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.
I don't think Syriza realized this. What do you think?
ReplyDeleteI may be completely off, but I have stated in a post earlier and in comments on various blogs that the referendum is really a rather clever move by Syriza. They defend their position in favor of what they promised when they ran, not cuts in pensions by calling for a no vote. However, if there is a yes vote as most polls seem to indicate (most Greeks really do not want to drop the euro), then they are in a position to cave to the troika while saying to the Greek population, "we are doing as you say you want."
ReplyDeleteNow, there are all these people, including you, Peter, who seem to think that a yes vote automatically means Syriza must step down. But why is that? Must they? I have seen no polls saying they are unpopular in Greece, despite the ongoing trouble. Tsipras and Varoufakis have gained much popularity according to most reports by standing up to the troika. By having the referendum, they can cave to the troika without losing face from having violated their campaign promises.
If there is a yes vote, and Tsipras goes hat in hand to the troika and says, "OK, we accept your last offer as stated," will the troika really say, "No, we have removed it; you must step down," especially if polls show that a new election would simply reinstall Syriza? Maybe there are some in the eurozone who want the Greek military to move, but I think most do not, especially if Syriza becomes fully compliant and subservient, which presumably they would do if the vote is yes.
I really do not see the necessity of this outcome you and many others are forecasting, Perer, although I could easily be wrong.
Why would they want office without power? To take responsibility for right-wing policy? That makes no sense.
ReplyDeleteYou are quite right. Syriza is toast. They brought knife to a gunfight. They will loose the referendum and that is a pity. Not all their ideas were good but the proposal of troika is certainly bad and will not work. It is insanity to keep doing the same thing and expect a different result - as a great man once said.
ReplyDeleteThe euro and the European project will have strongly negative drip-drip effect on its economy that will last for a long time unless the powers of EU and EMU decide to implement policies and create institutions that are effective and efficient for all and not just for the powerful.
Well, Varoufakis says he will resign if the vote is yes, but we shall see about Tsipras and others.
ReplyDeleteWhen I posted this, I was a bit nervous: what if I were wrong? But the last 24 hours have validated almost everything I've said. The only really speculative part is the notion that future leaks/releases/memoirs will show that the regime change intentions go back to the election of Syriza. I think this is likely because it's the simplest explanation for the course taken by the "negotiations", but of course I could prove to be wrong.
ReplyDeleteI doubt that the troika would expressly demand that Syriza step down... they'd be more passive-aggressive about it. I expect that there will be no debt relief until some party other than Syriza takes office.
ReplyDeleteThe real goal here is to force the elimination of all social safety net programs and all government-backed pensions, health care, etc. Once they've accomplished this, the troika will move on to Italy and Spain. Eventually, the common wisdom will be that only government-funded bailouts for the 0.1% funded by eliminating any programs benefiting the 99% can resolve an economy's problems. It's a rolling plan, intended to push Europe (and the rest of the world) back to an 18th century robber baron / wage slave economic structure.
Looks like No vote is winning in Greece, and by a wide margin, 60-40, but count not all in yet.
ReplyDeletePeter,
ReplyDeleteNope.
"Speculation is rife tonight that the leftist-led government may buttress the Greek negotiating team with members of the political opposition who creditors may find more palatable to deal with in the days ahead."
ReplyDeleteHoe is that 'regime change' thing working out for ya?
I will be (pleasantly) surprised if an acceptable deal is offered to Tsipras. My baseline scenario is continued attack by the ECB, economic meltdown in Greece, and European offers for relief (narrow) contingent on some form of regime change. If this is rejected we are on to Plan C. It's ugly.
ReplyDeleteThe one escape from this nightmare is if Greece can successfully resist the euro quarantine. The talk about simply printing euros and taking the case to the ECJ is interesting. I don't think the IOU option, which Varoufakis mentioned before resigning, buys much time. But printing euros, while it might help Greece in the immediate situation, would be the beginning of the end for the euro itself. Which might be a good thing in principle, but not in this particular process, which will lead to everyone blaming everyone else.
"I will be (pleasantly) surprised if an acceptable deal is offered to Tsipras."
ReplyDeleteI don't think it is a matter of "offering an acceptable deal to Tsipras." An acceptable deal presumes a "healthy" Europe and a "sick" Greece, neither of which is accurate. Instead, I think Greece manifests the symptoms of Europe's unhealthy dynamic. Similarly, Europe needs "the Greek problem" to mask a more systematic problem.
Gregory Bateson's analysis of the double-bind would be useful here. Bateson originally thought of it as an explanation for schizophrenia but the ubiquity of double-binds undermined its diagnostic specificity. This should not detract from its generality, though.