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(This was posted on FB by Jeff Richards. It overlaps with my article on
the drachma conversion issues.)
Greece: The scissors trap.
The story of why Greek Prime Minister Alexis Tsipras changed his mind in
the July 2015 negotiations with the European Union will, I am sure, be
revealed by memoirs and investigative reporting in the future. At
present any political assessment must be provisional. I am not one of
those on the radical left (and the radical right in the case of Nigel
Farrage) who are now letting off a lot of steam with cries of
‘treachery’ or ‘betrayal’ etc. etc. etc.
Former Finance minister in the Syriza government Yanis Varoufakis, in a
wide ranging interview with Phillip Adams on the radio programme Late
Night Live alluded to one of the reasons why Tsipras recommitted himself
to negotiations with the EU. Grexit would have required a new currency,
a new Drachma. The task of creating a new currency is a very big
organisational undertaking. Adams reminded the listener the vast
logistical operation that was required to implement a new currency in
Iraq following the invasion of that country by the Bush and Blair
administrations.
Varoufakis said in the interview that the new Syriza government did have
plans to opt for a new currency and they had assigned a special
committee to look into the matter. That committee consisted of five
members, whereas Varoufakis said that they would need to have a minimum
of 500 personnel to take the process of a new currency to the next
level. The reason why the finance ministry (which Varoufakis was leading
at the time) did not take it to this next stage was the fear that
setting up such a government department would harm the negotiations with
the EU ministers. So the Greek government was caught in a trap, on the
one hand trying to negotiate with intransigent ministers and hoping to
exploit internal divisions within the EU -between Germany and France-
and on the other hand not trying to do anything that might harm the
negotiations with the EU (like being seen to be creating a new currency).
Greece exiting the European Currency Union (which is not the same as the
European Union) is not an impossibly difficult task. It is however, a
major logistical operation that would require the full mobilisation of
the resources of the state, and the backing of the citizenry to
implement. Syriza have alway indicated that it was their intention to
try to negotiate and remain in the Euro with improved conditions. Plan B
would have been to create a new currency. Syriza were simply unprepared
for plan B, and were left with no option but to swallow the poison and
hope they will survive without the country descending into a nazi
revival. In many ways, it is an understandable why Syriza were caught
unprepared. The relative newness in government, the enormity of the
problems they were faced with, the urgent need to focus on meeting the
needs of those left destitute by the policies of previous right wing
governments. Most speculatively, I wondered if the lack of party cadres
with limited experience in managing governments and state bureaucracies
also played a role in the ‘turnaround’ by Tsipras.
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