Syriza Between a Rock and a Hard Place

I wouldn’t want to be in Alexis Tsipras’s shoes at this moment, because he is in an impossible situation. On the one hand, the referendum he brought about produced a resounding mandate from the Greek people–we must not accept an “austerity” package in exchange for a new bailout. On the other hand, the Eurozone leadership and most of its member states have made it abundantly clear, albeit to varying degrees, that they will not provide a third bailout without certain preconditions that are likely to be very similar to those contained in the proposal that was rejected by the Greek voters. Without such a bailout in the coming days, Greece’s banks will collapse and the economy will go into free fall.  To complicate matters, Syriza’s left-wing caucus has warned Tsipras against signing any agreement that would be “surrender and allegiance to the institutions of the EU, the ECB, and the IMF.”

In other words, if Tsipras signs a deal with conditions similar to those in the previous package, it will cause a revolt at home. If he insists on a deal that removes such conditions, he will run into a brick will of opposition from the Eurozone. A no-win situation.

What seems to have been lost in all the news coverage of the referendum is the fact that “austerity” is not a black and white issue. The negotiations between the Eurozone and Greece prior to the referendum were not over the question of “yes” or “no” to “austerity, but were about a hundred small details around the size and timing of pension cuts, tax increases, etc. So does “austerity” mean raising the VAT on hotels from 13% to the standard 23% applied generally in Greece (one of the primary sticking points of negotiations)? Is it about removing the special lower tax status for the Aegean islands (another main sticking point)? Is it raising the corporate income tax from 26 to 29% instead of 28%, as was debated between the two sides? Is it increasing the eligibility age for pensions immediately or next year? These were the kind of details that were being debated in the last days of the negotiations. In fact, after announcing the referendum, the Greek side came back with a proposal that essentially accepted all the conditions in the previous Eurozone offer, with minor revisions. Which is to say that Syriza accepted “austerity” with a few items cut here and a few added there.

Given where the two sides were before the referendum, an agreement seems eminently possible. But the hardening of sides that the entire referendum process has caused has made reaching an agreement that is palatable to all parties–the Greek people, the various factions of the governing Syriza party, the Eurozone leadership, and the Eurozone member states–the poorest of which seem to have adopted an increasingly hardline stance–a daunting prospect.

 

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