Friday, 18 May 2012

The Hugo Chavez Of The Aegean

Few people understand modern Greece better than Nicholas Gage. In his poignant and powerful book Eleni he tells the story of growing up in a mountain village in northern Greece during the Civil War in which his mother was executed by communist guerrillas. He knows his Greek demagogues and extremists better than most.

When he calls the rising star of Greek politics ‘daring, cunning’ and ultimately very dangerous for Greece it is worth paying attention. His column in Friday's International Herald Tribune  puts Alexis Tsipras, leader of the rapidly rising radical party Syriza, squarely in the tradition Alcibiades in ancient Greece and Nikos Zachariadis, leader of the communists during the savage Greek civil war.

 In the inconclusive election on May 6 Tsipras brilliantly played to the anger millions of Greeks feel about the destruction of their comfortable life style.  His party’s vote increased sharply as he outmaneuvered his clumsy opponents at every turn by constantly re-defining the debate. According to him it is no longer about reform of the sclerotic Greek state. It’s all about the ‘austerity’ that the evil Troika has forced on Greece or about the evil politicians that agreed to the reform program. Many polls put Syriza in the lead for the second election on June 17.

His brilliant solution to Greece’s problems is to hire yet more civil servants (all of whom will naturally vote for him in the future), nationalize the banks, increase taxes even more, and stop all the feeble attempts at privatization and liberalization of the economy. Basically he wants to take Greece back to the conditions that created the mess in the first place.

Who is going to pay for all this? In his brave new world Greece can renege on the reform program arranged with the Troika and somehow still remain in the Euro. If, and I admit it is a big if, the European leaders stick to their guns Greece under Tsipras will simply run out of Euros early this summer. Then, in order to fulfil his extravagant promises, he will start printing drachmas­ – lots of drachmas.

But he does have one great advantage over the bureaucrats in Brussels. Party leaders like Tsipras love confrontation. They thrive on it. European Union bureaucrats hate confrontation. They want everything settled quietly and politely around long conference tables arrayed with bottles of water and neat little note pads. Tsipras could well hound them into submission with his unrelenting polemics. Jean Claude Juncker, head of the Euro Group, has already started to run up the white flag of surrender by saying that they should take another look at the Greek agreement.

The negotiating style is well known. Demand, shout, demand again, never compromise, stay there all night if you have to, shout and bang the table until your opponents give up out of sheer fatigue and hunger. This is the all-or-nothing approach where compromise is a four-letter word.

In short order, Tsipras would become the Aegean version of Hugo Chavez of Venezuela and Christina Fernandez of Argentina by riding a wave of economic populism to strong election results. Unfortunately the same wave that carries him to the top will come crashing down  on the long suffering people and bury them for a long time.  

In the old days he could play the West off the Soviet Union and basically blackmail one side or the other to support him for geo-political reasons. Now, this is much harder to do. It’s extremely doubtful that either Russia or China would volunteer to take on the Greek headache.

The investment vultures are waiting eagerly for this Greek collapse. I have been told by more than one person over the last several months that they consider a Greek default and a return to the drachma as inevitable. “Things are going to get a lot worse fairly soon. Then the prices could be interesting.”

Gage sums up the hard realities facing a Greece under Syriza.

“Yet many Greeks look to Alexis Tsipras as the leader they have been waiting for – bold, daring, cunning. What they don’t realize is that he is also very dangerous, with a vision for Greece that will isolate it from the rest of Europe and reduce its people to the kind of poverty they have not seen in half a century.”

It is nothing but very cynical deception to attempt to delude the Greek people by claiming that a repudiation of the reform program will improve their economic situation. It won't. Such a repudiation would cripple an already weak economy. The real tragedy would be to give up on reform before it has even begun to bear fruit.

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