Editorial: Greek poker-bluff at abyss-edge

Photo: Urmas Nemvalts

Debt payments by Greece are due every month, and almost weekly: like on June 5^th, 12^th, 16^th and 19^th. The Syriza-led government is playing poker on other European nerves.  

Both Prime Minister Aléxis Tsípras and finance minister Giánis Varoufákis appear on TV screens every time a date draws near for a payment or some would-be-agreement. In the English language media, as adopted by us, the word «grexit» keeps repeating itself – the talk about what all Greece exiting the eurozone would bring about. Again, since Syriza rose to power this January in Athens, this does regularly haunt us. Traditionally sceptical regarding the common currency, Anglo-American economists and commentators talk about grexit as a sure fact to come. 

Is there a need to panic and fear the «grexit»? Rather not. The fact that Greece leaving eurozone and the domino effect to follow is not believed is confirmed by the relatively calm reaction by financial markets to whatever Mr Tsípras and Mr Varoufákis say.

Firstly, the Greek public is very clearly against leaving eurozone and the Greek politicians/officials are also repeating at every opportunity that they are not willing to give up the common currency. Meanwhile, the public supports the Syriza government’s «red lines» at talks with international creditors – further cuts are not wanted. Prime Minister Mr Tsípras needs to show his people that the government is fighting to the last breath for promises given at elections. This, the vital agreements for Greece come the very last minutes.

Secondly, the situation for the rest of Europe and especially so for the eurozone is altogether different that in the top frightening days of the debt crisis, because eurozone is better prepared for crises. Let’s, for instance, recall our own debated over joining European Stability Mechanism (ESM). Joining ESM was reviled as pampering Greek pensioners on account of our pensioners etc. In reality, both ESM and a string of other crisis management measures have brought us to a place where the scenario that as Greece falls the domino effect takes down other European nations is far from being as likely as three or four years ago.

And, lastly. So what if Greece gives up the euro, if it up and «grexits? The new Greek currency would sharply depreciate regarding the euro, and the Greek salaries and pensions would buy very little goods from other nations. It’s highly likely that for the people such a scenario is more painful than controlled cuts and the current popularity of Syriza would probably melt like snow in springtime. Thus, Mr Tsípras and Mr Varoufákis are bluffing at the edge of a precipice, while totally unwilling to fall off.