Where is the Greek government going with its approach? Is it heading for a rift with Berlin and the other creditors or kicking up dust before it achieves a compromise? Why has it dramatically reopened, even with the involvement of the prime minister, the issue of World War II reparations? Four scenarios present themselves and hold the possible answer:
1. Premier Alexis Tsipras is acting a lot like Andreas Papandreou. By taking on the Germans, he’s pushing the envelope and will ultimately present Parliament with a bill for measures and reforms. He’s masking this intention with skillful rhetoric.
2. The government knows that in around a fortnight the state will run out of money and commitments will not be met. It is afraid of the political and social consequences of such a development and is intentionally creating an atmosphere of hostility to incriminate Berlin if banks collapse and the state stops paying salaries and pensions.
3. The government has decided that a compromise cannot be reached with the country’s creditors and is playing a double game: It is negotiating and bringing technical teams to Athens to show that it’s conforming, but is actually preparing for a velvet exit from the eurozone via a dual currency or payment of obligations with special bonds.
4. The government is in the grips of the amateurism and fanaticism that is occasionally evident in the ruling SYRIZA party, and is pushing the country to the edge without even Tsipras being aware of it. The tension with Germany, meanwhile, is building into a self-perpetuating nightmare.
The other question is, what are Greece’s creditors trying to achieve? None of them wants to be cast as the bad guy. They are obviously weighing their next move. In Berlin, those responsible for foreign policy are telling Chancellor Angela Merkel to tread carefully. They are concerned with the spread of anti-German sentiment in Europe, the possibility of Greece becoming a failed state and even the scenario that Athens may pursue much closer ties with Moscow or Beijing. On the other hand, the creditors have run out of patience with the Greek government and some in Europe argue that Greeks will only become aware of the gravity of the situation if the country has a near-death experience, such as a pay freeze or the imposition of capital controls. That would already have happened if the ECB and IMF technocrats had not warned of the consequences.
So now we are in a chaotic balance of terror. It is almost impossible to guess how Tsipras will complete the negotiations, impose the plan in Greece and then implement it. He will have to make some very serious changes. Elections and referendums are not the solution. They may buy him time but he will soon face the same predicament again. He will soon have to choose between displeasing his party or displeasing the creditors – with whatever consequences both entail.