Why Varoufakis’ DiEM2025 is fighting the wrong fight

This text deals with strategy, but strategy cannot be seen separate from people and their histories and actions. SYRIZA has always been an uneasy conglomerate of groups of many political persuasions, but ever since it came to power in January 2015, until its capitulation seven months later, two main fractions fought a fierce fight. On one side, there was the heterogeneous left, which wanted to make good on the electoral promise (the Thessaloniki program): there was going to be no austerity any longer, Greece would negotiate a debt write off and if the Troika pushed the country to the brink, the group advocated leaving the euro zone. The leadership, on the other side, also wanted to end austerity. But under no condition was it willing to exit the euro zone.

As Lapavitsas explains, the Syriza leadership convinced itself that if it rejected a new bailout, European lenders would buckle in the face of financial and political unrest. The mastermind of this strategy was Yanis Varoufakis. He negotiated with the lenders for more than six months. But Greece could not negotiate effectively without an alternative plan, including the possibility of exiting the euro zone. Creating its own liquidity was the only way to avoid the Troika’s headlock. That would be far from easy, of course, but at least it would have offered the option of standing up to the catastrophic bailout strategies. The Syriza leadership would have none of it (see here).

‘SYRIZA failed,’ writes Lapavitsas, ‘not because austerity is invincible, nor because radical change is impossible, but because, disastrously, it was unwilling and unprepared to put up a direct challenge to the euro. Radical change and the abandonment of austerity in Europe require direct confrontation with the monetary union itself. For smaller countries this means preparing to exit, for core countries it means accepting decisive changes to dysfunctional monetary arrangements’ (see here and also here for his views about a Grexit).

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http://www.flassbeck-economics.com/why-varoufakis-diem2025-is-fighting-the-wrong-fight/