Athens burns: has Greece entered its Argentina moment?

by Jerome Roos on February 13, 2012

Post image for Athens burns: has Greece entered its Argentina moment?

Greece’s political establishment trembles as banks and government offices burn amid violent anti-austerity riots. Has the country finally reached a tipping point?

Exactly ten years ago, the crisis-ridden country of Argentina spiraled into a bout of social unrest that would eventually lead to the largest sovereign default in history. After three years of being forced to swallow the bitter pill of IMF-imposed austerity, a tipping point was finally reached: foreign creditors and neoliberal governments had pushed the people too far. They rose up in defiance and ousted five successive Presidents in the space of just three weeks.

With the incredible images of flame-engulfed buildings and policemen emerging out of Athens, it now looks like Greece may be headed down the same path. The country has become ungovernable. Even though a majority of traitors was found to pass yet another deeply unpopular austerity package through Parliament, this weekend’s violent protests indicate that the ‘Argentina moment’ may have arrived. The Greek people simply can’t take any more austerity.

This weekend’s 48-hour strike and mass demonstration witnessed some of the largest mobilizations in Greece to date. Even our weathered comrades inside Greece reported that the scale of the protests and the severity of the violence were some of the worst yet. With over 100,000 descending onto Syntagma Square, riot police desperately clung on to their perimeter as they were pelted with rocks and firebombs. The Guardian reported that:

More than 40 buildings were set ablaze in an orgy of looting that left scores injured as protesters vented their anger at the caretaker government and parliament’s ordering of a further €3.3bn of savings by slashing wages and pensions and laying off public sector workers … Meanwhile street battles between police firing rounds of teargas and demonstrators hurling firebombs and marble slabs left Syntagma square, the plaza in front of the parliament building, resembling a war zone.

“The rebellion has begun,” the Greek resistance hero and veteran left-winger Manolis Glezos told reporters. Indeed, as students and anarchists fought back waves of riot police assaults on the occupied University Law Department, as hundreds of outraged protesters took over a TV station, and as plumes of smoke and clouds of teargas filled up the Athenian night skies, one thing became overly clear: the social situation in Greece has spun entirely out of control.

Just before the weekend, the Guardian’s veteran Greek correspondent, Helena Smith, wrote that she feared for a “social explosion”, warning that the “Greeks can’t take any more punishment.” With poverty deepening, social inequality worsening, protests persisting and the economic situation only spiraling ever deeper into despair, “it is easy to see why, among politicians at least, there is little stomach for more.”

A series of resignations by ministers on Friday, unwilling to support the latest measures, not only underlined the panic of the political class – in a country where MPs no longer feel safe walking in the streets – but proved how tenuous public support is for the bailout. If there is to be a social explosion, many said that it would come because Greeks had been pushed too far.

In my own PhD research, which compares the Argentine crisis of 2001-’02 to the Greek debt crisis, I am paying particular attention to the process through which the “impossible” at some point becomes “inevitable”. In Argentina, two factors conspired to make a default and a massive devaluation of the peso — both of which previously seemed heresy — inevitable: massive popular protests combined with a willingness of foreign creditors to let Argentina fail.

In Greece, we appear to be approaching a similar tipping point. Six government ministers resigned this weekend, the far-right Laos party deserted the coalition, and over 40 lawmakers were sacked after they rebelled against the terms of the EU-IMF bailout. As the Guardian rightly concluded, “the scenes of mayhem on the streets of Athens and all across the country leave big questions unresolved regarding Greece’s capacity to stick with the savage austerity.”

Unlike two years ago, “when the angry graffiti demanded that the ‘IMF go home’ and ‘reject austerity’, it now exhorts protesters to ‘murder bankers’ and ‘rise in rebellion’ and ‘never be slaves’. The spirit of resistance shows no sign of abating. With support for the left … growing by the day, opposition to any cost-cutting reforms is bound only to increase.” As one opposition leader put it, “Martial law has to be imposed for these measures to be implemented.”

At the same time, Greece’s foreign creditors appear ever more willing to allow the country to default. Helena Smith has pointed out that, “as the talks [between Greece and its creditors] rolled on last week, a growing number of voices in the single currency’s more stable “core” countries suggested they could manage without Greece … Some investors, too, argue that, because a default has been a possibility for many months, financial markets would take it in their stride.”

Dutch Prime Minister Rutte — who throughout this crisis has been playing hard-ball with Greece, usually followed a few weeks later in his radical neoliberal footsteps by Angela Merkel — has already raised the possibility of a Greek exit from the eurozone. So have EU Commissioner Neelie Kroes and German Finance Minister Wolfgang Schauble. All in all, Greece’s creditors appear to be preparing the ground for what they previously told us was “impossible”.

Yet as the elites persist with their scaremongering just to buy themselves a little more time, at least the 82-year old WWII survivor Stella Papafagou won’t be afraid of the “apocalyptic” consequences that Prime Minister warned of in Parliament today. “We’ve fought several times for liberation,” she told the New York Times. “But this slavery is worse than any other. This is worse than the ’40s. I would prefer to die with dignity than with my head bent down.”

{ 12 comments… read them below or add one }

Andrew Stergiou February 13, 2012 at 09:46

The foreign bankers should be arrested for the bond crisis they promulgated, advanced, conspired for, committed fraud for, murdered for, and should die for as a debt to society for their crimes against humanity on behalf of the US, Germany, France, Holland Britain, for corporate parasitism.

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Julien Febvre February 13, 2012 at 19:34

I don’t think that the comparison of Greece with Argentina is valid. Greece is a member of the EU. Argentina was a Sovereign country. Way different case.

Unfortunately EU will not allow Greece to leave. Even when the 48% is in favour of default and only the 38% wants to remain in the EU. Please let us leave. And btw, we don’t want your bail out. We have nothing in common with Europe.

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Andrew Stergiou February 23, 2012 at 17:33

Why can’t you learn to write clearly “Unfortunately EU will not allow Greece to leave” in which way? (If Greece was not divided as it is over what is vaguely suggested do you think this would be occurring?)
example 1. the say that if Greece were to revert to the Drachma that it would be a devalued Drachma. WHY? Right now there is no drachma so if the drachma is recreated it could be in any manner it wishes, but that is not the issue because where Soros made his fortune off the devaluation pof the pound today there is the international parasitical speculative class of currency traders, currency futures traders, and stock traders are making fortunes off the volatility they have created: so #1 I would suspend all currency trading, then all trading if need be. Generally Greece has much in common with Europe the political structure can help Greece political if only the Greek politicians had balls rather than acting in their traditional role as sellouts placating the masses today as they did under the Ottoman Empire.

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Julien Febvre February 13, 2012 at 19:42
dave February 13, 2012 at 20:40

Here’s an interesting piece about argentina.

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Chuck February 14, 2012 at 20:12

Reached an Argentina moment? You mean they aren’t in enough trouble NOW that they wish to join the circle of nations that NO business of any sort will do business with without serious upfront hard (foreign) currency?

Greece got to this period in their history by doing exactly what Argentina, Zimbabwe, N. Korea, Venezuela, Cuba etc has done (and the US/most of the developed world is currently doing) by spending madly, inflating their currency, expanding their government, and in general meddling with their economies. The longer they try to put off the moment of truth of the necessity of downsizing government, removing it’s presence from the economy, and in general accept the fact that subsidies to everyone is bankrupting them-Greece will continue to burn.

Parasites will fight hard to keep their share of others money so I don’t see things getting better there anytime soon. I also doubt the other nations elsewhere facing similar walls of reality will slow their race to expand government activities and control.

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Jerome Roos February 14, 2012 at 22:17

Spending madly? Check out the stats: public expenditure is below the EU average. Inflating their currency? Impossible, they’re in the eurozone. And the parasites? Those are precisely the moneyed elite: the powerful shipping industry; non tax-paying, self-employed petit bourgeoisie; and the upper classes in general, those who refuse to pay corporate taxes or their swimming pool taxes. If you refer to people living on a 500 euro wage (in one of the countries with the highest living costs in Europe) as parasites, you must be at least mildly deranged.

Besides, no one wants to do business with Argentina? Eh. Where are you getting your facts from? Argentina may have been locked out of global capital markets, but their economy has been growing at spectacular 7-9% rates ever since their much-dreaded default and massive devaluation. The reason? Breaking the oppressive dollar-peso peg — which merely served the rich Argentine elites and powerful foreign financial interests — set the country free, liberated its exporting sector from the shackles of an overvalued currency, and restored monetary policy autonomy to a government that was actually (relatively) accountable to its people.

I don’t want to overdo the Argentine “success story” — Kirchner was way too reformist to be taken seriously as an agent for serious social change — but it is undeniable that Argentina (which suffered over 50% poverty rates in 2002, compared to less than 10% today) benefited MASSIVELY from its default and devaluation. Perhaps it’s time to get yourself informed on the facts for a change?

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panoulis February 20, 2012 at 18:43

i totaly agree with you Jerome…

we dont want to get back to global capital markets.those are the beasts that destroying countries like Greece now.

Decentalization of control, anti EU.

The Greek Revolution is Comiiiiiiiing !

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Nathan February 15, 2012 at 18:54

@Jeremy: very interesting article. I’d be interested in checking out your dissertation. Have you looked at Iceland as a counterpoint? I mean, the violence isn’t there, but the default is, and it’s in Europe. I think Argentina is a very interesting case, especially for the fact that just about no one is talking about it today, even though that episode shows that there is another valid, and possible better, way than taking IMF money and subjecting yourself to austerity cuts and foreign intervention.

@Julian: if the EU doesn’t want to be completely ruined, they will have to release Greece, at the very least out of the eurozone. And if Greece goes, so will Portugal and maybe Spain. Sure, this might be the death knell of the EU as a whole, but is that really a bad thing? After the latest round of EU enlargement, there’s been nothing but murmuring and bad blood between the solid core of France and Germany and places like Romania which frankly has no place in the EU. Let it crumble, figure something else out that’s more feasible and that doesn’t involve debt slavery of entire countries.

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Jerome Roos February 15, 2012 at 19:16

Thanks Nathan! I will be looking at Iceland in an article later this year, but note that Iceland did not experience a sovereign default: its banking system collapsed and it decided not to save its banks, which is quite different from deciding not to repay the public debt (although arguably just as radically heterodox a policy choice, as you rightly point out!). A very interesting case indeed!

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eduardo ernesto garay February 20, 2012 at 19:37

En Argentina cuando se dejó de pagar la deuda las cosas mejoraron notablemente. Por un lado aparecieron monedas de los bancos provinciales que mantuvieron su valor original y hasta aumentaron luego de su caducidad. Por otra parte, al tener los bancos mundiales al acecho de cualquier depósito de las clases altas, éstas tuvieron que gastar el dinero de sus rentas de cosechas y carnes en el mercado interno. El dinero del intercambio internacional lo debieron gastar en inversiones, sobre todo inmobiliarias para no perder ese capital. La Argentina pudo haber seguido mejor si no se hubiese arreglado de nuevo con los bancos acreedores. La deuda se volvió a pagar y los de la clase alta a depositar sus dineros en Europa (en la banca Suiza). Por lo cual han comenzado otra vez las dificultades. La solución es romper definitivamente con los bancos.

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Andrew Stergiou February 23, 2012 at 17:36

PS I hate these photos of cops burning what you should show are the photos of the every day Greeks who committed suicide or who died because they believed in what these idiot bourgeois governments told them and lost their businesses, homes, cars, families, lives.

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