Greek crisis nears a turning point


Alexis Tsipras campaigned with passion. Now that he’s leading Greece, does he still have it?

WASHINGTON (MarketWatch) — The simmering crisis in Greece has the potential to become one of those seemingly small events that leads to big consequences.

The election of a radical government by a public exhausted from five years of debilitating recession, the war of words conducted by that government in the face of the iron fist of establishment power in the European Union, and the expected resolution either in the form of a total retreat by the Greek government and its collapse or an exit from the euro EURUSD, -0.64%  — all this seems relatively small on the scale of global events.

But few expected the assassination of an Austrian royal heir to start World War I, or the shelling of a military depot in Gdansk by German forces in 1939 to lead to the conflagration of World War II, or, for that matter, the strike in 1980 by Polish trade union Solidarity in that same port city to lead to the unraveling of the Soviet empire.

Who thinks this can end well? Who knows what the consequences will be?

The Greek crisis could well become a similar turning point in history.

Amid all the posturing, dogmatism and bad faith in the standoff between the government of Greek Prime Minister Alexis Tsipras and European and international monetary officials is a genuine challenge not only to the postwar integration of Europe but the entire foundation of the peace ushered in during that period.

So if you’re sick and tired of hearing about Greece, think again.

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For the first time since the early 20th century, there are the elements of a genuine revolution brewing in Europe, a continent plagued by violence throughout its history.

The bumbling, short-sighted policies of the German government under Chancellor Angela Merkel and the spineless Brussels bureaucracy dominated by Berlin are in many ways similar to previous miscalculations by European leaders that plunged Europe and the world into disaster.

And it is not helped by a U.S. foreign policy in disarray under the weak and uneven leadership of a president ill-equipped to deal with global realpolitik.

The Greek government itself seems to be operating in a parallel universe of false hopes. The economy minister, George Stathakis, said he is optimistic Greece will reach an agreement with international lenders next week even though their stated goals remain diametrically opposed.

Will Syriza stand up to Europe, or knuckle under?

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Politics columnist

The head of the Greek central bank, Yannis Stournaras, who was installed by the preceding government that was voted out of office, still maintains that an exit of Greece from the euro is not an option, even though it is emerging as the only viable solution if the country wants to get back to any form of economic security in the foreseeable future.

Far from finding allies in the other distressed countries of southern Europe, Greece has accused governments in Spain and Portugal of undermining its efforts to reverse austerity policies out of fear that the establishment parties in those countries will meet the same fate as the Greek mainstream parties defeated in the January election by Tsipras’s far-left Syriza.

But there is also opposition to Athens’ course from within the governing party. Stathis Kouvelakis, who teaches political theory at King’s College in London and is a member of Syriza’s central committee, says the party has to face up to the reality of its recent retreat on its election pledges and the nature of the forces arrayed against it.

In particular, Kouvelakis notes the successive steps taken by European Central Bank to restrict the flow of liquidity to the Greek economy, shutting down or limiting Greek access to various types of ECB financing.

“It should be clear, however, that these moves would bring about a dynamic that would breach fundamental constraints of the monetary union and would inevitably lead to the exit from it,” Kouvelakis wrote in his latest post at Jacobin. “In any case, the ECB’s relentless blackmail with its provision of liquidity places onto the agenda every day the issue of regaining sovereignty over monetary policy.”

It was the stranglehold that prompted Tsipras in a recent interview with Der Spiegel to refer to the ECB “still holding onto the rope that is around our necks.”

But Kouvelakis argues that covering over the issues by renaming the troika “the institutions” or by using weasel words like “creative ambiguity” is not going to solve the problem.

The initial euphoria over Syriza’s victory has quickly faded, but it can be revived, he says, if the party faces reality.

“In order for this to happen, however, the horns of battle have to blow again, and the ensuing struggle has to be waged with all due seriousness and determination,” he wrote, “not with PR stunts and rhetorical contortions.”

He cited the widely quoted words from Interior Minister Nikos Voutsis earlier this month before the Greek Parliament, when he said “the country is at war, a social and a class war with the lenders” and that in this war “we will not go like cheerful scouts willing to continue the policies of the memorandum.”

This is the kind of talk the world needs to hear from Greek officials, Kouvelakis says, “not the language of facile optimism that creates illusions and causes confusion that tomorrow may prove costly.”

Who thinks this can end well? Who knows what the consequences will be?