Humiliation for Greece – the price of Tsipras’s gamble

After a truly marathon negotiating session, a deal has finally been reached between the Eurozone leaders and Greece. The deal includes:
– More austerity, mainly in the form of tax rises and pension reform
– The repeal of Syriza’s anti-austerity laws
– Freeing up some of Greece’s ‘closed professions’
– Privatisation of state assets (like the ports and electricity grid)
– These assets will be transferred to a 50 billion euro fund managed by Greece but supervised by the creditors. The funds will be used to support the banks and Greece itself

Wolfgang Schäuble – not a man you want to owe money to

Sounds bad enough for Greece’s leftist government, but there is another catch to all this. Laws introducing all these moves must be passed within 3 days by the Greek parliament. If that takes place, then negotiations can start on a real bailout and possible delayed debt payments (but not debt write-off according to Germany). If the laws don’t pass, Greece is out of the Euro. In other words, despite the ‘No’ referendum, Alexis Tsipras has accepted a far worse deal than anything that has been offered in the last few months. No wonder Greeks are talking about a ‘coup’. What caused this turn around?

What has essentially happened is this. When Tsipras walked out of negotiations two weeks ago to call a referendum, with zero consultation with European leaders, he destroyed any remaining trust Greece’s creditors had in him, not to mention offending them. After the referendum Tsipras has found out that the Eurogroup (finance minsters and leaders of the Eurozone) was in absolutely no mood to negotiate further. Instead of being welcomed back to the negotiating table, he was given an ultimatum to produce serious reforms with the clear alternative of Grexit if he didn’t cough up. He essentially gambled on behalf of the whole Greek nation, and lost – badly.

Once he did produce a list of reforms that were essentially the exact same deal rejected by 60% of Greeks, he was told that it wasn’t enough. The loss of trust on the part of Germany and other nations in the EU was so great that they wanted the above mentioned laws to be passed before any money was handed out. Faced with yet another gigantic sum of money for Greece, they wanted to be sure that the truly necessary reforms would be carried out. Germany was backed up by other poorer European nations who had also been forced into austerity. Slovakia for example was furious that they had gone through a few tough years to return to growth only to see the Greeks ‘rewarded’ for not making the real structural reforms needed. In the end it seems like Tsipras has caved in entirely. Despite a few cosmetic concessions, such as the 50 billion euro fund being in Greece rather than Brussels, the deal is a crushing blow to Greece’s hopes of a new deal. As a student of the Middle East, it’s hard to avoid the comparisons to the reforms and foreign oversight that were imposed on Turkey and Egypt by the Europeans in the 1800s.

Is it a ‘coup’ against democracy though? That depends on how you look at it of course, but it’s a bit more nuanced than that. Firstly, Europe was under no obligation to change their proposals after the Greek people voted No in the referendum. They are responsible to their own voters after all. Tsipras is of course accountable, and he has thoroughly gone back on the will of the people. However, he had little choice. With the creditors not backing down, his only options were this deal, or leaving the Eurozone – and the vast majority of Greeks are in favour of staying in the Euro. By going against the referendum result, he is following his mandate to keep Greece in the Euro in the only way he could.

Already there are the first reports of coming protests, with Greek pharmacists apparently planning a strike against the law that will liberalise their closed profession (Greece severely limits the number of pharmacies). Unfortunately these are the very structural reforms that should have been carried out five years ago. Now they come as part of a humiliating deal that the Greek Parliament has to vote yes to, or be kicked out of the Euro. Looking back over the last month, everyone, but especially Tsipras, will be wondering where it all went wrong.


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