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Syriza, Greece, and the Future of Left-Wing Coalitions

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‘From bad to worse’: Greece hurtles towards a final reckoning

Helena Smith in The Guardian


Dimitris Costopoulos stood, worry beads in hand, under brilliant blue skies in front of the Greek parliament. Wearing freshly pressed trousers, polished shoes and a smart winter jacket – “my Sunday best” – he had risen at 5am to get on the bus that would take him to Athens 200 miles away and to the great sandstone edifice on Syntagma Square. By his own admission, protests were not his thing.

At 71, the farmer rarely ventures from Proastio, his village on the fertile plains of Thessaly. “But everything is going wrong,” he lamented on Tuesday, his voice hoarse after hours of chanting anti-government slogans.

---For Background Knowledge read:

Yanis Varoufakis and the Greek Tragedy

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“Before there was an order to things, you could build a house, educate your children, spoil your grandchildren. Now the cost of everything has gone up and with taxes you can barely afford to survive. Once I’ve paid for fuel, fertilisers and grains, there is really nothing left.”

Costopoulos is Greece’s Everyman; the human voice in a debt crisis that refuses to go away. Eight years after it first erupted, the drama shows every sign of reigniting, only this time in a new dark age of Trumpian politics, post-Brexit Europe, terror attacks and rise of the populist far right.

“I grow wheat,” said Costopoulos, holding out his wizened hands. “I am not in the building behind me. I don’t make decisions. Honestly, I can’t understand why things are going from bad to worse, why this just can’t be solved.”

As Greece hurtles towards another full-blown confrontation with the creditors keeping it afloat, and as tensions over stalled bailout negotiations mount, it is a question many are asking.

The country’s epic struggle to avert bankruptcy should have been settled when Athens received €110bn in aid – the biggest financial rescue programme in global history – from the EU and International Monetary Fund in May 2010. Instead, three bailouts later, it is still wrangling over the terms of the latest €86bn emergency loan package, with lenders also at loggerheads and diplomats no longer talking of a can, but rather a bomb, being kicked down the road. Default looms if a €7.4bn debt repayment – money owed mostly to the European Central Bank – is not honoured in July.



Farmer Dimitris Costopoulos in front of the Greek parliament in Athens. Photograph: Helena Smith for the Observer

Amid the uncertainty, volatility has returned to the markets. So, too, has fear, with an estimated €2.2bn being withdrawn from banks by panic-stricken depositors since the beginning of the year. With talk of Greece’s exit from the euro being heard again, farmers, trade unions and other sectors enraged by the eviscerating effects of austerity have once more come out in protest.

From his seventh-floor office on Mitropoleos, Makis Balaouras, an MP with the governing Syriza party, has a good view of the goings-on in Syntagma. Demonstrations – what the former trade unionist calls “the movement” – are a fine thing. “I wish people were out there mobilising more,” he sighed. “Protests are in our ideological and political DNA. They are important, they send a message.”

This is the irony of Syriza, the leftwing party catapulted to power on a ticket to “tear up” the hated bailout accords widely blamed for extraordinary levels of Greek unemployment, poverty and emigration. Two years into office it has instead overseen the most punishing austerity measures to date, slashing public-sector salaries and pensions, cutting services, agreeing to the biggest privatisation programme in European history and raising taxes on everything from cars to beer – all of which has been the price of the loans that have kept default at bay and Greece in the euro.

In the maelstrom the economy has improved, with Athens achieving a noticeable primary surplus last year, but the social crisis has intensified.

For men like Balaouras, who suffered appalling torture for his leftwing beliefs at the hands of the 1967-74 colonels’ regime, the policies have been galling. With the IMF and EU arguing over the country’s ability to reach tough fiscal targets when the current bailout expires in August next year, the demand for €3.6bn of more measures has left many in Syriza reeling. Without upfront legislation on the reforms, creditors say, they cannot conclude a compliance review on which the next tranche of bailout aid hangs.

“We had an agreement,” insisted Balaouras, looking despondently down at his desert boots. “We kept to our side of the deal, but the lenders haven’t kept to their side because now they are asking for more. We want the review to end. We want to go forward. This situation is in the interests of no one. But to get there we have to have an honourable compromise. Without that there will be a clash.”

It had been hoped that an agreement would be struck on Monday at what had been billed as a high-stakes meeting of euro area finance ministers. On Friday, EU officials announced that the deadline had been all but missed because there had been little convergence between the two sides.

With the Netherlands holding general elections next month, and France and Germany also heading to the polls in May and September, fears of the dispute becoming increasingly politicised have added to its complexity. Highlighting those concerns, the German chancellor, Angela Merkel, attempted to end the rift that has emerged between eurozone lenders and the IMF over the fund’s insistence that Greece can only begin to recover if its €320bn debt pile is reduced substantially.

In talks with Christine Lagarde, the Washington-based IMF’s managing director, Merkel agreed to discuss the issue during a further meeting between the two women to be held on Wednesday. The IMF has steadfastly refused to sign up to the latest bailout, arguing that Greek debt is not only unmanageable but on a trajectory to become explosive by 2030. Berlin, the biggest contributor of the €250bn Greece has so far received, says it will be unable to disburse further funds without the IMF on board.

The assumption is that the prime minister, Alexis Tsipras, will cave in, just as he did when the country came closest yet to leaving the euro at the height of the crisis in the summer of 2015. But the 41-year-old leader, like Syriza, has been pummelled in the polls. Persuading disaffected backbenchers to support more measures, and then selling them to a populace exhausted by repeated rounds of austerity, will be extremely difficult. Disappointment has increasingly given way to the death of hope – a sentiment reinforced by the realisation that Cyprus and other bailed-out countries, by contrast, are no longer under international supervision.

In his city centre office, the former finance minister Evangelos Venizelos pondered where Greece’s predicament was now. “[We are] at the same point we were several years ago,” he joked. “The only difference is that anti-European sentiment is growing. What was once a very friendly country towards Europe is becoming increasingly less so, and with that comes a lot of danger, a lot of risk.”

When historians look back they, too, may conclude that Greece has expended a great deal of energy not moving forward at all.

The arc of crisis that has swept the country – coursing like a cancer through its body politic, devastating its public health system, shattering lives – has been an exercise in the absurd. The feat of pulling off the greatest fiscal adjustment in modern times has spawned a slump longer and deeper than the Great Depression, with the Greek economy shrinking more than 25% since the crisis began.

Even if the latest impasse is broken and a deal is reached with creditors soon, few believe that in a country of weak governance and institutions it will be easy to enforce. Political turbulence will almost certainly beckon; the prospect of “Grexit” will grow.

“Grexit is the last thing we want, but we may arrive at a point of serious dilemmas,” said Venizelos. “Whatever deal is reached will be very difficult to implement, but that notwithstanding, it is not the memoranda [the bailout accords] that caused the crisis. The crisis was born in Greece long before.”

Like every crisis government before it, Tsipras’s administration is acutely aware that salvation will come only when Greece can return to the markets and raise funds. What happens in the weeks ahead could determine if that is likely to happen at all.

Back in Syntagma, Costopoulos the good-natured farmer ponders what lies ahead. Like every Greek, he stands to be deeply affected. “All I know is that we are all being pushed,” he said, searching for the right words. “Pushed in the direction of somewhere very explosive, somewhere we do not want to be.”

Is it the Populists who threaten Democracy - or is it the Technocrats?

Mark Blyth - Brown University

One year on, Syriza has sold its soul for power .

Costas Lapavitsas in The Guardian


Alexis Tsipras has embraced wholesale the austerity he once decried

 

‘Above all, Tsipras and his circle were personally committed to the euro. Confronted with the catastrophic results of his strategy, he surrendered abjectly to the lenders.’ Photograph: Petros Giannakouris/AP


Today marks a year since a radical left government was elected in Greece; its dynamic young prime minster, Alexis Tsipras, promising a decisive blow against austerity. Yanis Varoufakis, his unconventional finance minister, arrived in London soon after and caused a media sensation. Here was a government that disregarded stuffy bourgeois conventions and was spoiling for a fight. Expectations were high.

A year on, the Syriza party is faithfully implementing the austerity policies that it once decried. It has been purged of its left wing and Tsipras has jettisoned his radicalism to stay in power at all costs. Greece is despondent.

Why did it end like this? An urban myth propagated in some media circles suggests that the radicals were stopped by a coup engineered by conservative politicians and EU officials, determined to eliminate any risk of contagion. Syriza was overcome by the monsters of neoliberalism and privilege. Still, it fought the good fight, perhaps even sowed the seeds of rebellion.

The reality is very different. A year ago the Syriza leadership was convinced that if it rejected a new bailout, European lenders would buckle in the face of generalised financial and political unrest. The risks to the eurozone were, they presumed, greater than the risks to Greece. If Syriza negotiated hard, it would be offered an “honourable compromise” relaxing austerity and lightening the national debt. The mastermind of this strategy was Varoufakis, but it was avidly adopted by Tsipras and most of Syriza’s leadership.

Well-meaning critics repeatedly pointed out that the euro had a rigid set of institutions with their own internal logic that would simply reject demands to abandon austerity and write off debt. Moreover, the European Central Bank stood ready to restrict the provision of liquidity to the Greek banks, throttling the economy – and the Syriza government with it. Greece could not negotiate effectively without an alternative plan, including the possibility of exiting the monetary union, since creating its own liquidity was the only way to avoid the headlock of the ECB. That would be far from easy, of course, but at least it would have offered the option of standing up to the catastrophic bailout strategies of the lenders. Unfortunately, the Syriza leadership would have none of it.

The disastrous nature of the Syriza strategy became clear as early as 20 February 2015. European politicians forced the new Greek government to agree to target budget surpluses, implement “reforms”, meet all debt obligations fully and desist from using existing bailout funds for any purpose other than supporting banks. The EU calmly turned off the liquidity tap at the European Central Bank, and refused to give a penny of additional financial support until Greece complied.

Conditions in the country became increasingly desperate as the government soaked up liquidity reserves, the banks went dry, and the economy barely ticked over. By June Greece was forced to impose capital controls and to declare a bank holiday. Syriza attempted one last throw of the dice in July, when Tsipras called a referendum on a new, harsh bailout. Amazingly, and with considerable bravery, 62% of Greeks voted to reject. Tsipras had campaigned for a rejection but when the result came in he realised that in practice, it meant exiting the euro, for which his government had made no serious preparations. To be sure there were back-of-the-envelope “plans” for a parallel currency, or a parallel banking system, but such amateurish ideas were of no use at one minute to midnight. Furthermore, the Greek people had not been prepared and Syriza as a political party barely functioned on the ground. Above all, Tsipras and his circle were personally committed to the euro. Confronted with the catastrophic results of his strategy, he surrendered abjectly to the lenders.

Since then he has adopted a harsh policy of budget surpluses, raised taxes and sold off Greek banks to speculative funds, privatised airports and ports, and is about to slash pensions. The new bailout has condemned a Greece mired in recession to long-term decline as growth prospects are poor, the educated youth is emigrating and national debt weighs heavily.

Syriza is the first example of a government of the left that has not simply failed to deliver on its promises but also adopted the programme of the opposition, wholesale. Its failure has strengthened the perception across Europe that austerity is the only way and nothing can ever change. The implications are severe for several countries, including Spain, where Podemos is knocking on the door of power.

Syriza failed not because austerity is invincible, nor because radical change is impossible, but because, disastrously, it was unwilling and unprepared to put up a direct challenge to the euro. Radical change and the abandonment of austerity in Europe require direct confrontation with the monetary union itself. For smaller countries this means preparing to exit, for core countries it means accepting decisive changes to dysfunctional monetary arrangements. This is the task ahead for the European left and the only positive lesson from the Syriza debacle.

The Guardian's pessimistic take on Corbyn let our readers down

Ed Vulliamy in The Guardian

For many of our readers and potential readers, the Labour leadership result was a singular moment of hope, even euphoria. It was the first time many of our young readers felt anything like relevance to, let alone empowerment within, a political system that has alienated them utterly.

The Observer – a broad church, to which I’m doggedly loyal – responded to Jeremy Corbyn’s landslide with an editorial foreseeing inevitable failure at a general election of the mandate on which he won. For what it’s worth, I felt we let down many readers and others by not embracing at least the spirit of the result, propelled as it was by moral principles of equality, peace and justice. These are no longer tap-room dreams but belong to a mass movement in Britain, as elsewhere in Europe.

It came as a disappointment – as I suspect it did to others who supported Corbyn, or were interested – to find such a consensus ready to pour cold water on the parade. To behold so little curiosity towards, let alone sympathy with, why this happened.

Of course the rest of the media were in on the offensive. Our sister paper the Guardian had endorsed a candidate who lost, humiliated; the Tory press barons performed to script. Here was a chance for the Observer to stand out from the crowd. But instead, we conjoined the chorus with our own – admittedly more progressive – version of this obsession with electoral strategy with little regard to what Corbyn says about the principles of justice, peace and equality (or less inequality). It came across as churlish, I’m sure, to many readers on a rare day of something different.

I accept that we are a reformist paper, and within those parameters one has to get elected. But that should not mean a digging-in by, and with, the parliamentary inside-baseball Labour party whose days and ways of presenting politics like corporate management selling a product (or explaining a product fault) have just been soundly rejected by its membership. Why embed with MPs in a parliament no one trusts against the democratic vote outside it?

And anyway, what if? Who, five years ago, would have predicted Syriza’s victory in Greece or bet on Podemos taking Madrid and Barcelona, now preparing for a role in government? It’s not as though the Observer’s accumulated editorials disagree that much with Corbyn.

During Ed Miliband’s Labour, the Observer robustly questioned the health of capitalism – our columnist Will Hutton calls it “turbo-capitalism”. We urged support for a living wage and the working poor, and the likes of Robert Reich and David Simon have filled our pages with more radical critiques of capitalism than Corbyn’s.

Anyway, how much of what Corbyn argues do most voters disagree with, if they stop to think? Do people approve of bewildering, high tariffs set by the cartel of energy companies, while thousands of elderly people die each winter of cold-related diseases? Do students and parents from middle- and low-income families want tuition fees?

Do people like paying ludicrous fares for signal-failure, delays and overcrowding on inept railways? Do people urge tax evasion by multinationals and billionaires, which they then subsidise with cuts to the NHS? Post-cold war, who exactly are we supposed to kill en masse with these expensive nuclear missiles? What’s so good about the things Corbyn wants to drastically change?

Even more fundamental is the appeal to principle and morality – peace, justice and internationalism – which drove the Labour grassroots vote, and was spoken at the rally for refugees which Corbyn made his first engagement and for which this newspaper stands absolutely. Why not embrace those principles, or at least show an interest in the fact that hundreds of thousands of people just did? Which better reflects the Britain we want: Corbyn’s “open your hearts” or Cameron’s “swarm”?

The parliamentary bubble – and our editorial – calculate that we cannot fundamentally change Britain on the basis of these aspirations, even if many people yearn to. In the acceptance speech, Corbyn should have appealed beyond the party in which he is steeped; perhaps he too inhabits a different echo-chamber.

But this isn’t about Corbyn, it’s about why he’s suddenly there. And what an appalling lesson to draw: someone is overwhelmingly elected to falteringly but seriously challenge that stasis and order of things – by urging peace, justice, republic and equality – only to be evicted by the deep system into a lethal ice-storm the moment he leaves the tent, like Captain Oates, though not of his own volition.

And even if middle England is more adverse to radical politics than middle Spain or Greece, does that mean we have to align with this mainstream stasis, just because it is so? What’s the point of principles if their trade-off for power is a principle in itself? Why have principles at all?

The legal philosopher Costas Douzinas argues for a separation of words: using “politics” to describe horse-trading between parties, which feign differences but actually agree, and “the political” to describe antagonisms that really exist in society. On that basis, why start with the stasis of “politics” to approach “the political”, rather than the reverse: invoke “the political” to challenge the stasis of “politics”? Especially alongside Greece, Spain and elsewhere.

Instead of a stirring leader, which did not have to endorse Corbyn but could celebrate the spirit of the vote along with those who delivered it, we’ve left a lot of good, loyal and decent people who read our newspaper feeling betrayed.

“There’s something happening in here / What it is ain’t exactly clear”, wrote Stephen Stills in 1967. It’s a good description of where we are with all this – we don’t as yet have the map whence this came, where it’s going or even what it is.

Dave Crosby sang: “Don’t try to get yourself elected” (from a mighty number called “Long Time Gone”). Along with almost half this country, I was inclined to agree, but Corbyn’s election throws Crosby’s dictum into question, just as to cut Corbyn down would prove Crosby right. “We can change the world” sang Graham Nash. But are we only allowed to try if middle England, the media and parliament try too?

The World Today - GREECE: A PEOPLE BETRAYED

Greece is a sideshow. The eurozone has failed, and Germans are its victims too

'This is what the noble European project is turning into: a grim march to the bottom. This isn’t about creating a deeper democracy, but deeper markets.' Photograph: Matt Kenyon

 Aditya Chakrabortty in The Guardian

Nearly every discussion of the Greek fiasco is based on a morality play. Call it Naughty Greece versus Noble Europe. Those troublesome Greeks never belonged in the euro, runs this story. Once inside, they got themselves into a big fat mess – and now it’s up to Europe to sort it all out.

Eurozone creditors raise hopes of Greek bailout deal

Read more

Those are the basics all Wise Folk agree on. Then those on the right go on to say feckless Greece must either accept Europe’s deal or get out of the single currency. Or if more liberal, they hem and haw, cough and splutter, before calling for Europe to show a little more charity to its southern basketcase. Whatever their solution, the Wise Folk agree on the problem: it’s not Brussels that’s at fault, it’s Athens. Oh, those turbulent Greeks! That’s the attitude you smell when the IMF’s Christine Lagarde decries the Syriza government for not being “adult” enough. That’s what licenses the German press to portray Greece’s finance minister, Yanis Varoufakis, as needing “psychiatric help”.

There’s just one problem with this story: like most morality tales, it shatters upon contact with hard reality. Athens is merely the worst outbreak of a much bigger disease within the euro project. Because the single currency isn’t working for ordinary Europeans, from the Ruhr valley to Rome.

On saying this, I don’t close my eyes to the endemic corruption and tax-dodging in Greece (nor indeed, does the outsiders’ movement Syriza, which came to power campaigning against just these vices). Nor am I about to don Farage-ist chalkstripes. My charge is much simpler: the euro project is not only failing to deliver on the promises of its originators, it’s doing the exact opposite – by eroding the living standards of ordinary Europeans. And as we’ll see, that’s true even for those living in the continent’s number one economy, Germany.

First, let’s remind ourselves of the noble pledges made for the euro project. Let’s play the grainy footage of Germany’s Helmut Schmidt and France’s Giscard d’Estaing, as they lay the foundations for Europe’s grand unifier. Most of all, let’s remind ourselves of what the true believers felt. Take this from Oskar Lafontaine, Germany’s minister of finance, on the very eve of the launch of the euro. He talked of “the vision of a united Europe, to be reached through the gradual convergence of living standards, the deepening of democracy, and the flowering of a truly European culture”.

 We could quote a thousand other such stanzas of euro-poetry, but that single line from Lafontaine shows how far the single-currency project has fallen. Instead of raising living standards across Europe, monetary union is pushing them downwards. Rather than deepening democracy, it is undermining it. As for “a truly European culture”, when German journalists accuse Greek ministers of “psychosis”, that mythic agora of nations is a long way off.

Of all these three charges, the first is most important – because it explains how the entire union is being undermined. To see what’s happened to the living standards of ordinary Europeans, turn to some extraordinary research published this year by Heiner Flassbeck, former chief economist at the United Nations Conference on Trade and Development, and Costas Lapavitsas, an economics professor at Soas University of London turned Syriza MP.

In Against the Troika, the German and the Greek publish one chart that explodes the idea that the euro has raised living standards. What they look at is unit labour costs – how much you need to pay staff to make one unit of output: a widget, say, or a bit of software. And they map labour costs across the eurozone from 1999 to 2013. What they find is that German workers have barely seen wages rise for the 14-year stretch. In the short life of the euro, working Germans have fared worse than the French, Austrians, Italians and many across southern Europe.

Yes, we’re talking about the same Germany: the mightiest economy on the continent, the one even David Cameron regards with envy. Yet the people working there and making the country more prosperous have seen barely any reward for their efforts. And this is the model for a continent.

Perhaps you have an image of Deutschland as being a nation of highly skilled, highly rewarded workers in gleaming factories. That workforce and its unions still exist – but it’s shrinking fast. What’s replacing it, according to Germany’s leading expert on inequality, Gerhard Bosch, are crap jobs. The low-wage workforce has shot up and is now almost at US levels, he reckons.

Don’t blame this on the euro, but on the slow decline of German unions, and the trend of business towards outsourcing to cheaper eastern Europe. What the single currency has done is make Germany’s low-wage problems the ruin of an entire continent.

Workers in France, Italy, Spain and the rest of the eurozone are now being undercut by the epic wage freeze going on in the giant country in the middle. Flassbeck and Lapavitsas describe this as Germany’s “beggar thy neighbour” policy – “but only after beggaring its own people”.

In the last century, the other countries in the eurozone could have become more competitive by devaluing their national currencies – just as the UK has done since the banking meltdown. But now they’re all part of the same club, the only post-crash solution has been to pay workers less.

That is expressly what the European commission, the European Central Bank and the IMF are telling Greece: make workers redundant, pay those still in a job much less, and slash pensions for the elderly. But it’s not just in Greece. Nearly every meeting of the Wise Folk in Brussels and Strasbourg comes up with the same communique for “reform” of the labour market and social-security entitlements across the continent: a not-so-coded call for attacking ordinary people’s living standards.

This is what the noble European project is turning into: a grim march to the bottom. This isn’t about creating a deeper democracy, but deeper markets – and the two are increasingly incompatible. Germany’s Angela Merkel has shown no compunction about meddling in the democratic affairs of other European countries – tacitly warning Greeks against voting for Syriza for instance, or forcing the Spanish socialist prime minister, José Luis Rodríguez Zapatero, to rip up the spending commitments that had won him an election.

The diplomatic beatings administered to Syriza since it came to power this year can only be seen as Europe trying to set an example to any Spanish voters who might be tempted to support its sister movement Podemos. Go too far left, runs the message, and you’ll get the same treatment.

Whatever the founding ideals of the eurozone, they don’t match up to the grim reality in 2015. This is Thatcher’s revolution, or Reagan’s – but now on a continental scale. And as then, it is accompanied by the idea that There Is No Alternative either to running an economy, or even to which kind of government voters get to choose.

The fact that this entire show is being brought in by agreeable-looking Wise Folk often claiming to be social democratic doesn’t render the project any nicer or gentler. It just lends the entire thing a nasty tang of hypocrisy.

Greek debt crisis is the Iraq War of finance

Guardians of financial stability are deliberately provoking a bank run and endangering Europe's system in their zeal to force Greece to its knees.

By Ambrose Evans-Pritchard in The Telegraph 6:29PM BST 19 Jun 2015  

Rarely in modern times have we witnessed such a display of petulance and bad judgment by those supposed to be in charge of global financial stability, and by those who set the tone for the Western world.

The spectacle is astonishing. The European Central Bank, the EMU bail-out fund, and the International Monetary Fund, among others, are lashing out in fury against an elected government that refuses to do what it is told. They entirely duck their own responsibility for five years of policy blunders that have led to this impasse.

They want to see these rebel Klephts hanged from the columns of the Parthenon – or impaled as Ottoman forces preferred, deeming them bandits - even if they degrade their own institutions in the process.

If we want to date the moment when the Atlantic liberal order lost its authority – and when the European Project ceased to be a motivating historic force – this may well be it. In a sense, the Greek crisis is the financial equivalent of the Iraq War, totemic for the Left, and for Souverainistes on the Right, and replete with its own “sexed up” dossiers.

Does anybody dispute that the ECB – via the Bank of Greece - is actively inciting a bank run in a country where it is also the banking regulator by issuing this report on Wednesday?

It warned of an "uncontrollable crisis" if there is no creditor deal, followed by soaring inflation, "an exponential rise in unemployment", and a "collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership".

The guardian of financial stability is consciously and deliberately accelerating a financial crisis in an EMU member state - with possible risks of pan-EMU and broader global contagion – as a negotiating tactic to force Greece to the table.

It did so days after premier Alexis Tsipras accused the creditors of "laying traps" in the negotiations and acting with a political motive. He more or less accused them of trying to destroy an elected government and bring about regime change by financial coercion.

I leave it to lawyers to decide whether this report is a prima facie violation of the ECB’s primary duty under the EU treaties. It is certainly unusual. The ECB has just had to increase emergency liquidity to the Greek banks by €1.8bn (enough to last to Monday night) to offset the damage from rising deposit flight.

In its report, the Bank of Greece claimed that failure to meet creditor demands would “most likely” lead to the country’s ejection from the European Union. Let us be clear about the meaning of this. It is not the expression of an opinion. It is tantamount to a threat by the ECB to throw the Greeks out of the EU if they resist.

This is not the first time that the ECB has strayed far from its mandate. It forced the Irish state to make good the claims of junior bondholders of Anglo-Irish Bank, saddling Irish taxpayers with extra debt equal to 20pc of GDP.

This was done purely in order to save the European banking system at a time when the ECB was refusing to do the job itself, betraying the primary task of a central bank to act as a lender of last resort.

It sent secret letters to the elected leaders of Spain and Italy in August 2011 demanding detailed changes to internal laws for which it had no mandate or technical competence, even meddling in neuralgic issues of labour law that had previously led to the assassination of two Italian officials by the Red Brigades. It demanded changes to the Spanish constitution.

When Italy’s Silvio Berlusconi balked, the ECB switched off bond purchases, driving 10-year yields to 7.5pc. He was forced from office in a back-room coup d’etat, albeit one legitimised by the ageing ex-Stalinist EU fanatic who then happened to be president of Italy.

Lest we forget, it parachuted in its vice-president – Lucas Papademos – to take over Greece when premier George Papandreou merely suggested that he might submit the EMU bail-out package to a referendum, a wise idea in retrospect. That makes two coups d’etat. Now Syriza fears they are angling for a third.

The creditor power structure has lost its way. The IMF is in confusion. It is enforcing a contractionary austerity policy in Greece – with no debt relief, exchange cushion, or offsetting investment - that has been discredited by its own elite research department as scientifically unsound.

The Fund’s culpability in this fiasco is by now well known. As I argued last week, its own internal documents show that the original bail-out in 2010 was designed to rescue the EMU banking system and monetary union at a time when it had no defences against contagion. Greece was sacrificed.

One should have thought that the IMF would wish to lower the political temperature, given that its own credibility and long-term survival are at stake. But no, Christine Lagarde has upped the political ante by stating that Greece will fall into arrears immediately if it misses a €1.6bn payment to the Fund on June 30.

In my view, this is a discretionary escalation. The normal procedure is to notify the IMF Board after 30 days. This period is a de facto grace period, and in a number of past cases the arrears were cleared up quietly during the interval before the matter ever reached the Board.

The IMF could have let this process run in the case of Greece. It has chosen not to do so, ostensibly on the grounds that the sums are unusually large.

Klaus Regling, head of the eurozone bail-out fund (EFSF), entered on cue to hint strongly that his organisation would trigger cross-default clauses on its Greek bonds – 45pc of the Greek package – even though there is no necessary reason why it should do so. It is an optional matter for the EFSF board.

He seems to be threatening an EFSF default, even though the Greeks themselves are not doing so, a remarkable state of affairs.

It is obvious what is happening. The creditors are acting in concert. Instead of stopping to reflect for one moment on the deeper wisdom of their strategy, they are doubling down mechanically, appearing to assume that terror tactics will cow the Greeks at the twelfth hour.

Personally, I am a Burkean conservative with free market views. Ideologically, Syriza is not my cup tea. Yet we Burkeans do like democracy – and we don’t care for monetary juntas – even if it leads to the election of a radical-Left government.

As it happens, Edmund Burke would have found the plans presented to the Eurogroup last night by finance minister Yanis Varoufakis to be rational, reasonable, fair, and proportionate.

They include a debt swap with ECB bonds coming due in July and August exchanged for bonds from the bail-out fund. They would have longer maturities and lower interest rates, reflecting the market borrowing cost of the creditors.

Syriza said from the outset that it was eager to work on market reforms with the OECD, the leading authority. It wants to team up with the International Labour Organisation on Scandinavian style flexi-security and labour reforms, a valid alternative to the German-style Hartz IV reforms that have impoverished the bottom fifth of German society and which no Left-wing movement can stomach.

It wished to push through a more radical overhaul of the Greek state that anything yet done under five years of Troika rule – and much has been done, to be fair.

As Mr Varoufakis told Die Zeit: “Why does a kilometer of freeway cost three times as much where we are as it does in Germany? Because we’re dealing with a system of cronyism and corruption. That’s what we have to tackle. But, instead, we’re debating pharmacy opening times."

The Troika pushed privatisation of profitable state assets at knock-down depression prices to private monopolies, to the benefit of an entrenched elite. To call that reforms invites a bitter cynicism.

The only reason that the Troika pushed this policy was in order to extract money. It was acting at a debt collector. “The reforms were a smokescreen. Whenever I tried talking about proposals, they were bored. I could see it in their body language," Mr Varoufakis told me.

The truth is that the creditor power structure never even looked at the Greek proposals. They never entertained the possibility of tearing up their own stale, discredited, legalistic, fatuous Troika script.

The decision was made from the outset to demand strict enforcement of the terms agreed in the original Memorandum, which even the last conservative pro-Troika government was unable to implement - regardless of whether it makes any sense, or actually increases the chance that Germany and other lenders will recoup their money.

At best, it is bureaucratic inertia, a prime exhibit of why the EU has become unworkable, almost genetically incapable of recognising and correcting its own errors.

At worst, it is nasty, bullying, insistence on ritual capitulation for the sake of it.

We all know the argument. The EU is worried about political “moral hazard”, about what Podemos might achieve in Spain, or the eurosceptics in Italy, or the Front National in France, if Syriza is seen to buck the system and get away with it.

But do the proponents of this establishment view – and one hears it a lot – really think that Podemos can be defeated by crushing Syriza, or that they can discourage Marine Le Pen by violating the sovereignty and sensibilities of a nation?

Do they think that the EU’s ever-declining hold on the loyalty of Europe’s youth can be reversed by creating a martyr state on the Left? Do they not realize that this is their own Guatemala, the radical experiment of Jacobo Arbenz that was extinguished by the CIA in 1954, only to set off the Cuban revolution and thirty years of guerrilla warfare across Latin America? Don’t these lawyers – and yes they are almost all lawyers - ever look beyond their noses?

The Versailles victors assumed reflexively that they had the full weight of moral authority on their side when they imposed their Carthiginian settlement on a defeated Germany in 1919 and demanded the payment of debts that they themselves invented. History judged otherwise.

Greek defiance mounts as Alexis Tsipras turns to Russia and China

Ambrose Evans Pritchard in The Telegraph

Two months of EU bluster and reproof have failed to cow Greece. It is becoming clear that Europe’s creditor powers have misjudged the nature of the Greek crisis and can no longer avoid facing the Morton’s Fork in front of them.

Any deal that goes far enough to assuage Greece’s justly-aggrieved people must automatically blow apart the austerity settlement already fraying in the rest of southern Europe. The necessary concessions would embolden populist defiance in Spain, Portugal and Italy, and bring German euroscepticism to the boil.

Emotional consent for monetary union is ebbing dangerously in Bavaria and most of eastern Germany, even if formulaic surveys do not fully catch the strength of the undercurrents. 

This week's resignation of Bavarian MP Peter Gauweiler over Greece’s bail-out extension can, of course, be over-played. He has long been a foe of EMU. But his protest is unquestionably a warning shot for Angela Merkel's political family.

Mr Gauweiler was made vice-chairman of Bavaria's Social Christians (CSU) in 2013 for the express purpose of shoring up the party's eurosceptic wing and heading off threats from the anti-euro Alternative fur Deutschland (AfD).

Yet if the EMU powers persist mechanically with their stale demands - even reverting to terms that the previous pro-EMU government in Athens rejected in December - they risk setting off a political chain-reaction that can only eviscerate the EU Project as a motivating ideology in Europe.

Jean-Claude Juncker, the European Commission’s chief, understands the risk perfectly, warning anybody who will listen that Grexit would lead to an “irreparable loss of global prestige for the whole EU” and crystallize Europe’s final fall from grace.

When Warren Buffett suggests that Europe might emerge stronger after a salutary purge of its weak link in Greece, he confirms his own rule that you should never dabble in matters beyond your ken.

Alexis Tsipras leads the first radical-Leftist government elected in Europe since the Second World War. His Syriza movement is, in a sense, totemic for the European Left, even if sympathisers despair over its chaotic twists and turns. As such, it is a litmus test of whether progressives can pursue anything resembling an autonomous economic policy within EMU.

There are faint echoes of what happened to the elected government of Jacobo Arbenz in Guatemala, a litmus test for the Latin American Left in its day. His experiment in land reform was famously snuffed out by a CIA coup in 1954, with lasting consequences. It was the moment of epiphany for Che Guevara (below), then working as a volunteer doctor in the country.

A generation of students from Cuba to Argentina drew the conclusion that the US would never let the democratic Left hold power, and therefore that power must be seized by revolutionary force.

We live in gentler times today, yet any decision to eject Greece and its Syriza rebels from the euro by cutting off liquidity to the Greek banking system would amount to the same thing, since the EU authorities do not have a credible justification or a treaty basis for acting in such a way. Rebuking Syriza for lack of “reform” sticks in the craw, given the way the EU-IMF Troika winked at privatisation deals that violated the EU’s own competition rules, and chiefly enriched a politically-connected elite.

Forced Grexit would entrench a pervasive suspicion that EU bodies are ultimately agents of creditor enforcement. It would expose the Project’s post-war creed of solidarity as so much humbug.

Willem Buiter, Citigroup’s chief economist, warns that Greece faces an “economic show of horrors” if it returns to the drachma, but it will not be a pleasant affair for Europe either. “Monetary union is meant to be unbreakable and irrevocable. If it is broken, and if it is revoked, the question will arise over which country is next,” he said.

“People have tried to make Greece into a uniquely eccentric member of the eurozone, accusing them of not doing this or not doing that, but a number of countries share the same weaknesses. You think the Greek economy is far too closed? Welcome to Portugal. You think there is little social capital in Greece, and no trust between the government and citizens? Welcome to southern Europe,” he said.

Greece could not plausibly remain in Nato if ejected from EMU in acrimonious circumstances. It would drift into the Russian orbit, where Hungary’s Viktor Orban already lies. The southeastern flank of Europe’s security system would fall apart.

Rightly or wrongly, Mr Tsipras calculates that the EU powers cannot allow any of this to happen, and therefore that their bluff can be called. “We are seeking an honest compromise, but don't expect an unconditional agreement from us," he told the Greek parliament this week.

If it were not for the fact that a sovereign default on €330bn of debts – bail-out loans and Target2 liabilities within the ECB system – would hurt taxpayers in fellow Club Med states that are also in distress, most Syriza deputies would almost relish the chance to detonate this neutron bomb.

Mr Tsipras is now playing the Russian card with an icy ruthlessness, more or less threatening to veto fresh EU measures against the Kremlin as the old set expires. “We disagree with sanctions. The new European security architecture must include Russia,” he told the TASS news agency.

He offered to turn Greece into a strategic bridge, linking the two Orthodox nations. “Russian-Greek relations have very deep roots in history,” he said, hitting all the right notes before his trip to Moscow next week.

The Kremlin has its own troubles as Russian companies struggle to meet redemptions on $630bn of dollar debt, forcing them to seek help from state’s reserve funds. Russia’s foreign reserves are still $360bn – down from $498bn a year ago – but the disposable sum is far less given a raft of implicit commitments. Even so, President Vladimir Putin must be sorely tempted to take a strategic punt on Greece, given the prize at hand.

Panagiotis Lafazanis, Greece’s energy minister and head of Syriza’s Left Platform, was in Moscow this week meeting Gazprom officials. He voiced a “keen interest” in the Kremlin’s new pipeline plan though Turkey, known as "Turkish Stream".

Operating in parallel, Greece’s deputy premier, Yannis Drakasakis, vowed to throw open the Port of Piraeus to China’s shipping group Cosco, giving it priority in a joint-venture with the Greek state’s remaining 67pc stake in the ports. On cue, China has bought €100m of Greek T-bills, helping to plug a funding shortfall as the ECB orders Greek banks to step back.

One might righteously protest at what amounts to open blackmail by Mr Tsipras, deeming such conduct to be a primary violation of EU club rules. Yet this is to ignore what has been done to Greece over the past four years, and why the Greek people are so angry.

Leaked IMF minutes from 2010 confirm what Syriza has always argued: the country was already bankrupt and needed debt relief rather than new loans. This was overruled in order to save the euro and to save Europe’s banking system at a time when EMU had no defences against contagion.

^{Greek prime minister Alexis Tsipras and finance minister Yanis Varoufakis}

Finance minister Yanis Varoufakis rightly calls it “a cynical transfer of private losses from the banks’ books onto the shoulders of Greece’s most vulnerable citizens”. A small fraction of the €240bn of loans remained in the Greek economy. Some 90pc was rotated back to banks and financial creditors. The damage was compounded by austerity overkill. The economy contracted so violently that the debt-ratio rocketed instead of coming down, defeating the purpose.

India’s member on the IMF board warned that such policies could not work without offsetting monetary stimulus. "Even if, arguably, the programme is successfully implemented, it could trigger a deflationary spiral of falling prices, falling employment and falling fiscal revenues that could eventually undermine the programme itself.” He was right in every detail.

Marc Chandler, from Brown Brothers Harriman, says the liabilities incurred – pushing Greece’s debt to 180pc of GDP - almost fit the definition of “odious debt” under international law. “The Greek people have not been bailed out. The economy has contracted by a quarter. With deflation, nominal growth has collapsed and continues to contract,” he said.

The Greeks know this. They have been living it for five years, victims of the worst slump endured by any industrial state in 80 years, and worse than European states in the Great Depression. The EMU creditors have yet to acknowledge in any way that Greece was sacrificed to save monetary union in the white heat of the crisis, and therefore that it merits a special duty of care. Once you start to see events through Greek eyes – rather than through the eyes of the north European media and the Brussels press corps - the drama takes on a different character.

It is this clash of two entirely different and conflicting narratives that makes the crisis so intractable. Mr Tsipras told his own inner circle privately before his election in January that if pushed to the wall by the EMU creditor powers, he would tell them “to do their worst”, bringing the whole temple crashing down on their heads. Everything he has done since suggests that he may just mean it.

To beat austerity, Greece must break free from the euro

Costas Lapavitsas in The Guardian

The agreement signed between Greece and the EU after three weeks of lively negotiations is a compromise reached under economic duress. Its only merit for Greece is that it has kept the Syriza government alive and able to fight another day. That day is not far off. Greece will have to negotiate a long-term financing agreement in June, and has substantial debt repayments to make in July and August. In the coming four months the government will have to get its act together to negotiate those hurdles and implement its radical programme. The European left has a stake in Greek success, if it is to beat back the forces of austerity that are currently strangling the continent.

In February the Greek negotiating team fell into a trap of two parts. The first was the reliance of Greek banks on the European Central Bank for liquidity, without which they would stop functioning. Mario Draghi, president of the European Central Bank, ratcheted up the pressure by tightening the terms of liquidity provision. Worried by developments, depositors withdrew funds; towards the end of negotiations Greek banks were losing a billion euros of liquidity a day.

Greece secures eurozone bailout extension for four months

The second was the Greek state’s need for finance to service debts and pay wages. As negotiations proceeded, funds became tighter. The EU, led by Germany, cynically waited until the pressure on Greek banks had reached fever pitch. By the evening of Friday 20 February the Syriza government had to accept a deal or face chaotic financial conditions the following week, for which it was not prepared at all.

The resulting deal has extended the loan agreement, giving Greece four months of guaranteed finance, subject to regular review by the “institutions”, ie the European Commission, the ECB and the IMF. The country was forced to declare that it will meet all obligations to its creditors “fully and timely”.

Furthermore, it will aim to achieve “appropriate” primary surpluses; desist from unilateral actions that would “negatively impact fiscal targets”; and undertake “reforms” that run counter to Syriza pledges to lower taxes, raise the minimum wage, reverse privatisations, and relieve the humanitarian crisis.

In short, the Syriza government has paid a high price to remain alive. Things will be made even harder by the parlous state of the Greek economy. Growth in 2014 was a measly 0.7%, while GDP actually contracted during the last quarter. Industrial output fell by a further 3.8% in December, and even retail sales declined by 3.7%, despite Christmas. The most worrying indication, however, is the fall in prices by 2.8% in January. This is an economy in a deflationary spiral with little or no drive left to it. Against this background, insisting on austerity and primary balances is vindictive madness.

The coming four months will be a period of constant struggle for Syriza. There is little doubt that the government will face major difficulties in passing the April review conducted by the “institutions” to secure the release of much-needed funds. Indeed, so grave is the fiscal situation that events might unravel even faster. Tax income is collapsing, partly because the economy is frozen and partly because people are withholding payment in the expectation of relief from the extraordinary tax burden imposed over the last few years. The public purse will come under considerable strain already in March, when there are sizeable debt repayments to be made.

But even assuming that the government successfully navigates these straits, in June Greece will have to re-enter negotiations with the EU for a long-term financing agreement. The February trap is still very much there, and ready to be sprung again.

What should we as Syriza do and how could the left across Europe help? The most vital step is to realise that the strategy of hoping to achieve radical change within the institutional framework of the common currency has come to an end. The strategy has given us electoral success by promising to release the Greek people from austerity without having to endure a major falling-out with the eurozone. Unfortunately, events have shown beyond doubt that this is impossible, and it is time that we acknowledged reality.

For Syriza to avoid collapse or total surrender, we must be truly radical. Our strength lies exclusively in the tremendous popular support we still enjoy. The government should rapidly implement measures relieving working people from the tremendous pressures of the last few years: forbid house foreclosures, write off domestic debt, reconnect families to the electricity network, raise the minimum wage, stop privatisations. This is the programme we were elected on. Fiscal targets and monitoring by the “institutions” should take a back seat in our calculations, if we are to maintain our popular support.
At the same time, our government must approach the looming June negotiations with a very different frame of mind from February. The eurozone cannot be reformed and it will not become a “friendly” monetary union that supports working people. Greece must bring a full array of options to the table, and it must be prepared for extraordinary liquidity measures in the knowledge that all eventualities could be managed, if its people were ready. After all, the EU has already wrought disaster on the country.

Syriza could gain succour from the European left, but only if the left shakes off its own illusions and begins to propose sensible policies that might at last rid Europe of the absurdity that the common currency has become. There might then be a chance of properly lifting austerity across the continent. Time is indeed very short for all of us.

Victory in Greece

Tariq Ali on Syriza's victory in the Greek elections

Syriza stood up to the money men – the UK left must do the same

Just imagine: if Labour wasn’t so in thrall to economic bodies and their predictions, we might have a radical left of our own

• 
• • Zoe Williams
  • The Guardian, Sunday 25 January 2015 18.57 GMT

‘A leftwing party that cannot face down the risks raised by investors will never be credible.’ Illustration: Robert G Fresson

‘When you study the successful experiences of transformative movements,” said Pablo Iglesias of Podemos, the new party of the Spanish left, “you realise that the key to success is to achieve a connection between the reality you have diagnosed and what the majority actually feels.”

This statement is more than bleedin’ obvious. It is crying out for a response that includes an expletive and Sherlock Holmes. Yet that’s what Iglesias has built: a successful, transformative movement. And in Greece, that’s what Syriza has built too, as demonstrated on Sunday, when a country that only a few years ago saw the rise of the fascist Golden Dawn party, went to the polls with a majority supporting the radical left. That, to a degree, is also what the yes campaign built in Scotland. So we know it is possible, to diagnose a reality that so many people actually feel. It should be possible, also, to decipher how these movements did it.

What they and others like them – the successful German campaign for free higher education, for example – have in common, first of all, is that they reject the prevailing economic verities. Conventional political debate in the UK has parties thrashing out positions, which they then justify and defend with reference to the International Monetary Fund or the Office for Budget Responsibility or the Bank of England. Economic projections, or rather the bodies who make them, stand as the final authority on what constitutes a good decision.

Grant Shapps, the Tory party chairman, provided a bland but elegant example of this on Sunday, when touting the election message – “Conservatives or chaos” – around the BBC. “The IMF says we can be the biggest economy in Europe in 15 years, but only if we stay on the road to growth.” Here, the IMF is presented as authority, godhead and visionary. It can see into the future. It cannot be questioned. In this worldview, party differences are simply practical, problem-solving ones: who can best do what the IMF wants? Who understands growth and how to deliver it? It is ironic that this has become the burning question for democracy, when history shows that growth is pretty unrelated to which party is in government.

Politicians are cast in a fairly minor role by this rationale. They take on a sort of valet position, there to arrange things the way the economy needs them. It is extremely difficult as this kind of politician to make any diagnosis of reality that people might recognise. The last thing you want to do when your hands are tied is to describe a situation – low wages for instance, high housing costs, unliveable lives – that demands action.

One of the fascinating things about the Greek election campaign has been listening to Syriza candidates reply to questions about what to do if the European Central Bank (ECB) becomes angry, or the markets panic. Miranda Xafa, a former IMF board member and supporter of the centrist Potami party, said in an emollient voice (in a Radio 5 Live interview), “I am sure the ECB will be patient.” The gulf between Syriza and all the other parties was suddenly, dramatically clear: the leftwing party no longer thinks of the ECB as its dad. It does not seek its patience. It will not take its terms at any price. This is the necessary precondition for credible leftism: a rejection of the bodies, mostly central banks and attendant forecasting agencies, currently in charge. You can’t build a new game to their rules.

The backstop position for centrists (I call it the centre, but many of its assumptions are what we once called hard right) is that any change invites instability, which is enough to undo the prosperity that all the sensible people are working towards. Whatever happens, money must not be frightened away; investors must not be threatened; job creators must remain secure. During the Scottish referendum this argument took the form of CEOs, standing in front of HQs, proclaiming their intention to leave Scotland forever should it fall into the wrong hands. A leftwing party that cannot face down the risks raised by investors will never be able to make a believable case for anything; their argument is a tinderbox, ready to ignite at the first fiery word from Alan Sugar.

PFI is a classic example of the failings of the UK left: every party agrees these contracts were a rip-off – the coalition is still signing them, while fulminating about Labour’s track record; Labour thinks radicalism means admitting that perhaps they weren’t a good idea. Nigel Farage (again on Radio 5) said to my face that Ukip would “get hospitals out from under the yoke of PFI”. This means tearing up the contracts, doesn’t it? What else could it mean? There is only one other group in the country with an idea so radical, and that’s The People vs PFI.

Why would Labour never dare? Because when people call it anti-business, it hasn’t got the apparatus to cope. Farage dares partly, I think, because he has no intention of carrying it out; but also because, in a bizarre twist to the new multiparty politics, Ukip is often saying something similar to the Greens: business interests aren’t everything. That’s a reality that the majority feels, but that you never hear described; that’s how the Greens overtook the Liberal Democrats, while all eyes were on Ukip.

Back in Greece, exit polls suggest Syriza is on course to form a majority government. We don’t yet know whether or not this spells Grexit, or what it all means for the eurozone. But we do now know, before anybody starts diagnosing anything, the most important thing about building a successful transformative movement: that it is possible. Eminently.

Greek elections: Syriza’s young radicals plot a political earthquake for Europe

Inside its smoke-filled HQ, the far-left party is making plans to defy the EU over Greece’s debt and abolish draconian austerity measures imposed to shore up the euro. But first it must win next Sunday’s general election 

• 
• • Helena Smith in Athens
  • The Observer, Saturday 17 January 2015 22.49 GMT

Syriza leader Alexis Tsipras, second right, celebrates success in May’s European parliament elections with Athens governor Rena Dourou, left, and mayoral candidate Gabriel Sakellaridis Photograph: Corbis/Panayiotis Tzamaros

An air of excitement pervades the headquarters of Greece’s far-left Syriza party. In small, smoke-filled rooms, off corridors plastered with posters advertising Marxist seminars and cluttered with coffee cups and leftover meals, staff pore over computers. Most are women, young and intense, cigarettes dangling from lips as they tap into keyboards. The hubbub of chatter is loud. Up narrow staircases people zoom this way and that. For the visitor there is no mistaking that the seven-storey building, overlooking one of Athens’s more rundown squares, is as much a place of workable chaos as it is a well of expectancy.

“Hope is coming,” proclaims a poster pinned to the noticeboards of almost every floor. “Greece is progressing, Europe is changing.”

“Welcome to Syriza,” says Panos Skourletis, the party’s grey-haired spokesman, proffering a guided tour of the offices’ newly renovated media room, “and please forgive the smoke.”

Barely a week before critical elections in a country once again caught up in the eurozone storm, Skourletis is buoyant. It is easy to see why. With every poll giving Syriza an indisputable lead, the radicals are on a roll. For Europe’s growing class of anti-austerians, victory is in sight. “We are going to win,” he enthuses somewhat triumphantly. “There is only one question, and that is by how much.”

If bookies in Athens are to be believed, the odds on the party securing an outright majority are still slim. But, says Skourletis, as the election campaign enters its final stretch things are looking up. “On the basis of data and empirical evidence, we believe we are going to get more and more votes from the undecided, because that is how it has worked for parties in the lead in the past.”

The leftwingers are not alone in taking note of the Greek electorate’s ballot-box intentions. From Westminster to Washington, Madrid to Rome, the 25 January poll is being seen as a potential watershed in the eurozone crisis. If the radicals are catapulted to power, their victory will resonate beyond Greece, reviving fears of Athens being led to the euro exit door.David Cameron and his prime ministerial counterparts in Spain and Portugal, who face electorates themselves later this year, are watching closely. So, too, are mandarins in Brussels and Berlin.

Syriza supporters paint a banner outside anelection rally in central Athens. Photograph: Orestis Panagiotou/EPA

From maverick marginals, the leftwingers have moved to centre stage, riding high on opposition to the austerity Athens has been forced to apply in return for €240bn in emergency bailout funds from the EU and International Monetary Fund. Their ascent poses the biggest threat to consensus politics in decades. Alexis Tsipras, Syriza’s firebrand leader, has promised to take an axe to the nexus of interests that have kept Greece’s rotten establishment alive – starting with the media-owning oligarchs who control so much of the country’s internal debate.

“The future has already begun,” he declared after parliament’s failure to elect a president triggered a constitutional provision for early elections.

Shock, anger and fear have marked Greece’s financial meltdown. But five years on, Syriza’s meteoric rise – and imminent electoral victory – also presages the passage of despair. Many Greeks will be inclined to vote for the insurgents as much out of hopelessness as helplessness.

“With our country’s economic crisis, our big opening has been to the decimated middle class,” Skourletis says. “In us they have found a voice.”

The radicals have come a long way from the time I would visit their headquarters back in the early 1990s.Then, conversation inevitably focused on intra-party disputes between Eurocommunists and the Stalinist KKE. Over tiny cups of Turkish coffee – gleefully provided as guests were so rare – Leonidas Kyrkos, the late Eurocommunist leader, would speak of the scandal-ridden nation’s need for “catharsis, ” amid warnings of its tendency to overspend, but bemoan the fact that his utopian views were shared by so few. That he would have a successor, who would emerge from school sit-ins and the anti-globalisation movement to be embraced not only by Greeks but the entire spectrum of Europe’s left, would undoubtedly have mystified him.

In many ways Skourletis personifies the tectonic shift. The son of a public-sector doctor, and owner of a successful company importing tools before the crisis hit, he has seen many of his friends destroyed by the fate that has befallen Greece.

“Like Greeks all over, they availed themselves of the loans that the banks were giving out so freely to buy houses and cars and, then, suddenly found themselves unemployed,” he says, wincing. “Because they are in their 50s, they are unlikely to ever work again, which means they have no prospect of getting a pension either. It’s tragic.”

Activists watch an interview with Syriza leader Alexis Tsipras newspaper at the party’s election centre in Athens last week. Photograph: Aris Messinis/AFP/Getty Images

Precisely because it has been untested by power, Syriza has also been able to count on the support of a younger generation disproportionately hit by job losses.

In the absence of open revolt, the anti-establishment party is regarded as the best form of resistance to policies that have caused a Depression-era recession, worse, analysts say, even than that suffered by the United States in the 1930s.

Although the Greek economy has begun to show the first signs of recovery – the result of rigorous efforts to balance the books by prime minister Antonis Samaras’s outgoing coalition – the effects of such momentous fiscal adjustment have been catastrophic.

GDP has contracted by more than a quarter, around 26% of the population remains out of work, and more than three million live on, or below, the poverty line. Tsipras, last week, likened the measures to “fiscal waterboarding”.

The appetite of Greeks for yet more drama is limited. Almost six years after the country was forced to come clean on the scale of its public spending, they are worn out by relentless cuts and tax rises and are visibly fatigued. Greece itself has been hollowed out. Athens, home to almost half of its 12 million-strong population, has become a casebook study of what happens to capitals when they go broke, its smashed pavements, unkempt parks, boarded up shops and ever multiplying beggars and homeless the tell-tale signs of its financial collapse.

In such a climate, Tsipras’s promise of a public spending spree has gone down well. Across the board, Greeks have welcomed his pledge to tackle the country’s “silent humanitarian crisis” by increasing the minimum wage, reducing taxes and hiring in the public sector. But the euphoria that accompanied past political sea-changes is unlikely to be evident. Many say they will be rooting for Syriza out of protest against the centre-right New Democracy and the centre-left Pasok, the two mainstream parties that,alternating in power for the past 40 years, have been blamed for Greece’s near economic death.

Aware that the vast majority want to remain in the eurozone, Tsipras, who turned 40 last year, has toned down his anti-European rhetoric. Gone are the references to “tearing up” the memoranda of conditions attached to the country’s rescue programmes. Last week he went out of his way to placate German taxpayers, saying that they had “nothing to fear from a Syriza government”.

“Our aim is not for a confrontation with our partners, to get more credits or a licence for new deficits,” he wrote in the economic daily Handelsblatt. “It is to stabilise the country, reach a balanced primary budget and end the bloodletting from German and Greek taxpayers.”

But the charismatic politician still says he has “Merkelism” in his sights. Ending austerity and writing off Athens’s monumental debt – at 177% of GDP the largest in Europe – remain priorities. And with creditors ruling out both, analysts say it will require a major kolotumba, or U-turn, on the part of the leader to avert a head-on collision. Earlier this month the European Central Bank added to the pressure with a stark warning that Greek lenders would be unable to tap funds if bailout conditions were dropped, raising the spectre of a bank run in the months ahead.

A free meal organised by the Athens municipality for elderly, homeless and needy people last Easter.Photograph: Panayiotis Tzamaros/Demotix/Corbis

“Tsipras is entrapped in his own rhetoric,” says Dr Eleni Panagiotarea, a research fellow at Eliamep, Greece’s leading thinktank. “To move from where he is now to pulling off the kolotumba will not only mean a loss of prestige but control over the various far-left factions in his party and, if that happens, it is going to be very difficult for him to get his own MPs to vote through legislation in the future.”

Maoists, Trotskyists, anti-capitalist activists and champagne-swilling ex-trade unionists, who once belonged to the socialist Pasok party, are among the 11 groups that are part of Syriza. At least 30% are militants who openly advocate dumping the euro in favour of the drachma. Tsipras moved up the ranks through Synaspismos, the Eurocommunist party that forms the alliance’s central plank. If he controls 60% of the MPs who are likely to be elected next Sunday, insiders say it would be a “huge achievement”.

“He is faced with a huge dilemma,” says Spyros Lykoudis, who spent more than 20 years in Synaspismos before abandoning the party in disagreement over the need to press ahead with reforms. “If he placates creditors abroad, he stands to lose his own constituency and if he doesn’t he risks bankruptcy.”

Lykoudis, who is now running with To Potami, a centrist party established last year, believes the best solution would lie in the formation of a coalition government.

“And our hope is that it is us who emerges as the country’s third biggest force and not the neo-Nazis in Golden Dawn,” he adds. “If reformers are in his government, it will act as a restraint and make it easier to take measures. As things stand, he is a populist who promises all things to all men.”

The charge that Syriza is composed of dangerous ideologues bent on turning Greece into a Marxist paradise is heartedly rebuffed by cadres.

Instead the leftwingers argue that the centre of gravity in politics has shifted so much to the right since the advent of Thatcherism that the party’s proposals now seem radical. “All the things that sound radical now were standard fare in the golden age of capitalism in the 50s and 60s,” says the economics professor Euclid Tsakalotos, Syriza’s shadow finance minister for the last two years.

Raised in Britain and educated at St Paul’s, the leading London private school, before going to Oxford, Tsakalotos, 54, insists that after years of being subjected to the brutal vagaries of the market, there are growing numbers across Europe who feel excluded from decision-making and the centres of power.

“We are only more radical in the sense that we have been influenced by the anti-global movement and believe in concepts of participatory democracy,” he adds. “The angst Syriza has caused is down to us challenging a system that can’t actually represent the interests of ordinary people.”

In the party’s smoke-filled headquarters, the leftwingers say they are gearing up for a fight. This is the closest they have come to power since the formation, almost 200 years ago, of the modern Greek state, and they are not going to surrender easily.

“Unlike the left elsewhere, we stopped arguing about Trotsky and Stalin and managed to bury our differences,” says the soft-spoken Christoforos Papadopoulos, a member of the party’s political secretariat. “That has been the secret of our success, and you can be sure that when we reach office we are not going to betray what we believe in.”

When the going gets tough, it is likely that Syriza will focus on clamping down on oligarchs and other vested interests to get by. One US cable, revealed by WikiLeaks, described the tycoons as “a small group of people who have made or inherited fortunes …  and who are related by blood, marriage or adultery to political and government officials and/or other media and business magnates.”

“What we will not be doing is making any kolotumbes,” says Papadopoulos, taking a mighty draw on his umpteenth cigarette.

A homeless man eats in the doorway of a closed shop in Athens. Photograph: Thanassis Stavrakis/AP

SYRIZA’S PROMISES

The party aims to end austerity by:
■ Giving free electricity to Greeks whose supplies have been cut off;
■ Providing food stamps to children;
■ Giving health care to the uninsured;
■ Providing a roof for the homeless;
■ Raising the minimum wage to €750 a month from under €500;
■ Introducing a moratorium on private debt repayments to banks above 30% of disposable income.

In addition, Syriza says it will call for Greece’s “unsustainable” €320bn euro debt load to be drastically reduced and interest repayments cut. It wants an international conference to be held on the issue in an echo of the treatment given Germany after the second world war.

It also wants to abolish the economic privileges enjoyed by the Greek Orthodox church and shipping industry, reduce military spending, raise taxes on big companies and set a 75% tax on incomes over €500,000.