Saturday, 4 July 2015

Grexit has always been Tsipras' endgame

Greece's economy and society have been through the wringer over the past 6 years. Successive bailouts, haircuts, Memoranda of Understanding, and persistent austerity have mired the country in a bog of economic depression and political instability. The failed attempts of the previous Samaras coalition government (including conservative New Democracy and centrist PASOK parties) to conclude the review of the latest ‘Troika’ program and his inability to garner the 180 votes (in a 300-seat Parliament) constitutionally required for the election a figurehead President paved the way for the electoral rise of the radical left-wing Syriza party to power.

Syriza is a former coalition of left-wing factions and movements that only gained the legal status of a unitary party in the run-up to the January 2015 elections in order to be eligible for the 50-seat bonus awarded to the first party. Its vote share rose from 4.6% in the 2009 elections all the way up to 36.3% in January mainly by promising to put an end to austerity while keeping the country within the euro. Syriza rose to power by stepping on the shoulders of the disenchanted and pauperized masses, whose amorphous political expression initially took shape through the mass protest movement of 'Aganachtismeni' in 2010 (similar to the 'Indignados' in Spain).

Greek PM Alexis Tsipras' choice of coalition partner, the nationalist anti-austerity Independent Greeks party, took many by surprise. The award of the defense ministry to its leader, Panos Kammenos, did not. But still the majority of moderate pro-Europeans mistook the ambivalence of these two Euroskeptic (but avowedly not Europhobic) parties over the currency question as a strong bargaining advantage in the impending high-stakes negotiation between Greece and its creditors.

Greek FM Yanis Varoufakis' professorial firebrand rhetoric set the stage for a protracted period of high-level meetings, strategic posturing on both sides, and fruitless staff-level negotiations. In one Eurogroup meeting after the other, the Greek government was finding itself increasingly isolated, shunned, and reprimanded for deliberately stalling and failing to engage in any sort of number-crunching exercises. The strategies of 'coercive deficiency', 'creative ambiguity', and politicization of the negotiations were all ingenious negotiating tactics to achieve a more favorable deal, on the assumption that the 'red lines' of the Syriza-Ind Greeks coalition government and the creditor institutions did actually intersect at some point. Or so the conformist reading of this saga went.

However, the events of the last couple of weeks have proven this interpretation egregiously wrong. On Monday 22/06/2015, Tsipras sends a signed proposal advocating fiscal adjustment measures of around 8 billion euro. During the crucial Eurogroup meeting of 25/06/2015, the Greeks are presented with a slightly improved version of the Juncker plan comprising pension reform and tax measures of the magnitude of 8.5 billion. On the following day, Tsipras declares the proposal an unacceptable ultimatum and flies back to Athens in order to announce a referendum on the creditors' latest draft proposal. (Mind you that a better deal was coming on Saturday, as publicly disclosed by Commission President Jean-Claude Juncker.) The referendum is approved by parliament, bank holiday is declared, and capital controls are imposed in order to stave off the bank run already underway. 

All this comes to show that, contrary to outside observers' sanguine view of Tsipras' brinkmanship politics, Grexit has always been the desired endgame of his master plan. Most polls conducted in the past few months had evinced a high level of popularity for the Tsipras government, but also at the same time significant majority support for the euro even with cumbersome conditionality attached. The bulk of the population was willing to stand behind Tsipras' high-risk tactics as long as those would lead to an 'honorable' compromise agreement. 

The Greek government followed up its act of a forceful 'bona fide' negotiation up until the last second before the extant bailout program expired and the country officially defaulted on its latest IMF payment of around 1,5 billion euros. Having dragged the economy into a state of complete insolvency and asphyxiation, culminating in the closure of banks and onerous capital controls, the Sunday referendum is Tsipras' last major gamble before his desired endgame of Grexit. According to this plan, the day after a potential 'No' vote will usher the way to the reintroduction of a national currency ('Drachma') as economic salvation and redemption of national dignity. The fact that up until this point government officials have painstakingly avoided any allusion to such a scenario or reference to concrete contingency plans for the day after would imply that these are exactly the plans that they aspire to despite their widespread lack of popularity.

What makes this scenario even more devastating is that Grexit will most probably lead to Greece's expulsion from the EU. According to the Maastricht Treaty, membership in the EMU is the default option for all signatory member states unless (i) they cannot satisfy the fiscal and monetary convergence criteria or (ii) they negotiate a special derogation or opt-out clause (as in the case of the UK). Therefore, simply exiting the euro while remaining a member of the EU requires some type of renegotiation with Europe (inevitably with some conditions attached) and plenty of good will on both sides. Why would Europeans choose to keep in their midst a country led by an intransigent and extremist government threatening the nuclear use of veto on issues of 'vital national interest' (echoing De Gaulle's 'empty chair crisis'), thereby acting as the Trojan Horse of its newly acquired international allies (see Russia)?

What the referendum has achieved so far is an exacerbation of political and ideological polarization and a deepening of societal cleavages and divisions. Having brought together Eurocommunists, nationalists, and neo-Nazis into an uneasy coalition in favor of the 'No' vote, against a moderate pro-European 'Yes' camp embattled and hampered by the utter delegitimization of its 'tried-and-tested' political elites. In that sense, the so-called 'theory of the two extremes', originally put forward in the guise of a conspiracy theory by the Samaras government, is materializing as we speak. The so-called Greferendum has brought to the surface irrefutable signs of democratic erosion, stretching the constitution very close to its breaking limit. How else would a government under a state of duress and emergency politics have been able to administer a referendum on an issue of existential importance for Greece within the official period of one week (while the British will have up to two years to deliberate their membership just in the EU)? Unless of course it had always been part of the overall strategy.

One may naturally ask oneself why Tsipras and his party would operate under such an extreme set of preferences. The answer probably lies in the name of the party itself: SYRIZA is short for the Coalition of the Radical Left, i.e., a purely ideological policy-seeking party of the far left that cannot govern within the boundaries of conventional liberal democratic politics or the straitjacket of EMU and EU membership. Tsipras and his cabal rushed to coalesce with the conspiratorial Independent Greeks, in order to put into motion a well-orchestrated plan of state capture by stealth, hijacking in the process Greece's liberal democratic institutions. This putsch is about to be completed under the democratic veil of a spurious and unconstitutional referendum, whose outcome may handily be rigged at the margin. Tsipras has given an extremist interpretation to his still fresh electoral mandate in order to materialize the ideological reveries of his university youth and execute the neo-Marxist theories of his intellectual anchor, Nikos Poulantzas.

In 2011-2 we got the economics of the Greek crisis wrong. Now we are getting the politics wrong. Regardless of the referendum outcome, Greece appears to be just the first battleground of a fomenting (hopefully just) economic conflict caused by the exigencies of globalization and the vagaries of unfettered casino capitalism. If Europeans believe that they can contain the political fallout of Grexit, they are sadly mistaken. If they could do that, then that would also imply that they already have those institutional mechanisms in place in order to mitigate the moral hazard considerations of another Greek bailout or even a new Marshall plan. Let us only hope that the outcome of the upcoming Greferendum can stem the downward spiral of disintegration in its very early stages. Greece is a severely injured state in desperate need of surgery; the question is whether this type of shock therapy will come in the form of Grexit and geopolitical isolation or through some externally imposed and carefully engineered reformist blitz.

Nikitas Konstantinidis, University Lecturer in International Political Economy, University of Cambridge, Department of Politics and International Studies.

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