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The one thing that might ensure a Greek deal: fear

23 June 2015

11:17 AM

23 June 2015

11:17 AM

On a narrow, sloping street in downtown Athens sits a graffiti-strewn wall that has captured the spirit of a nation. Amidst the spray-painted slogans and flaking posters, a black-and-white stencilled image of Greek Prime Minister Alexis Tsipras looks down benignly (beneath a perfectly-observed monobrow) at passers-by. His arms outstretched, dressed in flowing robes and with a halo circling his head, he is Christ come to redeem Greece.

Such is the bitter humour that now pervades the country’s capital city as the prospect of financial implosion nears. Tsipras came to power promising to get rid of austerity and take the fight to Greece’s European partners. Reality, alas, proved less accommodating. The partners didn’t budge. Syriza, the party Tsipras leads, has had to.

On 22 June, Tsipras arrived in Brussels for yet another round of ‘crisis talks’ with Greece’s creditors. He needs them to unlock €7.2bn of bailout funds so that the country can meet its next debt repayment of €1.6bn on 30 June. If he doesn’t get it, Greece will officially default, which may well begin the process of Grexit – something the Greek government, despite some internal disagreements, remains desperate to avoid.


So despite months of grandstanding, including the failed attempts of Greece’s confrontational Finance Minister, Yannis Varoufakis to play the European Central Bank and the International Monetary Fund – the country’s main creditors – off against each other, Greece has come to the talks with a new round of proposals that include considerable concessions.

The initial signs are positive, with German Chancellor Angela Merkel describing Greece’s new package of reforms, which included new taxes on business and Greece’s wealthy elite, as ‘some progress’. Nonetheless, she stressed both the number of outstanding issues remaining and the shortness of the window left to resolve them.

So the situation remains precarious. If a deal is not reached and Greece exits the Eurozone, the consequences for both Greece and the EU are likely to be egregious. For the EU, Grexit would most likely result in an immediate devaluation of the euro. But more important than the economic factors, argues Vassilis Petsinis, a visiting researcher at the Herder Institut, are the symbolic and geopolitical repercussions that might ensue. ‘Greece’s alienation from the EU,’ he says ‘may lead the country’s elites closer to the EU’s competitors in the “near abroad” – namely Russia.’ Bogged down in an expensive war with Ukraine, it is unlikely that Moscow could extend the necessary financial aid to rescue Greece from its financial turmoil, but it could well incorporate its ‘fellow-Orthodox’ state within its cultural orbit, drawing it further away from the EU.

And within Greece, the likely effects of Grexit are even more disconcerting to contemplate. Petsinis fears that all the economic upheaval involved could see the return of political unrest to the country once more. Most immediately, it is likely that Syriza would have to call a new round of elections within a year. Meanwhile social unrest on a scale not seen since 2011-2012 is also likely as the country’s economic situation would worsen dramatically. And if Greece falls then the contagion could spread to other EU countries; Portugal could be next, or even Spain.

These are frightening scenarios that neither Greece nor its EU partners wants to see, each for its own reasons. Given the wide gulf that remains between the two sides and the rapidly diminishing time frame left to resolve them, it may be that mutual fear rather than mutual agreement ultimately provides the impetus for some form of deal. If this can be achieved, then the talks in Brussels may stave off catastrophe, both for Greece and for the European project itself.

David Patrikarakos is a journalist, film producer and author of Nuclear Iran: The Birth of an Atomic State. He can be found tweeting @dpatrikarakos


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