Greece’s Runaway Train

http://www.nytimes.com/2015/06/04/opinion/nikos-konstandaras-greeces-runaway-train.html

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ATHENS — For months, Greeks have felt like passengers on a runaway train, with no idea who is driving it or whether it will be brought under control.

This is not because we lack information — on the contrary, Greek and foreign news media organizations obsess over the slightest developments in the bailout negotiations, while policy makers trade barbs and proposals through the media.

But no one — in Athens, Berlin, Brussels, Washington or Beijing — knows where we are going or to what extent failure to reach an agreement will affect Europe, the euro and the global economy. We don’t know whether what we hear and read is fear-mongering, wishful thinking, game-playing or sober analysis. This applies to local and foreign officials, to commentators in Greek and international media groups, all of whom often seem to be projecting their own positions, concerns and prejudices onto a uniquely complicated situation.

In Greece, where our very future is at stake, daily emotions alternate among hope, fear, resistance and resignation. Is our brash but inexperienced new government simply unable to reconcile its conflicting factions in order to make a deal with creditors? Or is it playing a kind of sophisticated brinkmanship aimed at squeezing concessions out of our partners?

More than four months of uncertainty have pushed the economy back into recession, draining deposits from banks and revenue from the treasury. The problems that the leftist Syriza party and its junior partner, the right-wing Independent Greeks, had promised to fix have worsened since the Jan. 25 election. The government has wrung every cent it could out of state hospitals, social security funds, universities and municipalities to meet its loan payments.

But money and time have run out. Even if Athens does scrape together 300 million euros to repay the next installment of its loan to the International Monetary Fund this Friday, without a new deal it will be impossible to raise either the rest of the over 1.5 billion euros Greece must pay the I.M.F. this month or the 6.5 billion euros the European Central Bank expects in July and August.

As we rush toward default, we would expect minds to concentrate and positions to soften in pursuit of an acceptable compromise. But it has proved difficult to overcome the lack of trust between Greece and its creditors. Each side has a point, but they pursue compromise halfheartedly, not sure that it will be worth the political cost at home; both are trapped by past positions, their citizens’ expectations and each other’s actions. Meanwhile, they try to stare each other down, using the Greeks’ suffering to argue their points, while exacerbating the people’s woes.

The government knows that it cannot shake off austerity, renegotiate the public debt, roll back changes to pension, labor and public administration, and offer citizens a return to the pre-bailout past. But it has to keep pushing for this, because it has always concentrated only on the program’s evident shortcomings. And creditors will not offer any concessions as long as the Greeks do not appear serious about reform.

Prime Minister Alexis Tsipras can promise citizens that this is a struggle for dignity and that victory will mean the easing of austerity. Creditors, taking seriously polls showing that most Greeks want to remain in the eurozone, say that this can be achieved only through an extension of the bailout and with further reforms. One side promises relief, the other more austerity. No one focuses on the day after a deal or a default, and on which outcome will offer the least pain.

But even as they stick to their positions, Greece and its creditors struggle with internal doubts and division. Last week, a dissenting faction in Syriza proposed to the party’s central committee that the government reject any deal that would move it away from its election pledges. The motion was defeated by 95 votes to 75, with 30 abstentions.

Chancellor Angela Merkel of Germany and other European leaders understand that they, too, will have a hard time persuading their citizens to provide further help to the Greeks, who want to renegotiate their 240-billion-euro deal. Unable to push convincingly for a deal, the Greek government and its European counterparts contribute to the Greek people’s insecurity and allow dissenters on all sides to harden their positions against compromise.

Underlining the impasse, Mr. Tsipras, in a recent op-ed piece in the French newspaper Le Monde, echoed the early days of the negotiations, framing the issue as a political crossroads for Europe and calling on his counterparts to take it out of the hands of the I.M.F. and the European Central Bank.

“Which strategy will prevail? The one that calls for a Europe of solidarity, equality and democracy, or the one that calls for rupture and division?” he asked. “The lack of an agreement so far is not due to the supposed intransigent, uncompromising and incomprehensible Greek stance. It is due to the insistence of certain institutional actors on submitting absurd proposals and displaying a total indifference to the recent democratic choice of the Greek people.” Mr. Tsipras’s position has been steady from the start: His government should be allowed to give what it promised voters, and if Greece defaults it will be its creditors’ fault.

Whether it’s compromise or default, Greeks will have to get by on a lot less than their prime minister has promised, whether in euros or another currency. It is impossible to know whether this will lead to a more sober understanding of what Greece can achieve without other people’s money, or to unbridled anger and political fragmentation, further delaying any effort to unify our fractured country and pursue recovery.