LATE UPDATE: Alexis Tsipras, demonstrating again his lack of experience, has wrecklessly called for a snap referendum on July 5 on whether or not to accept the creditors’ conditions for a debt agreement. Nonetheless, as recommended in the article below, at this critical juncture the Europeans and the IMF should still show magnaminity toward Greece.
See Jim Yardley and Niki Ki, “Greek Prime Minister Calls for Referendum on Bailozut Terms,” New York Times, June 26, 2015.
For the latest developments in the Greek debt crisis, see
C. Gammelin (Berlin), A. Mühlauer gBrüssel), und C. Schlötzer (Athen), “Athen lehnt neues Angebot der Geldgeber ab; Die Kreditgeber haben eine Verlängerung des derzeit laufenden Hilfsprogramms bis November ins Spiel gebracht. Doch Athen lehnt ab,” Suddeutscher Zeitung, 26. Juni 2015 (19:21 Uhr).
As Greece and its creditors approach a June 30 deadline to find an immediate solution to the debt crisis that would avoid a default, EU Council president Donald Tusk is reported to have told Alexis Tsipras in an emotional face-to-face encounter, in English, “The game is over.”
Tsipras reportedly responded with great passion, declaring,”It is no game.” Behind him “stood 1.5 million unemployed, three million poor, and thousands of families with no income which live on the income of their grandparents.” One should not underestimate what “a humliated people” is capable of, he declared.
Europe and the IMF, with great urgency, need to show magniminity toward Greece
According to reports, the positions of the two sides in the negotiations are now very close.
But a lack of trust, and indeed strong anger by Europe’s leaders and the IMF over the street-fighting techniques used by Tsipras and the Greek government throughout recent months of negotiations, could cause a deal not to be reached, a run on the Greek banks, and a default by Greece on its international debt obligations, leading to its exit from the Euro zone.
As has been remarked, these negotiations have resembled the drag race in the movie “Rebel without a cause” in which James Dean survives but the other racer is killed as he fails to jump in time and his car goes off a cliff.
Tsipras and his government rejected the creditors last “take it or leave it” offer on Friday. European officials are now working on “Plan B” in order to limit the damage to their own banks and financial institutions in the event of a default. Greek banks may not open on Monday.
It is time for the creditors to step back and take a deep breath, and also a look around at the geopolitical and historical context.
Tsipras has traveled twice to Moscow to meet with Putin, and declared that he opposed the EU sanctions against Russia and might even vote to block their renewal. While the EU recently decided to renew the sanctions through January, they should not overplay their hand. After a default Greece could block further renewals with its veto. It could even enter into security cooperation agreements with Russia. Everyone should be mindful of the experience of the Greek civil war in 1946-49.
It has even been suggested that the creditors are refusing to budge on the last details of the deal in order to provoke a “soft coup” in Greece which would bring a more malleable government to power after new elections.
See Laurence Lee, “Tsipras trapped inside his own Shakespearean drama; As the prime minister continues talks with creditors over Greece’s debt, some organisations have begun agitating,” Al Jazeera (aljazeera.com), June 25, 2015 (11:07 GMT).
In short, it is time for Europe and the IMF to take the long view, and to act urgently to show magnaminity toward the Greek people. Greek recovery will take time. And the end of the “New Cold War” with Putin and Russia is not likely to arrive by January, 2016, when the sanctions will come up again for renewal, requiring Greek cooperation or acquiescence.
Europe and the IMF must pull back from the brink, solve this immediate challenge, and then seek ways to cooperate with Greece in finding a way to positive growth, including debt restructuring where required.
Above all, they should think of the Greek people, history, and the future of Europe which is hardly conceivable without Greece, the cradle of its civilization. The Greek civil war was not fought, and won, in order to let Greece sink back into the abyss.
Tsipras is an inexperienced leader, who has barely been in office six months. He and his finance minister, Yanos Varoufakis, have offended the Europeans, greatly, with outrageous and personal attacks. But the future of Europe and the Euro Zone should not be decided on the basis of personalities, or the politicians of the moment.
It is time for Europe’s seasoned leaders and Christine Lagarde, Managing Director the IMF, to show magnaminity toward the Greek people, and even its current leaders.
The Trenchant Observer