How Alexis Tsipras is losing the plot with the EU and the Greeks
Earlier this year, Alexis Tsipras came to power in Greece with a thumping mandate. The Greeks were impressed by this one man’s ability to call the European bluff and abdicate calls for austerity. Tsipras may still have the support of the Greeks, but that may be waning quite fast. Alexis Tsipras and his finance minister have stumbled from one bungle to another. As Greeks slowly reconcile with the need to compromise with the EU stand, Tsipras and his Syriza party may be gradually losing the support of the Greeks.
The economy is pinching
Greece was always in shambles but the hard-headed style of Alexis Tsipras and his finance minister has only aggravated matters. Greece has a $1.6 billion tranche payable to the IMF; something that is likely to be postponed. Greece is already shut out of the debt markets, which means that it cannot borrow. The rate of unemployment is at 25% and the economy is growing at under 0.5%.
Greek banks are tottering as billions of Euros have fled out of Greece to safer havens. Without fresh infusion of funds, these banks are doomed. Ironically, these funds are unlikely to come in as long as Greece continues to hold on to its intransigent stand on austerity. At the ground level the Greeks are losing patience and are now eager to have a compromise to put the Greek economy back on track.
Austerity versus responsibility
Greeks are now realizing that the more Tsipras prolongs the problem, the closer they get to bankruptcy. Germany and France have decided to play the “Waiting Game” and that is not something Greece had bargained for. The idea was that they would use the demise of the Euro as a bargaining chip and Russia as a counter force. Neither seems to have worked for the Greeks!
The EU nations are not entirely wrong. Firstly, they have already made sufficient concessions to Greece. What they are asking for now is not austerity but a semblance of fiscal responsibility. That is absolutely logical. Secondly, most EU nations (including nations poorer than Greece) have gone through the pain of reforms and emerged stronger. They would not want to let their people down by supporting Greek profligacy. Tsipras and his finance minister need to realize that.
Sorry, just get on with reforms
Recent polls show that Syriza is losing ground. Not surprising; because people brought the Syriza party for rational solutions not for smart posturing. A vast majority of the Greeks want to stay in the Euro; so a return to the Drachma is ruled out. A default to the IMF could be disastrous for Greece’s external ratings. That is a situation, Greece and Tsipras should do their best to avoid. ©