Tsipras needs to sign a deal, but which one?

Agora Contributor: Nick Malkoutzis

There have been plenty of sensible people advising Greek Prime Minister Alexis Tsipras that he has to do a deal with the country’s lenders but few of them until now suggested he should sign the proposal put on the table by the institutions. Therein lies the problem for the SYRIZA leader: The risk of not agreeing with creditors carries so many potential dangers it is hardly worth considering but the option of agreeing to the lenders’ plan also has numerous pitfalls.

As we move into the most critical phase of this government’s negotiations with its lenders, Tsipras seems to be considering the option of rejecting the deal on the table and triggering an unpredictable set of consequences that most analysts believe will be deeply damaging for the country. It’s what he calls the “Great No,” harking back to episodes of glorious resistance in Greece’s history, such as the refusal to allow Italian forces to enter the country in 1940, as well as referencing one of the country’s greatest poets, Constantine Cavafy.

But historic and poetic connotations aside, Tsipras faces a brutally practical problem. As was the case with his predecessor, Antonis Samaras, he knows that agreeing to the terms proposed by lenders will lead to the potentially debilitating erosion of his political power and, while restoring some short-term stability, will not bring Greece that much closer to a solution to its problem.

To a large extent Tsipras only has himself to blame as he sued for snap elections in January by failing to compromise over the presidential ballot. However, it would be naive to think that Greece would most probably not have ended up in its current predicament anyway. Even if Samaras had agreed with the troika and passed the onerous measures being demanded through Parliament despite his coalition having just a 5-seat majority, its highly likely that at some point during the implementation process the government would have collapsed under the strain of New Democracy and PASOK MPs unable to vote for further pension cuts.

It should have become evident to anyone paying any attention over the last five years that what is being attempted in Greece is not just economically counter-productive but also politically unfeasible. Since May 2010, when the first bailout with foreign creditors was signed, no government has been able to survive intact for more than about 18 months. The pressure to implement one of the most drastic fiscal adjustment programmes the world has ever known has undermined each of the previous three prime ministers’ short-lived attempts to restore stability.

The political impossibility of Tsipras’s task is evident from opinion poll results made public this week. A GPO poll for Mega TV appeared to suggest there is no real dilemma for Tsipras as the majority of Greeks seem prepared to accept a “bad deal” with the institutions if that means staying in the euro.

However, when Greeks are hit with the reality of what that “bad deal” would mean they are much less keen to accept the conditionality that comes with it. A ProRata survey for SYRIZA-affiliated Sto Kokkino FM indicated that although voters want a deal, they do not want the government to back down on the key issues holding up such an agreement.

For instance, 89 percent of respondents said the government should not give in on VAT hikes, 88 percent said it should not raise VAT on electricity by 10 percentage points, 83 percent oppose pension cuts, 77 are against allowing mass dismissals and 77 percent believe the EKAS benefit for low-income pensioners should not be scrapped.

This is the problem for Tsipras, as it was for Samaras, Lucas Papademos and George Papandreou. He will bring back a deal that most people theoretically want because it keeps Greece in the euro and ends uncertainty for at least a few months. However, once you get down to the nuts and bolts of the agreement and a growing number of people are personally affected by the measures it contains, so the support for the government that is implementing this deal melts away. We have lived through this process in Greece several times over the last few years. The only difference is that each time it gets more difficult because the longer Greece is in its dark hole, the less faith people place in those who claim that they are digging the country out of it.

This will continue to be the case until lenders accept that a country which has been through the political, economic and social turmoil Greece has experienced over the last few years needs stability in which to reform, grow and heal its wounds. This cannot come if it is continuously chasing its tail in a panic-stricken effort to survive. It requires a bolder settlement that addresses the country’s public debt and provides the liquidity and stimulus needed to take advantage of the progressive changes that Greece must make on its own.

If we do not get a package along these lines in the next few days, then nobody should be surprised if we end up in the same position a little further down the line. Only this time, there will be less patience, less understanding and less belief. The argument that not agreeing to a “bad deal” would create an even worse situation has strong merits but should not even be part of a debate in a Europe that takes itself seriously as a political, economic or currency union.

*Follow Nick on Twitter: @NickMalkoutzis

21/06/2015 06:46
Posted by Dean Plassaras

Actually Tsipras needs to sign no deal whatsoever. This is one of the rare moments in history that the other side has already collapsed and therefore no further concessions are needed.

Enjoy the well deserved victory!

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