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Capitalism is the Crisis (Part 1): The Economic Crisis in Greece is a Crisis of Capitalism Itself: An Interview with Kostas Katarachias

By Asad Ismi

Kostas Katarachias is a medical doctor who works in Athens, the capital of Greece. He is an activist in the Federation of Hospital Doctors’ Unions of Greece and one of the 27 elected members on its General Council. He is part of the anti-capitalist left which has five members on the Council. I interviewed Katarachias in Toronto, which he visited recently to speak about the Greek economic crisis. As he told me, “We are organizing the struggle against the austerity measures of our government and the troika of the International Monetary Fund (IMF), the European Union, and the European Central Bank (ECB).”

Greece is in the throes of an economic depression, which has been worsened by the government’s draconian austerity measures that have cut the country’s purchasing power, consumption, employment, and tax revenue, while increasing bankruptcies. The country’s GDP is expected to drop by 4% during 2010.

The government, which is led by the social democratic PASOK party, has slashed civil servants’ salaries by up to 20%, reduced retirement benefits, and increased several taxes. As one observer puts it, “The result is that Greeks have less and less money to spend and sales figures everywhere are dropping, spelling catastrophe for a country where 70% of economic output is based on private consumption.” The austerity program has provoked strikes, protests, assassinations, and other violence “carried on an unpredictable current of rage.”

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ISMI: Tell us about the origins of the Greek economic crisis.

KATARACHIAS: The crisis started in November 2009 with the default of Dubai [United Arab Emirates] which spread fear in markets all over Europe. The speculators targeted the weakest countries in Europe [economically] and first the weakest of all, which was Greece. Greece had a huge debt and a large state deficit. The speculators were banks and others from the financial system that blackmailed the Greek government, whose deficit was making it harder and harder for it to borrow money from the markets. To calm the markets and to continue borrowing from them, the Greek government decided to take austerity measures. So the government started a campaign against the workers, using propaganda in the media with the support of the Greek ruling class, trying to persuade the public that the problem was the “privileges” of the workers, mainly those of the public sector workers.

ISMI: What is the main source of the economic crisis? Why did the debt become so high in Greece?

KATARACHIAS: The source of the problem goes back to the G-20 meeting last year when the richest countries decided to save the banks by bailing them out with an incredible amount of money, equal to about a quarter of the global GDP. This amount — a staggering $14 trillion! — was given to bail out banks all over the world. In this way, the richest countries transferred the financial bubble from the banks to the state budgets. Greece followed this strategy, too. Our last Conservative government, which collapsed in the elections [held in October 2009], had a rescue program for the banks that was worth about 60 billion euros. Because of this, the deficit increased dramatically and this was the start of the crisis of the Greek state budget. Greece is not a big country and does not have many competitive industries, so this deficit was a great burden for the nation. The banking system in Greece over the last 10 years was mainly exposed to deals with Balkan countries. The Greek banks had made many toxic loans to Balkan countries and to some in Eastern Europe such as Bulgaria, Romania, Serbia, Turkey, Albania, Macedonia, and Poland.

These loans could not be paid back. For example, the biggest Greek bank bought a large bank in Turkey. The banks were hiding these loans. So the Greek banks played a big role all over the Balkans, and their bad loans to these countries were a major factor causing the debt crisis in Greece. By imposing austerity measures, the government is now punishing Greek workers for an economic crisis caused by the banks.

ISMI: Is capitalism at the root of the crisis?

KATARACHIAS: Yes, capitalism is the crisis. It is an irrational, unstable system that depends on creating bubbles that burst, and then the working people are forced by the capitalists to pay the price for the resulting economic slumps. They resist, and this creates a constant social and political crisis. We are in a period when this crisis will be a prolonged one and will lead to a strong movement all over the world against it.

We have a chance to make a change, and this change can only be an anti-capitalist one. It isn’t just the financial part of capitalism that’s in trouble. The whole system of capitalism is the problem. Its corporations’ profits have been in decline for the last 30 years, and the only way they’ve found to increase their profits is to create bubbles. The problem starts from the main industries whose profits have been going down. Now the capitalists have run out of bubbles to create, and they don’t know what to do. They’re not sure that the massive bailout programs will work. The financial analysts don’t even understand what is happening; in Greece we laugh at what the analysts say. They think they’ll find a way to save the capitalist system. They don’t understand that the only way to save the system is through further brutality.

ISMI: What is the alternative to capitalism?

KATARACHIAS: Capitalism should be destroyed and replaced with a socialist system created from the grassroots by the workers. Workers have to control the wealth all over the world. Banks should be nationalized and put under workers’ control. This is realistic, because people are now radicalized. According to a recent poll, 30% of the Greek people are in favour of nationalizing the bank system. Not realistic is how the system is working now. Not realistic are these billion-dollar bailouts and austerity programs, and thinking they will lead to economic recovery. Not realistic is more than 14% unemployment in Greece, a country which is set to explode. [Author’s note: Unemployment in Greece has hit an incredible 70% in some places].

ISMI: What has been the Greek labour movement’s response to the government’s austerity measures?

KATARACHIAS: There is a large and strong labour movement in Greece against the austerity program, and this movement has been escalating. It began with a small strike in December 2009 which was started by the anti-capitalist keft, in this case teachers. This was the first strike against the government’s austerity program. Then, on May 5, 2010, there was the biggest strike in the history of the Greek labour movement. The workers are very angry. The leaders of the unions are friendly to the PASOK ruling party and at first wanted to achieve a consensus between the workers and the government. But this is now impossible because there is too much opposition to the government’s austerity measures from rank-and-file workers. The anti-capitalist left has succeeded in smashing this exercise in consensus-building.

So we have had about seven general strikes in the last three months, and now we are the point where the next step must be non-stop strikes against the government. This is our aim in the anti-capitalist left. With indefinite strikes we can defeat the government. The Power Workers’ Union, which is the strongest union in Greece, recently announced that it will have 48-hour-long rolling strikes.

ISMI: How radical is the Greek labour movement?

KATARACHIAS: The Greek labour movement is one of the most powerful workers’ movements in Europe, along with that in France. This is the experiment of the European ruling class: they see that Greek workers have a strong movement; so, if austerity measures can be imposed in Greece, then it will be easier for the ruling class to get similar measures passed all over Europe.

There is a strong tradition of workers’ militancy in Greece. During the last Conservative government’s tenure, which lasted five years, there were massive workers’ struggles. The conservative government tried to reform the pension system and was met by large general strikes. The government also tried to privatize the public university system, and, to stop this, the unions occupied the universities for a year. The radical left comes from this tradition of resistance. Due to the economic crisis and the austerity measures, there is now an escalation of this resistance.

ISMI: How does the Greek economic crisis affect other European countries?

KATARACHIAS: Now we are in the situation where the virus of the Greek crisis is spreading all over Europe. The next country to be affected is Portugal, then Spain, Britain, and Italy. Austerity programs similar to those in Greece are being imposed by other governments. In Spain, a big bank recently collapsed; the fear there is heightening and the financial situation in Spain could get even worse than in Greece.

Greece accounts for 3% of the European Union’s GDP, and Greece, Portugal, and Spain combined account for 20%. So these three countries being in crisis is a big problem. Ireland and Portugal have been under austerity programs even before Greece. Unions in Portugal have conducted two general strikes against these programs. Even in Germany, many municipal governments are bankrupt.

ISMI: Since the crisis affects most of Europe, should the continent’s progressive forces be united in their response to it so that the capitalists cannot pit national working classes against one another?

KATARACHIAS: Yes, of course. If we are to achieve results from our struggle, then there must be the same sort of resistance in other European countries. There are signs of this happening, such as the recent strike at British Airways, which is very important because such action against the British government will strengthen our struggle against our own government. In France, the unions have launched a big strike to protest the regressive pension reforms of the Sarkozy administration.

Similar strikes will happen in Spain. The crisis gives us a chance to spread the anti-capitalist movement all over Europe, and this is our next step. In left-wing conferences held Europe-wide, we’ve been discussing coming up with an alternative to capitalism, and a program not to save the banks, but to save the workers from the banks. We know that people are getting radicalized more and more every day with this crisis, and there is already a significant radical left in Europe that can organize the anti-capitalist struggle and create a program to guide it.

Published in the Canadian Centre for Policy Alternatives Monitor, October 2010

Asad Ismi is the CCPA Monitor’s international affairs correspondent. He is author of the forthcoming radio documentary Capitalism is the Crisis. This article is the first in a series of articles on this subject.