Tsipras
of Athens – a gripping drama entering its final act
The
scene was set for Greece to default on its debts and perhaps tumble
out of the euro. But, like all the best plays, there is more than one
possible ending
Larry Elliott /
Sunday 21 June 2015 19.23 BST /
http://www.theguardian.com/world/2015/jun/21/tsipras-of-athens-drama-entering-gripping-final-act
In the film
Shakespeare in Love, one disaster after another befalls the
impresario Philip Henslowe. The London theatres are closed by the
plague. The voice of the male actor playing Juliet cracks just as he
is about to go on stage. Henslowe never despairs, and he insists all
will turn out well. Asked how, he has a stock answer: “I don’t
know, it’s a mystery.”
Over the last week,
those who have said a solution will be found to the Greek crisis have
tended to fall back on the Henslowe explanation. Talks have broken
down. Summits have come and gone. Insults have flown in all
directions. The deadline for Greece to make a 30 June payment to the
International Monetary Fund has edged ever closer. There has been
nothing but bad news. Yet, through it all, the relative calm in the
financial markets has reflected a belief that, despite everything,
the drama Tsipras of Athens will have a happy ending.
The plot has moved
on rapidly in the past 72 hours. The scene was set for Greece to
default on its debts and perhaps eventually leave (or be forced out
of) the euro when a meeting of finance ministers from the 19
countries that use the single currency broke down acrimoniously on
Thursday. Christine Lagarde, the IMF’s managing director, did not
really need to say that it was time for “some grownups in the
room”: the lousy body language was clear from the photos of the
meeting.
But negotiations in
Europe rarely end. Instead, they are resumed at a later date, and so
it was agreed that eurozone leaders would hold a summit on Greece on
Monday following yet another meeting of finance ministers earlier in
the afternoon.
On Friday, Europe
turned the screw. The European Central Bank announced for the second
time in three days that it was providing emergency finance to prop up
the Greek banks. But Frankfurt was not over-generous: the lifeline
was only long enough to cover the period up until Monday’s summit.
The implied threat was clear: do a deal or we cut off the money and
your banks go bust.
This classic example
of the iron fist in the velvet glove appears to have worked. Although
the three main actors in the Greek crisis have sometimes given the
impression that they cannot stand the sight of each other, none
actually wants the euro to lose a member. Alexis Tsipras is a
conflicted politician: he thinks an end to austerity is needed if
Greece is to start climbing out of the deep economic hole into which
it has disappeared over the past five years. But he knows that, by a
large margin, the Greek people want to stay in the euro. The price of
staying in the euro may well involve swallowing fresh austerity
measures.
His co-star, Angela
Merkel, is also torn. The German people are fed up with writing
cheques to bail out Greece but remain committed to the European
project. Merkel does not want to be held responsible for the
disintegration of the euro. Nor does the main supporting actor,
Jean-Claude Juncker, who has just taken over as president of the
European commission, and whose reputation as the fixer-in-chief is on
the line.
As a result, talks
have been going on all weekend to see if a compromise can be reached.
These negotiations have been influenced by Russia and the United
States, more accustomed to lead roles but on this occasion lower down
the billing. Tsipras has been flirting with Putin, something that has
not gone down well with Barack Obama. Washington has made its
feelings known.
So what might the
deal look like? The usual can-kicking exercise, in all likelihood. In
Brussels, the talk is of Greece being prepared to offer some
compromises on pensions and tax in exchange for enough money to meet
its immediate needs, along with the promise of debt relief later
provided it sticks to its reform programme. This would resolve
little. Greece’s economy will continue to struggle, the government
will go slow on reform, and its bailout money will be depleted.
Tickets for the new autumn production of the drama will shortly be
going on sale.
Tsipras now has a
big decision to make. Clearly, the creditors would be getting more
out of this game of give and take than he is: they are not demanding
the full pound of flesh but something quite close to it. If he folds,
he will have big political problems at home. If he remains defiant he
will have a bank run to contend with by Tuesday morning. Like all the
best plays, there is more than one possible ending to Tsipras of
Athens. The stage is set for a gripping final act.
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