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What’s Next on Greece?

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Since Syriza's ascent to power 5 months ago, I felt –and hoped- that the negotiations for Greece's Bailout program would hit the wall at the end of its current extension. Whether it was part of well thought out plan or the result of incompetency, it didn't matter. It just had to happen, as indeed it did.

By George Courmouzis

The policy of the creditors was to not allow deviation from fiscal impositions, lest other indebted nations in Europe felt encouraged to follow Greece's course. The electoral platform of Syriza did not permit it to agree to the terms it fought against while in opposition. The strategy for both was to bring the issue to an impasse, giving adequate time for Syriza to become owners of political developments in Greece.

As the months rolled by, Syriza showed meager reform initiatives, other than the dismantling of certain Bailout measures that affected its political client base (i.e. fired public servants). No proactive legislation was introduced aimed at resolving some of Greece's endemic problems. As a party of tangents that flourished in cacophonic opposition, Syriza switched its focus to opposing Europe and its Creditors. Its noble cause was to usher a European wide revolution against the austerity measures capital imposes on the Union's citizens. Syriza hit the ground in Brussels last February tactically ready to provoke with their dress code, to annihilate with their behavior and to stall negotiations with Varoufakis' "creative vagueness".

With the state apparatus collapsed and Syriza voices officially disclaiming responsibility over the nation's debt and questioning its legitimacy, the state coffers were emptied by the lack of a mechanism to collect taxes, while paying state salaries and pensions. Bank liquidity was sustained artificially by the ELA mechanism, as Greeks were lead on to the upcoming liquidity crunch and took their money out of the banks well before capital controls were instituted.

As the economy tanked after 5 months in the doldrums, more debt was assumed, adding more weight to future bailout terms. The terms proposed last Friday by the Eurogroup, not even the current opposition could have voted for. With Greece bankrupt and soon to be in default to its Creditors, it officially filed for restructuring by walking out of the Eurogroup negotiations.

This opened the field for Tsipras to reassert his leadership with a call for a referendum on a rigged, invalid question: To agree or disagree over the last proposals tabled by the Eurogroup, which have since been withdrawn; therefore a non-question! The Eurogroup leader jumped in to clarify that a No answer was the way out of the Eurozone, whatever the painful implications might be. He further clarified that a Yes answer would not bring the Creditors back to the table across a government that, in their view, lacked negotiating credibility. In other words, a Yes vote would open the field for new elections, which is probably what the Creditors hope to see as a result of this referendum.

With the Greek oppositions parties in complete disarray –particularly New Democracy with the unpopular Samaras holding on to power- it was a prime opportunity for Tsipras to make a move to consolidate his power and build on his legacy. Greeks will be asked to decide what the worse of two choices is: continued austerity or a jump to the perilous return to the drachma.

They won't have time to figure this out in one week. They'll be emotionally charged by getting their first taste of limitations of their freedom with capital controls in place. The opposition, who governed the country during its 5 years of decline, has nothing substantive to counter-propose other than to scare them with the uncertainty of exiting the euro.

The outcome of the referendum is anybody's guess right now. A Yes vote would lead the nation to new elections and give the opposition parties time to reorganize and offer a credible alternative. But a No vote may have the same result. Tsipras needs a new electoral mandate to claim legitimacy for his future actions and clear out his political alliance from the extreme Left and Right that weighs him down.

Democracy is certainly above the dictatorship of the capital markets. But can it get its way?