The European Central Bank - as expected, and following political consultation with its masters - decided that it would not back Greek banks against a run this week. Yet that was the major reason why it was set up! The ECB was designed to create a tsunami of Euros for the Euro countries, backing Italian, Spanish, Portuguese and other weak banks, in order to get growth going across the Euro zone - at virtually any cost. (The 1.1 trillion euro scheme, announced this January, involves the ECB printing over a thousand billion euros and buying 60 billion euros a month of EU governments' bonds.) The costs of backing Greece's banks are minimal financially. But Greece is grand politics.
The aim of Europe's political masters in the last stage of the negotiations was to split Syriza and regroup the Greek parliament. Now it has become to split the Greek people. Not the arrangement they sought. These latest 'masters of the universe' are highly adverse to decisive political and economic choices made democratically by the people. They are used to a slimy political class of self seeking bootlickers that would normally do anything to get in with the money in the room and whose main skill is obfuscating key questions in front of their own populations. However, the EU is now on the spot. The supposed firewalls erected to cordon off the impact of a Greek exit from the Eurozone have not so far stopped the interest rates for Spanish and Italian government loans having to rise rapidly. It looks like the Greek population is about to mess with the Eurozone's future after all.
But that does not mean that pressure cannot be applied. Thus the ECB's 'decision' not to back Greek banks. Think how clear headed, principled and brave you now have to be, with the Brussel's manufactured fear of no income, following five years of dwindling resources and services, to vote 'no' next Sunday. (In fact Cyprus managed bank capital controls for three years, but stayed in the Eurozone.) The vote remains a major risk for the EU, which therefore suggests that some backdoor concessions could still be offered as a further pressure on the result. There might be more than the current hint of future overall debt relief for example. We shall see.
Syriza leaders are correctly stressing the political limits of the referendum. They say it is designed to bring the direct and democratic opinion of the Greek people to the negotiating table in the argument over the Greek debt and the EU support that is required. But that has not stopped them underlining the significance of the vote for the leadership of Greece. A Syriza minister ('Today,' BBC Radio 4, 29 June) said that should the referendum accept the Troika's proposals despite Syriza's strong opposition, there would need to be a new government. In other words Syriza's project would be defeated; a new government set up, and the next stage of the Troika's austerity programme for Greece would begin.
And the alternative? If Greece votes 'no' but the EU leaders still do not make major concessions, then the Syriza has brought itself to the point where it has the mandate to end austerity, to start growth and to end poverty and the humanitarian crisis - but it will have to do that initially within the country's own resources. Out of such bold steps, it would begin a different journey to new sort of European union.
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