Negotiations at the brink

Note kidly translated by Anne-Marie de Grazia

News of the interruption of negotiations between Greece and its creditors on this Thursday June 11th, are neither a surprise nor real news. On the one side, one might think that it is only a matter of a suspension in negotiations, and that the latter will pick up again in a few days, even if this means that we’ll again be submitted to a regime of Scottish hot-and-cold showers. But on the other hand, basically, it is clear that there is a fundamental disagreement on the political nature of these negotiations.

The nature of the disagreements

What the European Union is seeking, by the way of the Eurogroup, is to cauterize the precedent inaugurated by the Greek elections in January 2015. The demonstration must be brought that not only in the case of Greece, but much more importantly in those of Spain, Italy and France one cannot « exit from the framework of austerity » such as it has been implemented by treaties. What is important therefore is to bring Greece to bend, not for its own sake, nor to humiliate its leaders (even if such is the position taken by some European leaders) but in order to dissuade the other peoples of Europe from rebelling by electoral means against the diktats of Brussels and of Frankfurt.

What the Greek government is seeking is to impose a political solution to the debt question, which would make it possible to find another way out besides austerity. Which is why, in return of such an agreement and for an investment program in Greece, this government would be ready to make concessions, on privatizations as well as on pensions. But, in order for these concessions to be meaningful, a wholesale political agreement is needed. The Minister of Finances, M. Varoufakis, reminded us of this earlier this week [1].

The attitude of the Eurogroup thus broadly contributed to bring an evolution of the negotiations in the direction of what Yanis Varoufakis is calling a “war.”

 

Agreements and disagreements

So that one can find oneself technically very close to an agreement and politically quite far from one. The various European leaders (M. Jean-Claude Juncker to begin with), the German leaders, understand this problematic quite well. They have not yet taken the full measure of the Greek government’s and of Mr. Tsipras’ determination, which leans on several factors:

  1. Greece’s situation is so dramatic, and the support enjoyed by the Prime-Minister and his party is such, that one cannot see him give ground. If he did, he would commit political suicide. As it happens, the man is young. He knows that he is standing in today for a powerful symbol, in Greece as well as in Europe. He might make concessions if he obtained what matters most. But, in the absence of this, he has no interest in capitulating. Brussels believes that Tsipras is a younger Papandreou and Brussels is quite besides the mark.
  2. Greece has far less to lose from a break-up than the oligarchs in Brussels, Paris or Berlin. A failure of negotiations would entail a default, and this default would probably bring about an exit from the Euro. The shock for Greece would be considerable, but the latter would rapidly find back to the road of growth. On the other hand, the Eurozone would probably not survive it. Under these conditions, and measuring all that has been politically and symbolically invested in the Euro, it is clear that the hypothesis of a default appears far more unbearable for a François Hollande, a Pierre Moscovici, a Matteo Renzi, or even an Angela Merkel than for Alexis Tsipras.
  3. Greece is actually playing a game here with the European Central Bank. The latter is compelled in one way to continue financing Greek commercial banks, at a time when there is an important mechanism of retrieval of deposits in course since February. But this phenomenon is actually playing into the hands of Alexis Tsipras because it allows him to say that the capitals which are presently leaving Greece would come back rapidly in the case of an exit from the Euro and a massive devaluation of the newly-found Greek currency. This process contributes in effect in securitizing part of Greek savings in the perspective of an exit from the Euro. Which is why the Greek government has refused to put in place capitals controls.
  4. If one considers the question under a geopolitical angle, it is clear also that the United States and the European Union have far more to lose than Greece. A break-up between Greece and the Eurogroup would throw the country into the arms of Russia. Greece would oppose the renewal of sanctions as early as July, and could lean on the Russia-China “couple” in order to find the investments it needs. The muscle flexing of European diplomats who, in Brussels, are promising to « get the skin » of Greece or Cyprus if these countries should change camp are just that, muscle flexing. They just don’t have anymore the possibility of doing that, considering emergence of China and the return of Russia as an important European (and Asian) power.

The Eurogroup at a loss for a strategy.

In fact, it is the Eurogroup, and foremost Germany, who are at a loss for a strategy. If it gives in to Greece and accepts a global renegotiation of the debt, together with an annulation of part of it, it will immediately see Spain, Portugal and Italy, and maybe even Ireland, ask for conditions similar to those consented to Greece. If it upholds its intransigent position, it risks a break-up, together with a Greek default, and a process of dislocation of the Eurozone which will set in very quickly. Which explains the chaotic character of the present negotiations. It is indeed difficult for the Greek negotiators to negotiate with people without a strategy. The problem is widely amplified by the situation in Germany. If the Chancellor is conscient of the risk which she is taking by adopting intransigent policies, she must also take into account her own Minister of Finances, who is much opposed to the very idea of an agreement because he can measure the prize to be paid in terms of a loss of credibility of Germany both in the domain of economic policies but also – and maybe more directly – in budgetary matters. It is clear that if the Eurozone were to evolve in the direction of a logic of turning its back on austerity, pressures on Germany would be very strong to contribute in financing the countries of Southern Europe. This would then be the “Union of transfers” which Germany wants nothing to do with.

Negotiations therefore are more uncertain than ever. One must understand that political motivations and not solely – nor even principally – motivations of economic rationality – are intervening in these negotiations. There is also the geopolitical dimension and one can well see here that the United States, because of the Cold War logic which they are trying to impose versus Russia, have an interest in the Eurozone and the European Union holding out.

 

 

[1] Harald Schumann and Elisa Simantke for the Tagesspiegel : http://www.euractiv.com/sections/euro-finance/varoufakis-greeces-creditors-have-turned-negotiations-war-315247

 


Jacques Sapir

Ses travaux de chercheur se sont orientés dans trois dimensions, l’étude de l’économie russe et de la transition, l’analyse des crises financières et des recherches théoriques sur les institutions économiques et les interactions entre les comportements individuels. Il a poursuivi ses recherches à partir de 2000 sur les interactions entre les régimes de change, la structuration des systèmes financiers et les instabilités macroéconomiques. Depuis 2007 il s'est impliqué dans l’analyse de la crise financière actuelle, et en particulier dans la crise de la zone Euro.

Vous aimerez aussi...

Laisser un commentaire

Votre adresse de messagerie ne sera pas publiée. Les champs obligatoires sont indiqués avec *