June 11, 2015
There are two conflicting narratives about the deadlock in negotiations between Greece and its eurozone partners. According to the first, Greece is governed by populist radical leftists who blackmail the eurozone by threatening to explode the financial equivalent of a suicide bomb. According to the second, Greece is bullied by callous partners who are only interested in making an example of it. Both narratives are schematic but contain many elements of truth.
Despite his wooden language, Alexis Tsipras has matured more in the past few months than the rest of his party. The Greek prime minister understands the stakes and he knows his options. His problem is that they are all dreary. The brinkmanship cannot continue much longer. His government’s looming cash shortage is horrifying. If he finds himself unable to pay public servants, it will be the end of his career and his party.
Mr Tsipras cannot use “Grexit” — a Greek departure from the euro — as a bargaining chip, or he risks creating severe hardship in a country that imports such essential items as food, energy and pharmaceuticals. An exit would be detrimental economically but also socially. Any improvements in competitiveness will be annihilated by political turmoil and civil strife.
He cannot accept a new bailout agreement because that would signify that before the general election he was either mistaken, opportunistic or fooled. Even a watered-down version of the creditors’ proposal would embarrass him before the Greek people who gave him a clear mandate: no more austerity.