Dangerous Liaisons: The Economist on the Greek Crisis

Tsipras and MerkelMarch 21, 2015

The Greek crisis is not just an economic mess. Increasingly, it is becoming a geopolitical mess too. Alexis Tsipras, the country’s prime minister, whose radical-left Syriza party swept into government after January’s general election, has taken to tugging at crude political levers – from cosying up to Vladimir Putin to demanding war reparations from Germany – in the belief that this will somehow prompt concessions from the rest of the euro zone.

The whiff of blackmail has incensed Europe’s politicians. Mr Tsipras has a chance to calm things down in two meetings with Angela Merkel, Germany’s chancellor – the first this week on the fringes of a European summit in Brussels, and the second in Berlin on March 23 for what should be some hard talking between the European Union’s most powerful leader and its biggest troublemaker. Instead of stirring up resentment, Mr Tsipras should focus on the urgent task at hand: forging a deal.

Just now the Greek government seems to prefer lobbing incendiary political gibes instead. The defence minister has threatened to flood Europe with migrants, including jihadists. The justice minister has demanded that Germany pay €160 billion ($170 billion) in war reparations and warned Greece might seize the buildings of the Goethe Institute and even German holiday homes if the money is not handed over. And Mr Tsipras has brought forward to early April a trip to Moscow to see Russia’s president, Vladimir Putin. His hoped-for message is as clear as it is crude: Mr Putin might be only too happy to help a fellow Orthodox country that dislikes sanctions on Russia.

Clearly, Greece believes that it can use threats like Russia to his advantage. History provides a precedent: it was to fend off Soviet encroachment that America, under President Truman, provided aid to Greece in the aftermath of the second world war. Today, too, for Greece to fall under Russia’s spell is the last thing that NATO and the EU wants.

Mr Tsipras is playing a dangerous game. By feeding Greeks’ well-developed sense of victimhood (and the historical claims against Germany have some legitimacy), he is fanning flames that could soon burn out of control. Although opinion polls consistently show that a majority of Greeks want to remain in the euro, there is no better way to change their minds than to tell them that their EU partners treat them with injustice and contempt.

Likewise, by taking on Germany, the Greeks are alienating their biggest creditor – and the very country whose backing they most need to win a reprieve from the euro zone. Already, according to a poll published last week, most Germans want Greece to leave the euro. Even if Mrs Merkel wants to save Greece, she will not be able to resist the overriding wishes of her voters.

Under Mr Tsipras, Greece has had a knack for alienating countries such as France and Italy, which would naturally lean against Teutonic austerity. That hardly inspires confidence that he knows what he is doing today. By far the best outcome, for both sides, would still be to keep Greece in the euro. And, for most of the past few weeks, that has seemed the most likely. Although Mr Tsipras came to power promising to end austerity, he backed down last month, as money poured out of Greek banks at a weekly rate of some €2 billion and the prospect of capital controls loomed. The fiery rhetoric was briefly replaced with pragmatism – a reform programme in exchange for a four-month extension of Greece’s bail-out.

With Greece in imminent danger of running out of cash, a similar shift must urgently occur once again. The meetings in Brussels and Berlin will be crucial. The Greek leader has charm, and could get along fine with Mrs Merkel – provided he is prepared to eschew the blackmail and shows that his European partners can trust him.

He could make a good start by replacing his loquacious finance minister, Yanis Varoufakis, with somebody more pragmatic. He would be well advised also to dump his nationalist coalition partner, the right-wing Independent Greeks, for the more moderate To Potami. At home, rather than allowing his ministers to rail about reparations, he needs to get behind reform, and explain to his voters why Syriza’s extravagant election promises cannot be kept.

Under Mr Tsipras Greece has been squandering opportunities to make a deal with the rest of the euro zone. If he does not yield soon, he may discover that his chances have run out.

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One response to “Dangerous Liaisons: The Economist on the Greek Crisis

  1. Is there anything suprising in Mr. Tsipras’s idiosyncratic mode of bargaining that any ‘rational’ politician wouldn’t attempt to engage in – to apply any leverage available to maximize the ‘gains’ and minimize the ‘losses’ – for as long as s/he can get away with it? There is no risk-free lunch.