As a former UK Prime Minister once said, a week is a long time in politics. Mind you, it did not take a whole week for the political situation in Greece to gyrate almost 180 degrees. The big No vote against the EU imposed austerity measures barely lasted a day. Greece has now put forward new proposals which look remarkably like the one they rejected a week ago. These new proposals have even been enthusiastically approved by the Greek parliament. What is going on?
As I and others have consistently pointed out there is a yawning chasm at the heart of Syriza’s platform. This was to end austerity and to stay in the Euro. It was never made clear how they would be able to achieve both. The first, ending austerity, was not and still is not, something that Greece can do on its own. It needs the agreement of the infamous Troika, which is not really just three players, but anything up to 21. To get an agreement on changing the bailout conditions and thus ending austerity, Greece needed the approval of all 18 of the other eurozone members. Some of whom need to get Parliamentary approval to do so. Some are smaller and poorer than Greece, and they find it difficult to understand why Greece needs so much additional support.
The other big problem for Syriza is that while an overwhelming majority of Greeks want both an end to austerity and to stay in the Euro, Syriza never explained what might happen if both were not achievable. In large part this may be because the majority in Syriza regards euro membership as essential for the long term future of Greece. In this they are supported by an overwhelming majority of the Greek population. Polls consistently show anything between 70% and 80% in favour of staying in the eurozone.
However Syriza never really engaged with the people of Greece in terms of what alternatives there might be to not getting an agreement with the EU. Which makes last weekend’s referendum all the more puzzling. It is all very well to say you want to strengthen your hand in the negotiations, but for that you need to be able to threaten the others with something. That something could only be a default and with it a possible Grexit. But this is precisely what Syriza refused to do. It made it crystal clear that a No vote was not a vote for either default or Grexit. So what precisely was the point of the referendum?
Some informed commentators, with good contacts with leading Syriza members, have stated that the Syriza leadership expected to lose the referendum. They had reached the end of the road and wanted someone else to take on the burden of agreeing a new deal, with the extra austerity this would entail. This reading certainly makes some sense and is further borne out by the fact that after the resounding No vote, Syriza had no new proposals in place. It took until late on Thursday evening for their new plan to reach Brussels.
Whatever he expected from the referendum, given the massive No vote, Tsipras had no choice but to continue as Prime Minister. However he moved quickly to shore up his position by getting formal support from the main opposition parties in the Parliament. Hence the big vote in Parliament for the new EU proposals. Everyone now awaits the various meetings which will take place in Brussels tomorrow, Sunday. Most commentators expect the EU to agree on a new package for Greece, though it is by no means guaranteed.
What next for Syriza? If the deal goes ahead then the current financial crisis should end, and the banks reopen. The reforms will need to be legislated for and then implemented. Something that has not really happened up to now. Though the new austerity measures will be hard for many Greeks and completely unnecessary in economic terms, there is still much that a radical left government could do. Not everything depends on money. Once the negotiations are over, perhaps Syriza can spend more time on actually governing and implementing some of the small, but essential changes that will in time improve things for the majority of Greeks. Reducing the rather large military spending for example.
Other radical left forces in the EU need to reflect long and hard on the recent developments in Greece. In particular do not promise to achieve two objectives that are likely to be incompatible. In the case of Greece this was promising to end austerity and stay in the Euro. It is not that these two objectives could not be achieved, but rather that, given the current configuration of power within the EU, it was most unlikely. Power in the EU rests with the governments of the member states. And to the misfortune of Greece, almost all of these governments are right wing governments, some of them very right wing. All are committed to austerity and neoliberalism. All have been legitimately and democratically elected, so this is not a conflict between democracy and unelected institutions.
This should not have been news to Syriza. Which makes it all the more incomprehensible that they pointlessly stuck to their original plan. Which seems to have amounted to nothing more than hoping that the other 18 eurozone governments would be swayed by the eloquence of Varoufakis. In this situation it matters not a jot that Varoufakis may be right. What matters is that the others have the power and Greece did not and does not.
The only alternative to accepting a bad deal was to go for no deal and default and probably leave the eurozone. But the people of Greece, including the Syriza government, have consistently made clear that that choice would likely be even worse. Many commentators have urged Syriza to go for a Grexit, on the grounds that a devaluation would speed up an economic recovery and that anyway, things are so bad that they cannot get any worse.
I think they are wrong on both counts. Those arguing for a return of the Drachma and a massive devaluation point to the likes of Argentina and Canada as examples of where this has worked. This seems to me to ignore both that Greece and its economy is nothing like either Argentina or Canada, and just as importantly the global economy is pretty much stagnant at best right now. In the previous examples, both Argentina and Canada benefitted from rising global demand. Not to mention that Greece imports more than it exports.
As regards the argument that things are so bad, why not just go for it, this seems to me to be irresponsible in the extreme. Just to remind some people, things can actually get worse. In fact things can get a lot worse. The people of Greece need all the support they can get, but false promises of a new dawn are the last thing they need just now. Syriza in government can still make a difference to the lives of the majority of Greeks. Not as much of a difference as they would have liked, but still a difference. Let us wish them well and offer any support we can.