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Greek Government’s Negotiation Failure a Misreading of the European Project

Sunday, July 5, 2015  | 

The refusal—possibly the inability—of the Hellenic Government of Prime Minister Alexis Tsipras to disburse a required repayment of ca. 1.6 billion euros to the International Monetary Fund (IMF) this week, precipitated some unwanted firsts: The largest default event in the seventy-­‐year history of the IMF, and the first such event by an advanced economy. As such, Greece, its eighteen partners in the Eurozone, and the broader community of EU member states, Greece’s traditional trading partners in the region and beyond, investors at the national, regional and global scales, and the structures and agents who collectively constitute the global economy, are called by circumstances to act and react to this much feared (but anticipated by many) default event and what follows it.

The practical implications of this technical default are enfolding as I am writing. At the local level, in Greece, manifestations of crisis are everywhere: The closure of banks and the limiting of withdrawal allowance at ATMs to 60 euro per day, have created new patterns of daily life. Strategizing which ATMs to go to, at what time, and who will stand for, often, as much as an hour, to collect the small allowance, is quickly becoming a cortical part of one’s day. Commercial activity in Thessaloniki, Greece, from where I am writing, is substantially reduced, with only cafes and eateries attracting some business. There are limited runs at supermarkets for food and water. Salaries and pensions can only be withdrawn in the piecemeal manner I described, and only the massively optimistic would spend such small amounts on anything but staples.

Looming at the end of the week is the national referendum called by the Tsipras Government on whether or not to accede to the “troika” (European Commission, European Central Bank, IMF) plan under consideration on Friday, 26 June—a plan, which, since last night, has expired and cannot be considered a basis for any reasonable decision on how financial and structural assistance to Greece may continue. Greeks are called to either vote “No”, thereby rejecting the “troika” plan, or “Yes”, thereby accepting it. Per the Government’s discourse, “No” means a stronger hand in a renewed negotiation with supposedly frightened and chastened lenders and institutions, while “Yes” means total capitulation to the “troika” and acceptance of a structural adjustment plan that would perpetuate the on-­‐going hardship of Greek people. Given that the indicated plan no longer exists in either legal or political terms as of last night, does not appear to deter the Tsipras Government from using it to leverage the Greek electorate’s anger and despair against austerity policies of the last five years and the entities which have been constructed— fairly or unfairly—as its agents. In this high-­‐risk strategy, the Tsipras Government counted on its Eurozone partners’ aversion to risk, and relatedly, on their commitment to the preservation of the European common currency. It is also reasonable to assume that the Government counted on financial markets to panic and send indices sharply lower, thus signaling to Eurozone Governments, the European Commission, and the European Central Bank that the least costly resolution to the negotiation crisis would be to accommodate Greece’s significant demands: debt accommodation, easing (in fact, the rolling back) of structural reforms, reductions in the cadence and intensity of monitoring of the Greek economy, and the continuing financing under favorable conditions of what would be a substantially reduced debt load.

A high risk, high stakes gambit, indeed, because any careful reading and consideration of the European project— especially after the shape it took following the 1993 Treaty of European Union—would have confirmed that the prospect of financial loses, even at a very high level, do not and cannot possibly undermine the historic gains and continuing process of construction of European unity. Epigrammatically, I can summarize it as follows: Historical experience always points to “more Europe”. Since the creation of the first Community in 1951—the European Coal and Steel Community—“Europe” has been constructed, first, through a series of policy spillover events that have expanded the European institutions’ regulatory reach, and second, Member States and European institutions have been solving European problems through “more Europe” (meaning, by deepening the union) – never less. Further, the continuing error that commentators make in discussing this, or any European Union crisis, is to suggest that rollbacks are the reasonable solution (presumably, by reducing the regulatory footprint of the EU, and reasserting pieces of already conceded national sovereignty). The Greek Government erred in the same way: Per its counter proposed plans that span the five months it has been in power, the Tsipras Government gambled that Europe will seek to secure financial stability by suspending (for Greece, at least) significant dimensions of its acquis communautaire—the legal basis of the EU, with respect to the monetary union. Further, if there is a mortal sin to commit in EU political circles, is to question the veracity and commitment of the institutions and the Member States to European solidarity and cohesion. Whether reality matches the idealistic discourse of Europeanism discourse notwithstanding, the Tsipras Government did both continuously and in the most indelicate manner. To call its strategy a gamble, or a gambit, is an understatement, indeed. It represents a gross misreading of the European project in its most fundamental sense.

Importantly, it is a question of geopolitics, and not only of financial stability, although the two are clearly linked. Stepping back from its historic commitment to an “ever deeper union”, as envisioned by Robert Schuman and Conrad Adenauer, and the institutions and legal bases that have been laboriously crafted over a sixty five year period, cannot not be precipitated by the maneuverings of any Member State government, no matter how much or how often the pain of austerity upon people is invoked. And that last one, should really give European institutions, if not also all Member States, pause, because many Greeks have suffered a great deal in the last five years. At this point, preservation and extension of the Union is of existential significance. Notably, the Tsipras Government, quite correctly, though not adeptly, attempted to link Greece’s conundrum with European existential questions about social and regional justice, solidarity and cohesion.

Prime Minister Tsipras’ hard left Government failed to convince the social democratic wing of its European partners’ governments of its European credentials, thus also failing to gain their support. Sadly, it has not proven to be the progressive force some hoped would have catalyzed a new European conversation on the destructive excesses of neoliberalism and globalization. Instead, Tsipras’ party SYRIZA’s alliance with the rightist/nationalist/anti-immigrant Independent Greeks, poisoned the well. Invocations of the exceptionalist character of Hellenic democracy might have moved some to Greece’s side, had Greece’s political system and culture been less corroded by crony capitalism and clientelism. Perhaps the next government—one of national unity, perhaps—would be able to frame its demands effectively, with respect to not only political-social desiderata, but also with respect to the institutional and legal bases of the Union.

At approximately the noon hour in Brussels, on 01 July, the Tsipras Government took a step toward reconciliation by submitting a letter in which it appears to accede to most of the “troika” demands. It is conceivable that it will continue inching toward an acceptable document, and it is my great hope that the Eurozone partners, the European Commission, and the European Central bank will also take some steps to allow the Government to save face. I do not expect such movement or accommodation by the IMF. Should that rapprochement occur, the surreal and ill-afforded referendum planned for Sunday would either not take place, or the Tsipras Government will reverse its polarity, and urge the Greek electorate to support the “new” agreed plan.

The point here is to gain some understanding of what is proving to be a calamitous strategy vis-à-vis Europe by the Tsipras Government, or more simply, why it has been entirely incapable of bending Europe to its will. A discussion of the fairness or unfairness of the “troika’s” structural reform demands, and of the viability of the vast Greek debt, need to be given their due attention elsewhere. In closing, it is truly a silver lining of a very sad affair that this latest chapter of the crisis has revealed how very many Greeks, in their opposition to the so called “Greferendum”, have a deep understanding of, and commitment to a European solution to Greece’s crisis.

Thessaloniki, Greece 01 July 2015

Dr. Alex Papadopoulos of DePaul University is an Academic Advisor to HALC.  This piece was originally written for International Policy Digest and is republished with permission.


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