Beware of Greeks Playing Games
Have Syriza’s negotiations failed as spectacularly as many claim?
When a new leftist Greek government under Alexis Tsipras was elected in January with a mandate to end austerity, it seemed as if an irresistible force was about to meet an immovable object. Greece, which had been groaning under an EU-imposed “bailout” programme for four years was determined to reverse punitive cuts. Brussels and the other Eurozone governments were set on keeping Greece in the Euro in order to avoid a meltdown in the financial system and also keep Athens up to the mark in order to prevent backsliding from other countries in various “bailout” programmes. Strong nerves would be required all round. At the time, great play was made of the fact that the new finance minister, Yanis Varoufakis, was an academic economist who had worked on game theory, and was thus well-equipped to outfox his stolid Eurozone counterparts. The Greek electorate thought it had voted, as I argued at the time for “having one’s cake and eating it“: an end to austerity while remaining in the Eurozone. Their belief depended on Syriza, and especially the ebullient Varoufakis, on bluffing “Europe” at into believing that they needed the Greeks more than the Greeks needed them.
We now know that this did not happen. The EU eventually lost patience over the weekend. It presented an ultimatum to Athens, which prevaricated and responded with an unexpected appeal to the people through a referendum on the terms of the bailout deal. When the German Chancellor Angela Merkel suggested that the vote be on membership of the Euro as such rather than cuts, Tsipras refused on the grounds that Greece was “a sovereign country”. Now that Greece has defaulted on its latest IMF payment, it seems likely that Greek exit from the Euro will take place by the end of this week or the beginning of the next one.
At first sight, therefore, it would seem as if the game played by Mr Varoufakis and Syriza has failed spectacularly. They have failed to bluff the EU into backing down and now face the catastrophic consequences of default. The widespread sympathy for Greece evident across the continent in 2011-2013 has largely evaporated to be replaced by a voyeuristic fascination with the way in which a European country is sleepwalking towards penury and isolation. The expected solidarity from anti-austerity movements such as Spain’s Podemos has not amounted to much. Governments and voters in places like Ireland and Latvia, who endured substantial austerity themselves after 2008, and whose economies are recovering as result, are suspicious and hostile. This has prompted many commentators to lampoon the failure of the Greek game theorists, who have driven their economy back into negative growth are about to drive the whole country over a cliff. So is it really game over for Syriza?
No. Their play was an entirely different one. Almost all the Syriza activists – as opposed to their voters – are extreme leftists with profound ideological objections not merely to the capitalists system but the euro and the European project generally. Most of them, such as the economist and MP Costas Lapasvitsas, have made no secret of their desire to return to the drachma; the currency would serve not just as a badge of Greek sovereignty but would also enable the kind of state-centred deficit financing which they passionately believe in. It was the Greek population which clung to the euro so desperately, partly as a badge of their European status, but mainly because they had a well-founded suspicion of the clientelist Greek state and its funny money. Opinion polls throughout the crisis have consistently shown about 70 per cent of Greeks wanting to stay in the euro and clear if smaller majorities in support of bearing the cost of the bailout programmes if that was the price of remaining within the common currency.
In order to overcome this popular sentiment, Syriza had to avoid the appearance of a voluntary exit from the Euro and engineer a constructive ejection from the common currency which could then be blamed on Brussels and the other Eurozone capitals, especially Berlin. They had to frustrate the obvious will of the people while arguing from a democratic mandate. They had to close down the option of growing out of the crisis through reforms, which the previous government had been on the verge of doing. All this Syriza has now achieved. They have manoeuvred the EU into a position where even a referendum vote on Sunday to accept the cuts will not enable the Greeks to stay in the euro, either because they will have crashed out before then or because the rest of Europe no longer believes that they will or can deliver. This – and not the eyeballing of the rest of Europe – was the real game that Syriza was playing and they have played it brilliantly.