Caught Between 'Grexit' and 'Hell No' — Greece Submits To Austerity's Knife

After submitting a proposal for consideration by foreign creditors overnight, the Greek government of Alexis Tsipras on Friday presented the plan to a full meeting of Parliament, in hopes of securing backing for a plan that would keep Greece in the eurozone by exchanging long-term debt relief and further financial assistance for a new set of of harsh austerity programs and conditions.

"We are confronted with crucial decisions," a government official quoted Tspiras as telling Syriza lawmakers during the morning session. "We got a mandate to bring a better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone."

While acknowledging the plan is not ideal, he said: "We are all in this together."

The €53.5 billion plan—which calls for surplus budgets, cuts to pensions, controversial tax increases, and further privatization of industries and assets—looks much like a similar proposal that was put to a vote and rejected by Greek voters on Sunday, but includes important differences when it comes to the prospect of debt relief and includes longer pay-off periods. The Guardian looks at the details of the plan here.

Though market forces were responding positively to the proposal and French President Francois Hollande was among European leaders expressing optimism for an agreement as he called Greece's plan "serious and credible," voices and political forces on the left in Greece are expressing strong criticism of the deal.

Greek Energy Minister Panagiotis Lafazanis, who belongs to the hard left wing of the Syriza coalition, said the conditions of the deal are simply "not compatible with the SYRIZA program." As of Friday morning, however, it was unclear how angered party members would ultimately vote. "We will take it step by step," he said.

Looking at the deal from the outside, Nobel-winning economist Paul Krugman, in a blog post on Friday morning, argues that with the Troika "still demanding a rising primary surplus over time, and balking at top line debt relief that might at least offer a clear marker of progress," the deal that Syriza has presented is only putting off for now, what will become unavoidable later. "If those are the requirements for Greece to stay in the eurozone," Krugman predicts, "Grexit is inevitable."

In addition to those on the left who expressed criticism of the deal put forth by the Syriza leadership, many economists continue to believe that while painful, an exit from the eurozone would have been the better decision. Still other observers are making the case that the situation in Greece has become one for which no good solution—political or economic—exists.

As James Galbraith, economics professor at the University of Texas, told KPFA in an interview (audio) on Thursday, the Greeks have put the onus on foreign creditors to accept or reject their offer, but "[i]t's not going to be a good result no matter what happens." The choice, he said, "is between a bad result and a catastrophic one."

Responding to critics like Lafazanis, Galbraith acknowledged that opposition the proposal is a widely (and rightly) held position among a huge majority of the Greek people, as indicated by Sunday's referendum result. The Greek people, he said, "[d]on't wish to be bullied; don't want to have bad policies inflicted on them [by] the European leadership."

However, he continued, the government cannot just tell the EU and Troika members "to go to hell," because Greece, from the beginning of the crisis, "has been committed to paying its [debt] obligations—however odious and disagreeable they may be."

The crux of the situation, according to Galbraith, is that the only real political or economic leverage Greece has ever had against the European Commission, the IMF, and the ECB is the threat to leave the eurozone—but that this leverage is actually quite weak, because the political consensus within Greece, and the stated position of the Syriza government throughout the negotiations, has been to stay with the single currency.

As Alex Andreou, a writer and political commentator on Greece, put it in a tweet on Friday: "Some fellow Greeks seem to bemoan Tsipras not signing deal that existed only in their imagination. There was no right way. Don't you get it?"

And in a lengthier blog post—titled The Pantomime of the Greek Deal—Andreou explained:

Instant, dramatic, pantomime reactions of the type "Tsipras just destroyed Greece" and "Tsipras just saved Europe" are numerous and deeply unhelpful. He has done neither. This isn't a booing or cheering moment. He simply has tried to balance his two basic mandate commands to a. end austerity and b. stay within the Euro, which turned out to be pretty much mutually exclusive, in an ideologically propagated, German-controlled climate. As that became clear, one had to be prioritized over the other. It is fair to say that a shrewder assessment at the start may have revealed them to be mutually exclusive, but shoulda-coulda-wouldas are also not particularly constructive.

With the European Commission coming together in Brussels over the weekend to consider Greece's proposal, there remains much speculation about how events will unfold in the coming days.

In the streets of Athens on Friday, Guardian correspondent Angelique Chrisafis talked with 27-year-old Cristos, an engineer now employed at a cafe, who said that though he voted 'No' in the Sunday's referendum, he remains faithful in Tsipras and hopes that even with a new austerity package imposed, the Greek economy will begin to recover.

"I think everyone has always known that things were going to be very difficult now and in the coming years," he said. "The deal will be very difficult for us, but it’s probably the best solution. Better a deal than no deal. I think our only chance is to continue on our road in the eurozone. The No vote was a way for Greeks to express their feelings to Europe, there’s a certain happiness that the No vote has been heard. And it seems there has been an understanding that more should be put on the table for Greece, in the form of debt relief. There has been progress."

As for critical observers like Andreou, there also remains hope that the most recent developments have put Greece on stronger footing as it faces what comes next.

"My long term best case scenario would be Tsipras to make the deal, then start planning for an orderly and controlled Grexit and start working on convincing people that it is the right choice," he wrote. "My second best case scenario is Germany digging in its heels and refusing the deal. Painful, violent, but ultimately freeing Greece from bondage to pursue default. 

Andreou concluded: "After decades of the wrong people succeeding from the wrong reasons, Greece was yearning for the right people to fail for the right reasons. I believe this is what has happened. I do not, for a moment, doubt this government's honesty or integrity and that is an important step forward, psychologically. I believe they have done the best that anyone could have, with honesty and—yes, at times—wide eyed naïveté. I do not envy their task in the weeks and months to come, whatever it turns out to be, and I intend to fully support them in it."