The euro or the drachma?

January 11, 2012

The devastating debt crisis in Greece is raising a new question: What if Greece has to abandon the euro as its currency, in spite of the financial bailouts carried out by the European Union, European Central Bank and International Monetary Fund--known collectively as the "troika." What would a return to the drachma mean for the people of Greece who have endured harsh austerity as a cost of the troika's "rescues."

Antonis Davanellos, a journalist, unionist and member of Internationalist Workers Left (DEA) in Greece, takes up the debate on the Greek and European left about how radicals and revolutionaries should answer the question: Keep the euro or return to the drachma?

THE EXPERIENCE of two years under the financial supervision of "the troika" and of consecutive and severe austerity programs has led to a meltdown of illusions about "Europeanism."

Ten years ago, under the influence of arguments made by both the right-wing New Democracy and the center-left PASOK, a wide consensus emerged in Greek society about the country's relationship to Europe.

The consensus was based on the false hope that, with Greece becoming a member of the European Monetary Union and the eurozone, Greek capitalism would enter a stage of continual growth--and that in the process, working people would benefit. Workers were supposed to get their share from the increase in the total size of the pie.

Today, these hopes are crushed.

The debate about what comes next is very important. Thousands and thousands of workers are interested in it, and it is happening with an unexpected level of political urgency.

Important changes have taken place that will shape this debate and how it plays out.

Protesters fill Syntagma Square in Athens during a general strike in May
Protesters fill Syntagma Square in Athens during a general strike in May (Ioannis Poulopoulos)

On the one hand, there is the changed attitude of Europe's most powerful countries. German Chancellor Angela Merkel and French President Nicolas Sarkozy take the prospect of a two-speed Europe and a two-speed euro for granted. Not only Greece, but also Spain, Portugal and Italy (the "PIGS" of the European South) are clearly being pushed to the back of the EU train.

But after the European summit meeting on December 9, there is now a possibility for the first time that "failed states" could be expelled from the EU. Clearly, this prospect is mostly to do with Greece right now.

On the other hand, the ruling class in Greece is beginning to alter its own position. The bankers, industrialists and ship owners still prefer to remain inside the euro club, and they proclaim that they are ready to continue the savage attacks against working people in order to achieve this.

But for the first time, they are now having to start making calculations about whether it is in their best interests to remain inside the eurozone, under the circumstances created by the international economic crisis and by the troika's decisions about the handling of the debt crisis.

In the mainstream press, there have been articles reminding us that capitalism in Greece was capable of functioning before the euro--and so it could survive after the euro. The most insightful analysts can already detect some preparatory moves by the ruling class, which is hoping to retain the capacity to control the situation, even in the case of the massive financial turbulence that would make a return to the drachma necessary.

Political leaders like Finance Minister Evangelos Venizelos have underlined the point that such decisions are not just prospects for the distant future, but could be necessary in the coming months.

Of course, the debt crisis has undermined the power of Greek capitalists and restricted their ability to act independently from the bigger powers of Europe. But it has not eliminated this ability.

Greek capitalists and their state remain a force to be reckoned with in the Balkans and the eastern Mediterranean. The best proof of this is the Greek state's political-military alliance with the state of Israel, which seeks to safeguard energy resources in the eastern Mediterranean and protect the geopolitical stability in the region, particularly in the aftermath of the rebellions in the Arab world and the change of policy by the Turkish state.

THE DOMINANT view on the European left is that a majority of activists and working-class militants in the Greek anti-capitalist left support an exit from the eurozone and a return to the drachma. This isn't exactly accurate.

The Communist Party, the largest organized force on the Greek left, has traditionally stood for exiting from the euro and the European Union. Today, however, the CP stresses that these aims are to be achieved only under a future regime of "popular power and a people's economy."

The CP leader Aleka Papariga says at every opportunity that if a return to the drachma happens under the current line-up of political and social forces, the result will be an unprecedented speculative attack and unprecedented pauperization of wage-earners and farmers.

I partly agree with her.

The reason I say "partly" is because I don't understand where this stage of "popular power and a people's economy," placed between capitalism and socialism, comes from.

But I agree that a return to the drachma, if it happens under the direction of capitalists and their state, would have devastating results for the Greek population. The drachma would be undervalued from the start and would instantly lose even more value when it is introduced.

This would wreak havoc on the value of everything that is important to wage-earners (their wages, pensions, housing, etc.) and also farmers (the value of cultivable land). On the other hand, the capitalists--who would retain over 600 billion euros deposited abroad, more than twice the sum of the Greek debt--would be able to grab for just pennies public enterprises, hospitals, land and more.

This would represent a colossal transfer of wealth from the public to the private sector, comparable only to what happened in the countries of Eastern Europe after the fall of the Stalinist regimes in 1989.

Unfortunately, this "trap" for workers, spotted by the Communist Party, has not been detected by a section of the radical anti-capitalist left. At its recent conference, the ANTARSYA alliance of left organizations adapted the slogan "an anti-capitalist exit from the euro."

This formulation isn't honest about the facts.

If we are talking about an anti-capitalist overthrow of the existing system and the new system that would emerge from this, then a slogan about currency isn't the best place to start. The slogan "all power to the workers' councils" would be much better. But this only highlights the enormous distance between this goal and the current tasks and responsibilities of the anti-capitalist left.

For most of the comrades of ANTARSYA, the way to resolve the contradiction in their everyday political activity is to forget about the adjective "anti-capitalist" and speak only about an exit from the euro, pure and simple. They talk about Greece regaining the weapon of monetary policy in dealing with the economy, about a devaluation as a way to rebuild competitiveness, and about a reconstruction of the country.

This is a retreat toward the ideas of "realist" radical economists. For example, Costas Lapavitsas proposes an immediate return to the drachma and a systematic devaluation as the only way to strengthen the competitiveness of Greek enterprises and reinforce exports, which would make possible a general reconstruction of the country and the economy.

This "solution" has a very big weakness: The drachma won't be alone in this road. It would likely be competing with the British pound, the Portuguese escudo, the Spanish peseta, the Turkish lira, etc. The battle over which country is the most "competitive" would be, in reality, an economic war, with workers as the victims and the profits going to the capitalists.

Lapavitsas is honest in admitting that if his position were adapted, in the medium term, working people would face major shortages in food, fuel, medicines, etc. This is a concession that no left-wing political force can or should make.

SUCH PROPOSALS represent a return to past programs of mildly left-wing nationalist reformism.

In the early 1960s, an important section of radical economists--among them Andreas Papandreou, the founder of PASOK--suggested a similar road for Greek capitalism: nationalization of "strategic" sectors (energy, water, telecommunications, transport, etc.), an independent foreign policy, prioritization of heavy industry, and protectionist measures to support Greek products.

In theory, this was a program that could only be implemented by a left-wing government, and so its realization must therefore lead "objectively" toward some kind of socialism. In real life, these policies were partially implemented by the military junta of 1967-74 and even more so by the first right-wing governments that succeeded it under Kostantinos Karamanlis (who was denounced by other right-wing politicians for his "socialist mania"!).

Some on the left, making reference to the legacy of Trotskyism, describe their support for exiting the euro as part of a supposed "transitional program." This is a very "flexible" way to interpret the meaning of a transitional program--and it underestimates the dangers of compromising with economic "realism" and nationalism, even in its most "mild" and "left-wing" variant.

Such policies fall far short of the tasks of the working class movement in Greece today.

Our main task is the overthrow of the politics of austerity. Through this struggle, we have to amass the forces--both in mass social movements and in the building of a political left--that can put forward in real terms the question of the overthrow of capitalism and the fight for socialism.

In this effort, we should have nothing to do with any policy that would force workers--after enduring the harsh measures of an "internal devaluation" under the euro--to pay the costs of a capitalist reconstruction under the drachma.

Many comrades on the left point out that the euro is not a neutral symbol anymore, and I totally agree--the euro represents the neoliberal politics that have dominated the EU over the last 25 years. But the drachma likewise is not a neutral symbol. What a currency "represents" at any point in time depends on who controls the economy and political power in society.

In the SYRIZA alliance, we are trying to organize around the slogan: "Not a single sacrifice for the euro, no illusions in the drachma."

Our goal is a left-wing policy that confronts the vulgar "Europeanism" which legitimizes austerity policies today, but without taking responsibility for raising a call for an immediate return to the drachma.

In reality, a return to the drachma is no longer unlikely. But if this does happen under the current constellation of social and political forces, the results will be bitter for the Greek people--and devastating for the left, if it is caught politically and ideologically unprepared for such a development.

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