July 14, 2015

EU Must Invest in Its Newest Statesman — and Keep Him Honest

Reuters/Scanpix
Greek Prime Minister Alexis Tsipras leaves his office at the Maximos Mansion in Athens, Greece July 15, 2015. PM Tsipras battled to win lawmakers' approval on Wednesday for a bailout deal to keep Greece in the euro, while the country's creditors, pressed by the IMF to provide massive debt relief, struggled to agree a financial lifeline.
Greek Prime Minister Alexis Tsipras leaves his office at the Maximos Mansion in Athens, Greece July 15, 2015. PM Tsipras battled to win lawmakers' approval on Wednesday for a bailout deal to keep Greece in the euro, while the country's creditors, pressed by the IMF to provide massive debt relief, struggled to agree a financial lifeline.

This past Sunday in Brussels, Greek Prime Minister Alexis Tsipras received a well-earned dressing down for seventeen hours by his Eurozone colleagues. Following months of bombast that destroyed Athens’ trust among its creditors, Tsipras’ most recent two weeks of erratic behavior seemed like a transparent attempt to blackmail the European Union. According to EU officials, these shenanigans have raised the bailout cost to Greece by €25 billion to €30 billion. And, in the end, Tsipras backed Greeks into a humiliating choice between abandoning the euro they cherish and capitulating to reforms they have rejected. Capitulation won, at least for now.

It would thus be easy to write Tsipras off as a political neophyte who surrounded himself with a team of incompetent Marxist ideologues, who then lied to their own people by promising a new bailout agreement and reopened banks within forty-eight hours of a no-vote in the July 5 referendum. But something deeper may be in play here. Tsipras may have been following—or stumbled upon—a more prudent plan than recklessly gambling Greece’s future in the EU. Perhaps Tsipras realized all along that he needed to escape a nearly impossible dilemma: either preside over Greece’s economic death spiral or convince voters to accept the belt-tightening and structural reforms whose rejection generated the populist wave he rode to power.

Initially, Tsipras sought to escape this dilemma by relying on game theoretical analysis and insulting intransigence from former Finance Minster Yanis Varoufakis, apparently to extract as many concessions as possible from the European Commission, the European Central Bank, and the International Monetary Fund. When it finally became clear that the money and patience of Greece’s creditors had run out, Tsipras realized it was now time for the Greek people to blink.

Engineering Greece’s tectonic reversal required a stroke of political genius. Tsipras found that genius in his deep understanding of the urge to say no—or “oxi”—at the heart of Greece’s body politic since October 1940 when Greece rejected fascist Italy’s demand to capitulate without resistance.

The July 5 referendum was Greece’s latest “oxi moment,” and provided Tsipras two profound political benefits. First, regardless of whether they understood the vote’s confusing technicalities, Greek citizens received the political catharsis they craved to “just say no.” Second, by driving Greece’s creditors to their breaking point, Tsipras pushed as far as he could without crashing Greece out of the Eurozone. Taken together, these steps invigorated Greek voters’ support for their young leader.

For Tsipras, the result was a new mandate. Contrary to expectations, however, Tsipras courageously chose to use this mandate not to resume blackmailing the EU, but to make one of the most radical course changes in modern European history. Tsipras calculated that having restored Greek voters’ sense of dignity, he could count on their support to swallow even tougher reforms than they rejected one week earlier, and perhaps save their country from the greater indignities of financial collapse and loss of the euro. Such is the power of dignity and emotion in Greek politics. Either by design from the start or by default when in peril, Tsipras may have successfully harnessed his understanding of the Greek political soul to emerge as Europe’s latest statesman.

In the months ahead, as bailout negotiations resume and Greek emotions continue to roil, it will be essential for European leaders to strike a balance between sticking firmly to their red lines and listening to Tsipras’ counsel on what Greece’s political traffic can bear. Had EU leaders set a credible deadline with Athens months ago, they would have saved themselves tens of billions of euros and countless hours better spent on dealing with a revanchist Russia, a barbaric ISIS, and a migrant deluge. Looking further back, had they listened ten months ago to the appeals of Tsipras’ predecessor, Antonis Samaras, for limited relief from rigid austerity, they could have avoided these past months’ ridiculous squabbles with Syriza entirely.

Perhaps Tsipras will match Samaras’ statesmanlike leadership, which guided Greece back to economic growth, access to capital markets, and a short-lived reputation of success for the EU-ECB-IMF bargain of structural reform for financial assistance. Tsipras, however, must first win parliamentary approval on July 15 of Greece’s third bailout package, and then preserve his political life as his Syriza party disintegrates.

Thereafter, Tsipras and the EU will need all the friends the Greek Prime Minister can muster. If Tsipras survives in coming weeks as Greece’s national leader, it will be crucial for him to stick to Greece’s latest commitments and thereby restore his EU colleagues’ trust, and for European leaders to balance firm red lines with avoidance of humiliating gestures (such as a “timeout” for Greece’s Eurozone membership).

Originally appeared on the blog of the Atlantic Council.

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