It was clear all along that Greece had no defense against the troika’s doomsday weapon, a credit cutoff by the ECB. As “negotiations” dragged on, the dispenser of euros publicly warned of a Greek banking failure, actually provoking the sort of run that central banks normally do all they can to prevent. Finally, in retribution for Tsipras’ final act of defiance, calling a referendum scheduled several days after the termination of the loan program, the ECB fired away in force, freezing support and essentially telling Greek depositors, pull your money out now or never see it again. With capital controls in place, banks shuttered, and the government unable to find euros to fulfill its core obligations, Greece is prostrate.
That’s Act I, which has culminated with Tsipras folding and giving in to the same demands he rejected five months earlier.
Now begins Act II. The creditors will offer Greece a further deal, with more loans (and indebtedness) and more austerity, but enough support to allow Greece to have a financial system again. This offer will not be made to Syriza, however. It will be presented on the condition that Tsipras resign, and that a new government, led by New Democracy, the center-right party that Syriza replaced, take over. This appears to be the thinking behind the recent statements by Merkel and Dijsselbloem that no further discussions can be held until after Sunday’s referendum: the expectation is that “Yes” will win big, and that this will lead not only to a new government but athe collapse of Syriza as a coherent political entity. That’s Plan A. If a Plan B is required, the obvious strategy for the creditors is to exact even more suffering on the Greeks—for instance, keeping the euro spigot closed even as food imports dry up and starvation sets in. But that increases the likelihood of a violent regime change, presumably led by the military. My assumption is that “liberal, reasonable” Europe would prefer to see Syriza deposed in a civilized manner, without tanks and prisons, but one way or another the political goal has to be fulfilled.
From where I sit, it was obvious from the outset that a Syriza government in Greece was viewed as unacceptable by the rest of the EU. (I’m referring of course to member governments.) It was always understood that resolving the dispute meant removing Syriza as a disputant. It is likely that future releases of diplomatic communications will verify this. In the meantime, I wonder whether this was recognized in Athens and, if so, what their strategy was to prevent it.