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June 15, 2015 4:12 pm
Four games the Greeks may be playing
Gideon RachmanGideon Rachman
When the radical left won power in Greece in January much was made of the fact that Yanis Varoufakis, the new finance minister, is an academic economist. Many expected that Greece’s negotiating strategy would display a new subtlety and brilliance, now that it was guided by the co-author of Game Theory — A Critical Introduction .
Yet, a few months on, Greece is running out of friends and money. As a debt default looms, even some sympathetic commentators are baffled by the Athens government’s actions.
So what game are the Greeks playing? Here are four possible hypotheses:
Game 1: they are bluffing and they still think they can win. The Tsipras government may still believe that the EU will not ultimately tolerate the break-up of its most important project — the European single currency. The loss of political prestige would be too enormous; the risks of financial contagion too great. But the EU will not make serious concessions until the moment that it really believes that Greece is about to crash out of the euro. So some evidence of chaos and panic in Athens may actually be necessary to convince the EU that the end game is approaching.
Game 2: they are bluffing and they are only now realising that they have miscalculated. Alexis Tsipras and his Syriza party are newcomers to the high politics of the EU. They won election in January believing that they could win the argument against “austerity” and find like-minded friends across Europe. The past few months have been a painful education in the realities of European politics. Mr Varoufakis’s theories have not worked out in practice, leading him to lament the absence of “a skilled game theorist on their side”. But Syriza’s belated realisation that it must largely accept the terms of its creditors — or quit the euro — has come perilously late.
Game 3: this is all about retaining power at home. The erratic negotiating style of the Greek government betrays the chaos in Athens. In part, this is a reflection of the inexperience and lack of resources of the Syriza team. But the party may also be trapped by the internal politics of Greece. Syriza is a coalition and the hard left of the party is likely to split off if Mr Tsipras is seen to accept austerity in return for a new agreement with Greece’s creditors. The broader electorate may also be none too impressed. Cutting a deal might therefore mark the end of Mr Tsipras’s political career.
Game 4: Greece actually wants to leave the euro. Among the academics and politicians who have advised Syriza there are undoubtedly some who have always believed that Greece ultimately has to leave the euro. They think that their country can only escape its downward economic spiral if it repudiates some or all of its debt — and they know that the price of that is likely to be ejection from the euro. What is more, once Greece is out of the euro, a new, floating currency might help restore the country’s competitiveness. Some in Syriza also believe that the euro and the EU in general are inseparable from the “neoliberal” economics that they reject.
In depth
Greece debt crisis
Greece debt crisis
The Syriza government is facing resistance to its plans to tackle the country’s massive debt burden
Read more
The difficulty is that Syriza came to power against the background of opinion polls showing that a large majority of Greeks want to stay inside the euro. So it is crucial for the Greek government to construct a narrative in which Syriza is seen to make a genuine effort to stay inside the single currency — only to be ejected by unreasonable foreigners, led by the Germans.
Which of these games is actually being played in Athens? I suspect that elements of all four are playing out. Even now, decision makers in Athens must be hovering between options one and two — convinced at one moment that the EU will ultimately cut a better deal, fearing at another that no such deal will emerge.
Some of Mr Tsipras’s apparently erratic behaviour — such as promising to make a payment to the IMF and then delaying it — also reflect his political difficulties at home. And while the group of Syriza thinkers who actually want Greece to leave the euro may be in a minority, their number will surely grow as the crisis intensifies.
More video
The uncertainty about what is driving Athens is only amplified because a parallel set of questions can be asked about the motivations of Brussels and Berlin. It could equally well be argued that the German government is bluffing, in the expectation of Greek capitulation; or that the team around Chancellor Angela Merkel has miscalculated in expecting the Greeks to “behave reasonably”; or that the German government, like its Greek counterpart, is trapped by domestic politics; or, finally, that there are many in Germany, particularly in the finance ministry, who now actively want to force Greece out of the euro.
Uncertainty on one side of the negotiating table only increases the uncertainty on the other side. If both sides think that the other side’s calculations are shifting, then it is harder to make a reasoned assessment of what needs to be done to secure a deal.
Unfortunately, the “game” that is currently under way between Greece and its creditors looks less like a sophisticated exercise in a Cambridge seminar room than the scene in Rebel Without A Cause, in which two cars race towards a cliff — and each driver waits for the other’s nerve to crack first. In the movie, the scene ends with one of the drivers plunging over the edge.
gideon.rachman@ft.com
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/98eb8b70-1335-11e5-bd3c-00144feabdc0.html#ixzz3dE5DJzD8
June 15, 2015 4:12 pm
Four games the Greeks may be playing
Gideon RachmanGideon Rachman
When the radical left won power in Greece in January much was made of the fact that Yanis Varoufakis, the new finance minister, is an academic economist. Many expected that Greece’s negotiating strategy would display a new subtlety and brilliance, now that it was guided by the co-author of Game Theory — A Critical Introduction .
Yet, a few months on, Greece is running out of friends and money. As a debt default looms, even some sympathetic commentators are baffled by the Athens government’s actions.
So what game are the Greeks playing? Here are four possible hypotheses:
Game 1: they are bluffing and they still think they can win. The Tsipras government may still believe that the EU will not ultimately tolerate the break-up of its most important project — the European single currency. The loss of political prestige would be too enormous; the risks of financial contagion too great. But the EU will not make serious concessions until the moment that it really believes that Greece is about to crash out of the euro. So some evidence of chaos and panic in Athens may actually be necessary to convince the EU that the end game is approaching.
Game 2: they are bluffing and they are only now realising that they have miscalculated. Alexis Tsipras and his Syriza party are newcomers to the high politics of the EU. They won election in January believing that they could win the argument against “austerity” and find like-minded friends across Europe. The past few months have been a painful education in the realities of European politics. Mr Varoufakis’s theories have not worked out in practice, leading him to lament the absence of “a skilled game theorist on their side”. But Syriza’s belated realisation that it must largely accept the terms of its creditors — or quit the euro — has come perilously late.
Game 3: this is all about retaining power at home. The erratic negotiating style of the Greek government betrays the chaos in Athens. In part, this is a reflection of the inexperience and lack of resources of the Syriza team. But the party may also be trapped by the internal politics of Greece. Syriza is a coalition and the hard left of the party is likely to split off if Mr Tsipras is seen to accept austerity in return for a new agreement with Greece’s creditors. The broader electorate may also be none too impressed. Cutting a deal might therefore mark the end of Mr Tsipras’s political career.
Game 4: Greece actually wants to leave the euro. Among the academics and politicians who have advised Syriza there are undoubtedly some who have always believed that Greece ultimately has to leave the euro. They think that their country can only escape its downward economic spiral if it repudiates some or all of its debt — and they know that the price of that is likely to be ejection from the euro. What is more, once Greece is out of the euro, a new, floating currency might help restore the country’s competitiveness. Some in Syriza also believe that the euro and the EU in general are inseparable from the “neoliberal” economics that they reject.
In depth
Greece debt crisis
Greece debt crisis
The Syriza government is facing resistance to its plans to tackle the country’s massive debt burden
Read more
The difficulty is that Syriza came to power against the background of opinion polls showing that a large majority of Greeks want to stay inside the euro. So it is crucial for the Greek government to construct a narrative in which Syriza is seen to make a genuine effort to stay inside the single currency — only to be ejected by unreasonable foreigners, led by the Germans.
Which of these games is actually being played in Athens? I suspect that elements of all four are playing out. Even now, decision makers in Athens must be hovering between options one and two — convinced at one moment that the EU will ultimately cut a better deal, fearing at another that no such deal will emerge.
Some of Mr Tsipras’s apparently erratic behaviour — such as promising to make a payment to the IMF and then delaying it — also reflect his political difficulties at home. And while the group of Syriza thinkers who actually want Greece to leave the euro may be in a minority, their number will surely grow as the crisis intensifies.
More video
The uncertainty about what is driving Athens is only amplified because a parallel set of questions can be asked about the motivations of Brussels and Berlin. It could equally well be argued that the German government is bluffing, in the expectation of Greek capitulation; or that the team around Chancellor Angela Merkel has miscalculated in expecting the Greeks to “behave reasonably”; or that the German government, like its Greek counterpart, is trapped by domestic politics; or, finally, that there are many in Germany, particularly in the finance ministry, who now actively want to force Greece out of the euro.
Uncertainty on one side of the negotiating table only increases the uncertainty on the other side. If both sides think that the other side’s calculations are shifting, then it is harder to make a reasoned assessment of what needs to be done to secure a deal.
Unfortunately, the “game” that is currently under way between Greece and its creditors looks less like a sophisticated exercise in a Cambridge seminar room than the scene in Rebel Without A Cause, in which two cars race towards a cliff — and each driver waits for the other’s nerve to crack first. In the movie, the scene ends with one of the drivers plunging over the edge.
gideon.rachman@ft.com
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