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On Saturday, June 27, the Greek parliament approved Prime Minister Alexi Tsipras’ proposal to put the latest ultimatum by the Troika to the vote in a referendum which will take place on July 5th. Even at that time, the Greek government was still hoping for a change of heart on the part of the Troika. Finance Minister Varoufakis declared: ”There is no reason why we can’t have a deal by Tuesday. If the deal is acceptable we will recommend a positive vote.” Even Tsipras himself, in the course of the debate in Parliament explained how his government sees the referendum as a tactic to get a better deal from the Troika:

“Many are asking: what happens after the #referendum? With a clear “NO”, we will have a much stronger negotiating position”

But as we explained before, whatever the Greek government’s strategy is, both the masses and the Troika understand clearly what the referendum is about: more Memorandums and austerity or a rejection of those; and for the Troika, either the acceptance of their conditions or Grexit.

Troika provocations …

The immediate responses of the different spokespersons for the Troika were extremely provocative and belligerent. The very idea that the people of Greece would be given a say on a proposal which would deeply impact their daily lives is anathema to the representatives of European and international capital.

Greek Finance Minister Varoufakis describes the response he had at the eurogroup meeting of Finance Ministers on the same day: “The very idea that a government would consult its people on a problematic proposal, put to it by the institutions, was treated with incomprehension and often with disdain, bordering on contempt. I was even asked: ‘How do you expect common people to understand such complex issues?’”

The eurogroup meeting then issued a statement, opposed by Greece, pointing out that the bailout program expires on Tuesday and that is the end of it. They were not even prepared to concede an extension of a few days until after the referendum to see what the opinion of the Greek people was of. The truth is, they couldn’t care less. The capitalist class does not act on the basis of people’s opinions or interests, but on the basis of defending their own class interests.

Not yet satisfied, they then proposed the continuation of the meeting with only 18 ministers present, in effect expelling Greece from the meeting, an unprecedented move. Varoufakis asked for legal advice on whether this was even possible, this is the response he received: “The eurogroup is an informal group. Thus it is not bound by Treaties or written regulations. While unanimity is conventionally adhered to, the eurogroup President is not bound to explicit rules.”

This is extraordinary, because in normal times, bourgeois institutions try to adhere to democratic formalities and to appear to be fair and balanced (while always serving the interests of the capitalist class in the last instance). It is in times of acute crisis when the mask of formal democracy is shed and the real character of bourgeois institutions is revealed.

Varoufakis is therefore right when he asks the question: “Can democracy and a monetary union coexist? Or must one give way? This is the pivotal question that the eurogroup has decided to answer by placing democracy in the too-hard basket.“ Indeed, the democratic will of the Greek people to put an end to austerity and to defend the basic interests of working people is in direct contradiction with the aims of the European capitalists and bankers. Varoufakis hopes that this is just a temporary phenomena, but he is seriously deluded.

A meeting of the European Central Bank then decided to tighten the screws on Greece by maintaining the previous limit on the Emergency Liquidity Assistance (ELA) to the Greek banks. This is, in practice, an aggressive move, as anyone can understand that deposit withdrawals would increase on Monday morning after the breakdown of negotiations. By maintaining the same amount of liquidity assistance, the ECB was sending a strong message.

On top of this, there is the issue of the €1.6bn IMF repayment, which is due on Tuesday and which Greece will not be able to pay. Nor should it pay we add, as the ECB has made a profit of €1.6bn from Greek bonds which it refuses to release to the country.

All these were in fact attempts by the Troika to pre-empt the referendum and perhaps even prevent it from taking place. What is the point in voting on an “offer” (read ultimatum) which is no longer on the table, to extend a bailout program which has already expired?

Added to this there were also manoeuvres on the internal front. The leaders of both New Democracy and PASOK declared that the proposed referendum amounted to a “coup” and called on the president of the Republic not to sign it. This is particularly scandalous since it was precisely ND and PASOK who carried out a constitutional coup four years ago by imposing the unelected Papademos government when Papandreou wanted to put a previous deal to a referendum.

This shows how the Communist Tendency was correct to criticise the appointment of right wing New Democracy, Pavlopoulos, as President of the Republic at the proposal of Syriza. In the end, while Pavlopoulos met with the leaders of New Democracy and The River on Sunday, they probably calculated that it was not yet the right moment to use the card of the President of the Republic. However, the warning of the Communist Tendency is now more relevant than at the time when it was issued: “No one should forget that, in special circumstances, the President of the Greek Republic has the constitutional powers to call elections and therefore putting up a right-wing candidate who would hold this office for the next five years is a completely reckless and dangerous political choice.”

Under the pressure of the right wing and the big bourgeois, at least one Syriza MEP has also broken ranks and denounced the government for calling the referendum. More people from the right wing of Syriza will probably join him as tensions heighten.

Analysts at JP Morgan, probably summarised the position of big capital when they said: “We expect the referendum to vote in favour of accepting the creditors’ proposal. Our base case is that Tsipras steps down as PM, and a unity government is formed which negotiates a deal with the creditors.” Although when it says “we expect” one should perhaps read “we hope”.

… and the government response

The response of the government was to impose a bank holiday lasting until 7 July, during which people will only be able to withdraw 60 euro a day. Capital controls will also prevent any outflow of money from the country. This was the only possible response to the provocative moves of the Troika. For the duration of the bank holiday, public transportation in Athens will be free.

In announcing these measures, Tsipras made an appeal for calm. He lambasted the decision of the Troika not to grant Greece a temporary extension of the bailout: “It is clear that the objective of the decision of the eurogroup and the ECB is to attempt to blackmail the will of the Greek people and to hinder democratic processes, namely the holding of the referendum. They will not succeed. These decisions will only serve to bring about the very opposite result. They will further strengthen the resolve of the Greek people to reject the unacceptable memorandum proposals and the institutions’ ultimatums.”

This was accompanied by an appeal for the masses to mobilise to Athens’s Syntagma Square on Monday, June 29. This is completely correct, as the referendum will be a battle which can not be won on the ballot box alone, but rather, has to be fought through mass mobilisation in the streets.

Is a deal still possible?

On 27 June there were also a series of moves in the opposite direction, attempting to get negotiations re-started. Even the IMF’s Christine Lagarde issued a statement in favour of talks and debt relief. French president Hollande expressed himself in similar terms. US president Obama called Angela Merkel to say that “it was critically important to make every effort to return to a path that will allow Greece to resume reforms and growth within the eurozone”.

The United States are clearly worried about the impact of a disorderly Greek default for the European economy and more generally, the world economy. They are right to be worried. Despite all the talk about the EU being now “insulated” against the impact of a Greek default, the truth is that the European economic recovery is extremely fragile and any shock can propel it back into recession.

This is what could in the end push the Troika to make a substantial offer on debt relief. This cannot be ruled out, as the stake are high. But it does not seem to be most likely outcome because powerful forces have also been set in motion in the opposite direction. At the same time, the very strong reasons which led to the breakdown of the negotiations on January 26, still remain.

This morning, June 29, all the statements from Troika representatives were extremely harsh and confrontational. The president of the European Commission was particularly provocative. He accused the Greek government of not telling the truth to their own people. He kept a straight face when he said that the Troika had never asked for cuts in Greek pensions. This is a straight lie. The Troika demanded the immediate withdrawal of EKAS (a top up payment for the lower paid pensioners), though of course, he would say, this is not a pension payment.

Not happy with having insulted the Greek government saying they are liars, he then had no qualms in meddling into the affairs of a sovereign nation by calling on all Greeks to vote YES in the referendum. He insisted that the referendum was not on the latest Troika ultimatum, but on membership of the European Union and callously added that the Greek people “should not commit suicide”, after thousands of Greeks have taken their lives as a result of cuts imposed by the Troika.

To add insult to injury, Juncker added that in fact the Troika had been prepared to offer debt relief … to be discussed in the Autumn!

This was followed by German vice-chancellor Gabriel who also said that the vote was on membership of the euro, adding that “Tsipras had wanted to change the rules for the euro politically and ideologically” and that this was “very dangerous”. This is an admission of the real reasons for the Troika’s insistence in humiliating the Greek government into submission, which are not just economic, but also political. They cannot allow the existence of a government which defies austerity mandates as this would be a “bad example” for other European countries.

Angela Merkel said that, “no one was attempting to interfere with the Greek referendum”, as they were just “pointing out the consequences” of it. She made sure to put an end to rumours of a new emergency summit on Wednesday by declaring that there was “no real reason” for such a summit, and that there was “no legal basis for an interim program for Greece” after the expiration of the bailout on Tuesday.

The president of the European parliament, Martin Schulz, spoke in the same vein “appealing” to the Greek people to vote yes and even threatening to go to Athens personally to put the case.

This is the language of war, not that of concessions. Tsipras is absolutely correct when he says that all these provocations will have precisely the opposite effect, that of strengthening the resolve of the Greek people to fight against the ultimatum.

The mood of the people

There is, of course, a mood of uncertainty in Greece today, with banks closed, some queues at ATMs, a campaign by the powerful capitalist media to create panic, queues at gas stations and panic shopping at some supermarkets. The crucial question is however, who will the people blame for this situation. Opinion polls before the calling of the referendum showed that a majority, correctly, put the blame on the Troika.

There has been a lot of talk about two opinion polls which allegedly show that the majority of the Greek people favour staying within the euro and therefore would vote ‘yes’ in the referendum. This is extremely misleading and does not reflect the real mood. These opinion polls were carried before the referendum was called, between June 24 and 26. At that time it seemed that the government and the Troika were getting close to signing a deal and although the people were aware that this was not a very good deal, it is understandable that they considered it as the only option and as ‘better than nothing’.

That bears no resemblance to the mood after Tsipras announced the calling of the referendum and denounced the Troika as blackmailers while explaining the scandalous nature of the proposals which amounted to yet again,  making working people pay for the crisis.

A young Greek woman interviewed by the Spanish “20 minutos” today put it in the following way: “I feel like I was entering into a revolution, like we are going to shown them what we are capable of”. For Marilena, the citizens are not angry, but “ready for a fight”. She said she supports Tsipras “because he has balls” and “we do not accept the blackmail”. She didn’t vote in January, but now she feels “our future is at stake”.

The convening of the referendum has broken the impasse of what seemed to be endless negotiations and even greater concessions on the part of the government to the Troika, to be followed by even harsher demands. Now the camps are clear and they are lining up for a clash. The morale of the troops is all important in any war and will be decisive also on Sunday, July 5th.

The KKE and the referendum

In this respect it is worth commenting on the position taken by the Communist Party (KKE), which is one of rejecting the referendum as a false dilemma and calling for a spoilt vote. The Communist Party of Greece is a sizeable organisation with many excellent working class and youth militants, with a significant influence amongst the organised working class. On Friday, June 26, it was able to call a large demonstration against the latest deal which was being negotiated by the Troika and the government. Their arguments against both the ultimatum and the government proposals to the Troika are completely correct. There is nothing to choose between those two.

However, at a time when the Greek people are being divided into two opposite camps, one supporting the Troika ultimatum, the continuation of austerity, and the other opposing it, the position of the KKE is to stay aloof from this battle, which they consider phony. While it is true that Tsipras regards this conflict as a way of getting a stronger hand at the negotiations, people perceive it is as a chance to deliver a blow against the Troika. In order for revolutionaries to win over the masses of working people, they need to be able to relate to this mood and help the people draw all the necessary conclusions. This would be a genuine Leninist policy, as for instance implemented against the Kornilov coup in 1917 or as advocated by Lenin in “Left Wing Communism”. The opposite is the sectarian madness of the “third period” policies of the Communist International between 1928 to 1933 which has disastrous results.

If the KKE leadership continues with these policies towards the referendum, it will lose another large chunk of its voters and members, as was the case as a result of its sectarianism in the two parliamentary elections in 2012, when the party went from 8.5 to 5% of the vote.

What we are saying is not that the KKE should suspend its criticism of the Syriza leadership and its utopian idea that a deal with the Troika was possible. On the contrary. That criticism is correct and should be maintained (as the Communist Tendency of Syriza has consistently done). What the KKE leadership should say to the hundreds of thousands who will be mobilised in the course of the week to oppose the Troika’s ultimatum is: “we are with you, we will fight shoulder to shoulder against the Troika, but we have no trust in the leadership of Syriza, even if we win the referendum, in order to end austerity we must repudiate the debt and break with capitalism.”

Which way forward?

In his televised address to the nation on Sunday night, Tsipras appealed for calm, as well as announcing capital controls. But it is not enough to appeal for calm in the face of the sabotage of the Troika and their allies in Greece, the Greek capitalist class. The defensive measures taken by the government are necessary, but not enough. The people need to be reassured that their savings are safe, that their wages and pensions are going to be paid and that there is a government prepared to take any measures necessary to defend their livelihoods.

As well as a bank holiday and capital controls, the government should declare the immediate expropriation of all banks, as a way of safeguarding the deposits of small savers. But the banks are bankrupt, in effect. The government is also bankrupt. Even the latest proposal of an €8bn package of savings and increased revenue would have only guaranteed a 1% primary budget surplus (that is, before debt repayment). The only way for the government to have the necessary amount of money to pay for wages and pensions and keep the basic state functions running is by seizing the assets of the capitalists.

The need to bring the key sectors of the economy under collective ownership is not some utopian demand, but a concrete necessity dictated by the situation.

Contrary to the illusions of some in the Greek left (the main spokespersons of Syriza’s Left Platform included), the exit from the euro might be necessary and perhaps inevitable at this stage, but it is not a solution, nor a way forward, on a capitalist basis. The restoration of a Greek currency on the basis of capitalism would immediately mean a massive devaluation, trade restrictions on the part of the EU, hyperinflation and a frightful deepening of the economic recession.

Yes, deals might be arrived at with Russia, China and even Venezuela. These, however would be limited in scope and also come with strings attached. Russia and China are already involved in some of the privatisation processes and would demand their continuation, which would go against the January 25 mandate. The Greek economy has become linked to that of the EU and would be severely dislocated by Grexit.

The justified fear of economic collapse once the country is expelled from the euro will be an important factor in the referendum. Only by taking decisive action to bring the economy under state control and starting to put under democratic control and planning, can the government combat such fears.

By delivering decisive blows against capitalism (expropriation of capitalist assets, unilateral repudiation of the debt, extension the emergency program of social rescue, etc.), Syriza would be able to consolidate and extend the mood of defiance as well as arousing the enthusiastic support of working people throughout Europe who already feel an instinctive solidarity with the Greek people faced with the impositions of the Troika.