#ThisIsNotACoup - Dispelling some myths about the Greek agreement

The media is abuzz with hyperbole calling the Greek agreement to work toward a deal “humiliating”, “capitulation”, “surrender” or worse, “a coup”.  Weighty names such as Nobel Laureates Krugman and Stiglitz have also endorsed the #ThisIsACoup hasthtag that has been trending on Twitter.  The idea behind all of these is the supposed “near total” loss of Greek sovereignty. In particular, the idea that Greek public assets would be handed over to an agency under EU supervision for privatisation has provoked particular fury. Another idea that is doing the rounds is that the creditors exacted revenge for Tsipras having dared to call a referendum. The statement that the conditions under the new programme are much harsher than what was on offer has been repeated ad infinitum.

The third narrative floating around is one that holds Syriza and Tsipras primarily responsible for Greece’s current problems. The Eurogroup statement, for example, seems to blame doubts about debt sustainability primarily on the failure of Greeks to implement policies over the past few months. A particularly pernicious version of this is the politically tone-deaf and highly unprofessional tweet from Peter Kazimir, the Slovak Finance Minister, who said the agreement was tough for Athens because of their “Greek Spring”.

Why Greece never got a fair chance

On pure economics, Syriza got it mostly right both in terms of the diagnoses of the crisis and on what micro and macro level steps were needed to restore the Greek economy. But its big mistake was to assume that economic arguments could prevail over ideology and realpolitik. Another was its failure to convince its Eurozone counterparts that it would actually deliver on the promises it made. While Syriza could be excused for its naiveté’, its creditors get no such free pass. Their unwillingness to admit mistakes, keep promises for further debt relief and focus on petty parochial politics has once again trampled upon Greek democracy and sensible economic policy, and caused great harm to the European Project.

Unless they are willing to give Greece a fair chance over the next few days, the damage will be irreparable. And it is not just Greeks who will have to live with the consequences.

The Greek Deal – A game changer or a mere name changer?

Followers of Re-Define’s recent publicly available work on Greece will know that: 1) we thought Syriza’s election was good news both for Greece and for the EU 2) there would be a lot of noise and bluster, but that a compromise would eventually result, 3) the risk was always negligible and that of an “accidental” exit was zero, despite numbers such as 75% risk of Grexit pulled out of what can only be thin air by various “experts”, 4) Syriza deserved to, and probably would get a chance to, prove its mettle. 

Mercifully, it appears that we have been right, at least so far. The Troika, as we knew it, is dead.

Now that a “deal” has been reached, what do we make of its terms? Is it, as many are saying, “total capitulation” by Greece? A mere “name changing, not game changing” exercise? Or, is it something more substantial? Most important, does it leave Greece and the Eurozone better off?

There is something to the accusation, as articulated by Manolis Glezos, a respected Syriza MEP best known for having torn down the swastika from the Acropolis in 1941, that all that has happened is that the new euphemism for the Troika is “institutions”. Syriza tried, but has failed so far, to get the OECD more deeply involved, particularly at the cost of the ECB and the European Commission. But more has changed than meets the eye. Syriza can only claim some of the credit for the changes.

Why a Grexit should (and would) be vetoed

The noise around Greece is getting cacophonous, as each side poses and postures. The skirmishes have been rather frivolous so far, symptomatic of the two sides sussing each other out. The serious discussion is set to begin today at the European Council, but it will take weeks, if not months, to reach substantial conclusions about the future of Greece and, consequently, the Eurozone and the European Union itself.

It may be too early to pick winners, but Greece has fought a good fight. Syriza and its youthful leader Tsipras have kept their cool under unprecedented pressure. He, together with his charismatic Finance Minister Varoufakis, have come out as passionate pro-Europeans and have made many, often sensible and responsible, concessions to European partners by moving centre. Unfortunately, the same cannot be said of these partners, given that Jeroen Dijsselbloem, the president of the Eurogroup and Wolfgang Schäuble, the German Finance Minister, have been bullying, bitter and often irresponsible with their comments. Fortunately, both are just supporting actors in the Greek drama.

Greece’s fate will not turn on technicalities, but it will be the outcome of a ‘great game’ that has now begun. The European Council of leaders and the United States will provide the political anchor with the Commission, the IMF, the OECD and the ECB being the main economic actors. NATO will bring in the security angle and Russia, though absent, will undoubtedly loom large in negotiations.

Syriza may be doing the Eurozone a big favour

The “radical leftish” government of Syriza in Greece is not so radical or indeed leftish anymore. The “Marxist” finance minister, who is refreshingly bright and charismatic, has shown no “Marxist” leanings thus far. While many others in the markets and commentariat were panicking over Syriza’s win, we urged calm and reassured the public that Syriza’s election was good for Europe and good for Greece. A few days in, and signs are that we were right.

Despite several unsubstantiated rumours and sometimes deliberate, attempts to discredit a popular new government, Syriza has done a fairly decent job despite having no previous experience of governing whatsoever. It has not stepped on any nuclear mines, nor done irreparable harm to either its domestic or international standing. Yes it has had a somewhat rocky start but that was to be expected in such turbulent times and stressed conditions.

Syriza has done the Eurozone a great service by finally forcing it to start a debate on a number of critical issues that Frau Merkel, dubbed by the Economist as the West’s “greatest ditherer”, has so far declined to discuss.