates a four-month extension to Greece’s bailout in return for dropping key anti-austerity measures and undertaking a eurozone-approved reform programme.
2015 June – European Central Bank ends emergency funding. Greece closes banks, imposes capital controls and schedules referendum on European Union bailout terms for 5 July.Government reinstates former state broadcaster ERT as promised in Syriza manifesto.
2015 July – Greece becomes first developed country to miss a payment to the International Monetary Fund, having already delayed it

Bill Bland: Stalin: The Myth and Reality

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A Paper Originally Scheduled To Be Read By Bill Bland At The Conference Of ‘International Struggle: Marxist-Leninist’ In October 1999; Paris.

Brief Foreword: This talk was never delivered as Comrade Bland at the very last moment could not attend. The talk is offered however as a useful distillation of several decades of thought and concrete, factual and hard Marxist-Leninist research. The talk itself, originated in one that Comrade Bland gave to the young Communist League in 1975 at a summer school. It was widely distributed and has influenced the Marxist-Leninist movement profoundly. However, its implicatiosn ahve yet to be fully absorbed by certain sections of the movement. That original talk, and a later one given to the Stalin Society of the UK in 1991, are both also presented on this web page elsewhere; and are completely referenced. This web-page, being a summary in the form of a talk is not referenced.

Today almost everyone who calls himself a Marxist-Leninist accepts that, in its final years, the Communist Party of the Soviet Union was dominated by revisionists — that is, by people who claimed to be Marxist-Leninists but who had in reality distorted Marxism-Leninism to serve the interests of an embryonic capitalist class.

On one question, however, there is still disagreement, namely, when did the domination of the CPSU by revisionists begin?

These days, most people date it from the 20th Congress of the CPSU in 1956, when Khrushchev threw off his false Marxist-Leninist mask.

However, there are good grounds for believing that for many years prior to Stalin’s death in 1953, a majority of the Soviet leadership were either concealed or latent revisionists.

  • Why, for example, did Stalin, who played such an active role in the international communist movement in the 1920s, cease to do so after 1926?
  • Why did the publication of Stalin’s works, scheduled for sixteen volumes, cease with Volume 13 in 1949, four years before his death?
  • Why was Stalin not asked to deliver the report of the Central Committee to the 19th Congress in 1952?
  • Why were Stalin’s last writings confined to subjects like linguistics and the critique of a proposed textbook on economics — subjects which might be considered harmless to concealed revisionists had not Stalin turned them into attacks on revisionist ideas?
  • Why did the Soviet government surprise world opinion in 1947 by suddenly reversing its foreign policy in order to endorse the American proposal for the partition of Palestine which has proved so disastrous for the nations of the Middle East?

All this makes sense if — and I believe only if — we accept the fact that for some years before his death, Stalin and his fellow Marxist-Leninists were in a minority in the leadership of the Soviet Union.

The fact of the existence of a revisionist majority in the leadership of the CPSU was effectively concealed by the ‘cult of personality’ that was built up around Stalin.

Stalin himself criticised and ridiculed this ‘cult’ on numerous occasions. Yet it continued.

It follows that Stalin was either an utter hypocrite, or he was unable to put a stop to this ‘cult’.

The initiator of the ‘cult of personality’ around Stalin was, in fact, Karl Radek, who pleaded guilty to treason at his public trial in 1937.

A typical example of the ‘cult’ is the following quotation from 1936:

“Miserable pygmies! They lifted their hands against the greatest of all living men, our wise leader Comrade Stalin. We assure you, Comrade Stalin, that we will increase our Stalinist vigilance still more and close our ranks around the Stalinist Central Committee and the great Stalin.”

The author of these words was one Nikita Khrushchev, who in 1956 denounced the ‘cult’ as an indication of Stalin’s ‘vanity’ and ‘personal power’.

It was Khrushchev too who introduced the term ‘vozhd’ for Stalin — a term meaning ‘leader’ and equivalent to the Nazi term ‘Fuehrer’.

Why should the revisionists have built up this ‘cult of personality’ around Stalin?

It was, I suggest, because it disguised the fact that not Stalin and the Marxist-Leninists, but they — concealed opponents of socialism — who held a majority in the leadership. It enabled them to take actions — such as the arrest of many innocent persons between 1934 and 1938 (when they controlled the security forces) and subsequently blame these ‘breaches of socialist legality’ upon Stalin.

Stalin himself is on record as telling the German author Lion Feuchtwanger in 1936 that the ‘cult of his personality’ was being built up by his political opponents (I quote:)

“ . . . with the aim of discrediting him at a later date.”

Clearly, Stalin’s ‘pathological suspicion’ of some of his colleagues, of which Khrushchev complained so bitterly in his secret speech to the 20th Congress, was not pathological at all!

On one allegation both Stalin and the revisionists are agreed — that in Stalin’s time miscarriages of justice occurred in which innocent people were judically murdered.

The revisionists, of course, maintain that Stalin was responsible for these miscarriages of justice.

But there is a contradiction here.

Krushchev himself said in his 1956 secret speech (and I quote):

“The question is complicated here by the fact that all this was done because Stalin was convinced that this was necessary for the defence of the interest of the working class against the plotting of ememies. He saw this from the position of the interests of the working class, of the interest of the victory of socialism.”

But only a person who was completely insane could possibly imagine that the arrest of innocent people could serve socialism. And all the evidence shows that Stalin retained his full mental faculties right to his death.

However, the contradiction resolves itself if these judicial murders were carried out, not at the behest of Stalin and the Marxist-Leninists, but at the behest of the revisionist opponents of socialism.

At his public trial in 1938, the former People’s Commissar of Internal Affairs, Genrikh Yagoda, pleaded guilty to having arranged the murder of his predecessor, Vyacheslav Menzhinsky, in order to secure his own promotion to a post which gave him control over the Soviet security services. He then, according to his own admission, used this position to protect the terrorists responsible for the murder of prominent Marxist-Leninists close to Stalin — including the Leningrad Party Secretary, Sergei Kirov, and the famous writer Maksim Gorky.

And in order that the security services should not appear idle, Yagoda arranged for the arrest of many people who were not conspirators, but had merely been indiscreet.

After Yagoda’s arrest, the conspirators were successful in getting him succeeded by another conspirator, Nikolai Yezhov, who continued and intensified this process.

It was because of the suspicions of Stalin and the Marxist-Leninists that the security services were acting incorrectly — were protecting the guilty and punishing the innocent — that they began to use Stalin’s personal secretariat, headed by Aleksandr Poskrebyshev, as their private detective agency.

And it was on the basis of the evidence uncovered by this Secretariat and submitted directly to the Party — that the concealed revisionists, to maintain their cover, were compelled to endorse the arrest of genuine conspirators, including Yagoda and Yezhov.

And it was on Stalin’s personal initiative that in 1938, his friend, the Marxist-Leninist Lavrenty Beria, was brought to Moscow from the Caucasus to take harge of the security services.

Under Beria, political prisoners arrested under Yagoda and Yezhov had their cases reviewed and, as Western press correspondents reported at the time, many thousands of people unjustly sentenced were released and rehabilitated.

Marxist-Lenininists in Britain, in particular, should have no difficulty in accepting the picture of a Marxist-Leninist minority in the CPSU.

How many members of the Communist Party of Great Britain came out in opposition to the revisionist ‘British Road to Socialism’, which preached the absurd ‘parliamentary road to socialism’ when it was adopted in 1951? I know of only four.

The question arises, of course:
if revisionists had a majority in the leadership of the CPSU from the 1930s, why did they not take any steps to dismantle socialism until 1956, after Stalin’s death?

The short answer is that they tried and failed.

In the early 1940s, the economists Eugen Varga and Nikolai Voznsensky both published books openly espousing revisionist programmes, and both were quickly slapped down by the Marxist-Leninists.

Of course, it is important not to exaggerate the extent of these miscarriages of justice.

In the 1960s, anti-Soviet propaganda originally published in Nazi Germany, was republished by a former British secret service agent named Robert Conquest under the more respectable cloak of Harvard University. In his 1969 book ‘The Great Terror’ Conquest puts the number of ‘Stalin’s victims’ (in inverted commas) at ‘between 5 and 6 million’.

But by the 1980s, Conquest was alleging that there had been in 1939 a total of 25 to 30 million prisoners in the Soviet Union, that in 1950 there had been 12 million political prisoners.

But when, under Gorbachev, the archives of the Central Committee of the CPSU were opened up to researchers, it was found that the number of political prisoners in 1939 had been 454,000, not the millions claimed by Conquest.

If we add those in prison for non-political offences, we get a figure of 2.5 million, that is, 2.4% of the adult population.

In contrast, there were in the United States in 1996, according to official figures, 5.5 million people in prison, or 2.8% of the adult population.

That is, the number of prisoners in the USA today is 3 million more than the maximum number ever held in the Soviet Union.

In January 1953, less than two months before Stalin’s death, nine doctors working in the Kremlin were arrested on charges of having murdered certain Soviet leaders — including Andrei Zhdanov in 1948 — by administering to them deliberately incorrect medical treatment.

The charges arose out of an investigation into allegations by a woman doctor, Lydia Timashuk, The accused doctors were charged with conspiracy to murder in conjunction with the American Zionist organisation ‘JOINT.

Western press correspondents in Moscow insisted that some of the most prominent Soviet leaders were under investigation in connection with the case.

But before the case could be brought to trial, Stalin conveniently died.

The Albanian Marxist-Leninist Enver Hoxha, a tireless oppponent of revisionism and not a man given to indulging in unfounded gossip — insists that Soviet revisionist leaders admitted — nay, rather boasted — to him that they had murdered him. And we know that Stalin’s son was himself arrested and imprisoned for having declared that his father had been killed as part of a plot.

Be that as it may, the arrested doctors were immediately released and officially ‘rehabilitated’.

Then Lavrenti Beria — a scourge of the revisionists second only to Stalin — was arrested in a military coup, tried in secret, and executed.

The way was open for the revisionist conspirators to throw off their masks, expel the remaining Marxist-Leninists from leading positions in the Party, and take the first steps towards the restoration of a capitalist society.

Conclusion

This, then, is the picture of Stalin that emerges from an objective examination of the facts.

It is the picture of a great Marxist-Leninist who fought all his life for the cause of socialism and the working class.

It is the picture of a great Marxist-Leninist who, although surrounded by revisionist traitors, succeeded during his lifetime in preventing this revisionist majority from significantly betraying the working class he loved and restoring the capitalist system he hated.

We in all countries who have taken on the task of rebuilding the international communist movement must see the defence of Stalin as a part of the defence of Marxism-Leninism.

There can be no greater compliment for anyone who aspires to be a Marxist-Leninist than to be called a Stalinist.

The Girondes of Working Class

CPIM-21st-Party-Congress-Logo-Full

Written by Damodar on The Other Aspect blog.

The 21st party congress of CPI (M) recently concluded at Visakhapatnam with the usual ritualistic flavour that has become the hallmark of such events for the parties of Left Front particularly the CPI and the CPI (M). The party congress would be known for selecting or rather electing “unanimously” its new General Secretary Sitaram Yechury. Though the outgoing general secretary, Prakash Karat wanted the post to go to Ramachandran Pillai. The ongoing factional struggle between Karat and Yechury was somehow saved from being open in public when the Karat faction backtracked on the voting for new General Secretary. While Yechury was backed by West Bengal delegates, Pillai a Karat man enjoyed the support of the Pinarayi Vijayan faction from Kerala, but the Bengal lobby wanted a more pragmatic (read one who can hob nob with Congress and other parties) man at helm.

The party Congress of CPI (M), no longer evinces the same interest particularly among the Left movement as it did few years ago. No communist group/party or left journal devoted any analysis or criticism to the policy/issues raised in the congress. A major reason might have been that for CPI-M, like its counterpart bourgeoisie parties there has been a wide gap between its political-organisational reports and its politics on ground level. Further the dwindling base of the party and its almost moribund energy was enough to deter the bourgeoisie media. For the revolutionary Left, it has stopped taking cognizance of this party’s activities since long. Revisionist parties — as the CPI (M) has become–, adopts something in their party congresses while doing the opposite when it comes to the realm of day to day politics. This is an important characteristic of revisionism that differentiates it from a genuine revolutionary Marxist-Leninist Party.

Yet, nationally and internationally there are several comrades who still consider CPI and CPI (M) a still Marxist-Leninist formation, hence we would like to take this opportunity to analyse the resolutions particularly the new Political Tactical Line (PTL) adopted in the congress. At the same time it is our duty as a Marxist Leninist to wage a struggle to expose the real intention of reformist-revisionists so that their real intention comes to the fore.

21st Congress: The identity Crisis.

The Congress took place at a time when the party finds itself at the lowest. It has secured the lowest number of seat in Lok Sabha since its formation, its rule in the states is at lowest with only tiny Tripura saving the grace, the confidence of the leadership is at lowest so is the enthusiasm of the cadres. The set back of Bengal has still not gone so is the factional crisis in Kerala. In other parts of the country it was hardly any force to reckon with but there also it has lost its confidence to lead mass movement. The net result is the party is grappling with severe identity crisis. The spaces being vacated by it are being grabbed by new entities like Aam Admi Party (AAP) in Delhi and even by NGOs in several places. It has squarely failed to cash on the anti-establishment feeling of the common masses and in its once strong hold the party is seen as equally corrupt with rank opportunists, and self-seekers found it highly rewarding to join the party and to ditch it as well. So it is not a surprise when a senior party leader admitted that around 40,000 members have quit the CPM in West Bengal since 2011 and major section of it joining the BJP. The decimation and decline shows no sign of abetment, if the recently concluded bye-elections and the civic elections are any sign, where the Trinmool Congress resoundingly trampled the party and Left front’s candidates. Bengal unit is no longer able to mobilise masses on the scale as when it was in power.

Left front government in its eagerness to hug the capitalists nudged the peasant & proletariats, who in turn dumped him in the elections. The people have thoroughly rejected the conversion of CPI (M) from a social democratic party to that of agent of national and international finance capital. It’s policy of embracing industrialisation-at-any-cost by appeasing international and national capital and inviting predatory multinationals like Wal-Mart in the naïve belief of advancing the “productive forces”. It forcibly acquired land, deeply antagonising peasants and the working class as well. But only the revolutionary force and its organisation can help in advancement of productive force. After three decades of stagnant rule based on terror, intimidation and sycophancy CPM neither commanded a revolutionary force nor was it ever a revolutionary organisation.

The Singur-Nandigram occurrences weren’t causes but effects/symptoms of a deeper malaise: pursuit of neoliberalism, which the party’s central leadership assails. The CPM, with a strongly upper-caste sophisticated, westernised, middle and upper middle class leadership, failed to combat caste, gender and anti-Muslim discrimination not is it able to understand the changing dynamics of the Indian polity. It became a party of careerists bereft of imagination, yet complacent and arrogant first towards its smaller partners and then to the people at large. Tales of party leaders threatening masses and silencing every voice of dissent using most heinous ways that only a bourgeoisie party is capable of undertaking that too against fellow communist showed the rot that had engulfed it.

In name of industrialisation the CPM government was happy to give away with hundreds of acres of fertile land perhaps best quality agrarian land of the country at throw away price to Tata. When the people protested they even did not blink an eye to shoot the poor peasants and rural proletariats their support base for decades and terming them as reactionaries.

Prakash Karat has been lecturing and writing long articles on the exploitation in SEZs across the country but same Karat had no qualm in declaring SEZs in Bengal as ‘progressive’.

Similarly in Kerala it has suffered setbacks because of the CPM-instigated murder of political rivals like T.P. Chandrasekharan, neglect of social and gender issues, and outright opposition to Western Ghats conservation and support for encroachers. The party today is seen to be no different than Congress of RSS. Gone are the days of mass mobilisation today it relies on mob mobilisation to silence its critique. Several top leadership of Kerala have been implicated in various scams. In Lavalin scam the party’s State Secretary and the former Politburo member Pinarayi Vijayan is directly involved.

The leadership both at national and state levels seems to have lost the capacity to lead independent mass actions. Years of tailism and being propped on the crutches of this or that bourgeoisie party has done away with the capability of agitation, a fact that has been accepted in the Congress as well.

 The Congress apart from adopting regular resolutions and reports adopted a new PTL. The previous PTL was adopted at the 13th congress held at Thiruvananthapuram from December 27 1988 to 1st January 1999.

The Political Tactical Line: Nothing new!

Suddenly a realisation has dawned in the party that there is something wrong with their strategy and the organisation. From where did this sudden fountain of realisation erupt? It did not emanate as a result of any genuine desire to resist the onslaught of capital but the new PTL itself answers it. It says:

 “The 2014 Lok Sabha election review conducted by the Central Committee in June 2014 had concluded that the Party has been unable to advance for sometime and this was reflected in the poor performance of the Party in the election.…The election review report adopted by the Central Committee stated that:

 “In successive Party Congresses we have been emphasizing the need for enhancing the independent strength of the Party. Some of the states have attributed the erosion of our independent strength to the tactics of aligning with the bourgeois parties. The failure to advance the independent strength of the Party necessitates a reexamination of the political-tactical line that we have been pursuing”.

So the necessity of reviewing the PTL came from the massive drubbing that it got in the elections. Since 1989-90 it may be remembered CPI (M) with its politics of alliance along with manipulations what may be termed as Harikishen Surjeet’s line was instrumental in playing a major role in power-play/ power broker role. Though the party never had any significant pan India presence, yet the Machiavellian politics of Surjeet kept CPI(M) at centre of Delhi’s power gallery.

Today things are very different, The party’s sudden deemphasizing of electoral politics and rhetorical calls for “mobilizing the masses” are due to its marginalization in bourgeois parliamentary politics. So to be relevant it has to raise the bogey of mass mobilization as recently we saw AAP doing in Delhi. In fact CPI (M) has been highly mesmerised with the polity and tactics of AAP. Its mouthpiece even eulogised the Kejriwal’s team and indirectly pleading for an alliance, but unfortunately it got no feeler from the later for having any kind of alliance.

The PTL further says:

“The P-TL is the tactics we adopt from time to time in a specific situation in order to advance towards our strategic goal which is the People’s Democratic Revolution. The tactical goal we have set out in the P-TL is the forging of a Left and democratic Front in order to present the Left and democratic alternative to the bourgeois-landlord order. The struggle to forge the Left and democratic alternative is part of our effort to change the correlation of class forces so that we can advance towards our strategic goal.”

So much for that coveted goal of Peoples’ Democratic Revolution, which this party wants to achieve by forging a Left and democratic Front. Interestingly the mention of revolution starts and ends here. The entire document then is about forging or not forging alliance with the other parties! It does not mention any substantial tactics to be adopted vis-à-vis the working class nor with the peasantry.

One is bound to ask, who are the “democratic” parties? While the PTL has left us to speculate, but those who have been following the Indian polity even cursorily would have no hesitation in answering the question. For the CPM leadership the democratic forces among others today are the siblings of the so-called Janata Parivar like the Samajwadi Party, Janata Dal, Rashtirya Janata Dal and similar parties. Now everyone knows the character of these parties and what harm they have done in stalling the progress of the working class and peasant movement. These rank casteist outfits are no better than the rightist or the Bourgeoisie outfits. In fact when there will a call for decisive struggle against the forces of fascism and capitalism, these outfits instead of being with the working class and toiling masses would ally with the capitalist and fascist forces.

The Political Resolution of the 10th Congress explained the Left and democratic Front as follows: “The struggle to build this front is part of our endeavour to bring about a change in the correlation of class forces, to end a situation in which the people can choose only between two bourgeois-landlord parties, and get imprisoned within the framework of the present system. By gathering all Left and democratic forces together for further advance, the Party makes a beginning to consolidate these forces which, in future, will participate in shaping the alliance for People’s Democracy under the leadership of the working class. The left and democratic Front is not to be understood as only an alliance for elections or Ministry, but a fighting alliance of the forces for immediate advance – economic and political – and for isolating the reactionary classes that hold the economy in their grip.”

This point needs to be elaborated. The Party has elucidated its intention of gathering the Left and democratic forces for future advance of the party, to shape the alliance for People’s Democracy (emphasis ours) so much so for the caricature of Peoples’ Democracy! Peoples’ Democracy as propounded by Stalin and further elaborated by Dimitrov is a special form of dictatorship of the proletariat, where there is a class alliance with other progressive forces under the general leadership of the Communist or workers’ party. This model of Peoples’ Democracy was implemented immediately after the Second World War in Eastern Europe and China.

The characteristic feature of Peoples’ Democracy is:

The rise and development of people’s democracy should be examined concretely and historically, since people’s democracy is passing through various stages and its class content changes, depending on the stage.

The first stage is the stage of agrarian, anti-feudal, anti-imperialist revolution, in the course of which people’s democracy arises as the organ of revolutionary power, representing in its content something in the nature of dictatorship of the working class and peasantry, the working class having the leading role. A characteristic feature of this power is that it directs its sharp edge against imperialism, against fascism.

The second stage is the establishment of the dictatorship of the working class in the form of people’s democracy and the building of Socialism. (A. Sobolev, Peoples’ Democracy as a Form of Political Organisation of Society)

So we leave it to the good sense of our comrade readers to decide which politics of CPM confirms to their working towards the course of achieving the Peoples’ Democratic Revolution. What has been the role of CPM in fight against imperialism or against Fascism? When they were in power, the policies adapted by them were no different from that of any other bourgeoisie party.

Before proceeding further we would like to state another related issue, which gets mentioned prominently. The PTL in point 14 further states about the adoption of Left Democratic Secular Front:

For this we have to look for the reasons within the P-TL itself. From the 13th Congress (1988) we started talking of the unity of the Left and secular forces. We made a distinction between the immediate  task of forging a non-Congress secular alternative to meet the current situation and the task of building the Left and democratic Front. By the 15th Congress we had set out the slogan of the unity of the Left, democratic and secular forces. By that time we had more or less concluded that the Left and democratic Front is a distant goal and is not a realizable slogan as reiterated in the 11th Congress of the Party. By and by we relegated the Left and democratic Front to a propaganda slogan. The Left, democratic and secular alliance became the new interim slogan. While this began as a slogan against the Rajiv Gandhi Congress government to rally the non-Congress secular bourgeois parties while demarcating from the BJP, later it became the slogan directed against the BJP. It is on that basis that we joined the United Front, without participating in the government in 1996.

Now in terms of secular, the most important secular formation for our “Marxist” friends apart from the so-called democratic parties are parties like AIADMK, DMK, TDP etc. who share the crumbs with our revolutionary “Marxists” thus helping them win a seat here a seat there. Though, it never has crossed the mind of our comrades to check about the secular credentials of these parties. The less said the better. All such “secular” and “democratic” parties have no qualm of hobnobbing with the BJP or Congress as the compulsion of the parliamentary polity demands.

The Entire PTL is full of such jingoism and pseudo revolutionary phrase mongering, but we will not go into the detail in interest of space and time of our dear comrade readers.

How different were CPM from the other bourgeoisie parties when in power? After the 2004 elections Ashok Mitra wrote an article commenting on the capitulation of the CPI M leaders to the camp of neo liberalism, he wrote:

The main poll issue in West Bengal was the state government’s policy of capitalist industrial growth; events in Singur and Nandigram were offshoots of that policy. Many sections, including staunch long-time supporters of the Left cause, had been shocked by the cynical nonchalance initially exhibited by the state government on police firing on women and children in Nandigram. A series of other faux pas was committed in its wake, including the messy affair of the Tata small car project. The electorate reached its conclusion on the government’s putting all its eggs in the Nano basket. Once the Tatas departed, the state administration was dubbed not only insensitive, but incompetent as well. Questions have continued to be raised one after another: was it really necessary to take over fertile land at Singur, why could not the Tatas be prevailed upon to choose an alternative site, why did not the state government apply adequate pressure on the United Progressive Alliance regime in New Delhi — which was assumed to depend upon Left support for survival — to pass the necessary legislation so that land belonging to closed factories could be taken over to locate new industries? And why the state government was reluctant to lobby earnestly in the national capital for adequate resources from centrally controlled public financial institutions to the state exchequer, which could have ensured industrial expansion in the public domain itself — whether this reluctance was merely due to lack of resources or because of a deeper ideological reason such as a loss of faith in socialistic precepts and practices.

A number of other unsavoury facts also need to be laid bare. A state government does not have too much of funds or other spoils to distribute. But in a milieu where feudal elements co-inhabit with the petit bourgeoisie, persons in a position to dispense only little favours can also attract fair-weather friends and gather sycophants around them. Concentric circles of favour-rendering develop fast. Merit necessarily takes a backseat in official decisions. Corruption, never mind how small-scale, creeps in. Nepotism, sprouting at the top, gradually infects descending rungs of administration, including the panchayats. Much of all this has taken place of late within the precincts of the Left regime. The net effect is a steep decline in the quality of governance. The fall in efficiency is illustrated by the inept handling of programmes like the rural employment guarantee scheme. To make things worse, all this has been accompanied by a kind of hauteur which goes ill with radical commitment.

As we have mentioned umpteen times revisionist parties use revolutionary phrase mongering to hide their revisionist character. Same goes with our great defenders of Socialism and Peoples’ Democracy, while degeneration and double-talks reach their nadir while lending credence to abject surrender to the lap of the World Bank, the IMF, the MNCs and the World Bank’s trusted men like Manmohan Singh or even the regional allies of capitalism like Mulaym Singh and Chandrababu Naidu. Did not Tito or Khruschev continued to hang the Communist, Marxist and other revolutionary sign boards, while doing the exact opposite of what the tenants of Marxism Leninism teaches.

 But we must commend the CPM leadership for they are always not dishonest. In point number 17, they have been ultra-honest (if there is any such word in English):

As the realization of a third alternative became more unattainable, in the 18th Congress Political Resolution another distinction was made between the electoral understanding for specific elections by drawing the non-Congress bourgeois parties and the building of a third alternative. Thus the Left and democratic Front was relegated to the third phase of our task. The first phase being the immediate current task of electoral understanding for a specific election by drawing in the non-Congress bourgeois secular parties. The second phase being the formation of a third alternative based on a common programme which would be forged by building joint movements and struggles. The third phase was the building of the Left and democratic Front.

Reading this point in conjunction with point 16 and above, clearly demonstrates the real intention and politics of the party. The aim of the party three layers down is elections and nothing but elections. First they want or wanted to build an electoral understanding of non -Congress (or now non BJP) parties followed by a common front like the discredited United Front and followed by the so called Left Democratic Front. So the party will work for elections and nothing but elections. We all know that the limitations of bourgeoisie elections, and neither are we for boycotting it like some of the adventurist groups claims, but basing the entire politics around parliament, did not Lenin sharply criticised this tendency terming it as parliamentary cretinism? What can one gain but few reforms for the working class even if one has a commanding position in such institution? A quote from Lenin will not be out of place here. Lenin in his article titled “Marxism and Reformism” wrote:

Unlike the anarchists, the Marxists recognise struggle for reforms, i.e., for measures that improve the conditions of the working people without destroying the power of the ruling class. At the same time, however, the Marxists wage a most resolute struggle against the reformists, who, directly or indirectly, restrict the aims and activities of the working class to the winning of reforms. Reformism is bourgeois deception of the workers, who, despite individual improvements, will always remain wage-slaves, as long as there is the domination of capital.

The liberal bourgeoisie grant reforms with one hand, and with the other always take them back, reduce them to nought, use them to enslave the workers, to divide them into separate groups and perpetuate wage-slavery. For that reason reformism, even when quite sincere, in practice becomes a weapon by means of which the bourgeoisie corrupt and weaken the workers. The experience of all countries shows that the workers who put their trust in the reformists are always fooled. (emphasis ours)

Now this is what CPM aims for, some reforms!

The PTL goes on to summarise the experience of various fronts and alliances that the party had undertook in the past and not so distant past in a tone that resembles a chronological reading of the government formation since the National Front days. While the party has accepted its mistakes there has been no self-criticism or mention of its wrongdoing in Bengal and Kerala. So much for honesty of a revolutionary communist party! It has though in passing mentioned,:

“What has to be recognised is that the processes underway during the globalisation-neo-liberal regime have posed new problems for the Left and has created adverse conditions for developing the movements of the working class, agrarian, students, youth and women. It is imperative that we understand the processes at work and work out new and suitable tactics and organisational methods.”

But as much CPM may gloss over its mistakes the proletariats have not. In Bengal the toiling class has not forgotten the tyranny and high handedness of the party nomenklatura who adopted all kinds of legitimate and illegitimate means to bring success to their rule and satisfy the mandarins or babus (from Jyoti babu to Buddhadeb babu) at the Muzaffar Ahmed Bhawan (the West Bengal state HQ) rather than the toiling masses and even to silence the enemies. The coal field of Bengal still reverberates from the atrocities and the terror of the CITUs leadership. The people have not forgotten the several bloody attacks perpetrated by the hooligans at the behest of the party. The cowardly assassination of the fire brand trade union and highly respected communist leader comrade Sunil Pal on 29-12-2009 by the hired goons and marauders of CPI (M) is still fresh in the minds of people of coalfields. His only fault being that he was a dedicated Marxist-Leninist whose sole aim being to bring justice and safeguard the workers interest against the capitals offensive.

The CPM de-radicalised the trade unions and lost its prime working class cadres, reducing Trade Union to being a dovetail of the government and a means for money collection and keeping in check the working class. At every juncture CITU was found capitulating to the whims of capital. Apart from one day ritualistic strike and dharna, whose outcome is known to all and sundry beforehand it has only compromised the interest of the working class at an all India level. During the Maruti struggle CITU instead of giving a militant leadership to the struggle was seen siding with the management and on the pretext of maintainingindustrial peace was seen chiding the belligerent workers. When the workers were put in jail it did nothing to bring them out but at every crucial juncture sided with the management.

Similarly in the struggle against Coal ordinance in January 2015, the CITU leadership since beginning of the strike had adopted a defeatist position and was only seen praying and pleading to the government for some reforms. We are once again reminded of the words said by Lenin for the reformists, “Fight to improve your condition as a slave, but regard the thought of overthrowing slavery as a harmful utopia”! does it not fit CPM today?

Another glaring point that finds no mention in either the PTL of the Pol-Org Report is the  support the CPI-M extended to Pranab Mukherjee in the last presidential election. The CPI Congress document on the past developments noted this and informed its members of the division suffered by the Left on this issue when the CPI and other Left parties refused to follow the CPI-M and back Pranab due to his role in carrying out neoliberal reforms. The CPI-M’s backing of Pranab is not so simple as it may seem—for behind it was the largesse by a Big Business house (with which Pranab is deeply associated) to the CPI-M.

 With all the tall promises and phrase of mass mobilization the PTL amply gives the direction that party will take on ground. Consider point 30, it says:

There can be swift changes in the political situation. New contradictions may merge amongst the bourgeois parties and within them. Political parties may undergo changes through splits or coming together to form a new party. Flexible tactics should be evolved to deal with the situation. In our pursuit of united actions, joint platforms may have to be formed with various social movements, people’s mobilizations and issue-based movements.

So, in event of an alliance this clause will be invoked to hoodwink the cadres, in guise of “contradiction” opportunist alliance will be forged, neo-liberalism will be supported and the bourgeoisie will be given free hand to rule. Same intention is reflected in point 46.

Given the danger posed by the communal forces reinforced by the BJP in power with an absolute majority in the Lok Sabha, we should strive for the broader unity of the secular and democratic forces. Such joint platforms are necessary for a wider mobilization against communalism. Such platforms, however, should not be seen as the basis for electoral alliances.

Given the nature and ambition of these democratic and secular parties whom our friends had just termed as agent of capitalist and supporter of capital, there is again a yearning for an alliance. Old love never dies! By the time the PTL came for conclusion, the authors of this document could not suppress their desire for alliance.

So after all the epithets and brickbats the point 61 mentions:

Electoral tactics should be dovetailed to the primacy of building the Left and democratic front. In the present stage, given the role of the regional parties, there is no basis for forging an alliance with them at the national level. Instead, we can have electoral adjustments with non-Left secular parties in states wherever required in the Party’s interests and which can help rally the Left and democratic forces in the state. (Emphasis ours)

Voila here we are back to square one, the party will continue to do what it has done, and it will just not change. Years of tailism cannot be shed in one day or rather one congress. So, the party will enter in alliance with the non-Left secular parties in states and not at national level, but then comrades of CPM you yourself do not contest elections on national level if we compare your seats with the national parties! Since its formation CPM has failed to develop even the trade union consciousness, not to speak of revolutionary consciousness. Rather it has developed mafia consciousness and factional fights. Politics and ideology were never in command because they lost their credibility, as communist, the line pursued by it under the banner of Marxism-Leninism stands exposed through its ideological line and practice at all levels. Then how is it possible for the CPM to practise anything for the oppressed classes?

Conclusion

As Lenin wrote, “Reformism is bourgeois deception of the workers, who, despite individual improvements, will always remain wage-slaves, as long as there is the domination of capital.” The CPM is no different.

Sitaram Yechury is known to follow the Surjeet line and there is already a campaign that the party is preparing to cosy up its relationship with Congress. As mentioned in a news magazine known to be close to both CPI and CPM “Yechury is eager to join hands with the Congress in combating the Sangh Parivar. It betrays a pathological antipathy for the Congress and a flawed understanding of the present situation. the Congress does not mean only Sonia Gandhi, Rahul Gandhi or Manmohan Singh. The Congress means the hundreds of thousands of Congress-supporting masses spread all over the country whose participation is essential in any move-ment against communalism and in defence of secularism. The Left can deny this reality and cling to the old slogan of ‘Left-Democratic Unity’ only at its own peril and at the cost of weakening the movement.”

The party today has not learnt from its past mistakes nor is it in its agenda to counter and challenge the onslaught of neo-liberalism and imperialism. At best it will continue to give the knee jerked reaction in form of out dated token strikes and rallies to LPG (Liberalisation, Privatisation and Globalisation). Today the task of the revolutionary communist has to be to expose this farce and unleash an in-depth political and theoretical offensive against it to expose its opportunist line and practice.

 ****


Gironde: One of the two political groups of the bourgeoisie during the French bourgeois revolution at the close of the eighteenth century. The Girondists, as distinct from Jacobins, vacillated between revolution and counter-revolution, and their policy was one of compromise with the monarchy. Lenin frequently stressed that the Mensheviks represented the Girondist trend in the working-class movement.

Readers may also like to read our analysis on Left Front 

https://otheraspect.wordpress.com/2009/06/15/left-out-of-the-great-indian-tamasha/

Lugansk People’s Republic authorities ban strikes, International Workers’ Day marches, and forbid international anti-fascist forum

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Open letter to The General Secretary of the World Federation of Trade Unions Georgios Mavrikos

 General Secretary of the World Federation of Trade Unions

Georgios Mavrikos

Being the communists of Lugansk region we apply to you as to worldfamous avowed champion of communist ideals. We are surprised and deeply revolted from the fact that the main and powerful tool of struggle against the dawning of the world imperialism upon the rights of workers all over the world, that is headed by you and called the World Federation of Trade Unions, declares and supports the protégés of oligarchs as represented by the leaders of “Lugansk People’s Republic” and the puppet Federation of Trade Unions, that is headed by O. Akimov, who pursues totalitarian anti-national policy.

One of the most glaring example of their “achievements” is the oppression and terrible counteraction to the activity of public organization “Communists of Lugansk Region”. It is expressed in banning the leaders and Party activists to take part in public performances during mass events and appear in the Mass-media, in secret ban to perform the public activities, that are organized by the communists. The deputies from “LNR People’s Council”, who are elite from the PO “Communists of Lugansk Region,” are subjected to accusations and oppressions.

The authorities of LNR, that are supported by you, have forbidden us to organize the traditional procession dedicated to International worker’s day categorically. Until very recently we’ve accepted the situation because we didn’t want to undermine very complex sociopolitical situation in the Republic. But the last straw was the interdiction of holding the international forum of international solidarity of anti-fascism that had to take place in Lugansk on 8, May 2015 and was well planned for a long time by us and the representatives of Communists Parties from many world and European countries. Our multiple appeals and requests to the leaders of LNR have faced to incomprehension and prohibitions. As a result, if there was no help from the leader of battalion “Prizrak” Aleksey Mozgovoy (who, in spite of all prohibitions from the leaders of LNR, has helped us to organize the forum in Alchevsk town), the international conference, where more than 130 representatives of communistic and anti-fascist movement have taken part, would be just hampered. Only Fascists can be such afraid of the conducting of anti-fascist event in the capital of the young Republic! Because of this reason, we, the communists of Lugansk Region, petition to you to use all your authority in order to exert influence upon the authorities of LNR and demand to stop repressions of the communists, that have taken great part in the formation of independence of LNR.

Yours faithfully,

Party activists of communist movement in Lugansk region

May, 13, 2015

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Putin’s Western Allies

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Why Europe’s Far Right Is on the Kremlin’s Side

By

Given that one of Russian President Vladimir Putin’s stated reasons for invading Crimea was to prevent “Nazis” from coming to power in Ukraine, it is perhaps surprising that his regime is growing closer by the month to extreme right-wing parties across Europe. But, in both cases, Putin’s motives are not primarily ideological. In Ukraine, he simply wants to grab territory that he believes rightly belongs to him. In the European Union, he hopes that his backing of fringe parties will destabilize his foes and install in Brussels politicians who will be focused on dismantling the EU rather than enlarging it.

In Hungary, for example, Putin has taken the Jobbik party under his wing. The third-largest party in the country, Jobbik has supporters who dress in Nazi-type uniforms, spout anti-Semitic rhetoric, and express concern about Israeli “colonization” of Hungary. The party has capitalized on rising support for nationalist economic policies, which are seen as an antidote for unpopular austerity policies and for Hungary’s economic liberalization in recent years. Russia is bent on tapping into that sentiment. In May 2013, Kremlin-connected right-wing Russian nationalists at the prestigious Moscow State University invited Jobbik party president Gabor Vona to speak. Vona also met with Russia Duma leaders including Ivan Grachev, chairman of the State Duma Committee for Energy and Vasily Tarasyuk, deputy chairman of the Committee on Natural Resources and Utilization, among others. On the Jobbik website, the visit is characterized as “a major breakthrough” which made “clear that Russian leaders consider Jobbik as a partner.” In fact, there have been persistent rumors that Jobbik’s enthusiasm is paid for with Russian rubles. The party has also repeatedly criticized Hungary’s “Euro-Atlantic connections” and the European Union. And, more recently, it called the referendum in Crimea “exemplary,” a dangerous word in a country with extensive co-ethnic populations in Romania and Slovakia. It seems that the party sees Putin’s new ethnic politics as being aligned with its own revisionist nationalism.

The Kremlin’s ties to France’s extreme-right National Front have also been growing stronger. Marine Le Pen, the party leader, visited Moscow in June 2013 at the invitation of State Duma leader Sergei Naryshkin, a close associate of Putin’s. She also met with Deputy Prime Minister Dmitry Rogozin and discussed issues of common concern, such as Syria, EU enlargement, and gay marriage. France’s ProRussia TV, which is funded by the Kremlin, is staffed by editors with close ties to the National Front who use the station to espouse views close to National Front’s own perspective on domestic and international politics. The National Front wishes to replace the EU and NATO with a pan-European partnership of independent nations, which, incidentally, includes Russia and would be driven by a trilateral Paris-Berlin-Moscow alliance. Le Pen’s spokesman, Ludovic De Danne, recently recognized the results of the Crimea referendum and stated in an interview with Voice of Russia radio that, “historically, Crimea is part of Mother Russia.” In the same interview, he mentioned that he had visited Crimea several times in the past year. Marine Le Pen also visited Crimea in June 2013.

The list of parties goes on. Remember Golden Dawn, the Greek fascist party that won 18 seats in Greece’s parliament in 2012? Members use Nazi symbols at rallies, emphasize street fighting, and sing the Greek version of the Nazi Party anthem. The Greek government imprisoned Nikos Michaloliakos, its leader, and stripped parliamentary deputies of their political immunity before slapping them with charges of organized violence. But the party continues to take to the streets. Golden Dawn has never hidden its close connections to Russia’s extreme right, and is thought to receive funds from Russia. One Golden Dawn­­–linked website reports that Michaloliakos even received a letter in prison from Moscow State University professor and former Kremlin adviser Alexander Dugin, one of the authors of Putin’s “Eurasian” ideology. It was also Dugin who hosted Jobbik leader Vona when he visited Moscow. In his letter, Dugin expressed support for Golden Dawn’s geopolitical positions and requested to open a line of communication between Golden Dawn and his think tank in Moscow. Golden Dawn’s New York website reports that Michaloliakos “has spoken out clearly in favor of an alliance and cooperation with Russia, and away from the ‘naval forces’ of the ‘Atlantic.’”

Finally, a cable made public by WikiLeaks shows that Bulgaria’s far right Ataka party has close links to the Russian embassy. Reports that Russia funds Ataka have swirled for years, but have never been verified. But evidence of enthusiasm for Russia’s foreign policy goals is open for all to see. Radio Bulgaria reported on March 17 that Ataka’s parliamentary group “has insisted that Bulgaria should recognize the results from the referendum for Crimea’s joining to the Russian Federation.” Meanwhile, party leader Volen Siderov has called repeatedly for Bulgaria to veto EU economic sanctions for Russia.

In addition to their very vocal support for Russia’s annexation of Crimea within the EU, Jobbik, National Front, and Ataka all sent election observers to validate the Crimea referendum (as did the Austrian Freedom Party, the Belgian Vlaams Belang party, Italy’s Forza Italia and Lega Nord, and Poland’s Self-Defense, in addition to a few far-left parties, conspicuously Germany’s Die Linke). Their showing was organized by the Russia-based Eurasian Observatory For Democracy & Elections, a far-right NGO “opposed to Western ideology.” The EODE specializes in monitoring elections in “self-proclaimed republics” (Abkhazia, Transnistria, Nagorno-Karabakh) allied with Moscow, according to its website.

The Putin government’s cordial relations with Europe’s far right sit oddly, to say the least, with his opposition to “Nazis” in the Ukrainian government. Yet Putin’s dislike for Ukrainian “fascists” has nothing to do with ideology. It has to do with the fact that they are Ukrainian nationalists. The country’s Svoboda and Right Sector parties, which might do well in the post–Viktor Yanukovych Ukraine, stand for independence in a country that Putin does not believe should exist separate from Russia.

Similarly, Russian support of the far right in Europe has less to do with ideology than with his desire to destabilize European governments, prevent EU expansion, and help bring to power European governments that are friendly to Russia. In that sense, several European countries may only be one bad election away from disaster. In fact, some would say that Hungary has already met it. As support for Jobbik increases, the anti-democratic, center-right government of Prime Minister Viktor Orban has tacked heavily to the right and recently signed a major nuclear deal with Russia. Russia plans to lend Hungary ten billion euro to construct two new reactors at its Paks nuclear plant, making Hungary even more dependent for energy on Russia. Jobbik’s Vona wants to go even further, taking Hungary out of the EU and joining Russia’s proposed Eurasian Union.

European parliamentary elections, which are scheduled for the end of May, are expected to result in a strong showing for the far right. A weak economy, which was weakened further by the European Central Bank’s austerity policies, has caused the extreme right vote to surge. Current polls show the far-right parties in France and Holland winning the largest share of seats in their national delegations. Brussels strategists worry that 20 percent of members of the new European parliament could be affiliated with parties that wish to abolish the EU, double the current number. That could cause an EU government shutdown to rival the dysfunction of Washington and deal a major blow to efforts to enlarge the Union and oppose Russian expansionism.

It is strange to think that Putin’s strategy of using right-wing extremist political parties to foment disruption and then take advantage — as he did in Crimea — could work in southern and western Europe as well. Or that some of the extreme right parties in the European parliament, who work every day to delegitimize the European Union and whose numbers are growing, may be funded by Russia. Yet these possibilities cannot be dismissed. Russia might soon be able to disrupt the EU from within.

To counter Russia, European leaders should start launching public investigations into external funding of extreme-right political parties. If extensive Russia connections are found, it would be important to publicize that fact and then impose sanctions on Russia that would make it more difficult for it to provide such support. Pro-European parties must find a way to mobilize voters who are notoriously unwilling to vote in European parliament elections. Europe will also have to rethink the austerity policies that have worsened the grievances of many Europeans and pushed them to support the anti-system, anti-European right. Although Germany has banned extreme right parties from representation, other countries have not. Germany may have therefore underestimated the extent of damage austerity policies could do to the European project and should rethink how its excessive budget cutting, monetary prudence, and export surpluses are affecting politics in the rest of Europe.

Putin’s challenge to Europe must be taken seriously. Rather than making another land grab in his back yard, he might watch patiently from the sidelines at the end of May as pro-Russia far-right parties win a dramatic election victory in European parliamentary elections. These elections could weaken the European Union and bring Russia’s friends on the far right closer to power.

Source

‘Novorossiya’s’ ‘Leftist’ Friends

Anti-NATO meeting with supporters of 'Novorossiya' in Munich

Anti-NATO meeting with supporters of ‘Novorossiya’ in Munich

The frenzied world-wide front is expanding
Mercy to no one, no one, no one!

Stanza from 1989 Russian anarchists’ song Vintovka – eto prazdnik (The Rifle is a Holiday)
By the Russian punk bank Grazhdanskaya Oborona (Civil Defense)

The annexation of Crimea, the “Novorossiya” project, and the fight against the “Kyiv junta” are not supported in Russia alone.  There are political forces around the world, both marginal and relatively respectable, which voice their support for the separatists in the Donbass.  At times, activists themselves travel to the war zone as volunteers, but they mostly hold demonstrations in support of the separatist republics and pressure their governments to renounce their support for Ukraine and “stop the aggression against Russia.”

These political forces may identify as left-wing, right-wing, or deny any conventional political identity (although their “political neutrality” usually conceals one ideology or another).  Novorossiya’s foreign friends who, in 99% of cases, are also friends of Russia and worshippers of Putin, may explain their views from various, sometimes incompatible positions.  Novorossiya can be supported both by a white racist and a communist who talks about the fight against “Ukrainian fascism” and “Western imperialism.”  But despite the apparent differences in their theoretical ideological grounding, their political practice is remarkably similar.  Eventually, they arrive at the same conclusions and stand on the same side of the barricade.

Not that long ago, an “antifascist forum” took place in the Donbass, which was attended by representatives of not major, but still quite notable Stalinist organizations from Europe and the United States.  Around the same time, a forum of ultra-right, nationalist, and conservative activists took place in the Donbass.  The fact that these events coincided is more than revealing.  We will talk about both left-wing and right-wing supporters of Novorossiya and attempt to find similarities in their modes of thinking.  The first text mostly focuses on leftists, but there are certain elements which are also relevant to the right-wing camp.

Lies and Truth

European and US radicals, both left- and right-wing, do not trust the media.  Leftists mistrust mainstream outlets because the latter, according to their worldview, are controlled by oligarchs or their puppets.  Far-rightists do so because, in their version of reality, the media are controlled by Zionist, cultural-Marxist, and homosexual lobbies.  In general, a critical approach to any kind of information is advisable, but the conspiratorial and critical approaches are seldom compatible.  A conspiracy theorist judges information as follows: If the media work for oligarchs, then everything they report must be a lie serving the interests of the men behind the scenes.  But they still need to get their information somewhere.  While they can get news about their own country from blogs, party newsletters, and congenial news websites, learning about foreign countries is more complicated, particularly due to the language barrier.  It is necessary to find an independent source, with adequate resources at its disposal, which could send its correspondents to different parts of the world; at the same time, this source must be independent from the “secret masters,” whoever these might be.  And here, Russia Today(RT.com) comes to the rescue.

Russian propaganda is not limited to the spouting of [Kremlin propagandist Dmitry] Kiselyev, who is only needed for the domestic consumer.  For the Western audience, there is Russia Today, an information product unique in its nature.  This TV channel often shows high-quality broadcasts of protest movements and demonstrations in Western countries; on other occasions, RT talks about events which other media ignore for one reason or another.  A great deal of material is broadcast in the form of raw video footage without commentary or voice-over, which creates the effect of objectivity.  RT.com actively attracts Western journalists and gives them carte blanche to honestly and uncompromisingly criticize their governments.  All of the above definitely affords the channel a certain credit of trust.  And it actively utilizes this credit when it finds it necessary to compel a Western viewer to believe in blatant lies and propaganda.  For instance, in the notion that the EuroMaidan movement consisted exclusively of fascists directly controlled by the United States.  While Russian propagandists need only to present their domestic audience with pure lies without any admixture, the lies shown to a foreign consumer must be craftily alternated and combined with truth.

Soviet Ressentiment

Western leftists often perceive the USSR not at all like those who would seem to be their likeminded Ukrainian counterparts. In our country, overt Soviet sympathies are only voiced by parties which are direct successors of the Soviet nomenklatura, such as the Communist Party of Ukraine.  Or those who are trying to win over the pension-age electorate, filled with Soviet nostalgia.  All other leftists – anarchists, Trotskyists, left-communists, social democrats – are more than critical toward the USSR; after all, it was that state which virtually eradicated these political movements in the territory under its control.  In the West, particularly in the countries which never found themselves under Soviet rule, the left’s attitude toward its legacy is softer.  To them, the USSR was a kind of remote abstraction which did not pose a direct threat, but frightened the rulers of their countries which in turn were forced into compromises and concessions favoring domestic worker and trade union movements.  The USSR’s existence inspired a hope that a different, non-capitalist world was possible.  Active attacks on the USSR during the Cold War would, indirectly, amount to support for one’s “own” government.  Thus, leftists preferred not to pay any special attention to Soviet politics, instead concentrating on critique of Western imperialism.  The further away from the GULAG, the easier it is to assess the edifying results of the Soviet experiment and observe its “positive aspects.”  For instance, in the United States, even the anarchists considered the hammer and sickle the perfect symbol for outraging local conservatives, rather than the emblem of a totalitarian regime which completely exterminated their comrades.

Now, the USSR’s place has been taken by Russia, which continues to be regarded as the antipode to “Western capitalism,” even though the Russian Federation has long exhibited much fewer characteristics of a welfare state than the countries of Western Europe.  Those leftists which fell into the trap of geopolitical thinking ended up in the same camp as the right-wingers.  In this respect, the coalition which the Greek Syriza party was forced to join, having previously won a majority in the latest parliamentary election, is telling — the “socialists” were forced to cooperate with overt right-wing populists.  The only things that the two have in common are sympathy toward the Russian Federation and criticism of the European Union.

Bear-Ukraine

This illustration clearly demonstrates how the supporters of Novorossiya present the conflict between Ukraine and Russia.  Ukraine is simply a virgin territory encroached upon by Western imperialists.  The latter are opposed by the Russian bear.  Not man, mind you, but bear.  We are dealing with a kind of “positive dehumanization.”  The Russian is presented as a creature belonging to another species, to whom human ethical norms need not apply; therefore, Russia is easily pardoned for the actions which, if conducted by the West, are harshly criticized.

Information “Warfare”

As a rule, left-wing organizations eagerly lend an ear to their counterparts in other countries.  It is always more simple and agreeable to listen to those who say things close to one’s heart in a familiar language.  During the Maidan protests and immediately thereafter, the Borotba [Struggle] organization, which initially supported the Anti-Maidan movement and subsequently the “People’s Republics,” successfully imitated before the Western audience, completely ignorant of Ukraine, a “mass left-wing party,” which waged a “relentless antifascist struggle in the underground.”  Their success is easily explained: Borotba had a budget that covered the services of translators who rebroadcast their materials in different languages.  Furthermore, they use the language of the left more aptly than the Communist Party of Ukraine does.  However, the Communist Party has also made its contribution – the magical word “communist” in its name has won the ears of many a naive Western leftist, who sincerely believe that “communists are being persecuted and suppressed in Ukraine,” and who see in communists the continuers of the ideas of Marx and Engels, not a party bureaucracy which has sold out many times over.

What we get is a simple, convenient, and completely unambiguous picture, which perfectly matches the line of official Russian propaganda: a fascist putsch and an antifascist underground.  What questions are there left to ask when one group is toppling monuments to Lenin and the other is defending them with their lives?  Especially given that independent media, not controlled by “Western governments” and “transnational corporations,” such as Russia Today, are saying more or less the same thing using almost exactly the same words.

Other Ukrainian leftists produced fewer articles (because there were no staffers to write them), and these texts are more difficult to understand, because they do not always paint such a simple, unambiguous, and heroic picture.  Propaganda and simple clichés will inevitably be more successful than analysis.  And while Ukrainian anarchists more or less managed to align the sentiments among many of their Western counterparts, most adherents of the Bolshevik tradition remained at the level of “the people of the Donbass are waging a national liberation struggle against the junta which seized power through a fascist putsch.”

The Myth of the Odessa Khatyn

An important element in the mythology of “leftist” supporters of Novorossiya was the fire in the Odesa Trade Unions Building.  It was a very powerful image: “the fascists burned people alive.”  And not just anywhere, but in the Trade Unions Building!  Across the world, trade unions are directly associated with left-wing movements, which means that people who died there would automatically be perceived as left-wing activists, especially given that Borotba and the Communist Party of Ukraine lost a few of their supporters there and took the trouble to paint them as heroes.  And it is secondary that the backbone of the Odessa Anti-Maidan consisted of people professing right-wing, even far-right pro-Russian views, and that it included those of the Black-Hundred and imperialist persuasions.  For a Western leftist, imperialism is by no means such an obvious right-wing symbol as, for instance, a Wolfsangel or the Azov Battalion’s “black sun.”  All the more so because the Anti-Maidan members sported St. George’s ribbons which, not without the help of official Russian propaganda, were actively exported as an “antifascist symbol,” including to the West.

The deaths in the Trade Unions Building finally convinced many Western leftists of the “fascist” essence of the Maidan and the new Ukrainian authorities.  This entire situation (from the location of the tragedy to the death by fire) fits perfectly into the existing set of clichés.  It is revealing that most people who now recall the “burned martyrs of Odessa” do not know about, or prefer not to mention, the deaths in the Kyiv Trade Unions Building, where many Maidan protesters lost their lives, including the wounded.  That’s because it would not fit into the general picture — the “antifascist [now defunct riot] Berkut police force” could not have possibly burned wounded people alive.

Even moderate forces, such as the German Die Linke party, which reject direct support or solidarity with the self-proclaimed republics, are inclined to sympathize with the victims of  the May 2 fire, while completely ignoring the violence which the Odessa Anti-Maidan had regularly carried out from the moment of its formation up to and during the events of May 2.

The Prizrak Brigade and Its Communists

There is no point in enumerating all the organizations which support Novorossiya in one form or another.  The reader need not decipher the multitude of names and abbreviations; it is far more important to understand the general pattern of thought which caused hundreds of people from different countries of the world to travel in March to Alchevsk in search of the phantom of communism in [now deceased separatist militant Aleksei] Mozgovoy’s Prizrak Brigade.

alchevsk-kommunistyi

Most European volunteers travel to the Donbass from Spain and other South European countries.  A great contribution to that was made by Banda Bassotti, a prominent Italian punk group.  The mobilizing potential of musicians can sometimes be greater than that of parties and civic movements.  European communists fighting in the ranks of Mozgovoy and other field commanders fell into Novorossiya’s trap largely due to the unsophisticated propaganda ventilated by these “punks” professing Stalinist views.  They actively channel all aforementioned clichés while diluting them with their own stupidity.  They mix “leftist” rhetoric with national-chauvinist propaganda – Lenin and Trotsky might not have executed them, but they would have definitely expelled them from the party.  For instance, during interviews, members of Banda Bassotti say without a hint of doubt that Ukraine was created artificially, in defiance of Russia, citing “a book they read recently.”

alchevsk-kontsert

It is important to understand that until 2014, most Western leftists supporting Novorossiya did not have the slightest idea of the political situation in Ukraine, let alone its history, ethnic and cultural groups populating its territory, the history of Ukraine-Russia relations, and so forth.  In 2014, they quickly acquired that “knowledge,” thoughtfully offered to them by Russian propaganda.  The language barrier allowed for all types of suggestions.  Even the most anti-scientific source gains legitimacy if it is translated from a foreign outlet.  That is precisely why the Spanish volunteers subsequently arrested in their homes explained during an interview their desire to fight on the side of the separatists with the fact that “they were helping defend Russia against Ukrainian aggression.”

Indeed, for some Spanish Stalinists who have a vague idea of Ukraine’s geographical location, the words “Ukrainian” and “fascist” have become synonymous.  Last fall, a telling episode took place: a 56-year-old Ukrainian was attacked by a group of Catalan nationalists and slipped into a coma.  This episode caused very strong indignation, including in left-wing circles, but was condemned mostly by anarchists; there was no reaction whatsoever on the part of major leftist parties.

The German Antiimperialistische Aktion group cooperates with ANNA News, a popular propagandist channel.

Their cooperation likely dates as far back as the Syrian war.  Both the pro-Russian TV channel and the “anti-imperialists” actively supported Assad in this war.  The ideology of the “anti-imps,” as they are called in Germany, can be briefly summarized as follows: radical anti-Americanism, a partiality to conspiracy theories, covert (and sometimes overt) anti-semitism, and thoroughly uncritical support for all regimes opposed to the United States and Israel.  The official flag of Antiimperialistische Aktion resembles the antifascist flag, but instead of a red-and-black banner in a circle, it depicts the flag of the USSR and the “anti-imperialist” regime which they currently love most.  There are variations depicting the flags of Libya, Syria, and Palestine.  There has recently appeared an “anti-imperialist” flag on which the Soviet flag is accompanied by the two-headed Novorossiya eagle, and the pantheon of antifascist and anti-imperialist heroes was supplemented not only by Strelkov and Mozgovoy, but also by Ramzan Kadyrov.  It sometimes feels like the anti-imps are a kind of parody of the left-wing supporters of Novorossiya (their performance at an anti-NATO meeting with dogs sporting Berkut uniforms was more amusing than any parody).  Regrettably, however, they are absolutely real.

Novorossiya-Dogs

“Anti-imperialists” at the Munich Meeting

Anti-NATO meeting with supporters of ‘Novorossiya’ in Munich

Anti-NATO meeting with supporters of ‘Novorossiya’ in Munich

Not only are they absolutely real, but they also have supporters both in different cities of Germany and beyond the country’s borders – in Sweden, for instance.  They do not only actively accept the Kremlin propaganda, but also rebroadcast it to European audiences with great enthusiasm.  This propaganda video, which tells the “truth about Euromaidan,” is one example of that.

Many admirers of Russia in the West like to set up accounts on the VKontakte social network (which they also consider anti-imperialist and a counterweight to the corporate Facebook).  With the use of automatic translation services, they try to communicate with Russian-language audiences, and even receive occasional feedback.

berkut-2berkut

A photo from Tobias Nase’s VK profile.  The anti-imps still permitted themselves to use Ukrainian in April 2014.  Eventually, however, they decided it is a fascist language and switched their automatic translators to Russian.

Active support for Novorossiya is also expressed by numerous Greek left-wing organizations. The ruling Syriza party has already stuck in people’s memory with its pro-Russian stance and, consequently, with its loyalty to Russia-controlled regimes.  However, many of Syriza’s opponents (today we are talking about their opponents “on the left,” the ultra-rightists from the Golden Dawn party will be discussed in another article) have gloated over the puppet regimes of the LPR and DPR even more strongly.

Not only overt worshippers of Stalin and the Soviet legacy, but also many forces identifying themselves as followers of the Maoist tradition have supported the LPR and DPR.  They are driven by the same anti-imperialist (read “anti-American”) logic.  Everything that is opposed to the West with all its corporations and capitalist expansion is perceived as an absolute good, “anti-imperialist” regimes are easily forgiven what is considered a taboo in  leftist circles: from racism to homophobia.  Furthermore, Maoists are inclined to romanticize rebellion and armed struggle and, in this context, they certainly find the image of Novorossiya quite attractive.

Certain Trotskyists have also taken a liking to the myth of the left-wing Donbass.  Notable in this respect are the International Marxist Tendency (an international group known for its overt and completely uncritical support of the Venezuelan model of state socialism) and the International Committee of the Fourth International.  If they consider the USSR a “deformed workers’ state,” then the post-Soviet space consists of “workers’ states” which are even more deformed are still preferable to the capitalist, neo-liberal West.  Therefore, the thought of reunifying the USSR is no less attractive to them than to Stalinists, except that the former seek to re-establish the USSR without the cult of the moustached leader, and believe that this can be done without forming a new party establishment and bureaucracy.  It is important to note that there are a great number of Trotskyist organizations and internationals around the world, their names are often similar, and behind familiar abbreviations there often lie unappeasable enemies with diametrically opposite stances on Ukraine.  Whenever you throw a stone at a Stalinist, you will almost definitely hit a supporter of Novorossiya; before throwing one at a Trotskyist, it is worthwhile asking him a few leading questions.

Living in a special, completely parallel universe are leftists from the United States, who prefer to fight the evil empire directly from within.  In their view, the war in the Donbass started at the instigation of the United States and, obviously, because of oil.  After all, every global conflict is waged by the United States and always because of oil.  And yes, the “Odessa carnage” was also planned by the United States, in case you had any doubts on that score.

This video footage (recorded, by the way, by the aforementioned Russia Today channel) can be understood without any knowledge of English, and has already been commented on a thousand times.

Putin’s Cautious Friends

Many political forces feel they are too respectable to stoop to cheap clownery.  They do not fling up wild slogans about the “junta” and “conspiracy.”  However, they say essentially the same things using more civilized, diplomatic language.  And, in a way, they are even more dangerous, given that such parties as Die Linke and Syriza are members of the European Parliament.  And though they do not send volunteers to the Donbass, they do contribute to blocking aid to Ukraine (as do their right-wing twins).

Deputy Andrej Hunko (who on account of his surname is considered a foremost expert on Ukraine within the party), together with his colleague Wolfgang Gerke, became notorious in the Ukrainian media owing to a photo in which he is seen posing with Zakharchenko.

linke

Earlier, however, both he and his associates made a lot of effort to indirectly support the separatists.  Through their efforts, Borotba party leader Sergey Kirichuk was granted political asylum in Germany; they helped him broadcast propaganda about the “workers’ rebellion in the Donbass,” including at the level of the European Parliamentary.  And despite the fact that Die Linke publicly dissociated itself from Borotba, cooperation with its leader continues.

The rhetoric of “peace” and “intolerance for inciters of war” is very popular among such politicians.  Except that when saying “peace,” they mean exclusively “peace with Russia,” and they agree to only see inciters of war in the West.  At the same time, they deny Ukraine any kind of subjecthood, and its population is allotted the unenviable roles of Western puppets, blood-thirsty fascists, or their victims.  And once again it turns out that the “leftists” are speaking the same “geopolitical” language as the “rightists” whom they criticize.  But even the formal difference between them is getting smaller – Sara Wagenknecht of Die Linke has already publicly called for a dialogue with the ultra-right anti-immigration Pegida organization, appealing, first and foremost, given the proximity of their position on the Ukrainian and Russian question.  One can assume that this rapprochement will continue;  European countries have yet to see in action the “red-brown” synthesis, which is so popular in the post-Soviet space.

Source

Alliance Marxist-Leninist: Chechnya, Oil and the Divided Russian Capitalist Class

chechnya

INDEX

1. INTRODUCTION. 4

1. THE WAR ITSELF – MUTINY OF THE GENERALS 5

2. WHAT LIES BEHIND THIS WAR ? THE OIL BACKGROUND 8

3.VIEW OF STALIN VERSUS KHRUSHCHEV AND VOSNOSENSKY UPON INDUSTRY 9

4. DIVISIONS INSIDE THE USSR CAPITALIST CLASS SINCE STALIN 15

5. THE ERA OF GORBACHEV AND YELTSIN 21

6. THE CRASH OF THE ROUBLE 22

 1. INTRODUCTION

The nation of CHECHNEYA, under the former socialist state of the USSR, enjoyed full national rights up to and including the right of secession. This lasted until the German invasion of Soviet USSR in 1941, when part of the Chechen-Ingush people allied themselves with the German fascists. For that reason, a correct policy of transportation of the rebels away from the Front, was undertaken (See forthcoming reprint of address to the Stalin Society by Bill Bland; Alliance 14). Following the war, full national rights were restored and Chechnya-Ingush was once more part of the Soviet Socialist Federation of Republics.

The democratic government of Chechnya-Ingush stated its wishes for autonomy in 1991. Since then, they have endured attacks by troops of the Russian Federation. Recently, this “hidden war” became a full scale vicious assault, led by Boris Yeltsin‘s Russian Government, against the Chechen Government. Yet the Chechen Government and its peoples led by General Dzokar Dudayev, have waged a determined and resolute battle of self-defence. The Chechen bravery is only matched by the relentless bombardments of the Russian invading army. In the midst of a brutal war, once more, the utter bankruptcy of Yeltsin’s regime is exposed.

BUT THE CONDUCT OF THIS WAR, SHOWS THAT THERE IS AN OPEN CONFLICT WITHIN THE RULING CLASS OF RUSSIAN CAPITALISTS. WHAT IS THE BASIS FOR THIS DIFFERENCE?

Even during Stalin’s lifetime, hidden revisionists advocated a shift away from emphasis on heavy industry. Stalin successfully defeated these hidden revisionists led by Khrushchev. But after his death, the division between advocates of Heavy industry on one side; and advocates of Light industry on the other, took on the character of a battle between two sections of the capitalist class. There remains now a fundamental division of interests in the Russian capitalist class, between capitalists based in heavy industry, and capitalists based in light industry. The detailed evidence for this is presented below.

This article tries to answer the following questions:

“Yeltsin must have had some reasons to launch this war. What were these?”

“What explains the divisions between the army and Yeltsin?”

“What is the nature of the open conflict between Yeltsin and his capitalist opponents?”

“What is the meaning of this for the working class of Russia and the other nations?” and,

“What is the attitude of Marxist-Leninist to Chechenya?

1. THE WAR ITSELF – MUTINY OF THE GENERALS

Marxist-Leninists recognise that the Army is part of the “armed might” of the state itself. If so we must explain the :

“Near-mutiny in the upper ranks of the army.. at least half a dozen senior generals and probably many more have refused to fight in Chechnya or give their support to the campaign there.. those who have signalled open dissent are high-profile, sometimes politically active and popular men in their early middle years.”

Financial Times, London UK. Dec 31/1 Jan, 1995. p.7.

In this mutiny, Major General Ivan Babichev, refused to fire on the people of Grozny.

THE CURRENT MUTINY OF THE ARMY GENERALS, AGAINST THE WAR IS DUE TO THREE FACTORS:

i) A Proletarian refusal to fire upon the people.

Some generals probably are genuinely moved by the plight of the people; and refuse to fire as an international proletarian duty.

ii) A Military and strategic refusal to engage.

Some generals realise that the war cannot be won in this manner. High echelons of Army elsewhere, like senior Commanders in the British army see Major General Ivan Babichev’s behaviour as follows:

“I think he knew they were going about the operation entirely the wrong way and he didn’t have the means to complete the task, “One said.. “Tanks and armoured vehicles are almost useless in fighting in built up areas, said a British general who helped devise NATO tactics for the defence of Berlin during the Cold War.”

Daily Telegraph, London, UK, reprinted Globe and Mail, Toronto, 3.1.95. p.A9.

BUT THERE IS A THIRD REASON WHY THE ARMY IS IN MUTINY:

iii) An Inter-Capitalist battle aimed at Yeltsin.

The army and its advocates, benefit largely from the advocates of heavy industry. Part of the army’s refusal is, explained by the lining up of the army with the scions of heavy industry based capitalists in Russia.

THE OBJECTIVE OF THE MUTINY WAS TO HUMILIATE YELTSIN AND LEAD HIS GOVERNMENT INTO A SERIOUS CRISIS OF CONFIDENCE IN ITS CONTINUATION.

THE TACTICS OF THE ARMY GENERALS IN RELATION TO THIS WAR WERE :

First to lure Yeltsin into a seeming “short lived war”. Obviously Yeltsin was led to believe that a military venture would be a short lived and “un-costly” war in terms of Russian dead and political consequences.

Second; to then refuse his directions when the war was palpably failing.

Third; to refuse to disengage when he ordered to do so. After foreign pressure was brought to bear following the brutal air bombing, Yeltsin was compelled to order the troops to stop bombing. Yet this order has been repeatedly ignored:

“Mr. Yeltsin demanded to know why the bombing of Grozny was not stopped when he ordered it at end last week. He has now ordered two bombing halts, and.. the artillery assault on the city has never been heavier. Looking directly at Mr. Grachev, he said : “I want to hear absolutely precise information from the Defense Minister (Mr. Grachev).”

New York Times, 7.1.95; p.1-4.

Reasons offered for ignoring Yeltsin’s orders have been clearly insubordinate, but have mainly hinged on military imperatives :

Col Gen.Pavel S.Grachev, commander of Russia’s airborne troops – said :”Once we’ve launched the operation we must finish it. There is no way back.”

New York Times, New York, 7.1.95. p.4.

Yevgeny Podkolzin, commander of Russia’s airborne troops in Chechnya, said the President’s order would cause serious problems for Russian soldiers inside Grozny.. If “Bombings stop, men from each window and basement and from behind each corner will fire at our soldiers..” He warned that it could take the military until the end of January to capture Grozny. Instead of storming the city, the military should have simply surrounded it and blockaded it, he said. But he added: “Once we have launched this operation, we must finish it. There is no way back”.

Globe and Mail, Toronto, 7.1.95. p. A11.

The results for Mr. Yeltsin to date are depressingly clear, he is “between rock and a hard place”:

“Mr Yeltsin finds himself caught between two clear dangers: the political and moral cost of pressing on militarily in Chechnya, and the political and strategic cost of giving up.. it seems he has decided that the costs of giving up are worse for himself and the country than pressing ahead.”

New York Times, 7.1.95.; p.4.

IN FACT THE OVERALL OBJECTIVES OF THE ARMY GENERALS’ MUTINY APPEAR TO HAVE BEEN SUCCESSFULLY ACHIEVED:

“The economic and personal costs of the war continued to mount. Russian newspapers and agencies have estimated Russian casualties in the fighting to date at anywhere between 256 to more than 1000. Another victim is the Russian currency, which has fallen 2.7% over the last two days to a rate of 3,661 roubles to the dollar. The Russian central bank, which estimates has spent at least $200 million over the past 2 days to prevent a larger fall, raised its key re-financing rate to a nine month high of 200 %, up from 180%. “The Russian economy has started to feel the consequences of the Chechen crisis,” Mr. Alexander Livshits, the president’s chief economic adviser said.. warning of inflationary pressures.”

Financial Times, London, 7.1.95. p.26.

“The economy is suffering.. the expense threatens to blow a hole in a budget designed to be tough.. it is a critical time. The budget depends on a phased series of loans from the International Monetary Fund and World Bank. The stabilisation of the currency- the main aims of the loan- depends in its turn on making the budget even tougher than that approved by the state duma, parliaments’ lower house this month. Moreover the government will have to stick to its budgeted targets. Last year it squandered opportunities for economic reform by printing money when the going got rough..Mr. Yeltsin humbled his Government after “Black Tuesday” in October, when the rouble lost a quarter of its value against the hard currencies. This re-established his pre-eminence, but no international financial institution or government will now find it a stabilisation programme credible unless they also believe he is committed to it. At present however, he is committed only to wining in Chechnya.”

Financial Times, London, 1.1.95, p.7

Mr. Yegor Gaidar, until recently a staunch ally of Yeltsin’s, warned of a military coup:

“There is a great danger of a military coup.” Russian democracy has never been shakier since the break up of the Soviet Union. Mr. Gaidar who broke with the President over the Chechnya policy, called events there “a massive military crime.” He urged Mr. Yeltsin to get rid of those “who pushed him into this adventure,”, including Defense Minister Pavel S. Grachev; Deputy Prime Minister Nikolai D. Yegoroav and Oleg Lobov, the secretary of the National Security Council.”

New York Times, 4.1.95. pA1-A6.

It is precisely because the foreign imperialists see their man, Yeltsin, under such intense difficulties; that they give him advice. This advice consists on the whole to stop the battle in Chechnya to search for a negotiated settlement. These efforts are led by France and Germany, and would use “experts” from the Organisations for Security and Cooperation In Europe (OSCE) (New York Times 4.1.95, p.A1). The USA also concedes Yeltsin’s mistakes, but continues to fully support Yeltsin as “their man”, also urging Yeltsin to use the OSCE (NY Times, 7.1.95. p.A4). In fact, the international imperialists have not criticised Yeltsin’s basic stand of denial of national rights to Chechnya. Thus President Clinton:

“Reiterated his Administration’s support for Russia’s unity and territorial integrity and its opposition to any attempt to change the international border by force.”

New York Times, 7.1.95. p.A4.

2. WHAT LIES BEHIND THIS WAR ? THE OIL BACKGROUND

Data from recent trade negotiations over oil indicate something is more at stake in Chechnya than simple autonomy. Azerbaijan, itself a victim of recent aggression launched by Russian imperialist forces, tried to exert national rights. The suppression of these rights was directly linked to the oil reserves. Prospects of oil prompted fervent bargaining by Russian capitalists with foreign imperialism. But the deal cut, antagonised a section of the Russian capitalist class, enough to spur them on to struggle with foreign imperialism:

“A leaked letter sent by Andrei Kozyrev, Russia’s Foreign Minister to Viktor Chernomyrdin, his prime minister, reveals that Russia plans to prevent Western oil companies from going ahead with a $8Bn (PS 5bn) agreement to exploit offshore field in the Caspian The agreement advertised as “the deal of the century”, was signed by Azerbaijan and a consortium of Western oil companies led by British petroleum.. Mr. Kozyrev stresses the importance of Russia retaining its share of the Caspian reserves.. and proposes that Russia will impose economic sanctions on Azerbaijan if it does not back down.. Russia is unlikely to retreat because the way it deals with Azerbaijan sets a precedent for Kazakhstan and Turkmenistan, the two other republics with long Caspian coast lines and growing oil industries.”

The Independent; London UK; 3.11.94. p.14

This agreement would link the British owned British Petroleum, owning 30% of shares; with the US Oil companies of Pennzoil and Amoco which together holding 40% of shares; and Azerbaijan’s Socar Company holding 20%, and Russian owned Lukoil owning 10%. The Carnegie Endowment For International Peace commented :

“If the Russians throw a monkey wrench in the oil deal there will be a strong reaction here in Washington because so much money is involved.” A diplomat said : “It shows Russia will not allow any of the ex-Soviet states to move towards full economic independence.”

Independent, Ibid, 3.11.94. p.14.

The War in Chechneya shows that this interpretation is correct.

BUT WHO IS MR. CHERNOMYRIDIN, THE PRIME MINISTER,

AND WHY DOES THE ABOVE CONCERN CHECHNYA?

“The oil and gas lobby is very powerful with Mr. Viktor Chernomyridin, former head of Gazprom, as prime minister. Ensuring that oil and gas from Central Asia is transported to Europe via Russian pipelines and ports is an obsession. the main oil pipeline from the Caspian Sea to the oil export harbour of Novorossiisk passes through Chechnya.. at stake is.. control over the main rail, road and gas rich Caspian sea and the central Asian republics.”

Financial Times, London, UK, 7-8.1.95. p.2.

Thus, Chechnya is critical as a conduit for the oil reservs of the Caspian coastal areas. Naturally Chernomyridin has financial interests stemming from his previous job, to protect. But, to fully understand the complexity of the stands taken by Chernomyridin, Kozyrev and the other new Russian ruling capitalists, we have to understand their class positions.

3. WHAT LIES BEHIND THIS WAR ? THE BATTLES BETWEEN HEAVY AND LIGHT INDUSTRY ADVOCATES

i) Under Socialism : View of Stalin Versus Khrushchev and Vosnosensky Upon Industry

There is a basic difference between two types of industry.

The split is between Heavy (Marx’s Department A) and Light (Marx’s Department B). This, split, is an important consideration for the development of a country’s industrial, and economic independence. As Stalin said:

“We must maintain the present rate of development of industry; we must at the first opportunity speed it up in order to pour goods into the rural areas and obtain more grain from them, to supply agriculture, and primarily the collective farms and state farms, with machines, so as to industrialise agriculture and to increase the proportion of its output for the market. Should we perhaps, for the sake of greater “caution”, retard the development of heavy industry so as to make light industry, which produces chiefly for the peasant market, the basis of our industry? Not under any circumstances! That would be.. suicidal; it would mean abandoning the slogan of industrialising our country, it would mean transforming our country into an appendage of the world capitalist system of economy.”

Stalin J.V.S. 28 May, 1928. “Speech to the Institute of Red Professors, On the Grain Front”, ‘Works’, Volume 11, Moscow 1954, p.98.

Stalin was arguing here, mainly against Nikolai Bukharin, who had argued that the economic measures proposed by Stalin were:

“A disastrous going over to the Trotskyist positions.” An industrialisation based on the “impoverishment of the country, the degradation of agriculture, and the squandering of reserves.”

Stephen F.Cohen, “Bukharin and the Bolshevik Revolution A Political Biography 1888-1938″, Oxford, 1980, p.306.

Nonetheless, a successful industrialisation was achieved leading to the establishment of socialism in 1936. But hidden revisionism later resurrected the Bukharin line, in its new life under Khrushchev. Khrushchev and allies wished to reintroduce profit as a regulator of production. Moreover they wished to place more emphasis on increasing the availability of consumer goods. This of necessity, would lead to a dominance of consumer based industry – or light industry, over heavy industry. The countryside became one focus of this sharp conflict, and took the form that:

“Some members of the Politburo.. urged that the traditional course be modified in the direction of increased reliance on economic levers.. and relaxation of central controls over kolkhozes.. this was current among leaders.. like.. Voznosensky.. and Khrushchev.. and opposed by Malenkov and Beria.”

Sidney Ploss Conflict and Decision Making in Soviet Russia. A case study of agricultural policy 1953-1963. Princeton, 1965. p.28.

The general line of Khrushchev in the countryside was completely in keeping with Vosnosensky‘s own stated views. Thus Vosnosensky had allied with a wing of economists and party officials who wished to relax the planning priority for Department A goods:

Vosnosensky, Mikoyan, Kosygin and Rodionov came in 1945 explicitly together as a managerial grouping which favoured establishing a place in the eacetie economy of the Soviet Union of light as well as heavy industries.. Vosnosensky’s Five Year Plan speech of March 1946 assigned priority on the immediate level to reconstruction tasks, civilian housing and consumer goods.. After 1945 this group and particularly Rodionov was involved in political intrigues.. Rodionov was a Russian nationalist.”

William O McCagg, Junior:”Stalin Embattled: 1943-1948″, Detroit; 1978; p.134-135.

The Vosnosenky clique, effected their programme in their own power base of Leningrad:

“After 1945.. in the Russian republic a number of administrative reforms to increase consumer production.. ministries for technical culture, cinematographic, luxury goods, delicatessen products light industry and the like was established.”

McCagg bid, p. 135, 163.

In 1947, Vosnosenky published a major work, entitled “The War Economy of the USSR In the Period of the Patriotic War.” This work took significant departures from Marxism-Leninism. Amongst others, it favoured relaxing the priority of Department A goods:

“It is proposed to increase the portion of the social product earmarked for consumption.”

Nikolai Vosnosensky “War Economy of the USSR in the Period of the Patriotic War”; Moscow; 194; p.147.

Khrushchev, now allied with Vosnosensky, argued that the self-interest of the peasants be boosted by a “link” system of small unit production which would aid incentive related payment.

These policies all aimed to “enrich” the peasant and reinforce individual small scale capitalist tendencies in the countryside.

“They adopted measures to reward diligent work in both the private and socialised sectors. The policies of one-cow-per-house-hold, commercial trade, and the small work unit in grain farming were all directed at this end. The leaders most closely associated with these incentive policies were Khrushchev and Voznosensky.”

Ploss Ibid. p.39-40.

“N.A.Voznosensky.. promoted greater material encouragement.. defense of the collective farmers rights to conduct private activities and enhanced autonomy and payment for on the spot technicians.” Ploss. p.29.

Powerful agrarian party officials supported Khrushchev.

At the February 1947 CPSU(B) CC Plenum, Vosnosensky was raised to full membership in the Politburo. Khruschevites dominated the 1947 CC Plenum :

“Within the CPSU(B) CC Plenum in February 1947, Andreyev promoted the same views.. and with Dronin (a key Khruschevite supporter from the Ukraine).. authorized incentive driven “link” in grain farming. Still another concession to peasant self-interest which resulted from the Plenum was broader allowance for consumer cooperatives to act as commission agents in disposing of kolkhoz surpluses in urban markets. The cooperative shops paid higher than official state purchase prices for foodstuffs bought under decentralized procurement and offered urban consumers an alternative to the free kolkhoz market in supplementing their purchases. In the early part of 1947, 19,000 commission shops opened.”

Ploss p.32-33.

Initially, as Stalin was in a minority on the Politburo, his counter-attack was tangential; but effective, in that no changes at the kolkhozes could be made without the direct participation of practical specialists at the kolkhozes:

“Stalin came forward at the February 1947 CC Plenum with one of his rare overt interventions of the day. Andreyev revealed.. that Stalin recommended that agricultural experts not working in farms and MTS, but in administrative posts remote from the barnyards should receive a quarter less pay than those in operational jobs. This would have logically complemented a recent directive prohibiting anyone from rescinding or altering agro-technical measures formed by kolkhozes.. without the knowledge of the specialists involved or permission of the district representatives of the Ministry of Agriculture.

p.33 Ibid. Ploss.

Stalin also effected the removal of Khrushchev from the party First Secretaryship of the Ukraine, subordinating him to Kaganovich. But Khrushchev remained premier of Ukraine.

BY 1949, THE PLANS OF THE LENINGRAD CLIQUE OF VOSNOSENSKY TO RESURRECT CAPITALISM WAS EVEN MORE CLEAR. ACCORDING TO KHRUSHCHEV HIMSELF, STALIN HAD SAID ABOUT VOSNOSENKY’S 5 YEAR PLAN:

“You are seeking to restore capitalism in Russia.”

Khrushchev, cited by Wolfgang Leonard:”The Kremlin Since Stalin”, London; 1962; p.177.

Accordingly under Stalin’s directives Vosnosensky was dismissed as Chairman of the USSR State Planning Committees on 5 March 1949. The trial of Vosnosensky and the other members of the “Leningrad Affair” took place on 29-30 September 1990; and Vosnosensky was sentenced to death. (See “The Leningrad Affair”, extracted from W.B.Bland; ” Restoration of capitalism in the USSR.” Wembley, London 1979; ISBN; re-printed Alliance Number 9).

Meanwhile, Khrushchev soon launched a campaign aimed at creating “agro-towns” to “improve the lot” of the peasant, at a Moscow Regional Soviet meeting in March 1950 he unveiled a grand plan:

“He tabled proposals to consolidate the many medium and small sized kolkhozes into large scale units and provide them with elementary urban amenities like electric lighting and plumbing.. the Kolkhozes were also entitled, he held, to build their own subsidiary enterprises.. he envisioned model plans for administration, public and recreational buildings.”

Ploss, Ibid, p.46-7.

“Khrushchev.. championed the village improvement program in speeches.. abridged in Pravda on March 4 1951.”

Sidney Ploss. Ibid, p.49.

THESE POLICIES OF THE KHRUSCHEVITES WOULD INCREASE THE DEMAND FOR CONSUMER LIGHT INDUSTRY. STALIN WAS OPPOSED TO THESE MANOUEVRES:

“Stalin decisively intervened in the matter of rural reconstruction on March 5 1951. At his behest, the editors of Pravda informed readers that, through an oversight.. word had been omitted that Khrushchev’s article of the previous day was offered only for purposes of discussion and did not express.. official opinion.. Malenkov at the 19th Party Congress, rebuked “some of our leading workers” (Khrushchev) who.. had forgotten the principal production tasks facing the collective farms”.. Malenkov claimed also that building materials produced in kolkhozes were more expensive .. than those of state industry.”

Ploss, Ibid, p.49-50.

AS PART OF STALIN’S COUNTER-ATTACK ON REVISIONISM, HE PUBLISHED “ECONOMIC PROBLEMS OF SOCIALISM IN THE USSR”, IN 1952.

IN THIS WORK STALIN ATTACKED IDEAS THAT :

  • PROFIT SHOULD BE THE REGULATOR OF PRODUCTION;
  • THE LAW OF VALUE SHOULD BE THE REGULATOR OF PRODUCTION;
  • LAWS OF POLITICAL ECONOMY NO LONGER APPLY UNDER SOCIALISM.
  • STALIN ALSO ATTACKED THE NOTION THAT HEAVY INDUSTRY WAS NOT THE BASIS OF SOCIALIST CONSTRUCTION:

“Stalin made permanent the priority status of heavy engineering over that of light and food industries.. In the course of his monologue, Stalin revealed that one of his critics outside the Kremlin had appealed to the Politburo at large to start creating badly needed material incentives for the peasantry. The statistician Yaroshenko affirmed at a plenary session of the economic conference in November 1951, and in a letter sent on March 20th, 1952, to members of the Politburo, that Marx’s theory for the normalcy for preferential development of heavy industry was applicable only to capitalist economies and was inappropriate under socialism.”

Cited Ploss, Ibid, p.53-54.

Later, Khrushchev following Stalin’s death, effected the very changes he had earlier argued for unsuccessfully against Stalin. Khrushchev, first dismantled the Machine and Tractor Stations in the countryside (MTS), then actively promoted the proponents of light industry over and above that of heavy industry. During his lifetime, Stalin fought against each of these retrogressive steps introduced by Khrushchev.

Ill informed commentators see the struggle between the Marxist-Leninists, led by Stalin (pro-Heavy Industrial) and the revisionists led by Khrushchev (pro-Light Industry), as hinged on how hard to “squeeze” the peasant. It is alleged that Stalin wished to squeeze the peasant, and that his resistance to “consumerism” or light industry was based on this. In fact, Marxist-Leninist resistance at that time to further expenditure on light industry was based on the overwhelming necessity to increase the heavy industrial base in order to improve the well being of the people. Stalin makes this clear in “Economic problems of socialism”:

“Insuring the maximum satisfaction of the continual growing material and cultural needs of society – that is the goal of socialist production : a continuing growth and development of socialist industry on the basis of an even higher technology that is the means for its attainment.” J.V.Stalin Cited F.A.Durgin Jr. “The relationship of Stalin’s death to the economic change of the post-Stalin era”

In R.C.Stuart. The Soviet rural economy. New Jersey, 1984. p. 78.

Durgin writing in 1984, comments how modern this concept is:

“This postulate…is one that the current generation for US economists has come to recognise…in the new ‘supply side’ economics.”

p. 121.

During points out the higher expenditures on consumer goods under Stalin, rather than Brezhnev:

“One of the most salient and overlooked features of the post-Stalin era has been the ever decreasing share of GNP going to consumption and the ever increasing share going to investment.. consumption’s share fell from 62.4% of the total in 1950 under Stalin to some 56.5% in 1974 under Brezhnev. Investments’ share during the same period doubled, rising from 14.8% of the total to 28.4%. The “imbalance”.. of the Stalin years seems not to have improved, but rather in a certain sense have worsened.”

p. 119.

Durgin concludes :

“All of the Stalin Five Year Plans called for significant increases in consumption. While consumption’s share of the national income during the First Five year Plan was to fall from 77.4 to 66.4 %, in absolute terms it was to increase by some 75%. The Second Plan called for a 133 % increase in the output of consumer goods and a two fold increase in the urban workers consumption of food and manufactured products.. The priority that Stalin gave to consumption in the post war period..was also high.”

Durgin, Ibid. p.121-2.

But Stalin’s priority was to increase consumption as the heavy industrial base could be expanded.

ii) DIVISIONS INSIDE THE USSR CAPITALIST CLASS SINCE STALIN; TO BREZHNEV

After the death of Stalin, the revisionists, succeeded in the resurrection of capitalism. But, the new Russian capitalist class, was divided between a section of capitalist linked to Heavy Industry and that section linked to Light Industry. This was first reported to Marxist-Leninists, by “The Communist League” UK; in Compass. This section is drawn from that. The basic division, between heavy based industrial capitalists and light based industrial capitalists has persisted, down to the current time.

The conflict between the then embryonic, state capitalists involved in heavy industry and those involved in the consumer goods industries came into the open within a few months of Stalin’s death. On August 8th, 1953 the new Prime Minister Georgi Malenkov cast off his socialist cloak, to show his erst-while hidden revisonism. He told the Supreme Soviet :

“On the basis of the success achieved in the development of heavy industry, all the conditions exist for a sharp rise in the production of consumer goods. However, while the output of means of production as a whole has risen in the last 28 years by almost 55 times, the production of consumer goods during the same period had only increased 212 times, which cannot be considered satisfactory. Hitherto we have had no possibility of developing light industry and the food industry at the same rate as heavy industry. We must, therefore , in the interests of ensuring a more rapid increase in the standard of life of the people, promote the development of the light industry by every means.”

G. Malenkov :Speech to the Supreme Soviet, August 8th, 1953, Cited in :Kessings Contemporary Archives”, Volume 9; p.13,096.

It took the state capitalists involved in heavy industry eighteen months to secure the official reversal of this policy and the removal of its leading proponent, Malenkov. In his letter of resignation of February 8th; 1955, Malenkov humbly recanted:

“On the initiative and under the leadership of the Central Committee of the Communist Party, a general programme has been worked out.. The programme is based on the only correct principle– the further development of heavy industry to the maximum. The further fulfilment of this programme alone can create the necessary conditions for a real advance in the output of all the consumer goods needed.”

G. Malenkov: Letter of Resignation to Supreme Soviet, February 8th., 1955; Cited in “Keesings Contemporary Archives”, Volume 10; p.14,033.

Malenkov’s successor as Prime Minister was Marshall Nikolai Bulganin, who as a representative of the armed forces, might be expected to give full support to the principle of higher priority for heavy industry in the name of “defence.” In his first speech as Prime Minister, in fact, Bulganin emphasised:

“Heavy industry is the basis of the defensive capacity of our country and of our military forces.. Heavy industry provides for the development of all branches of our national economy, and is the source of the constant growth of the well being of the people.”

N. Bulganin: Speech February 9th., 1955, Cited Keesings Ibid, p.14,033.

In May 1957 First Secretary Nikita Khrushchev presented to the Supreme Soviet his scheme to “decentralise” the state’s control of the economy. 25 industrial Ministries were to be abolished and replaced by 92 Regional Economic Councils.

In June 1957 the representatives of Russian heavy industry on the Presidium of the Central Committee of the CPSU allied themselves with the surviving Marxist-Leninists, headed by Vyacheslav Molotov, to reject this scheme. Khrushchev appealed to the Central Committee itself and succeeded in winning a majority of this body to condemn his opponents as an “anti-Party group” and to secure their removal. In November 1957, Khrushchev felt his position strong enough to be able to say that industrial development:

“Had reached a such a level that without detriment to the interests of consolidating the defence of the country, without detriment to the development of heavy industry ad machine building, we can develop light industry at a considerably higher speed.”

N.S.Khrushchev :Speech at 40th Anniversary of October Revolution, in : “Pravda”, November 7th, 1957.

In March 1958, Bulganin was removed as Prime Minister, and in November denounced for having been a member of the “anti-Party group.” His successor was Nikita Khrushchev himself, who retained the post of First Secretary of the Party.

At the May meeting of the Central Committee, Khrushchev put forward the view that the “decisive” branch of “heavy industry” was the chemical industry, and proposed that the expansion of the chemical industry, with “aid” from the older capitalistic countries, should be a prime element in the Seven Year Plan– painting a glowing picture of the consumer goods applications of this expansion.

At the 21st Congress of the CPSU in January/February 1959, Khrushchev’s basic theme was that eh Soviet Union was now in process of passing from “socialism” to “communism,” a process which could be complete when:

“We shall have a provided a complete abundance of everything to satisfy the requirements of all the people.”

And he elaborated further the doctrine put forward at the 20th Congress, that war was “no longer inevitable,” and that the danger of war was “receding.” His report thus laid a theoretical basis for according greater scope to the development of the consumer goods industries.

On January 17th, 1961 Khrushchev declared :

“Today our country has such a powerful industry, such a powerful defence force that it can, without jeopardising the development of industry and the strengthening of its defence, devote more funds to the development of agriculture and increase the production of consumer goods,”

and he deplored the fact that :

“An appetite had developed in some of our comrades for giving more metal to the country.”

(N.S. Khrushchev: Speech Jan.17th., 1916, In Soviet Embassy (London) Press Dept Release).

At the 22nd Congress of the CPSU in October 1961 Khrushchev referred to the Seven Year Plan target of 68-91 million tons of steel a year to say:

“Some people proposed increasing steel output to 100 million tons a year. But we restrained them, saying that all branches of economy had to be developed evenly.”

(N.S.Khrushchev:Report to the CC to the 22nd Congress of the CPSU; London; 1961; p.40.)

And in his report to the congress on the following day on the new party programme, Khrushchev said:

“The 20 year national economic development plan- the general perspective- provides for the rates of growth in the output of means of production and of consumer goods to come considerably closer together.”

N.S.Khrushchev : Report on the Programme of the CPSU; London; 1961; p.24.

As a result of this lead, the congress adopted a resolution which said :

“The revenues accumulated as a result of the over-fulfilment of industrial production plans should be channelled mainly towards agriculture, light industry and the food industry.”

Khrushchev Report on the Programme of the CPSU; London; 1961; p.24.

On September 9th., 1962 “Pravda,” the organ of the CC of the CPSU, published an article by the Kharkov economist, Professor Yevsey Liberman, advocating a discussion on the question of reorientering the Soviet economy on the basis of the profit motive. On Khrushchev’s initiative, a Plenum of he Central Committee on November 19th-23rd 1962 took an important step to weaken the Party’s control over the economy.

The party organs up to, but not including, the level of Republic Central Committees were divided into two separate branches: one concerned with industry, the other with agriculture. At a press conference in October 1963 (reported in “Pravda” on October 27th) Khrushchev declared that the time was now ripe for diverting immense funds from heavy industry to chemicals, agriculture and the consumer goods industries. At the end of February 1964 “Pravda” published an article by A.Arzumanyan, Director of the Institute Of World Economics and International Relations, attacking the “dogmatists” who defended priority for heavy industry and recommending equal growth rates for heavy and consumer goods industries, with future priority to the latter.

In July 1964 an official press campaign began to popularise Liberman’s theories. The Bulletin of the Soviet Embassy in London summed this up as follows:

“In recent years.. the consumer goods industries have been greatly enlarged, It has become clear that the planning of the production of consumer goods must be brought closer to market demands. It has also become clear that economic incentives must be provided in order to induce industry to produce what the consumers want and adapt themselves quickly to changes in fashion, and also so as to ensure that the whole factory from the director to the worker is interested in meeting the demands of the consumer.”

Soviet Embassy, London Bulletin, Cited in “Keesings’ Contemporary Archives”, Volume 15; p. 21,036.

The base of support which Khrushchev had built up among the intelligentsia and petty bourgeois enabled him to survive against growing opposition for more than 10 years. But on October 15th, 1964, Khrushchev was forced to resign both as First Secretary of the CC of the Party and as Prime Minster. One of the changes levelled against him later was that of:

“Neglecting the priorities of heavy industry by over-emphasising light and consumer goods industries.”

“Keesings Contemporary Archives,” Volume 14; p. 20,390.

Khrushchev was succeeded as First Secretary by Leonid Brezhnev, and as Prime Minister by Aleksei Kosygin. This was to some extent a balanced coalition, as Kosygin was inclined towards consumer industires. This is shown by his sponsorship of economic measures advocated by Professor Abel Aganbegyan. (Later these measures would be more energetically enacted by Gorbachev. See below). Therefore the new leadership of the party and the state went some way to placating the demands of the state capitalists involved in the consumer good industries (e.g. By the adoption of Liberman’s theories, providing for increased independence of enterprises and the gearing of production to the market through the profit motive). However Brezhnev’s influence prevailed, and the regime demonstrated its’ basic interest in serving the state capitalists involved in heavy industry by greatly strengthening party and state control of the allocation of material resources, investment funds, etc.

The new line was summarised by General Secretary Leonid Brezhnev in his report to the 23rd Congress of the CPSU in March/April 1966 :

“Strengthening the centralised planned direction of the national economy is now combined with the further development of the initiative and independence of the enterprises.”

L.Brezhnev: Report to the 23 rd Congress of the CPSU, cited in “Keesings Contemporary Archives”, Volume 15, p. 21, 466.

On November 16th, 1964 the Central Committee of the CPSU abolished the division of the party introduced in 1962, with the aim of strengthening the party’s control over the economy. On the other hand, in January 13th 1965, it was announced that 400 consumer goods factories would go over to the system of production abased on market demand.

On April 1st, 1965 textile, lather and some other factories were transferred to the new system, under which they would gear their production to the basis of orders from retailers. These factories were permitted to retain a considerably larger amount of their gross profit than previously, this to be used partly for self-investment and partly for renumeration of management and workers over ad above basic salaries and wages.

In August-September 1965, the new leadership began punitive action against intellectuals representing objectively the interests of the state-capitalists involved in the consumer goods industries. In these months 30 Ukrainian intellectuals were arrested, Andrie Sinyavsky and Yuli Danile were arrested, as was Aleksandr Yessenin-Volpin and Vladmir Bukovsky.

Meanwhile on September 28th, 1965, the CC of the CPSU resolved to abolish the Regional Economic Councils of Khrushchev, established in May 1957; and to re-establish the industrial Ministries which had been abolished. The same resolution resolved to extend the “economic reform” introduced experimentally earlier in the year to the economy as a whole.

The Supreme Soviet gave legislative effect to this resolution on October 1st-2nd 1965. On December 10th, 1968, Nikolai Baibokov (Chairman of the State Planning Committee) told the Supreme Soviet that enterprises working under the new “profit motive” system now produced 75% of total industrial production and 80% of profit.

At the 23rd Congress of the CPSU (March 26th-April 8th 1966) Ivan Kazanets (Minister of the Iron and Steel Industry) complained that the Khrushchev regime had lowered the planned rate of increase in iron and steel output as a result of “the wrong and subjectivist counterposing of the chemical industry against the iron and steel industry.”

However the main reports presented at the congress revealed that the state capitalists involved in the consumer goods industries had fought successfully for an increased allocation of material resources, investment funds, etc, to their field.

In his report on the new 5 Year Plan from 1966-70, Prime Minister Aleksei Kosygin said:

“Funds will be re-distributed in favour of the production of consumer goods, while continuing to give priority to the development of the output of means of production. Their output will rise by 49-52% and that of consumer goods by 43-46%, compared with 58% and 36% respectively during 1961-65.”

A. Kosygin: Report on the 5 Year Plan, 23rd Congress CPSU, Cited in “Keesings Contemporary Archives”, Vol 15; p.21,468.

Backed by propaganda from the dissident intellectuals, the political representatives of the state capitalists involved in the consumer goods industries continued to press their case. In the economic plan for 1968 it was still maintained that:

“The emphasis will continue to be on the development of heavy industry”,

“Keesings Contemporary archives”, Vol 16; p. 22,508.

But in that year, 1968, the planned growth on the output of consumer goods for the first time exceeded (at 8.6%) that of the panned growth of the output of heavy industry (at 7.9%).

This picture was repeated in the economic plan for 1969, which provided for a planned growth rate of consumer goods of 7.5% against 7.2% for heavy industry, and in the economic plan for 1969 where the figures were 6.8% and 6.1% respectively.

At the 24th Congress of the CPSU (March 30th – April 9th 1971), General Secretary L. Brezhnev said:

“The CC considers that the accumulated productive potential permits of a somewhat higher rate of growth for Department 2 (ie the consumer goods industries).. This does not invalidate our general policy based on the accelerated development of the output o the means of production.”

Brezhnev L: Report to the 24th Congress of the CPSU, in: “Keesings Contemporary Archives”, Vol 18; p. 24,656.

And the Five Year Plan for 1971-75 adopted by the congress provided for the first time in any Five Year Plan for a higher rate of the output of consumer goods industries (at 44-48%) than that of heavy industry (at 41-45%). But as the intellectuals were repressed, and as the movements for “freedom ” in the Baltic states were repressed, the leadership of the party and state felt able to reverse this dominance of consumer industry. By 1975, the representatives of the state capitalists involved in heavy industry had again won temporarily. On December 2nd, 1975 Nikolai Baibakov reported to the Supreme Soviet that it was planned to increase the output of heavy industry in 1976 by 4.9% (against 8.3% achieved in 1975) and that of the consumer goods industries by 2.7% (against 7.2% achieved in 1975).

iii) INDUSTRY IN THE ERA OF GORBACHEV AND YELTSIN

Following the death of Brezhnev, Yuri Andropov came to power in 1982. Andropov had been the director of the state security forces the KGB, since 1967. Using this base, Andropov launched a so called “anti-corruption” drive, especially targeted at the Brezhnev faction. This allowed the pro-Consumer goods industries faction to regain control of the state. Andropov had built up the careers of younger pro-Consumer advocates, such as Mikhail Gorbachev; Eduard Shevardnadze; Nikolai Ryzhkov; and Yegor Ligachev. All these individuals would follow the same “liberal” programme aimed at aiding the consumer based industries. In a short space of time, Andropov made changes aimed at:

“The independence of assciation and enterprises of collecvtive farms and state farms to be increased.”

Cited: “Gorbachev: Chistian Schmidt-Hauer: “The Path to Power”; Topsfield, MA; 1986; p.84.

But Andropov was ill, and died after 8 months, on February 9th, 1984. His successor Konstantin Chernenko, was himself severely ill. His accession was a temporary reprieve for the heavy based faction, in whose favour Chernenkov’s report of November 15th 1984, “Accelerate The Intensification of the Economy,” was given (Schmidt-Hauer; Ibid; p.109). However his death on March 10 1985, left the path open for the vigorous proponents of light consumer industry. By 11 March 1985, Gorbachev had taken the post of General Secretary of the CPSU.

Gorbachev now took up the programme outlined by Professor Abel Aganbegyan, whose Institute of Economics was in Novosibirsk. His programme, first outlined in 1965, and promoted by Kosygin, identified as the major problem in the USSR economy:

“The staggering share of resource that the economy committed to defence, with something like a third of the entire workforce involved in the defence sector, and ‘the extreme centralism and lack of democracy in economic matters.”

Cited in “The Waking Giant: The Soviet Union Under Gorbachev,” Martin Walker, London, 1986; p.38.

This then was a programme targeted against the heavy industrial base, and was pro-light industry. However the programme also aimed to openly acknowledge and allow “profit.” These changes were similar to those proposed by Liberman i.e. further decentralisation and self contained “planning,” and local profit sharing under the guise of “incentives.” This was embided under the principle of “autonomous financial accounting” or Khozraschet.

Kosygin’s attempts to fully implement Aganbegyan’s changes met with resistance, because they entailed an increased unemployment. But since both wings of the capitalist class (heavy and light based industrialists) stood to gain, they collaborated to push some of Aganbegyan’s programme through :

“In 1970…the Khozraschet experiment…decreed that not only each factory, but the industry itself had to become self-financing…By 1980, four of the biggest industrial ministries had been transferred to the self-financing system: tractors and farm machinery, heavy and transport engineering, energy engineering, and electrotechnical. The principles of self-financing and management autonomy had also been adopted for…the creation of territorial-production complexes (TPCs), the new industrial complexes… in Siberia.”

Walker Ibid, p.43.

But enforcing the Russian workers towards capitalist norms was not easy, and the capitalist class wished for a speedier transformation. Professor Popov of Moscow now advocated in Pravda on 27 December 1980:

“Wage cuts to increase incentives and a system of planned unemployment with a minimum wage of 80 rubles a month for the redundant.”

Walker Ibid, p.45.

To facilitate this, one of Aganbegyan’s pupils, Dr. Tatiana Zaslavsaya offered an updated programme in 1983 targeting “bureaucracy” who were “preventing further dissolution of central planning.” This programme was accepted by Gorbachev. In February 1986, he reported to the 27th Congress of the CPSU:

“Prices must be made flexible. Price levels must be linked not only to the costs of production, but also with the degree to which they meet the needs of society and consumer demand..it is high time to put an end to the practice of ministries and departments exercising petty tutelage over industrial enterprises.. enterprises should be given the right to sell to one another, independently what they produce over and above the plan.. enterprises and associations are wholly responsible for operating without a loss, while the state does not bear any responsibility for their debts.. Increase of the social wealth as well as losses should affect the income level of each member of the collective.”

Walker Ibid, p.51-52.

But as well as these general steps to increae market forces, a narrower sectional interest became also clear. An underlying aim apart from completely raising the lid on private market forces and profit was to enhance consumer industry:

“Gorbachev’s requirements (are).. set out in the “Prinicpal Directiosn fo the Economic nad Soical Development of the USSR Fro the Year 1986 to 1990 and For the Period up to 2000”.. “More consumer goods and better serives are vital.. says the new Chairman of the State Planning Commision (Gosplan) Nikolai Talyzin.. over the past 5 years the supply of consumer goods had grown at an averae of below 4%.. the “Complex Programme For the Development of the Production of Consumer Goods and the Service Sectors for the Year 1986-2000”, .. meant.. production of Consumer goods is to increase by as much as 30 % during the first 5 Year Plan period (1986-90) “mainly tough intensification of production on the basis of improved organisation and full use of existing capacity..the programme aims at “perfecting the production and consumption of light industry goods, cultural and domestic articles, reacting in good time to changes in public demand”… The long term plan .. prescribes that the contribution made by heavy and defence industries to supplying the public with high-quality industrial goods as well as modern electrical household goods must be “substantially increased.”

Maria Huber : The Prospects for Economic Reform”, in C.Schmidt-Hauer, Ibid; p.171-179.

Furthermore, as part of Gorbachev’s strategy, links with foreign capital were actively encouraged:

“At the beginning of 1985, Oleg T.Bogomolov, Director of the Institute For the Economics of the Socialist World System, in lecture in Vienna announced that eh Soviet Union would make it possible for joint-venture companies to be set up with capitalist enterprises.. an important step for decentralisation.. trade relations with the industrialised capitalist countries are to be likewise intensified.. the joint resolution of the Central Committee and of the Council of Ministers of July 1985.. foresaw the promotion of exports at enterprise level.”

Maria Huber; Ibid; p.174.

But the division of interests and between the two basic groups of capitalists, is now much more acute. It has also taken a new form. The most current form it has taken, is that of a division between those who wish to be an appendage to the foreign imperialists, and those who wish to be totally independent of the foreign imperialists. As Mikhail Leontiev:

“One of Russia’s most respected liberal commentators…and the Segodnya newspaper owned by one of Russia largest private businesses notes…in an editorial on November 24th, 1994 said : “‘The first stage of Russia’s transformation – Westernization – is over. It has ended in defeat and disappointment.'”

Cited “The Economist” London UK, Week of Dec 5th, 1994. Reprinted Globe and Mail, Toronto, 5.12.94.

Clearly, the anti-Western capitalists are not dead inside Russia. Although more than $500 million US of foreign capital are flowing into Russia every month, there has been some opposition to this virtually unrestricted entry :

Anatoly Chubais…as the first deputy prime minister responsible for coordinating economic policy…has been leading the effort to attract foreign investment…Moscovsky Komsomolets has published a stinging series of attacks on Mr. Chubais, who used to be responsible for Russia’s program of mass privatization, Komsomolets argues that this sell-out is just a sell out to the West. GAZ a car makers with 1000,000 workers was worth a mere $27 million when it was auctioned earlier this year. That, the newspaper points out sourly, is only $2 million more than the Vancouver Canucks agreed to pay Pavel Bure a Russian ice-hockey star, for a 6 year contract.”

“Economist,” from Globe and Mail Ibid, 5.12.94.

As the Economist notes:

“Mr. Yeltsin is nevertheless the only Russian peasant who could take a stand against a strong anti-western sentiment. He may look and act lie a Russian peasant, but so far at least, his instinct have been solidly pro-Western.”

“Economist” from Globe and Mail Ibid 5.12.94.

That Boris Yeltsin has been the “Man of the West,” inside the Kremlin is not new news. Of course recent events surrounding the “Crash” of the rouble also aroused major conflicts within the capitalist class, which also reflected the underlying differences. As the ICRSU report makes clear, the rouble was deliberately “crashed.”

6. THE CRASH OF THE ROUBLE

“The rouble’s 3 week slide began when the Bank set out trading on 22 September with dwindling reserves.. By the bottom on the Tuesday 11.10.94, the rouble had shrunk to 60% of its value.. the bank had spent a quarter of a billion US$ in 3 days…”

Globe and Mail, Business News, Toronto, 14.10.94. p.B1-2.

Alliance reprinted the analysis of The International Committee for the Restoration of the Soviet Union, based in Moscow, (ICRSU) on the “Crash” of the rouble, on October 11th, 1994. (See full reprint in Alliance 9). The ICRSU gives as a reason for the crash an impending General Strike, and a need for the Government to obtain additional funds to cover a cash shortfall:

“The ‘crash of the rouble’…on October 11th and its subsequent recuperation on October 12-13th…did not result from a loss of control by the Central Bank of the Russian Federation over the market of hard currency. On the contrary the crash of the rate of the rouble to the dollar by almost 900 points in one day (27% of the previous rate), and its recuperation on Wednesday and Thursday so that the rate came down lower than that of Monday, was planned and provoked by the leadership of the Central Bank with the permission of Victor Chernomyrdin, the Prime Minister. This was a result of a financial operation organized jointly by both the Central Bank and the Ministry of Finances TO COVER A FINANCIAL GAP… WHAT IS THE MAIN REASON FOR THIS FINANCIAL OPERATION? WHY HAS THE BUDGET GAP TO BE COVERED NOW? (Emphasis-Editor). The answer is clear. These cash based on speculation has been transferred to the Ministry of Finances to pay wages. Why now? Because a general strike is to take place on October 27th. That is the sole reason. The government is not in a position to manage a general strike in a generalized state of wage non-payments.”

I.C.R.S.U. October 19-10-94.

But it is possible that an additional reason for the engineered crash is the conflict between the wings of the capitalist class. We suggest that the manipulation of the rouble, in part, reflects the differences between pro-Western capitalists (led by Yeltsin) and anti-Western capitalists (led by Yegor Gaidar, and Victor Chernomyrdin, the Prime Minister). As the ICRSU point out it was Chernomyrdin who set in train the rouble crash. How was the manipulation managed?

“In the two weeks prior to the crash, the Central Bank provoked constant devaluation of the rouble by suddenly changing its policy of intervention in hard currency stock exchange sessions. Normally the Central Bank policy of intervention is based on selling relatively small amounts of American dollars on a regular basis so that the dynamics of the rate of the rouble to the dollar does not correspond to its real devaluation in the market. The result of that policy is that the rate was kept over 2000 when the real rate should be (the rate that would be reached if the Central Bank would not make dollar interventions in the market) according to reliable estimations around 5000-6000.”

I.C.R.S.U. October 19-10-94.

Who gains the most benefit from this policy?

“A ‘cheap’ dollar has led to a drastic reduction of Russian goods exports for the past two years. Import of western goods has far overtaken export. Russian goods can not compete even in the internal market (shops do not sell Russian goods). A low rate guarantees foreign trade companies a high rate of profit in commercial operations. The Central Bank policy is dictated by foreign interests. A low rate is one of the factors for the state of collapse in industry and agriculture, a huge budget deficit (that reached already in June-August 15% of the GNP!!), complete lack of state investment, non-payment of wages in the state sector (non-payment of wages has been very extensive from August).”

I.C.R.S.U. October 19-10-94.

“The Central Bank changed its policy of selling dollars to hold the rate by a massive sell of roubles. That provoked a raise of the rate from 2200-2300 to 3100 (for a period of 10-15 days). The Government argued that the raise of the rate is good for the economy and recognized that the Central Bank’s policy towards the rouble for the past two years has been highly harmful for the Russian economy.”

I.C.R.S.U. October 19-10-94.

But then a reversal occurred. We suggest that this policy, that favoured a foreign imperialist penetration of the Russian market, led to resentment and a reversal under pressure, of the policy:

“In a surprising move on Tuesday 11th, the Central Bank under the supervision of its President, Guerashenko, accomplished a massive rouble intervention that brought up the rate to almost 4000 roubles to a dollar. Those banks that were purchasing dollars were obliged to buy them from the same Central Bank and four major private commercial banks that were aware of the operation, at a rate that was 1000 roubles more expensive in the hope that the rate would rise even further. In one day the Central Bank “earned” 3 trillion roubles. 2 trillions were used to buy dollars at a high rate of 4000 from the Ministry of Finances (previously bought at a substantially lower rate) to cover a budget gap. The Central Bank got back the dollars which had been sold to the Commercial banks. The Ministry of Finances got in one day a huge amount of roubles to cover (almost 1000 roubles for every dollar sold) a budget gap. The Hard currency market was in shock so that in the next two days the Central Bank managed to bring down the rate with a relatively small intervention of dollars. A number of Commercial Banks that were not aware of the operation lost several trillions of roubles that are now transferred to the Ministry of Finances.”

I.C.R.S.U. October 19-10-94.

It is for the reasons outlined that Yeltsin said:

“the collapse of the roble was a ‘threat to national security’, setting up a committee of Inquiry the next day, with Sergei Stepashin Director of Federal Counter-Intelligence as a co-chair.”

Keesings Contemporary Archives, October, 1994, p. 40,250.

The Economy Minister Alexander Shokin was more explicit and said that the rouble’s collapse was a plot:

“To destabilise the government of Prime Minister Viktor Chenrnomyridin. “There are forces out there who do not want to see the government in full control,” Reuter’s quoted him as saying..”

Globe and Mail, Toronto, p.A1, A12. 13.10.94.

Vyascheslev Kostikov, President Yeltsin’s top spokesperson, suggested:

“The crisis was concocted by commercial banks that support political opponents of the regime. the strategy was to remove the President and curb market reforms.”

Globe and Mail, Business News, Toronto, p.B1-2, 14.10.94.

Source