More Austerity for Working People

Imperialist Bankers Strangle Cyprus

For a Socialist United States of Europe!

The following article was written by the Trotskyist Group of Greece, section of the International Communist League (Fourth Internationalist).

Unable to contain the debt crisis that has roiled the European Union (EU) since 2010, the imperialist overlords of the EU and their International Monetary Fund (IMF) cronies have struck again. Their latest “rescue package” for the bloodsucking banks, centered as always on savage attacks against working people, is aimed at the tiny Republic of Cyprus—the southern, Greek Cypriot state on the partitioned island. The Troika of the IMF, European Central Bank and EU responded to the Republic of Cyprus’ request for funds to prop up its failing banks by demanding nothing less than the destruction of its economy as an offshore banking and tax haven. As reported in the Cyprus Mail (23 March): “German Chancellor Angela Merkel told lawmakers that while she wanted to keep Cyprus in the eurozone, it must first recognise it had no future as an offshore financial centre for wealthy Russians and Britons.”

What sent shockwaves through the populations of EU member states was not the demand that the Greek Cypriot government raise funds through an austerity program of the kind already imposed on Greece, Ireland and Portugal—slashing wages, benefits, jobs, health care and education. It was the initial demand that the Republic of Cyprus tax the deposits of anyone with money in its banks. This provoked a rebellion by the parliament, which aptly referred to it as “bank robbery.” More importantly, it raised the spectre that people would rush to pull their money from teetering banks in the euro zone (countries using the euro currency), causing a banking collapse in the much larger economies of countries like Spain. A run on the Greek Cypriot banks has been prevented so far only because they were closed for nearly two weeks and then reopened with limits on money taken out of the banks and the country. Additionally, the Troika agreed to limit the tax to deposits over 100,000 euros.

These events stoked fears that the euro was no longer a stable currency, causing it to drop in value against the U.S. dollar. After the Troika tried to pin the blame on Cypriot officials for proposing a tax on all depositors, Dutch Finance Minister Jeroen Dijsselbloem, head of the “Eurogroup” of euro zone finance ministers, told the press that taxing depositors would be the model for any future bank bailouts. Stocks tumbled in response to his comments, forcing him to backtrack somewhat. Troika officials have since tried to contain fears by insisting that Cyprus is a “unique case.”

That events in a place representing 0.2 percent of the euro zone economies could rock the whole EU is an indication of the profoundly unstable nature of this alliance of competing capitalist states. Sections of the bourgeoisie in Europe and internationally are fearful that applying the demands placed upon Cyprus to Italy, Spain or Slovenia could lead to a major economic meltdown.

Blaming southern Europeans and rich Russians for the EU’s crisis is a convenient way of deflecting responsibility from the German and other imperialist bourgeoisies, whose banks inundated the currently failing economies with loans and are threatened with insolvencies if the debtors fail to pay. Although a bailout of banks in the Republic of Cyprus would be mere pocket change, the German bourgeoisie has evidently decided to use this opportunity to send a loud message that they will no longer bear the cost of bailing out countries on the verge of bankruptcy. With national elections coming up later this year, getting tough on Europe’s debtor nations plays well politically for both Angela Merkel’s Christian Democratic Union/Free Democratic Party ruling coalition and for her opponents—the reformist Social Democratic Party and the petty-bourgeois Greens.

Imperialist Domination and National Rivalries

The modern history of Cyprus is one of subordination to rapacious imperialist powers and rivalry between capitalist Greece and Turkey for control of the island. For over 80 years Cyprus was subject to bloody British colonial rule, the legacy of which was profound and violent communal divisions between the Turkish and Greek Cypriot populations. In 1974, the U.S.-backed Greek military junta attempted to incorporate Cyprus into Greece by orchestrating a coup on the island by right-wing officers, prompting an invasion by Turkish troops. The Turkish and Greek Cypriot communities were then brutally driven apart and the island divided into two states—the Turkish Republic of Northern Cyprus and the Republic of Cyprus in the south.

The island’s strategic position in the eastern Mediterranean has long placed it at the juncture of the interests of several great and not-so-great powers. To this day, Cyprus continues to be occupied by Greek troops in the south, Turkish troops in the north, UN troops in a “buffer zone” and British troops on two bases. As staunch opponents of the Greek nationalism and anti-Turkish chauvinism constantly whipped up by the Greek bourgeoisie over Cyprus, the Trotskyist Group of Greece demands the immediate withdrawal of all Greek troops from Cyprus. We also demand the immediate withdrawal of all Turkish, UN and British troops and bases.

With a population of less than a million people, the Republic of Cyprus built up its economy around banking and tourism following partition. It was in the context of UN-brokered negotiations over the reunification of the island that the Republic of Cyprus was admitted to the EU in 2004 and adopted the euro as its currency in 2008. Many Greek Cypriots saw membership in the EU as giving them the upper hand over Turkey and Turkish Cypriots in the reunification negotiations. But within five years of adopting the euro, the Republic of Cyprus’ major banks faced collapse as a result of the financial crisis that has engulfed the EU. So it is no surprise that thousands have rallied in the Republic demanding “Troika Out!” and that a reported two out of three Greek Cypriots now want out of the euro zone.

After a futile attempt to get alternative funding from Russia, the capitalist rulers of the Republic of Cyprus ended up submitting to the EU’s revised demands, with the right-wing government of Nicos Anastasiades of the Democratic Rally presenting this deal as much better than the initial round of extortion. Since then, the creditors have doubled their demand for money from the Republic to 13 billion euros to qualify for a 10-billion-euro bailout.

Meanwhile, brutal austerity is planned for workers and the poor, and pensioners and a section of the sizable petty-bourgeoisie face ruin. Particularly vulnerable are immigrant workers—some 100,000 East European, Asian and Near Eastern immigrants were counted in 2011. The Cypriot brethren of the Greek fascist Golden Dawn have been scapegoating immigrants, and violent attacks are on the rise. The London Independent (31 March) reported “a Molotov cocktail thrown at a family home near Limassol; a Bulgarian woman attacked in her house; another fire-bombing at an office of the Kurdish party.” These attacks underscore the need for the workers movement to fight for full citizenship rights for all immigrants and to demand no deportations.

Although Turkey is not impacted by the bailout deal and is, relatively speaking, in good financial shape, thousands of workers from the much poorer Turkish Republic of Northern Cyprus who have toiled in the south in recent years are also suffering the effects of this economic crisis. The imperialists have long had a hand in starving the working people in the north of Cyprus—its government, which is recognized only by Turkey, has faced decades of international restrictions on trade and travel. These include a 30-year trade embargo by the EU and its predecessors, which was only eased when a large majority of Turkish Cypriots voted in favor of a UN referendum for reunification in 2004. (The plan was overwhelmingly rejected in the south.) This shows that imperialist blackmail has long been practiced on both sides of the island.

For a Workers Europe!

The latest round of pillaging of a small, dependent country confirms yet again that the EU is an imperialist trade bloc, dominated by the German and French capitalists, which seeks to increase the exploitation of the working class in Europe while trying to gain advantage over its imperialist rivals in the U.S. and Japan. As the plummeting conditions of life for working people in Greece, Portugal, Spain and Ireland have shown, all the talk of European “convergence” had nothing to do with bringing poorer countries up to the level of the wealthier nations but was about creating “flexible labor markets,” i.e., low-paid workforces with no protections. A case in point is Greece, where labor costs have dropped 20 percent in the last three years and official unemployment has skyrocketed to more than 27 percent.

The International Communist League has consistently opposed the EU and its predecessors. The only way forward for working people is to put an end to the “boom and bust” crises of capitalism through socialist revolution—for the expropriation of capitalist industry and banks and for an internationally planned economy that will overcome the limits of the reactionary bourgeois nation-state. We say: Down with the EU! For a Socialist United States of Europe!

The ICL recognized from the beginning that the euro would be an instrument of the imperialist EU, and we opposed its introduction. German imperialism has made huge profits by driving down the wages of workers in Germany and through the introduction of the euro, which has helped keep its industrial exports cheap throughout the euro zone. However, the weaker euro zone countries that have run trade deficits and borrowed heavily do not have the usual capitalist mechanism of devaluing their currency to make their economies more competitive. In reality, the euro has never been viable. A common currency necessitates a common state. The snowballing divergent interests of the member countries threaten to tear apart the euro zone and the EU while consigning the euro to the albums of coin collectors.

The crisis as a whole is rooted in the giant game of speculation and financial swindles that is an integral component of the domination of international finance capital. As Bolshevik leader V.I. Lenin explained in Imperialism, the Highest Stage of Capitalism (1916): “Although commodity production still ‘reigns’ and continues to be regarded as the basis of economic life, it has in reality been undermined and the bulk of the profits go to the ‘geniuses’ of financial manipulation.” Banks in the Republic of Cyprus lost billions when they wrongly guessed that investing in high-yield Greek government bonds would pay off. The same imperialist masters of the EU who gave these banks cheap credit to buy up the bonds later forced bondholders to take a 75 percent “haircut” in order to prevent a Greek default. Now the imperialists demand their pound of flesh, overwhelmingly from the working people.

Bourgeois Hypocrisy and Reformist Schemes

The imperialists have added a new twist to their propaganda campaign aimed at covering up their responsibility for the Cyprus crisis: Rich Russians have been added to the list of “lazy” southern Europeans and immigrants as the supposed villains. Actually, the fabulously rich, including the gangsters who looted state property in Russia in the aftermath of the 1991-92 destruction of the USSR, got their money out before the bank doors slammed shut. Behind the sensational stories of Russian oligarchs piling up “hot money” in Cyprus is the supreme hypocrisy of the European bourgeoisies, who have long availed themselves of offshore havens such as Switzerland, Luxembourg and the British Virgin Islands, to name but a few. A recent leak has unsurprisingly revealed that German banks make use of tax havens, while no less than 36 German shipping companies are registered in Cyprus. Meanwhile, France is having its own scandal over high-placed officials with offshore accounts.

Capitalist politicians promising to prevent tax evasion is a long-running joke in Greece, with its “Lagarde list” of Swiss bank account holders (named after IMF chief Christine Lagarde). Such talk is simply a distraction from the real fleecing of working people that takes place through capitalist exploitation. While working people have no power to force a “fair” taxation system upon the rich, as sundry left-talking, pro-EU types like those in Greece’s Syriza coalition propose, the working class can disrupt the flow of profits by withdrawing its labor through strikes. However, sporadic outbursts of outrage will not suffice to resolve the current economic crisis.

The social power of the working class urgently needs to be mobilized in a struggle for decent jobs for all, for a shorter workweek with no loss in pay, for opening the books of the capitalists and their banks (to expose their plunder and theft). Such urgent needs demand seizing the banks, factories and mines from the capitalists with no compensation, placing these under the control of the workers. Only through fighting for such transitional demands and their culmination in the overthrow of the bourgeois state and its replacement with a proletarian dictatorship can the working class—in Europe and internationally—lead the way out of this crisis for all those thrown onto the scrap heap by capitalism.

Mobilizing the power of the working class in such struggle is anathema to the current pro-capitalist misleaders of the General Confederation of Workers of Greece (GSEE—private sector) and the Confederation of Public Servants (ADEDY) unions. While Greek workers have certainly demonstrated their willingness to fight, the GSEE and ADEDY bureaucracies refuse to challenge the capitalist order and thereby help consign the workers to increasing immiseration. Furthermore, an effective struggle against the economic crisis requires an internationalist perspective, linking up the workers of different nations in a common fight against the capitalist exploiters. But both the trade-union misleaders and organizations such as Syriza push the fallacy of reforming the capitalist profit system to serve the workers and the poor. This is explicit in Syriza’s support to the EU and its promotion of the fraud that there can be a “social Europe” under capitalism.

The experience of the Republic of Cyprus shows that even a left capitalist government is subordinate to the imperialist masters. The reformist “Communists” of the Progressive Party for the Working People (AKEL), which held power from 2008 until February of this year, were responsible for implementing the first rounds of Troika-dictated austerity. When AKEL was seen to be dragging its feet on the harshest measures, the imperialists openly backed the right-wing candidacy of Anastasiades, with Merkel flying in to campaign for him in January! Having helped to carry out the attacks on its base and being seen as incapable of solving the economic crisis, AKEL was swept out of power by an electoral landslide for Anastasiades.

Speaking much louder than Syriza’s occasional rhetoric about an international fightback against the Troika’s policies was its recent formation of a “common social and political front to support Cyprus” with the extreme nationalist and anti-immigrant Independent Greeks party. Those right-wing populist opponents of the Troika, who want Greek capitalists to exploit and oppress the workers without the interference of foreign powers, clearly have no interest in solidarity with the working people of Cyprus, with its immigrant and Turkish Cypriot components. The purpose of this front is to whip up Greek nationalism in the guise of defending Cyprus against the Troika. Such nationalism, particularly anti-Turkish chauvinism, has been used time and again to deflect class struggle against the Greek capitalist rulers. This was demonstrated vividly in 1974 when the Greek military junta organized the coup in Cyprus, attempting to prop up its own shaky regime by rallying “true Greeks” around the flag.

The Greek rulers continue to promote themselves as protectors of Cyprus against their more powerful capitalist rival Turkey, as seen in recent vitriolic exchanges over the question of reunification of the island. Also at issue are the natural gas deposits off its southern coast. The Republic of Cyprus government claims sole sovereignty over these deposits (and the EU made sure to back this claim in the latest bailout memorandum), while Northern Cyprus demands that the gas be exploited jointly—a demand that Turkey backed up by sending warships and fighter jets into the area when exploratory drilling was being carried out in late 2011. Most recently, the Troika demanded that the Republic of Cyprus immediately initiate drilling in the contested area, indicating that the prospect of igniting a war does not deter the avaricious imperialist bankers.

Greek Nationalism: Poison for the Working Class

The British maintained their colonial rule over Cyprus both through bloody repression and by taking advantage of the existence of a Turkish minority to use the old strategy of “divide and rule,” giving some privileges to one people over another in order to prevent joint struggle against the colonial oppressors. Thus the right-wing guerrilla struggle that emerged in Cyprus in the 1950s against British rule and for union with Greece was virulently chauvinist against Turkish Cypriots. Suffice it to say that it was led by the WWII fascist collaborator Colonel Grivas and the head of the Greek Orthodox church in Cyprus, Archbishop Makarios. Cyprus gained its independence in 1960 under the “guarantee” of Britain, Turkey and Greece, but it did not take long for the first post-independence government to fall apart and for the island to descend into civil war in 1963-64. Following years of terror and counter-terror against both the Turkish and Greek Cypriot communities, a UN “peacekeeping” force was introduced in 1964 to police the population along with British troops.

The leading political force at that time was AKEL, which had both Greek and Turkish Cypriot members and leaders. This was anathema to reactionaries of all stripes. Central Committee member Dervis Ali Kavazoglou, a Turkish Cypriot, was assassinated by right-wing Turkish nationalist forces in 1965, and Greek Cypriot leaders and members were victims of right-wing terror carried out by both Greek and Turkish forces. The AKEL-led labor federation controlled half of the organized workers and had some history of leading Greek and Turkish Cypriot workers in joint struggle under British colonial rule. But rather than fighting for a perspective of interethnic working-class unity independent of all representatives of bourgeois and petty-bourgeois nationalism, the AKEL ended up embracing the conservative archbishop and president Makarios. Because of the archbishop’s resistance to U.S. demands that he ban the Communists, which would have been deeply unpopular in Cyprus, and his looking to the Soviet Union for diplomatic support against the imperialists’ machinations, he was falsely painted by Stalinists around the world as a leftist.

The 1974 coup against Makarios resulted in the first-ever united Greek and Turkish Cypriot demonstration against the Greek junta, which took place in London. This indicated the basis at that historic moment for a battle to be waged along class lines. But AKEL’s response to the upsurge was to swear undying loyalty to Makarios. Following Turkey’s invasion of Cyprus, Marxists were duty-bound to uphold a position of revolutionary defeatism on both sides—i.e., opposition to both Turkish and Greek military forces. AKEL, however, supported the junta-led forces who had just imprisoned and tortured thousands of AKEL members and drawn up lists for their execution! In the end, the defeat of Greek forces in Cyprus rapidly led to the fall of the junta in Greece itself.

The events of 1974 had dire consequences in Cyprus. In “Cyprus Fiasco Topples Greek Junta” (WV No. 50, 2 August 1974), we noted that the Greek and Turkish communities “remain deeply hostile and far more integrated into the social life of their respective mother countries than into any kind of binational Cyprus.” The article continued:

“None of the solutions available under present social-economic conditions can possibly satisfy the aspirations of both majority and minority. Enosis (union with Greece), ‘double enosis’ (partition between Greece and Turkey), ceding sections of Thrace to Turkey in exchange for incorporating Cyprus into Greece and even the continuation of some sort of federated independent Cyprus would involve destructive forced mass population transfers and would contain within them the seeds of further bloody communal and national wars.”

And in fact, about a third of Cyprus’ population was driven from their homes and distinct Greek and Turkish areas were compacted, with thousands killed and wounded on both sides. AKEL’s Stalinist popular-front politics of allying with bourgeois forces for “defense of our homeland” helped pave the way for the resurgence of national antagonisms and communal violence.

As we wrote in “The Founding of the Trotskyist Group of Greece” (November 2004): “Our fight is for a proletarian solution to the national question [in Cyprus], which of necessity requires the revolutionary overthrow of the nationalist bourgeoisies in Nicosia/Lefkosa, Athens and Ankara.” In contrast, AKEL and much of the Greek left talk only of Turkish “occupiers” in Cyprus. Without proletarian revolutions in Turkey, Greece and beyond, the island’s working people will always be subject to the domination of the imperialist and regional capitalist powers.

Instead of such a revolutionary internationalist perspective, both AKEL and the Communist Party of Greece (KKE) look to the enforcement of United Nations resolutions as the basis for solving the “Cyprus problem.” The UN is an imperialist den of thieves and their victims under whose “democratic” fig leaf millions have been slaughtered and starved, from the 1950 U.S. invasion of Korea to the deadly sanctions imposed at the time of the first Iraq war in 1990. While the KKE leadership may sometimes warn against illusions in the UN, they have promoted precisely such illusions by saying that the Cyprus issue “had to be resolved in the framework of the decisions of a General Assembly of the UN” (“Cyprus and the New World Order,” Rizospastis, 31 January 2003).

“The Working Men Have No Country”

Far from leading its large working-class membership in opposition to Greek nationalism and anti-Turkish chauvinism in a struggle for workers power, the KKE leadership teaches the workers to swallow this poison. The “Theses of the Central Committee of the Communist Party of Greece” for an April party congress states: “The struggle for the defence of the borders, the sovereign rights of Greece, from the standpoint of the working class and the popular strata is integral to the struggle for the overthrow of the power of capital.” Then-KKE general secretary Aleka Papariga made clear who the borders supposedly need to be defended against in a talk published in Rizospastis (31 March): “Of course we will defend our territory. And why, in other words, does the struggle for power not mean also the struggle for the borders, etc? Are we going to give Greece to the Turks?” She went on to posit that Albania, Bulgaria, Turkey and what she called the Former Yugoslav Republic of Macedonia (i.e., Macedonia) might attack Greece.

For the KKE leadership, spewing such nationalist demagogy goes hand in hand with preaching the absurd Stalinist dogma that socialism can be built in one country, even in a country as small and lacking in resources as Greece. The KKE tops’ nationalism can only serve to repel revolutionary-minded workers in the countries that border Greece while tying Greek workers to the interests of the bourgeois state that is the mainstay of their exploitation and oppression. This lie is best refuted with some words from Lenin during the interimperialist slaughter of World War I:

“With reference...to the tasks of the proletariat in its struggle to destroy, not feudalism but capitalism, the Communist Manifesto gives a clear and precise formula: ‘The workingmen have no country.’... The socialist movement cannot triumph within the old framework of the fatherland. It creates new and superior forms of human society, in which the legitimate needs and progressive aspirations of the working masses of each nationality will, for the first time, be met through international unity, provided existing national partitions are removed. To the present-day bourgeoisie’s attempts to divide and disunite them by means of hypocritical appeals for the ‘defence of the fatherland’ the class-conscious workers will reply with ever new and persevering efforts to unite the workers of various nations in the struggle to overthrow the rule of the bourgeoisie of all nations.”

—“The Position and Tasks of the Socialist International,” November 1914

The Trotskyist Group of Greece is committed to the task of forging a revolutionary party that, as Lenin said, will fight to unite the workers of different nations in the struggle to overthrow the bourgeoisies of all nations. This is why we and the entire ICL fight against the oppression of national minorities in Greece such as the Vlachs, Pomaks, Turks and Albanians and demand the right of self-determination for the Macedonians, while opposing the oppression of the Kurdish people by the rulers of Turkey, Syria, Iraq and Iran. We call for a socialist federation of the Balkans, the only framework in which the myriad national questions in this region can be equitably resolved. The working class needs a revolutionary leadership that is internationalist not only in words but in deeds, armed with a program to sweep capitalism and all the national divisions it breeds off the face of the earth.