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Now that the negotiations between the greek government and the lenders (Troika) are ongoing and nobody knows what is going to happen, I propose that it is worth considering this; any step back that the lenders and especially Angela Merkel take, includes, for them, the following problem: If they do step back and agree to a new deal effectively admitting that the austerity measures failed (and I am not discussing here whether they did or not, numbers paint a very clear picture if you know what to ask them!) they will lose face in their ability to negotiate from here onwards. If they admit that half the Greek young people are unemployed and the other half is either paid peanuts or have left the country (these are widely available numbers, not ‘Greek statistics’) because of the austerity measures being a mistake, then

a) the lenders are responsible for a national disaster, crucially not of their own nation and

b) they have de facto been proven inadequate to deal with such important issues and therefore inadequate to govern, hence “especially Merkel” as I said above.

In other words, those who are politicians will be politically finished, and those who are financial institutions will also be proven inadequate in dealing with issues of such magnitude and their only relevance will appear to be that they can lend (and not make or influence political decisions). The lenders will, after such a development, be negotiating having effectively admitted that they messed the whole thing up, both towards the Greeks and towards the other nations that were in one way or other, involved in supporting the bailout and the austerity measures through the memorandum. For the lenders, it would have been a potential get-out-of-jail card if they could claim that the memorandum took effect because it was forced by Papandreou, Samaras or Venizelos. These Greek politicians are politically dead and would have been easily expendable. The lenders could have said “ok, let’s have another look at the whole thing. Your leaders messed it up, let’s see what we, the rational and knowledgeable lenders, can do to salvage the situation”. This was the spirit of the memorandum anyway. The lenders had the moral high ground, in addition to writing off a huge part of Greece’s unserviceable sovereign debt. This is why troika (the lenders’ representatives) used to come to Greece and and talk to Greek ministers and PMs as if they were Headmasters talking to unruly schoolchildren.

Now, Tsipras and Varoufakis (P.S. Varoufakis resigned on July 6!) even though they are also leading a party that represents a huge basis of people who were previously PASOK and therefore well within the sphere of responsibility for what has happened, can and do say to the lenders:

a) the memorandum was a disastrous mistake and

b) we didn’t draft it or agree to it, YOU DID

c) everybody in Europe is against austerity, look at the demonstrations


Russell Brand, lending his support to the anti-austerity movement, talking to me in Trafalgar sq. during an anti-austerity demonstration on February 15, 2015.

The lenders can not refute b). They can only argue that a) is not correct. But how can this happen when Greece’s numbers (unemployment, debt, GDP, etc) make Somalia look like a Swiss canton? They need to find a narrative, to which the Greek side has to agree, according to which the lenders did NOT make a mistake. This is why the only narrative from the lenders is, without any exception that “the Greek side needs to come up with new proposals” (btw, they also mean “the proposals need to be exactly what WE have suggested all along, and you need to appear to be asking for it”.) Because the lenders themselves can not come up with anything new. In my view, the most viable forward narrative would be for both sides to say that things have now changed and a new way of dealing with the situation is required, which, by the way, is actually true. That the memorandum was, according to some logic, the right decision when it was taken but now circumstances dictate a new scheme. This would save face for the lenders, whom, lest we forget, after having written off many billions of euros, the Greeks need to continue borrowing from. It is tragic that this debate is over money when people are losing their lives and livelihoods over this but we are where we are. (Note, in Greece on Sunday July 5 a referendum on agreeing with the measures got a NO vote, banks are closed for a week, no obvious reopening point)

The Greek government on the other hand can not appear to compromise much either. Tsipras promised he’ll end the memorandum, is asking for a new loan deal and can’t come of the negotiations and say “well, we tried but they wouldn’t hear a word. We’ll go on and see what happens”. SYRIZA needs to appear to come out of the negotiations as ‘winners’ at least in a way that the lenders will agree to co-sign. Difficult but not impossible.

I consider it possible that at some point during the negotiations, the Greek side suggested what I am saying above, pushed for it and brought the argument “don’t you want to come up with something that will sound like a victory for both sides?”, and may not have got the desired answer. As above, such a development would imply mistakes in previous actions from the lenders.

My guess is that the only place an acceptable narrative will be found is somewhere along the lines of focusing on the contribution of the memorandum towards the leaning of an ‘obese’ and corrupt Greek public sector but a reworking is now necessary.

Watch this space.

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