Published on 21 May 2015

Why Greece’s Syriza party is not sticking to the script on an IMF deal

The leaked IMF document seen by Channel 4 News last weekend effectively signals a three-week endgame in the Greek debt stand-off.

The IMF thinks there is “no possibility” that Greece can meet €11bn worth of debt repayments due between June and the end of August.  The Greek government is running out of cash.

Yanis Varoufakis, the finance minister, told Channel 4 News last night (see video below) that faced with the choice of paying €350m due on 5 June to the IMF on 5 June, or paying pensions and salaries, he would choose the latter.

Privately, those within the ruling far-left party Syriza who were once confident of reaching a compromise with lenders, are now alarmed. Euro exit plans drawn up by the far left of the party are being studied seriously by those previously dismissive of them; articles contemplating a debt default have begun to appear in the party’s daily paper Avgi.

In the script according to the eurozone, the expected ending is: Syriza splits; finance minister Varoufakis makes good his pledge not to sign a surrender and resigns. A government of the centre-left forms, with Alexis Tsipras now allied to the centrist Potami party and with tacit support from a liberal wing of the New Democracy party. Debt relief happens, but on the terms dictated by the lenders, and Syriza survives to complete its mutation into a centre-left social democratic party.

Not sticking to the script

However, there are some who are not sticking to that script.

Zoe Konstantopoulou, a 39-year-old, Sorbonne-educated human rights lawyer who is now the speaker of the Greek parliament, is among them.

The Syriza MP has used her office set up three legal processes that could, even now, give the radical left government leverage over its lenders: a “debt truth” committee, a committee to oversee Greek war reparations claims against Germany, and a pipeline of high-level corruption cases targeted around public sector contracts with German firms.

It had been assumed in Europe that these initiatives were rhetorical, allowing Syriza to construct a narrative in government and nothing more.

Now I understand the debt truth committee has identified a tranche of Greek debt that looks – according to those who’ve seen the evidence – “unconstitutional”. Ms Konstantopoulou told me:

“There is strong evidence on the illegitimacy, odiousness and unsustainability of a large part of what is purported to be the Greek public debt.”

She warned creditors that the Greek people have the right “to demand the writing-off of the part which is not owed.”

“Pending the audit, it is unethical on the part of creditors to demand further payments while refusing disbursements and at the same time exercising extortionate pressure for the implementation of policies contrary to the public mandate,” she said.

Legal proceedings?

If the Greek parliament – not the government – were to launch legal proceedings, not only demanding write-offs and reparations but demanding the Greek government unilaterally cancel parts of the debt, that would take matters out of the hands of Syriza ministers.

“Claiming the abolition of the unsustainable part of the debt and demanding the reparations is not a matter of prerogative,” MS Konstantopoulou told me: it is a legal duty.

Though not well known in the Anglosphere, Ms Konstantopoulou is being touted among some Syriza members and MPs as a potential figurehead for opposition to the coming deal. In the past month she has toured European capitals to make Greece’s case – standing alongside Vladimir Putin at the Russian V-Day parade on 8 May.

Yesterday, as pensioners were blocked from approaching parliament by riot police, Ms Konstantopoulou stormed out of her office and confronted the police commander, live on TV. You don’t have to understand Greek to get the gist:

The symbolism was not lost on the Greek press this morning (see illustration below).

The lenders, and the centre-right in Greek politics, have calculated – correctly up to now – that the Greek lower middle class is so wedded to euro membership that a Syriza goverment that risked it would face revolt.

But on the ground things are shifting. The three months since Mr Varoufakis made what he thought was a deal that could unblock Greece’s frozen banking system have sapped people’s energy. More than €35bn has drained from the banking system.

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And though recent opinion polls have found a majority in favour of staying in the Euro, 70 per cent said it should not come at the cost of giving in on the so-called “red line” issues of pension entitlements, trade union rights and reinstating laid off workers.

Those saying “stay in at all costs” are now down to 52 per cent.

The hard left of Syriza is already pushing a “negotiated” euro exit plan launched publicly this week by London University professor and Syriza MP Costas Lapavitsas.

But in the weeks since the Riga summit, the main body of the party’s membership, and many of its influential journalists, have begun seriously to debate the merits of a default and exit strategy.

To the European officials trying to seal a last-minute deal, it is now no longer just the obstinacy of Germany and its allies in the ECB that they have to worry about.

They also have to anticipate the threat of a wider revolt within Syriza, and the actions the debt truth committee, both of which could throw a spanner into the works of any agreement.

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17 reader comments

  1. nmb says:

    Lapavitsas: 15-20% devaluation for the new drachma!

    http://bit.ly/1R45fYY

    1. Stephen David Mauldin says:

      Be careful .. or attentive: That aspect of Lapavitsas’ proposal is to avoid a 50% devaluation of a 1:1 ratio to the Euro if no compromise in the grexit process were to happen. He is advocating grexit being negotiated for a 50% write-down of the debt and ECB coverage to limit the drachma devaluation. The argument is that the troika would take this deal as better for the EU than no such deal at all. It would be better for a new Greece too as it would indeed limit the devaluation and sustainably honor some debt because repayment of the portion is also tied to percentage of recovery. So crying “15-20% devaluation for the new drachma!” is either misinformed or deceptive.

  2. dandraka says:

    “The Syriza MP has used her office set up three legal processes that could, even now, give the radical left government leverage over its lenders”

    Seriously ?

  3. Philip says:

    Given what we know about the behaviour of UK & other major banks, I’m not entirely surprised that some of what Greece owes may be extremely dodgy lending. After whopping fines for illegal forex manipulation (but not a single banker charged with an offence), it’s good to see the Greeks standing up to a greedy & corrupt financial establishment which is more interested in its vast remuneration than putting thousands of people’s lives into poverty.

    1. Mohmd Zain says:

      Deception through corruption practiced between individuals is bad . But practicing it on Nations through currupt governments is a huge crime no written law can justify it. We must not yield and refer to such laws of the jungle . It is the nonwritten law of human nature that should be supreme over all criminal deceivers and corrupt conspirators against their own people . Any contract signed outside this law is null and void . The parties who indulge in such deals are said to be organized criminals . A Mafia of global size which induces global wars and great suffering on millions of human beings . Overwhelming individual wealth is a huge problem greater than overpopulation and widespread poverty .

    2. Mohmd Zain says:

      Deception through corruption practiced between individuals is bad . But practicing it on Nations through the IMF and World Bank with currupt governments is a huge crime no written law can justify it. We must not yield and refer to such laws of the jungle . It is the nonwritten law of human nature that should be supreme over all criminal deceivers and corrupt conspirators against their own people . Any contract signed outside this law is null and void . The parties who indulge in such deals are said to be organized criminals . A Mafia of global size which induces global wars and great suffering upon millions of human beings . Overwhelming individual wealth is a huge problem greater than overpopulation and widespread poverty .

  4. Anne Peterson says:

    And the banks that were bailed out? What do they owe the national banks that bailed them out. Why is everyone else left in debt while they run on unaffected?

    1. R.Reeves says:

      Outstanding question Ann Peterson.
      Hmmmm!

      Thanks for asking it.

      My guess is that nobody is going to answer your question anytime soon.
      Superb question on your part though.

  5. Kos says:

    Socialist Economist Dimitris Kazakis: Syriza Has No Plan B – No devaluation for the new natioanl currency

    http://www.truth-out.org/news/item/30852-dimitris-kazakis-syriza-has-no-plan-b-left-came-to-continue-with-austerity

  6. iGlinavos says:

    This so called truth committee masterminded by Kostantopoulou is the Frankenstein version of Lapavitsas debt audit idea. It is a propaganda firework and not much else.

    1. Tsigantes says:

      @IGlivanos “Greek Analyst”

      To paraphrase Mandy Rice Davies: You would say that wouldn’t you.

  7. Michael Barbas says:

    Excuse me for this intervention, but I just wish to mention, that Zoi Konstantopoulou is not representing the SYRIZA government at all. She is not the government speaker. Her role is quite different. Zoi Konstantopoulou is actually the President of the Greek Parliament, In the video she is complaining to the Police for blocking access of demonstrators to the Parliament, as the majority of the Parliament has decided that the Parliament is open to all citizens and no-one, including the police, has to write to block access as this decision is taken by majority vote. Thanks and Cheers.

  8. anon says:

    thinking along the lines [sorry nearly wrote lies], ‘if it aint broke don’t fix it’, maybe drawing on the recent V&A Press events with the BoE, imagine one of the vases there….promise this is going somewhere,

    imagine it got broken, then it would have to be stuck back together

    imagine the EU is a diamond where is the flaw to re shape it?

    perhaps Greece?

    therefore is Greece is quietly encouraged to go the route of default, the Euro will basically collapse in value, and our negotiating position with what the EU ideal has been misshaped into, will radically change for the better, this will be for the benefit of everyone in Europe by protecting ultimately what the EU could be, should be and was intended to be,

    David Cameron would then be seen as the rescuer of the EU, and from being seen as someone who the Euro lot can treat how their wish and throw a few scraps can ask for pretty much anything he likes and expect to get it,

    roll on the Greek default for their sakes, for ours and for the future of the EU

  9. Krusty Flaps says:

    Go on Greece! Don’t let the Eurozone screw you over! If only Britain had the gumption to stand up to the Banks like this.

  10. Richard Lucas says:

    I attended a talk on 28th April given by Vassilis Fouskas of UEL on Syriza and the Greek debt crisis. According to Fouskas the Greek loans were negotiated by IMF and other lenders under British contract law which favours creditors rights above those of the debtor. Whereas with the Greeks and other southern european jurisdictions it is the borrower whose rights are paramount including on foreclosure. Collateral was given but no details were stated by Fouskas – perhaps if there is a default Crete or Corfu will be handed over to Goldman Sachs and the others.
    Richard Lucas

  11. Nikohl Vandel says:

    Greece should do an Iceland. Replace the government who wants to continue down a failing path, withdraw from the EU and all those games being played. As a nation and people, go within and don’t worry about that system for a while until, as a nation, it is autonomous for and by and with its people. #outsidelookingin sending love

  12. iGlinavos says:

    Legally there is no basis for denying debt for being odious in this case. This is a limited technique used to write off debts incurred by illegal governments during a coup or civil war. Greece’s debt is linked to international investment treaties. Fraud and corruption may have been the case for individual contracts, but this is not material to GGBs. See here for a review of Kostantopoulou’s efforts (in Greek) http://wp.me/p5zzQG-3r

Comments are closed.