On Sunday (19-7-2015) the SYRIZA-ANEL government announced that the ‘banking holiday’ imposed 21 days ago will be lifted and banks will re-open. Also, there will be a relaxation of the stringent capital controls imposed.
This is an economic and political damage limitation move.
First, capital controls were in fact imposed on Greece by the ECB as it curtailed its provision of liquidity to Greek banks. ECB did so, in close co-operation with the EU, in order to coerce SYRIZA to accept the troika (EU-ECB-IMF) austerity program and implement it unconditionally.
Second, capital controls caused serious economic and political problems. The already gravely wounded by the troika austerity program Greek economy took a severe hit because of the additional problems in financing its activities. It is estimated that ECB’s curtailing of liquidity cost more than 3bn euros. In political terms the climax from a limited liquidity to fully blown capital controls signified a blatant imperialist intervention by the EU in the affairs of Greece. The ECB, as the long arm of the troika, obliged the foolish and wavering SYRIZA government to impose the unpopular capital controls the very week before the crucial referendum of the 5th of July. With this move it tried to blackmail the Greek people and coerce them to vote for YES (that is for capitulating to the insolent demands of the EU). However, this blackmail backfired as the mass of working people and lower middle strata – that constitute the vast majority of the Greek population – voted for NO. However, the very next day of this resounding referendum result, SYRIZA betrayed it, realigned itself with the pro-EU and pro-business opposition parties and proceeded to agree to a third 3-year troika austerity program. This causes a growing rift between SYRIZA (who is becoming another EU-subservient austerity government) and the vast popular majority.
Third, in order to ameliorate these problems, SYRIZA – working in tandem this time with the EU – relaxes capital controls. As it faces popular discontent it tries, first, to realign itself with the business interests hit by the restriction of finance and, second, to placate the common people whose everyday lives have been disrupted by the freezing of their mediocre deposits.
The outcome of this damage limitation move is dubious. With the 3rd austerity program the Greek economy is led into further recession and the working people and the middle strata will pay the costs. With or without capital controls popular support for SYRIZA is withering away.