Even before the new Greek government embarked on its magical mystery tour of Europe this week, the French cartoonist Nicolas Vadot asked – and answered – the most pressing question of the past seven days: why do the new Greek ministers not wear ties?
In his cartoon Vadot's open-necked Athenians – the prime minister, Alexis Tsipras, and his finance minister, Yanis Varoufakis – pointed to their answer: the man Tsipras defeated, Antonis Samaras, being hoisted by his tie and choked by an outsized Chancellor Angela Merkel.
Last month's election victory has given the hard-left Syriza alliance a clear mandate to reset the way Greece deals with its EU partners, their aid programme and its hated managers, the EU-IMF-ECB troika.
The message from Athens to Europe: Plan A – German-led austerity – is not working. It’s time to scatter Angela’s ashes and chase the troika out of town, along with their Tina – the acronym stands for “there is no alternative” – reform logic.
Hopscotching across the continent this week, the Greek tag team insisted that the troika drugs aren’t working because the diagnosis of the illness was as flawed as the subsequent prescription. The patient is dying.
Since the crisis began the Greek economy has shrunk by a quarter. Total debt stands at €322 billion, or 175 per cent of gross domestic product. Even if the Greek economy grew at 2 per cent a year it would take 13 years to recover to its 2008 size, ending the crisis after two lost decades. The jobless rate for young people is more than 50 per cent; the crisis-led spike in suicides is no longer news.
But Tsipras and Varoufakis, both government novices, face a steep learning curve in pressing their demands on impatient EU partners. So are we watching the final act of the Greek tragedy in the euro or the moment when Greece grabs success from the jaws of defeat?
Rational discussion
Yanis Varoufakis, the plucky new finance minister, certainly got the world’s attention in Brussels last week by refusing further bailouts, demanding debt write-downs and apparently refusing to deal with the troika – a “tripartite committee” that he said was pushing a programme with an “anti-European spirit”.
The Eurogroup head Jeroen Dijsselbloem managed only a fumbled handshake as he ran for cover before the Greek bombshell hit financial markets.
Varoufakis moved to a windswept balcony in central Athens where, losing his earpiece but never his cool, he denied on Newsnight, on the BBC, he had pulled the plug on the troika. Greece could have a "rational discussion" with the officials, he said, but not about their flawed programme. So were remarks lost in translation or was Varoufakis, an expert in game theory – the study ofstrategic decision-making – deliberately shaking things up?
With existing emergency financing due to expire at the end of February, the finance minister’s blunt admission that Greece was insolvent spooked markets. By Sunday Tspiras insisted that it “has never been our intention to act unilaterally on Greek debt”.
As their tag-team European tour progressed the two men soon toned the rhetoric. Varoufakis's cobalt-blue shirt was flapping in the wind as he strolled into Downing Street on Monday morning, but his lip was tightly buttoned. Debt write-downs were banished from his vocabulary. Instead he told the Financial Times that he wanted more sustainable loans for Greece, with repayments linked to growth or stretched into perpetuity.
Never short of a simile, Varoufakis said offers of yet more money for Greece – to buy time for reforms in the hope of sparking growth and loan repayment – are like handing a credit card to a friend in mortgage arrears.
His Financial Times message to EU governments and markets was: "Help us to reform our country and give us some fiscal space to do this, otherwise we shall continue to suffocate and become a deformed rather than a reformed Greece."
With his finance minister in London, Tsipras departed for Rome and Paris. He got a sympathetic hearings from hosts who see him as an ally for their campaign to replace the German-led austerity doctrine with a European investment agenda worth the name. But Tsipras knows that sympathy will neither pay his country’s bills nor provide an adequate political pivot for the reform U-turn he wants.
In Rome he got a tie, but no firm promises, from the Italian prime minister, Matteo Renzi. In Paris, behind President François Hollande's verbal gymnastics, was a clear message: meet your reform and financial commitments. Dubbed the "Euro bogeyman" by Germany's Bild tabloid, a chastened Tsipras departed France saying, "We want to correct this framework, not smash it."
An acidic Le Monde analysis the same day reminded the Greek visitor of the financial stakes: Greece owes its EU partners almost €195 billion, about 62 per cent of its total debt. Previous euro-zone concessions have seen interest rates drop to 2.6 per cent, below market rates and barely above Ireland's, while repayments on the principle of the largest chunk of loans have been postponed to 2022. Everyone is in this together, Le Monde thundered: "Greece does not have a monopoly on victimisation."
On to Brussels, where the European Commission president, Jean-Claude Juncker, held Tsipras’s hand in public but left him empty-handed in private. The European Council president, Donald Tusk, representing EU member states, predicted “difficult” talks requiring “co-operation and dialogue as well as determined efforts by Greece”.
In Frankfurt, meanwhile, the Greek finance minister had met his match. Hours after Mario Draghi urged Varoufakis to "engage constructively and speedily" with the Eurogroup, the ECB president showed he meant business by pulling the plug on accepting Greek sovereign bonds as loan collateral.
With Greek funding options narrowing, Varoufakis once again ramped up the rhetoric when he arrived in Berlin: attacking EU rescue efforts to date while asking for a three-month bridging loan to assemble a new reform package. When his German counterpart, Wolfgang Schäuble, suggested diplomatically that they had “agreed to disagree”, Varoufakis disagreed.
Their chilly stand-off exposed the bone of contention at the heart of the euro crisis. Schäuble insisted the problem is rooted in “unsustainable Greek policies” – years of deficit spending – that could be corrected only by cutbacks.
Varoufakis disagreed, saying that Greece is insolvent but being given forced liquidity injections to repay bank loans, bloating it with further debt and trapping it in a negative economic spiral.
In a swipe that didn't go down well in Berlin, Varoufakis reminded Germany of its Nazi past and noted the rising Nazi tide he was returning to in Athens.
At this rate it may be only a matter of time before the Syriza-led government lodges an €11 billion bill in Berlin for a 476 million Reichsmark loan that the Nazi occupying forces extracted by force from Greece and used to finance Erwin Rommel’s desert campaign.
Germany denies the bill is outstanding, pointing to two reparations deals that saw more than €2 billion paid to the Greek state and victims of Nazi aggression.
Any further reparation payments, including the forced Greek loan, were postponed at the 1953 London debt conference until a permanent peace treaty was signed by the Allies and Germany – a peace treaty that is still outstanding. Berlin says the 1990 unification agreement, recognised by Greece, settled the matter.
Merkel’s balancing act
All eyes turn to next week's informal summit in Brussels and Tripras's first meeting with Merkel. The German leader is waiting for the new Greek leader to run himself out, say allies. Explaining her reserve to date, they cite the chancellor's favoured maxim: "In der Ruhe liegt die Kraft" – strength lies in calm.
Merkel knows that the bridging loan Athens wants could be a bridge too far for her centre-right Christian Democratic Union. Any further concessions to Greece would allow the Alternative für Deutschland party, with its pro-Grexit campaign, peel away more of her conservative members.
With her attention focused on Ukraine, the German leader knows that resolving the Greek crisis is a balancing act that goes beyond single-currency concerns: too much leeway risks exhausting the patience – and finances – of Greece’s neighbours; too little leeway could force Athens to look elsewhere for financing.
“The only reason I think Greece is still in the euro is the fear of driving them into anyone else’s arms, like Russia,” says Jan Techau, head of the Carnegie Europe think tank, in Brussels.
After a week on the road Greece faces a complicated campaign with many moving parts and national interests. It has some sympathetic but noncommittal allies to its cause and may yet win a hearing from sceptical capitals in Berlin’s camp, such as Vienna and Helsinki. Even though Finland faces an election in April, with eurosceptic populists relishing a renewed Greek crisis, the Finnish foreign minister, Erkki Tuomioja, admitted on Wednesday that it was “in the general European interest to get along with the new Greek government”.
Between the two fronts are former programme countries such as Ireland and Portugal, torn between applauding and upbraiding Greece for taking on the troika for a better deal.
After many twists and turns the Greek crisis has reached its most dangerous bend in the treacherous mountain road. As the rest of the euro area looks on, Athens and Berlin are racing towards each other, each claiming in public – and hoping in private – that the other has more to lose by not yielding. But as the pressure builds in both capitals, the same poisonous accusation has seeped into the political discourse of the other: blackmail.
