Straight lines are useful sometimes

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.

Nick Malkoutzis

13 responses to “Straight lines are useful sometimes

  1. Guys, I am sorry but why is it so difficult to get anything straight?

    What are you talking about here?

    If there is to be a renegotiation of terms, this is a purely political task to be undertaken jointly by Samaras, Venizelos and Kouvelis.

    Stournaras has nothing to do with it. Stournaras’ job is implementation not Brusells’ politics.

    It speaks of political naivite that you even think that a technical and inconsequential ecofin meeting is a platform to launch renegotiation terms. It isn’t.

    • Dean, having observed this from safe distance in Austria, I can assure you that the government indeed was perceived as erratic. I was extremely surprised when I first heard that they would live with the bail-out terms for the time being (and I wondered how long it would take for Tsipras to come up with a soundbite about that, which he swiftly did). But I was even more suprised when I then read that they were going to renegotiate before the month is up.

      While it should not serve as a text book case on decent politics in a class of political science, in extreme situations I could accept a party (or parties) saying wrong things during the campaign and, once in office, forget the campaign stories and do the right things. If they fail, they will go down into history as liars. If they succeed, they will be heroes and praised for their tactical skills.

      But if you take the kind of turns which the government has taken within a week, then you make people think of the New Testatment (“for they know not what they are doing”).

      • Klaus:

        If you had an erroneous perception that this government will negotiate immediately, then it’s your fault.

        What the 3 political leaders understood from the get go was that the renegotiating of terms will be done by the 3 of them, not in an ecofin setting (because none of the 3 are finance ministers), at a separate time.

        BTW, the idea of immediate renegotiation is a ridiculous one to begin with for the following reasons:

        1. Having obtained a 2% financing Greece already has the eurobond equivalent that the rest of Europe is craving for. So if a Greek renegotiation is to occur, it will not occur with other “hungry” Europeans in the same room because they would insist in getting the same rate Greece got which they could only get through a common Eurobond issue. And we both agree that such would be impossible for Merkel at this point.

        2. A prerequisite of renegotiation of terms is a Greek alternative plan which the Finance Minister did not have physically the time to hatch yet. It’s not only him but a few other ministries that need to contribute with concrete work.

        3. To submit a renegotiation plan and have it be denied on the spot is not smart politics. Let Tsipras go to Berlin and issue terms of surrender to Merkel if he wishes. But this government is much more responsible than that. It needs to prep the soil , make contacts, garner support and then submit at a time and place when it looks like a done deal. Otherwise this government will have egg on its face.

        Therefore, this egging on the government about zick-zacking and duplicity is something straight out of Tsipras’ mouth. Last time I told Nick to stop promoting the agendas of Tsipras he protested that he is impartial.

        I am getting tired of this theater too you know. Bad Dean attacking innocent Nick so that Austrian and Brazilian chevaliers in shining armor come to his protection and heckle bad Dean. I would too like to play the role of the good guy once in a while.

      • Dean, you’re arguing for argument’s sake.
        You’re points are excellent ones, and I state quite clearly in the piece: if the tactic is to hold off on negotiations, that’s fine, it makes absolute sense.
        What doesn’t make sense is to fail to communicate what you are doing and to then apparently abandon this position within days.
        This makes the government appear weak to the people it’s going to negotiate with and even weaker to the people who have voted it into power.
        That is what I’m questioning.
        On the issue of the three leaders negotiating, this is something that has been pushed primarily by Venizelos. Does that make you a Venizelos supporter for promoting it as a good idea? Of course not. So, please stop casting aspersions about the political leanings of others while having no idea of what they may believe.
        Finally, rest assured that I would like to see this government (or any Greek government) succeed. I live in this country, I pay taxes in this country, I have invested both financially, and more importantly, emotionally in this country, my child was born and is being raised in this country and I have defended this country publicly when I felt it was being wronged.
        I have the right to want it to succeed but I also have the right to express an opinion on what is going wrong. One doesn’t cancel out the other.

      • Dean, I take it you are a Greek-American. You know what Americans would say when someone says he would like to play the role of the good guy once in a while? “Go ahead, do it!”

      • Nick:

        You are right about me arguing for argument’s sake. Now, let me ask you this.

        Assume for a second that I care about Greece as much as you do. If the issue of the future of our country is at stake, would you want to consult the smartest Greek alive – in fact one that has a higher IQ than Einstein?

        http://greece.greekreporter.com/2011/12/22/greek-nikos-lygeros-with-highest-iq-in-the-world-visits-crete/

      • Dean, I’m glad you’re being honest about your approach. Arguing for argument’s sake has its place but don’t be surprised if people don’t always have time for it.
        Also, I do not question whether you or anyone else cares about Greece more or less than I do. I don’t see this as a competition, nor do I expect us to have uniform views on why we ended up here or how we get out. You are the one who is always questioning others’ patriotism or sensitivity for all things Greek.
        I am sure that Mr Lygeros would have some very interesting views on Greek issues. I’m always interested to hear others’ opinions.

      • Nick:

        Excellent then.

        Mr. Lygeros has an extensive Opus. I would start towards the end with entry 9636 to catch up on the latest thoughts. Because I think the man has his fingers on what needs to be done to get out of the crisis. And without relying on anyone but ourselves.

        http://www.lygeros.org/

    • Estevao Veiga

      Despite it is not clear which “guys” Dean is commenting, I presume he means Samaras, Venizelos and Kouvelis.

  2. Estevao Veiga

    Everything that you wrote now make sense, and was a pleasure to read, except that this was not what was reported in the newspapers. Can you cite your sources?

  3. Nick:

    Check this out to get a flavor:

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