The Eurogroup,agreement of 20 February was the best possible option –or the least damaging– amongst the real options the Greek Government was presented with at that moment in time. The agreement allowed the Greek Government to escape the “death trap” through banking system's strangulation, a trap set up by international as well as domestic hard-core austerity evangelists. Furthermore and for the first time since the onset of the crisis, an official diplomatic document outlined the key points of an alternative way of thinking regarding the crisis handling, which was contrary to the very views by which the MoU was originally compiled. On the other hand, let’s not gloss over reality; the agreement of 20 February meant a number of serious concessions by the Greek side, at least compared to SYRIZA’s election manifesto/programme/commitments - Independent Greeks haven't really got an issue with privatisations...
An agreement which is not being implemented
Almost a month after the Athens-Eurogroup agreement, this is what the situation looks like: the Greek government is going ahead with its programme (humanitarian Bill, reinstatement of national broadcaster ERT, settlement of debts to the State – “100 instalment” provision), while creditors’ technical teams are in Athens compiling information regarding the real state of the Greek economy. The Greek Government has so far violated none of the terms of the agreement of 20 February. On the contrary, the other party, i.e. the Eurogroup, is not implementing it. In fact, certain circles within the Eurogroup have taken a series of actions and omissions that seem to be undermining the agreement.
The undermining of the agreement by the hard-line conservative circles within the EU, is two-fold. First, it is a constant effort to slip/go back/return/regress from the current agreement to the previous MoU and the fifth round of negotiations. It's not just the persistent references by various officials (not least Schaeuble himself) to the MoU or the Troika. Most importantly there is an effort to bring back policies on the agenda which are far from the agreed framework and which were part of what the previous Samaras-Venizelos government had agreed to.
But the pivotal aspect of this undermining is blocking the funding of the Greek State. Almost a month after the agreement of 20 February, the loan tranches are yet to be released while at the same time European Central Bank refuses to increase even slightly the ceiling for T-bills so that the Greek State could patch-up a solution to meet public sector's funding needs. In other words, back in February it was the Greek banking system under threat of suffocation; now it is the State's turn.
Towards a ruthless/relentless dilemma?
Without the slightest inclination to conspiracy theories, and demonstrating the necessary moderation which is necessary for one to make any sort of political speculation, the extreme approach which we have seen so far by the uber conservative EU circles leads us to the conclusion that, by funding suffocation, these circles are trying to bring the Greek Government before a ruthless dilemma: third MoU or Grexit. In other words they want things to come to such a critical point that the government will have no other option but to give in and betray the popular mandate in order to cover public sector's basic funding needs as well as staying in the Eurozone.
Of course their behaviour is not dictated by any sort of economic thinking. The money Greece needs (a few billions) is a drop in the ocean of European economy. Greek State budget has got a stable primary surplus while the new Greek government is managing State finances prudently.
The issue is deeply political. The forces of conservatism that dominate Europe, want to politically crush Tsipras and SYRIZA so that they can nip an alternative political paradigm/model of pan-European appeal, in the bud. They are attacking SYRIZA in order to finish/end/stop/kill Podemos and Sinn Fein.
Moreover, the sweeping rise of right-wing populism in Germany pushes Merkel’s government coalition deeper into conservatism and, most importantly, the national entrenchment/retrenchment behind national borders. The Merkel-Schauble duet operates more like a German leadership rather than a European leading force.
The difficult choices/option
By now the government has proven that respecting popular mandate is its fundamental principle. For the first time in its history Greece has got a government whose main concern and priority is to defend the rights of the people and not the vested interests of the few. In addition over these first few weeks the government demonstrated honesty as well as sound political judgment as it managed both to manoeuvre and build alliances. So arguably what the Government is doing now is further building alliances in order to overcome the impasse and stop the plans of the hard core austerity supporters.
However, if at the eleventh hour the Government is indeed presented with a dilemma such as “third MoU or Grexit”, then this Government of social salvation can under no circumstances go for a “third MoU” reply. And not just because Grexit is the ideal way to growth as some naively seem to suggest; to the contrary: Grexit would mean GDP drop and would call for limiting policies. And not just because this Government cannot tolerate any MoU policies – what is at stake here is much more important than the party’s (well intended) interests.
If things ultimately get to this, then the really painful Grexit option would depend on two main factors. First, whatever MoU, recession measures the Government would be forced to take, will neither be the last, nor able to open the road to growth for all. To the contrary, maintaining the MoU framework guarantees that, on one hand, new measures to be taken every time the (unreachable) objectives of the programme are not met, while on the other hand, it locks in place economic stagnation (with recession or very small growth rates) since no economic restart policies are provided for. Grexit is indeed very painful, hence it hasn’t been an option for SYRIZA – and rightly so. But over time, in the long run a Grexit can open up prospects that simply do not exist in the MoU framework.
But the key reason why a third MoU is not an option, if things become critical (because of the Europeans’ handling), is not just purely economic. A third MoU would be an unprecedented humiliation for the Greek people, especially at a time when there is a sense of hope and exaltation. If humiliated, Greek people will not be able to participate in Europe with a sense of political dignity; but that’s not the full story. If humiliated, Greek people cannot even be creative in the real economy and business; psychology is a key aspect of economic and business activity. If humiliated, Greek people will sink into cynicism and apathy with a high risk of turning to the dark forces of fascism. And at the same time the humiliation of the Greek people will bury once and for all the hope of the Left across Europe.
So, if things get to the end of the line and Greece has only got to choose between two very painful options, then it should go for the less harmful, i.e. the one that does not deprive Greek people of the last ray of hope they’ve got.
Yanis Albanis is a former member of the Central Committee of SYRIZA.
- Translated by: Michalis Sotiropoulos
- The original text was first published on: RedNotebook,15.3.2015
- Link to original version: Το Grexit είναι προτιμότερο από ένα τρίτο Μνημόνιο