Athens searches frantically for a new compromise between politics and economic reality

This week the new Greek government started faltering on all accounts. The young Prime Minister Alexis Tsipras, who got elected on 25 January under a populist banner to change everything in this crisis stricken nation, proposed Prokopis Pavlopoulos for President of the Republic, an old fox representing the corrupt and incompetent political system which governed the country for the last thirty years. On the same day, Tuesday, Tsipras also tried to cheat his compatriots and deceive the European Union too by asking for a continuation of Eurozone’s financial support but ostensibly ‘denouncing’ the austerity that goes with it, knowing very well that he can’t have the one without the other. Today in Brussels the Eurozone will decide if the latest Greek proposal can constitute a base for negotiations. The ECB conceded yesterday afternoon only an additional €3.5 billion in liquidity that can keep the Greek banks alive for only a few days. But let’s return to Athens. Picking a President Yesterday Tsipras picked this person for President of the Republic, and by doing so he let down the Greeks who had believed he meant what he had said about fighting the clientele politics that Pavlopoulos represents. On the same day Tsipras tried to cover up an almost total repudiation of his pre-election uncompromising rhetoric against the ‘Memorandum of Understanding’ his country has signed with its Eurozone peers. The MoU contains both; a soft loan agreement and an austerity and reform program. The one doesn’t exist without the other. Yet Tsipras insists that Greece can keep receiving soft loans from Eurozone without applying strict conditions. During the two and a half years after June 2012 when the current Memorandum was signed by Greece and the ‘Troika’ of EU-ECB-IMF, Tsipras was very eloquent slamming every politician who would even remotely insinuate that the country needed it. SYRIZA has turned the terms ‘Troika’ and ‘Memorandum’ into real swear words. Conciliating promises and reality Tsipras, under this banner, dragged the country to the 25 January legislative election. The term of the incumbent President of the Republic expires in March and the constitution requires the election of a new President by the Parliament with a 3/5 majority that the previous center-right-socialist (New Democracy- PASOK) government couldn’t summon. After three barren votes the previous Prime Minister Antonis Samaras, the leader of New Democracy, was obliged to dissolve the Parliament and call an early election that all opinion polls were predicting Tsipras and his left-wing SYRIZA party were expected to win, as it actually happened on 25 January. Still SYRIZA didn’t win an absolute majority and had to form a coalition government with an extreme right-wing, nationalist anti-immigrant party the Independent Greeks (ANEL). The connecting material was their common populist anti-Memorandum, anti-Troika, nationalist rhetoric. ANEL is an offspring of New Democracy and its leader Panos Kamenos has served as minister in conservative governments in the recent past. He was rewarded by Tsipras and now holds the portfolio of National Defense. All that for what? It’s really an absurdity that both the parliamentary groups of Tsipras’ SYRIZA and the ANEL of Kamenos are now proposing an old New Democracy Politian, a real fox of the Greek clientele political system, Prokopis Pavlopoulos for President of the Republic, whom Samaras can’t refuse. Had Tsipras and Kamenos done so in the previous Parliament and no legislative election would have been held, neither the country would have had any problems of the existential kind that it now faces. In short, it was not the country or its people that Tsipras and Kamenos bothered to ‘save’, but it’s now proven beyond reasonable doubt that they just wanted to rule over them. Let’s now turn to the other trick that Tsipras and Kamenos are trying to sell to Athens and Brussels. Having sold ‘national dignity’ to Greeks and the end of austerity, they both perfectly knew that this would end up, as it now has, to capital outflows and a bank run. In view of that, they are presently trying to convince everybody within and without the country that it is possible to continue receiving soft loans from Eurozone, without strict conditions. They pretend they can repudiate austerity, structural reforms, deregulation and privatizations and still get money from Europe. Political brinkmanship in economics To achieve this, the duo now proposes to Greece’s Eurozone partners to sign a new loan agreement, but with limited auditing and conditionality. Of course this is mainly addressed to the internal audience, while Tsipras and Kamenos hope that in Brussels they will be able to conclude a political accord, concealing the real tough terms. Those will be agreed at a later stage, when the public opinion in the country would be more perceptive to realities. In any case they are both caught between their electoral promises for less austerity and the financial realities. In reality the Greek government is playing with words trying to avoid the use of the terms ‘Troika’ and ‘Memorandum’. It is exactly at this stage that the Greek issue has currently culminated. Athens is about to propose today the extension of the Master Financial Assistance Facility Agreement of 2012 of €109.1 billion endorsed by Greece and the European Financial Stability Fund, representing the EU and the Eurozone member states. This is not exactly the Memorandum of Understanding but contains all the financial aid details and conditions. Athens is happy with that for as long as the words ‘Troika’ and ‘Memorandum’ are not mentioned, despite the fact that the terms and conditions related to auditing, austerity and reforms are there all right. Caught in words Tsipras is really trapped between his pre-electoral rhetoric and the pressing economic realities, with capital massively flowing out of the country and a bank run that accelerates. It’s up to Germany and Brussels to decide if they want to pay another lip service to Greece and understand the idiosyncrasies of Athens. By the same token it’s not at all clear where a blunt denial by Berlin could lead Greece and its precarious government. The administration contains even neo-Stalinist elements, who could long for a state-capitalism kind of closed economy, hoping for Russian support. In such an uncharted terrain accidents do happen and nobody can predict where they could lead.