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Order from Chaos

Greece and the politics of brinksmanship

The Greek government is in the middle of very intense negotiations for a deal with its European creditors and the International Monetary Fund (IMF) for additional funding in exchange for agreed policy steps by Greece. Further, Prime Minister Alexis Tsipras will need to successfully sell any compromise to his parliament, where the greatest problems will come from within his own Syriza Party. Whatever the ultimate outcome, the process of getting to this stage highlights several interesting political and geopolitical points of wider applicability.

Walking on the edge 

First, brinksmanship, for all its dangers, is often essential to successful negotiations, even when the broad outlines of the eventual deal have been painfully obvious from the beginning. Ironically, this symptom of political dysfunction may be worse in democracies than other forms of government. In democracies, leaders must show their constituents that they tried as hard as they could to achieve the impossible and are only compromising out of necessity. (Think of our own embarrassing process of agreeing on increases to the U.S. debt ceiling a couple of years ago.) The general outline of the Greek deal has been obvious for at least four months, give or take some admittedly important details. It would have been nice to achieve agreement in a less damaging and quicker way.

Tsipras and his Syriza colleagues arguably pushed Greece into recession over the last five months by inducing a high level of uncertainty about whether any deal could be reached or whether the nation might end up exiting the eurozone (“Grexit”). This uncertainty damaged business conditions badly. 

The counterargument is that Tsipras would not be able to negotiate as good a deal—or carry his party and nation along with the eventual compromise—without confronting his creditors with the very real possibility of a failed negotiation, potentially leading to Grexit. The brinksmanship was necessary to drag his creditors towards his position and to prove to his constituents that he had done everything possible, thereby justifying the deal. Certainly, Tsipras and Syriza garnered strong support within Greece for “standing up” to Europe and reasserting Greek sovereignty.

Second, inexperienced governments are likely to make serious mistakes when they are thrown into the deep end of the pool right after they are elected to power. Even if one accepts the argument that high-stakes brinksmanship was necessary, it is hard to see any advantage to the way that the Greeks alienated most of their natural allies in the first month of negotiations. Spain, Portugal, Ireland, and Italy shared a common desire for less austerity imposed from Brussels and Berlin, and more control over their own affairs. Instead of finding common positions with these governments, the Greeks actively supported the anti-establishment opposition parties that shared certain beliefs with Syriza, particularly Podemos in Spain. 

Thus, they turned the people with actual power in those countries actively against the Greek position, even if they gained kudos from their (out of power) ideological allies. This also added to the fear within Germany and many other European governments that being too nice to Greece would encourage other radical leftist parties across Europe, making it still harder to push forward with the restructuring programs they believed to be essential.

Third, ideological parties that have no experience of power can be destabilizing, especially in the early days. SYRIZA stands for “the Coalition of the Radical Left” and most of the seven parties that recently fused into one have a history of ideological views that are indeed as radical as advertised—many of them are offshoots of the Communist Party.

The party’s background created two problems for the negotiations. For one, its members simply do not accept many of the premises shared by all of the creditor governments about how economics works in the real world. Naturally, this makes reaching a deal harder. Moreover, many of the Syriza members of parliament would rather lose power than compromise their ideals. This is admirable in many ways, but it leaves open the real possibility that enough Syriza members will oppose Tsipras’ deal that he will be unable to get it through parliament. He appears to have sufficient support from members of other parties—especially To Potami and PASOK—in order to push a deal through, but he may find he needs New Democracy, as well. The price for their support may prove too high to pay. 

Fourth, geopolitics matter. The United States pushed both sides very hard to reach an agreement, and it does still have significant influence with Europe and with the International Monetary Fund. American leaders had a number of fears, starting with concern that a failing state at the south end of the Balkans and not far from the Middle East and North Africa would be seriously problematic. This was compounded by fears of the outside possibility that financial distress emanating from Greece would trigger another, albeit smaller, financial crisis. Not to mention the recognition that Greece has strong cultural affinities with Russia and might become a Russian ally within the European Union. Many European leaders also shared these fears.

Wishing and hoping 

The United States was right to push for a deal. Nevertheless, U.S. leaders probably should have been more sensitive to the reasonable fear of core European governments that they were too concerned about the geopolitics and the risk of short-term problems to insist on principles necessary for the proper functioning of the eurozone in the long term. Sometimes the United States appeared, to certain Europeans, to insist that Europe give the crying brat more cookies, rather than dealing with the core issues.

Whatever historians eventually conclude, let us watch and hope that a reasonable deal is indeed about to be delivered.

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