A betrayal, not a coup
On Monday, Greece struck a deal that saved it from being kicked out of the eurozone but at the cost of losing, at least temporarily, its national sovereignty. A fund of €50 billion, from the forced privatisation of State assets, will be under international supervision. Alexis Tsipras, the Greek Prime Minister, has agreed to reverse any laws his government has passed that are not in line with the third bailout his country will receive.
Tsipras has swallowed everything he’d said he’d never accept. He’s accepted an austerity package harsher than the one he urged the Greek public to reject only a week earlier. He accepted terms that his government had been rejecting as economically irrational – a view that several top economists have publicly backed.
Tsipras has tried to justify his capitulation. The measures that have been imposed will make the economy suffer, he said, but the assurance that Greece will remain in the eurozone will remove investors’ uncertainty. The deal, he concluded, is therefore based on the hope that the path is now clear for the inward investment that will promote net growth.
Hope? That’s the investment strategy behind this deal? As a European Commission official with experience of tough economic negotiations told me, when a politician issues a statement based on hope, not guarantees or a strategy, he gives little hope to his listeners.
In the Twittersphere, Monday’s deal has been denounced as a coup. It’s not – no more than, a few years ago, Italy’s replacement of a democratically-elected government with a technocratic one.
It’s no sign of democratic health, of course. But, in both cases, national sovereignty was lost on terms that were endorsed by democratically-elected representatives, who remained in a position to pull the plug on the arrangement. In the Greek case, it also seems that there is majority support for a bad deal as long as a Grexit was avoided.
However, while it’s not a coup, Monday’s deal does constitute multiple betrayal.
Let’s begin with Tsipras first.
It is clear that he accepted the terms because he realised that Greece could not afford a Grexit. What is shocking, however, is the news that no preparations for a possible Grexit were ever made. There is no evidence that the Central Bank of Greece ever discussed the possibility with private banks, even as the creditors were threatening that a Grexit seemed inevitable.
Ambrose Evans-Pritchard, business editor of The Daily Telegraph, who has consistently had access to well-informed sources in Syriza (the party led by Tsipras), has reported that Tsipras was actually hoping for a Yes vote.
His hope – that politically hopeless word again – was that losing the referendum would have enabled Tsipras to pass on the buck to another prime minister while Syriza would remain the political party that had tried its best for the dignity of Greece.
Even if only half of that is true, Tsipras joins the line of other successive Greek leaders who betrayed their country with their narrow partisan vision and irresponsibility. His brinkmanship, while having no Plan B, meant he had to accept virtually any deal offered to him.
In the circumstances, the deal that was offered punished him for calling the referendum – on the grounds that he had lost all credibility with the creditors, who could no longer take him at his word.
But the punitive cruelty of the deal means that, across Europe, not only in Greece, all confidence and trust in a European common good has been lost for the foreseeable future.
Let’s be clear. This deal does not have the endorsement of a single leading European economist while several have long claimed that any deal that does not include debt reduction will not work. Several Nobel Prize-winners have condemned, as economic nonsense, the austerity that has been imposed on Greece over the last five years.
Monday’s deal only promises to review the issue of debt reduction at some point in the future. However, the unpopularity of the deal in Germany is mainly due to recognition that debt reduction is necessary if Greece is to remain in the eurozone. (Saying debt reduction is against the rules, as the German-led coalition claimed, is meaningless: throughout the economic crisis, even fundamental rules have been rewritten when it was seen as necessary.)
Led by the finance minister, Wolfgang Schaeuble, those Germans who wanted Greece ‘eased’ out of the eurozone, can see that Monday’s deal very likely leaves matters unsettled. Without debt reduction, a fourth bailout looms.
Even if, somehow, a fourth bailout is not needed, the conditions are in place for the same kind of situation to recur elsewhere. Sometime down the line, an economic recession will occur again.
Monday’s deal has embedded a precedent that will see debt-stricken countries unable to address their problems in the most economically rational way.
The deal is, in fact, economically illiterate. That is the greatest betrayal of all: the rejection of economic reason and experience by strutting European leaders attempting gravitas, speaking of the European interest while in fact pursuing their narrow national interests.
The BBC and The Guardian poked fun at Joseph Muscat’s tweeting during the latest summit, suggesting he was out of his depth. But it’s hard to think better of the really important figures.
Tsirpas is clearly incompetent. France’s François Hollande, claiming to have saved Europe, is pathetic.
Angela Merkel has rewarded every European populist who claims that Germany wants to rule Europe. If this deal was meant to stabilise the European economy, we have yet to see what it will do to the stability and moderation of European politics.
Donald Tusk, president of the European Council, announced the agreement with an awful pun that only a Euro-English speaker could crack. Completely out of place, given the gravity of the occasion and the cruelty that was to be unleashed, let that silly joke stand as an epitaph for European solidarity.