It is becoming clear after the breakdown of negotiations with creditors that Athens has planned its strategy taking a page off Abu Bakr al-Baghdadi’s book. The strategy it seems is to blackmail the Europeans by threatening to blow up the Euro. This is less ‘Kougki’ (blowing oneself up, rather than capitulate) and more ISIS, blowing oneself up and everyone around you. The problem is that there is no happy ever after, rivers of milk and virgins for Greece if this type of grandstanding results in a disorderly default and Grexit.
Varoufakis stated “Σήμερα είναι μια καλή μέρα γιατί είναι πιο κρυστάλλινα τα πράγματα” meaning today is a good day because things are more crystal clear. What is exactly clear Prof Varoufakis? Oliver Blanchard spells it out in his post (see here). Any better deal for Greece means corresponding costs for the lenders that they have to assimilate. A much better deal for Greece (lower primary surpluses AND no cuts in pensions or wages now) means costs AND debt reduction. This is why the IMF walked away, because the deal Greece wants requires the Europeans to accept debt relief and they do not want to do this. Also, let me remind everyone that while Tsipras is trying to save pensions, the economy has been nose-diving since the start of the year. While we are all partying to celebrate re-opening ERT, lets spare a thought for the private sector dying on the side of the road.
I have become blue in the face (or in the fingers, since I am typing) saying that Varoufakis is right to complain that the ‘programme’ is wrong and recessionary. Nonetheless, he is right in his analysis but wrong in his approach. This is not an all or nothing game, a deal now allows improvement in the future. All this kougki nonsense has to stop. Unless of course Varoufakis has come to Lapavitsas side and wants Grexit.
Let me say this clearly for all those who complain that I have shifted my position from a government supporter to a “lender lackey”: The likes of Lapavitsas have not presented a detailed plan on how to deal with Grexit. If this is what the proud resistance is leading to, they need to tell the Greek people that Grexit does not lead to Nirvana, but to a harsh adjustment, way worse than anything austerity has inflicted on Greece. PLUS, and this is crucial, not Syriza, not anyone has the capacity to guide the country through this adjustment. This is why I changed my view in 2010, from thinking that Grexit would be better, to thinking that we need to work with the Europeans. The Greek political establishment is not competent to handle default and Grexit. Anyone who thinks otherwise is deluded, or devious and/or has a cushy job abroad to return to.
Europe is not Syria and Tsipras is not al-Baghdadi. Enough with the rhetoric. One does not blow up a country to make a point!