Sunday, 12 July 2015


What's not to understand?
As the marathon Sunday evening Eurozone summit stretches out into the early hours of Monday morning, it is a rash moment to write a post that may be proved wrong by breakfast. But, amid all the headlines about Greece caving in to a deal that is worse than the one that the referendum rejected, there is something so big being missed that it feels as if people are holding the telescope the wrong way round.

It's this: the Greek government has consistently made it abundantly clear that it will not accept a deal that makes things worse. The only basis upon which it might accept further austerity would be with meaningful debt forgiveness, which could bring a sense that all the suffering was somehow worthwhile.

Since debt forgiveness is very much not on the table, and since the other Eurozone members have been piling on additional measures - way beyond those passed in the Greek parliament last week - why does anyone imagine for a moment that Mr Tsipras will sign up to a new agreement? After all, when a deal looked close a fortnight ago, he backed off and called a referendum in order to avoid appending his signature. In terms of Greek public opinion he is now in a much better place as a result of that decision.

One possible answer lies in that Greek opinion, so opposed to the Eurozone's onerous terms, yet so attached to Euro membership. The only acceptable way for the government to achieve an exit from the Euro in these circumstances is to be forced out. If Mr Tsipras and his colleagues can return to Athens with a convincing story that they agreed to almost everything and were still rejected, they can still hope to command the post-Grexit political landscape.

If this is true, they've played it almost to perfection. Mr Varoufakis upset everybody with his cogent reasoning; Mr Tsipras was urbane and engaging; Mr Tsakalotos sits calmly in the Eurogroup while all around are seething, an inscrutable smile playing on his lips as if he is the only person in the room with a clear plan. When Varoufakis left Athens for a family retreat on the evening of the parliamentary vote on Friday, it looked very much as if he was drawing fire, to give both his prime minister and his successor a clearer run.

Everybody fears Grexit, but the media consensus that it must necessarily be worse than a complete surrender of autonomy to the European institutions is surely wrong. People are extraordinarily resourceful, and will find ways to make their economic relationships work in the face of institutional breakdown. Although the paper losses will be great, the real, productive wealth of the country - the land, the climate, the sea, the hotels, restaurants and beaches, the factories, shops and warehouses, the ports and railways - are not going away.

The image of a post-Grexit Greece somehow losing fifty years of economic progress makes no sense in this context. After a chaotic period it will recover; those great assets will start to perform, and more effectively if they are not carrying insupportable indebtedness. All the signs are that Messrs Tsipras, Varoufakis and Tsakalotos know this full well. They are just waiting for Mr Schauable and Mrs Merkel to smooth their way.

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