If the new Greek government is attempting to bamboozle the country’s lenders into submission with its tactical meandering, who knows, it might have struck on a great idea. If it’s trying to convince the Greek people it’s capable of dealing with the economic crisis, then performing more sudden turns than Fernando Alonso going through the Monaco chicanes is just not going to cut it.
Within a week, the three parties who campaigned on a pre-election platform of renegotiation, renegotiation, renegotiation suddenly decided that the bailout terms are fine as they are for now. Then, they changed their minds again and decided it would be best to bring up the issue of changes to the loan deal in talks with the troika later this month.
Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras caused consternation last week when they suggested there would be no Greek bid to renegotiate the bailout, without making it clear whether this meant abandoning efforts or simply putting them off. There is logic to the strategy of putting aside the renegotiation issue in the sense that the coalition government can draw a line under what has happened in the past, express its commitment to meeting fiscal and reform targets and allow a little time for trust with its lenders to be restored and goodwill credits that could be subsequently cashed in to be amassed.
The tactic also has drawbacks. It immediately causes suspicion and disappointment among many of the voters who supported the three coalition parties in the June 17 elections. They had been promised less onerous bailout terms, so to suspect that the government had capitulated immediately is a blow to their belief in the new administration. The strategy also gave SYRIZA a platform to launch its post-election attack on the new administration. Within minutes of the government’s statments, the leftist party was referring to the “Stournaras Dogma” of non-negotiation and accusing Samaras and his two coalition colleagues of being “pro-Merkelists” rather than pro-Europeans.
Maybe, though, the government had calculated that these were hits worth absorbing because its first aim should be to convince the eurozone that it will bring stability and reliability. After all, there can be few governments in recent history whose fate was so dependent on decisions taken outside the country’s borders. However, if this was the thinking among the coalition partners, it is inexplicable that they should suffer the taunts that came with announcing the delay in negotiations, only to backtrack a couple of days later.
Reports of Wednesday’s meeting involving Samaras, Stournaras, PASOK leader Evangelos Venizelos and Democratic Left chief Fotis Kouvelis suggest that the coalition partners decided that Greece would have to table proposed changes to the bailout in a meeting with troika officials later this month rather than waiting until September, as had originally been planned. But by this time, political capital had been expended defending the strategy that favored a cautious approach to negotiating with the troika. Now, more political capital must be spent to justify a change in course.
Wednesday’s meeting was apparently called after an intervention by Venizelos. If his intention was to draw attention to the fact that the government was undermining its position by allowing voters and opponents to interpret its strategy as a total surrender, then the PASOK chief was absolutely right to jump in. Both Samaras and Stournaras made rather vague comments regarding the renegotiation and there was no attempt by the government to clarify when or whether Greek officials would sit down with the troika to ask for changes to the bailout. Starting off with such a major communication faux pas was a blow for the fledgling coalition.
If Venizelos’s intervention was motivated by narrower, party concerns, as some have suggested, then it has been an even more damaging beginning for the government. If the PASOK leader has qualms about giving the finance minister free rein or about ensuring that he is personally associated with any positive changes to the loan agreement, a potentially destructive seed of short-termism has been sown. The government’s bid to avoid further cuts to so-called “special” salaries in the civil service gives off the similar bad smell of opportunism. The determination to hold on to what are above-average salaries in select groups within the public sector, such as the police and the armed forces, will be seen my many Greeks who have suffered serious wage cuts over the last few years as bid to protect the enclaves that were created by political favoritism in the past. Again, this seems an unwise way for the government to spend the precious and scant goodwill it has.
The challenges facing the government are immense. It must gain a foothold in its relationship with the country’s lenders while keeping an increasingly unhappy Greek public onside and maintaining delicate domestic political balances. Time will tell whether this can be achieved but the coalition will limit its chances it cannot agree on a clear and coherent strategy on something as fundamental as the bailout. There is talk of a multi-layered negotiating team led by Samaras, Venizelos and Kouvelis. Maybe this has the potential to work but if there is a lack of togetherness on the basics, it seems destined to fail spectacularly.
The three leaders, their parties and ministers are liable to disagree on all kinds of policies but this area must be one where there is absolute unity, where all can agree on where Greece is starting from and where it should end up. If they can do so, they might discover that the shortest and most effective route between these two points is a straight line.