Greece’s Syriza: A Government With Tactics but No Strategy

After five long years of brutal austerity measures that reduced Greece’s GDP by more than 20 percent and caused official unemployment rates to reach stratospheric levels (over 25 percent), not to mention swelling debt and the stripping of public assets, the Greek people voted overwhelmingly in a national referendum on July 5 (though close to 40 percent of registered voters abstained from the ballot boxes) against the continuation of a bailout program worth billions of euros in exchange for more austerity and deeper structural adjustments.

At least this is how things seem on the surface.

To put it another way, if the referendum had included a question as to whether Greece should remain in the euro (perhaps even at any cost), it is beyond a doubt that the result would have been entirely different.

This is why Greece’s leftist government rejected the Greek Communist Party’s proposal that the referendum include a question about delinking Greece from the European Union (EU).

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Indeed, the majority of Greeks continue to attach themselves to the euro straightjacket, and there are only two political parties represented in the Greek Parliament that call for an exit from the eurozone and the EU: the neo-Nazi Golden Dawn and the Greek Communist Party.

The Coalition of the Radical Left (Syriza), which has been in power since late January and came up with the idea of the referendum in an attempt to avoid the collapse of the government on account of being forced to accept an unpopular European proposal, has been staunchly pro-euro all along and has refused to embark on a political dialogue about the pros and cons of Greece remaining in the euro area.

So here is the crux of the matter. Can Greece remain in the eurozone without continuing to receive external financial aid that would be accompanied with demands on the part of its official creditors for more blood and tears?

If anyone says “yes,” they need a reality check. And that includes Greek Prime Minister Alexis Tsipras, his former finance minister and the entire Syriza-led government. This is why the July 5 vote was a muddled referendum, a sham referendum with great implications.

To be sure, Syriza has already extracted the consent of Greece’s pro-European parties (New Democracy, Pasok and To Potami) to strike a deal with the creditors as quickly as possible that would, hopefully, prevent the collapse of the Greek banking system and avoid Greece’s exit from the eurozone, a so-called Grexit.

And Tsipras did not hesitate one moment following the outcome of the referendum to sacrifice his flamboyant and irritable finance minister, Yanis Varoufakis, the architect of Syriza’s disastrous “diplomacy as warfare” negotiation approach with Greece’s creditors, in an attempt to make a conciliatory gesture to the euromasters.

Mind you, all this is not to suggest that a disorderly exit from the euro is the preferred option for dealing with the sadistic stance of Greece’s creditors and the economics of social disaster enforced in Greece by a neoliberal Europe and the International Monetary Fund (IMF). In fact, it should not be an option at all, for such an outcome would have catastrophic effects on Greece beyond anything the country has experienced so far under the EU and IMF bailout programs. An exit from the euro requires having reached in advance an agreement with the European authorities, having plans in place for the transition from the euro to a national currency (which could take months to be fully completed), having made efforts to introduce a substitution policy, and having secured some important strategic alliances from major actors in the international system.

The Syriza-led coalition government, a peculiar alliance between the “radical” left and the nationalist, right-wing Independent Greeks (Anel) party, has no contingency plan whatsoever in the event of a sudden Grexit.

This is why the referendum was a sham referendum that makes the Syriza-led government not only highly opportunistic but also quite dangerous. It has tactics, but no strategy. And as Sun Tzu, the Chinese general and philosopher, said, “tactics without strategy is the noise of defeat.”

Indeed, what has Syriza accomplished after five months of being in power aside from having toyed with people’s emotions and having generated a great deal of temporary enthusiasm about giving the finger to Germany and the EU?

It has not made one inch of progress toward the realization of the Thessaloniki program (end austerity, secure a debt write-off, create hundreds of thousands of new jobs, address the humanitarian crisis) but has managed, instead, to revert the economy back to a recession after a minor but promising 0.8 percent rate of growth at the end of 2014, bring the banking system to the verge of collapse (Greek banks have been closed for over a week now and may never open again if there is no agreement very soon) and impose capital controls, limiting withdrawals to 50 euros a day (it was originally 60 euros, but banks have run out of 20 euro notes!), force many businesses to lay off additional workers and risk a disorderly exit from the euro.

No one ever said that managing Greece’s catastrophic, austerity-driven crisis would be a walk in the park. Regardless of the nature of the government in power, the Greek economy faces some enormous challenges that cannot be overcome in a matter of months or even a few years. But it requires facing reality head-on and having a strategy for a way out of the crisis.

Syriza has failed miserably on both of these tasks. It refuses to address the problem of the inefficiency of public sector institutions and continues to employ the same despicable cronyist habits of the previous governments by providing jobs to government family members. Its views on higher education (human capital remains Greece’s most vital resource) are counterproductive and have already alienated the bulk of the academic community in Greece; it seems to have no idea how to boost the economy (apparently, the Syriza government has yet to decide whether it wants to run a capitalist or a socialist economy!); and its diplomacy and negotiation skills have proven not merely insufficient but outright incompetent.

It is very hard to predict what will happen next. The European Central Bank, as a true enforcer of austerity as I have argued elsewhere, made the decision yesterday to hike Greek Emergency Liquidity Assistance haircuts, thus bringing Greek banks a step closer to collapse and one step closer to being taken over by foreign banks in the event no deal is made by July 20, which is the date that the Greek government needs to make a 3.5 billion euro payment to the European Central Bank.

At this moment, the Greek government is getting ready to submit a proposal to the eurozone authorities (the first step will be some king of a bridging program) in order to avoid the catastrophic scenario of a disorderly exit from the euro and the return to a national currency. In all likelihood, the deal will revolve around the so-called Juncker proposal (named for the president of the European Commission, Jean-Claude Juncker), which is a milder version of the extremely harsh proposal offered to Greece at the June 25 euro summit, but it will include a demand for debt restructuring, immediate financing for Greek banks and funds for the boosting of the Greek economy. The case for debt restructuring is enhanced by the IMF’s debt sustainability analysis of late June, which describes Greece’s debt as unsustainable. As for the rest, only the clause for immediate financing for Greek banks might fly.

In exchange, it is certain that the Tsipras government will make major concessions on reforms, including privatizations, otherwise it knows there will be no deal.

How Germany will react to the Greek proposal is anyone’s guess. If past experience is any guide, Berlin will seek to humiliate the Greek government by forcing it to accept harsh bailout terms. It will be Germany’s way of getting even for the outcome of the Greek referendum. At the same time, however, it appears that the eurozone masters are rather hesitant to let Greece go as they are afraid of the geopolitical repercussions of such a development much more so than the economic cost associated with Greece defaulting and crashing out of the euro.

Varoufakis’ belief that there will be an Armageddon in the event of a Grexit couldn’t have been more wrong, and it is the primary reason as to why the negotiation approach pursued by the Greek government produced nothing but dismal results. So, if the new Greek negotiation team plays its cards right, it may get away with some minor concessions on the part of the creditors.

In sum, the outcome of the Greek referendum in no way implies that Greece will have it any easier in its negotiations with the euromasters. The actors behind the EU’s technocratic and anti-democratic institutions could not care any less what the outcome of the referendum was, as the wish of the Greek people takes a back seat to the interests they represent while European politicians need to justify to their own voters why they should continue bailing out Greece.

The Tsipras government may be opportunistic and incompetent, but it is hardly unaware of these realities. That’s why it is ready to make a deal that would still be in line with the logic of the previous bailout terms. This is why Tsipras secured the consent of Greece’s pro-European parties, i.e., in order to ensure that the Greek Parliament will approve a new bailout program.

With the referendum, Alexis Tsipras succeeded in making himself the unquestionable king on the Greek political stage (a development which led to the resignation of the leader of the conservative New Democracy party), but he remains at the mercy of the euromasters.