Greece is stuffed by the Merkozy

If the political meltdown in Greece tell us anything, it is that the eurozone crisis has gathered an unstoppable momentum and the ruling elites can’t do anything about it.

Whatever decisions are made by the major economic powers at the G20 summit in Cannes, the die, as Julius Caesar is reported to have said on crossing the Rubicon, is well and truly cast.

The unravelling of the second phase of the financial meltdown that got under way in 2008 is running ahead of and proving stronger than the half-baked decisions made by political leaders from the US to Europe.

It is not a matter of if but when the euro’s claim to be a stable currency that rivals the dollar and sterling falls apart. The debt contagion has already embraced Italy, the world’s eighth largest economy, with France and Spain considered next in line.

Italy has the second largest nominal government debt outstanding in the eurozone, at €9.3 trillion. “Italy is a banana republic that didn’t depend so much on foreign capital in the past, but now it does, and markets are less forgiving,” said Daniel Gros, the director of the Centre for European Policy Studies in Brussels. “Italy is in the danger zone; that is quite clear now.”

The political consequences are grave. Silvio Berlusconi’s government is close to collapse, while George Papandreou's government in Greece is now in a state of utter chaos. Whatever little political dignity Athens had as it carried out spending cuts ordered by the IMF and European Union, was lost this week.

After Papandreou called for a referendum on the latest austerity package he signed up for in Brussels last week, the storm clouds broke and the markets tumbled. He was immediately summonsed to meet the Merkozy – aka the chancellor of Germany and the president of France. Papandreou was given his marching orders – call off the referendum and impose the cuts.

While the referendum plan was undoubtedly a populist move to quell the strikes and mass demonstrations that have racked Greece, it at least offered the opportunity for a democratic debate. Opposition to it came from the opposition New Democracy (conservatives) as well as the Greek Communist Party (KKE).

The KKE, an ultra-Stalinist party, is the third biggest in the Greek parliament. It has spent the summer striving to keep the Pasok government in power while posturing against it.

On October 20, its members in the trade union front PAME formed a human shield at the entrance to parliament during a two-day general strike. Armed with clubs and dressed in a para-military fashion, their aim was to prevent workers and students from storming the parliament building. This led to ugly clashes with anarchists, who the Stalinists typically labelled as agents provocateurs.

Fresh election in Greece – or anywhere else for that matter – would solve nothing. The dilemma remains. How can the mountains of state, corporate and personal debt that have overwhelmed the capitalist system be reduced in a way that does not lead to mass unemployment, a collapse of living standards and a global depression?

The answer is that from a capitalist point of view, there is no alternative. This is the twilight for parliamentary democracy everywhere. Its fortunes are inextricably linked to the corporations and banks who dominate economic matters.

In defending the limited political freedoms we have against the Merkozy and others, it is clear that we need something better. A new political and sovereign power that puts into practice the very meaning of the term “democracy”, which ironically comes from the Greek words “demos” (people) and “kratos” (power), will be needed to overcome the imminent catastrophe.

Paul Feldman

Communications editor