Why Greece Hasn't Threatened to Leave the EU... Not Yet, Anyway
In one of Aesop’s fables, a pigeon driven to desperation by thirst flew toward what appeared to be a pitcher of water, only to find itself crashing into a painting. Severely wounded, the bird is captured by a bystander and taken as food. Zeal, Aesop warns, should not outrun discretion.
On the verge of a week of furious negotiations, it would seem Greece is a country driven to desperation. With an emergency meeting of Eurogroup finance ministers this Wednesday, and a full summit scheduled for Thursday, what isn’t being said by Greece’s Syriza government may be more important than what is.
Knowing that Greece’s course has substantial consequences for the Eurozone and the United States, Syriza is being very careful about its language.
On Sunday, Prime Minister Alexis Tsipras vowed to continue fighting for debt renegotiations while prioritizing the “humanitarian crisis” brought on by years of austerity. He also signaled that frugality would be best exemplified on the governmental level by selling off half of the government’s limousines and a jet.
With all the talk of a “Grexit,” it’s important to note that Greece’s Syriza government has yet to threaten leaving the European Union or the Eurozone.
On the other side of this equation, European officials and even the defrocked high priest of free markets, Alan Greenspan, have been warning of Greek exit from the European Union.
Upon winning the election, many casual observers believed Syriza, which means “Radical Coalition of the Left,” would opt to leave the European Union or at least present the idea as a bargaining chip--a kind of political blackmail.
So why isn’t Syriza threatening to leave the Eurozone?
The simple answer is that Syriza, a party born of the anti-austerity protest movements, is reading popular opinion.
A nuanced analysis indicates that Syriza, governing a fragile coalition government, is planning for all contingencies. They understand that their negotiations with the Troika (the European Central Bank, the European Commision, and the International Monetary Fund) have broad implications.
They also understand the necessity of building long term political support on the homefront by sticking to the democratic will. As recent opinion polls indicate that as many as 70% of Greeks hope to remain within the currency union.
Syriza holds two mandates. First, they must end the social catastrophe that many blame on austerity. Second, they must appear committed to keeping Greece within the European Union. In some ways the two seem antithetical, but Syriza believes they aren’t.
To achieve the first, they need debt restructuring or forgiveness, a reformed taxation scheme, and continued funding for social programs. In short, they need the European Union.
But the Troika holds that no restructuring is possible and that Greece must stick to their commitments or leave the currency union.
If the polls are to be believed, had Syriza began its negotiations with European officials by threatening to leave the European Union, they would have faced a political disaster on the home front.
Last week, the government sent its economics-professor-turned-finance-minister Yannis Varoufakis on a multi nation tour in hopes of winning support for his “modest proposal to save Europe.” Varoufakis’ proposal includes a bridge agreement that would hold Greece over for a few months, until a new agreement can be worked out.
The night before his meeting with German finance minister Wolfgang Schäuble, the European Central Bank announced it would no longer accept Greek government bonds as collateral for loans to Greek banks. And as expected, Schäuble rejected any talk of restructuring the Greek debt.
Despite warm receptions for Syriza officials in Italy and France earlier this week, those governments held the party line and backed the German and Troika officials’ insistence that Greece remain on the program of bailout, austerity, and debt payments.
But this too is politically untenable in Greece, where the austerity-crippled population strongly favors ending a program that has seen suicides, homelessness, and poverty skyrocket.
A Way Out By Staying In
Syriza sees a way out of this paradox.
Consider the statements by their other prominent economist, Costas Lapavitsas in The Guardian: “first, the forces of austerity currently strangling Europe should not be allowed to crush the Syriza experiment, or turn it into a moth-eaten compromise; second, Syriza should make solid and meticulous preparations for all eventualities, a point that is well understood by many within it.”
Having expected harsh resistance and an onslaught of veiled threats from the financial community, it would be naive to imagine Syriza hasn’t prepared for this exact scenario.
If Varoufakis’ proposals, which are are viewed as reasonable by most Greeks, are rejected by EU officials, more Greeks will consider leaving the European Union a necessary evil.
At that point, if a Syriza government still exists, they can threaten to leave the union. That’s when the German government’s mettle will be tested. Can the European Union afford a “Grexit” and the potential implications for Spain and other austerity-ravaged countries?
It should be noted, in his book Crisis in the Eurozone, Lapavitsas has supported a Greek exit from the Eurozone and has argued that austerity throughout Europe has been counterproductive.
A Syriza government that remains in the union poses a problem for Germany and the United States on another front. They have made it clear that they will veto any attempt to ratify the Trans-Atlantic Trade and Investment Partnership, an international trade agreement that both Germany and the United States want urgently.
At that point, does the European Union want Syriza to capitulate on a debt if it means the loss of the TTIP? Can it afford to let Greece out if it means destabilizing the currency union further?
There are many contingencies and a slew of potential scenarios that affect various players. This is more than a game of brinksmanship; frankly, this isn’t a game.
Greece may be relying on the words from another of Aesop’s fables, The Lion and the Mouse: “in critical moments even the very powerful have need of the weakest.”