Tsipras Marched Bravely Forward And … Surrendered

grexisOn Friday night, February 20th, the government of Greece under Prime Minister Alexis Tsipras agreed to the conditional financial rescue deal demanded by other Eurozone nations, especially Germany.

As is customary in such circumstances, Tsipras declared victory. Even though I am familiar with that custom amongst politicians, I’m a little taken aback by the effrontery of this declaration. Victory?

Yes, that’s what he called it, though in a bit of humblebrag he added that “we won a battle, not a war.”

What he and his ministers “won” looks a lot like a humiliation for the new government. Consider the day to day events that got him there.

First, he took the clear stand that he would not continue extend-and-pretend. He and his finance minister didn’t want an extension, they wanted a renegotiation and they wanted it NOW, i.e. in February 2015.

On February 8th, speaking to parliament, the same PM called the austerity program “cruel;” asserted that the bailout was a failure; and said the Greek government was not asking for an extension, “Because it [the government he heads] cannot ask for an extension of mistakes.”

Tsipras seemed to believe that a significant restructuring, an anti-austerity restructuring, would take place over the two-week period following that speech. The “contacts” between Tsipras and “the institutional partners of the European Union convinced me that it is feasible,” he said.

Germany said “nein.”

But Germany said no, and as cash ran low, it was Greece that had to back down. Early Thursday, February 12th, the Greek/Syriza government gave in to Germany’s opposition to any such restructuring, asking precisely for an extension that would amount to a continued pretension about its solvency.

Germany again said “nein.” Six months was too long. Indeed at this point some observers saw the dispute as a personal one between the German finance minister, Wolfgang Schaeuble, and his counterpart in Athens, Yanis Varoufakis. The BBC quoted an anonymous “top European official” who said “there is a real problem of personalities and I understand that Schaeuble is outraged by comments made by Varoufakis.”

The deal on Friday, then, was for a four-month extension.

In what sense is a victory for Syriza, or Greece? Tsipras’ own explanation is that the deal leaves “austerity, the bailouts, and the troika behind.” The only sense in which any of that is true is that the Troika will no longer be referred to as the Troika. The new agreement refers to “the institutions” that will continue working “in the framework of the existing arrangement.” So “institutions” is the new term for the Troika. Great victory, there.

As to austerity, Greece is still committed to ensuring “the appropriate primary fiscal surpluses.’ The government apparently plans to do so by cracking down on tax evasion. That is easier said than done, of course. “Let’s close loopholes, crack down on cheaters, and our treasury will be filled with dough in no time.” It’s an old and seductive notion. Right now, the troika seems to be pretending to go along with it.

The Glazos statement

Over the weekend, Manolis Glezos published a statement on the website Kinisi Energoi Polites. Glezos, a long-time left-wing activist who was arrested by riot police in February 2012, carries some weight with this government and its base. When he won election to the European Parliament last May, he received more votes than any other Greek candidate.

Glezos’ statement is that it is a “pity, and again, pity” that the government has effectively accepted the pre-election status quo, nullifying “the elections of 25 January 015.” Glezos apologizes for his own part in creating the illusion of change. He calls for “emergency assemblies, of all ranks” within Syriza organizations, so that the members of the party can reject what its leadership has done.

It is safe to predict that this call will have some resonance. You can bet on it. In fact, finding creative ways to bet on it seems a sound alpha strategy. The political situation in Greece will become increasingly volatile over coming days, and whether this accord (with the troika) will survive the prescribed four months is not at all clear.

As to the use of the term “institutions” for the troika, Glezos observes aptly that one may as well “rename fish as meat.” It is still fish.

 

 

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