Tuesday, May 22, 2012

Syriza's Challenge

"Empty threats! There's no way they're going to kick us out. There won't be a euro zone if they do that...

No one can force us to leave the euro. Now that they have us, they're stuck with us...

If they change the laws to force us out, then there will be no euro zone. They're just barking to scare us but actually they're the ones who are scared," 

-- Greeks embrace some new myths about life with the euro, Reuters

It is all right for 'pundits' to fret about dangers of electing Syriza in the next round of Greek Elections, but reading this commentary one wonders what is wrong for Tsipras to play the gambit of tearing down EU austerity pact? He has rightly figured out that Europeans would finally come to senses in realizing 'self damage or collateral cost' in throwing out Greece from Euro. Of course it is gun point diplomacy and terrorism by another name; given the fact Greek Politicians first cooked books to enter Euro while Greek People are hardly ready for fair taxes and reforms. But why to practice 'reforms' when one can do without it? That must be the thinking of one Tsipras. The playbook was there 'crying' for someone to pick and here is one young, ambitious politician ready to embark upon that ploy. The way Politics works, how hard it is for someone to argue for 'change' to capture the power and then once in power; do the full U turn? What worst can happen, an election loss or two. But Greek politics being a life long profession; eventually you come back. Pandering to base - what is wrong? That is what politics is generally.

Appealing senses of common people, that is one way of dealing with this situation which non-Syriza Greek Parties, global pundits and rest of Euro are attempting. But at best it can be a weak strategy since there is no leverage while the political competence required to 'turn public' opinion away from short term benefits towards longer term advantages is off high order; generally absent. That means two things can or should happen:

- Syriza wins the election, tries to call the bluff of Europe; but Euro / IMF folks do not heed his demands and manage to control the damage of kicking Greece from Euro. Meanwhile Greece joins the club of  Third World / Fourth World countries instantly. That deprives Syriza of credibility and it gets completely wiped out politically. Importance of this is not about Greece, but rest of European Population and Politicians get the hard message of undertaking badly needed reforms instead of being captivated to silly populism. Also in the process Euro folks convince the market that indeed they can erect the appropriate 'firewall' and can limit the damage.

- Or rest of the European Politicians articulate a 'convincing narrative' - that Greece can very well tear the austerity pact and still stay in the Euro; it is just that they will not get any more money and will have to do the 'hard default' unless reforms are done. Whatever Euro Bonds and all those pro-growth solutions Europe wants to undertake to solve current mess, all those measures will simply skip Greece. Sure, that will be ostracization or discrimination of the worst order; but then that is the price you pay. European austerity first crowd has ignored importance of 'growth' for too long whereas Greek Politicians do not have any gumption to undertake needed reforms so as to grow; then you do pay price like division of Euro Project.

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