When Alexis Tsipras took office as Greece’s Prime Minister in January he declared war on the eurozone. The two previous bailout packages that Greece had signed with the Troika—Greece’s three creditors: the European Commission, the European Central Bank and the International Monetary Fund—were, he had repeatedly made clear throughout his election campaign, unacceptable.
Tspiras really seemed to believe that he could change the way the eurozone worked. That he could bring an end to neoliberal economic orthodoxy and its vicious stalking horse, austerity. And he had the support of his country to try to do it. Syriza, the party he leads, went from gaining around five per cent of the vote in Greece’s 2007 elections to being just two seats short of an overall majority in the 300-strong Greek parliament this January.
Since then, Syriza has been locked in a head-on battle. On one side stood the Prime Minister himself, supported—until recently—by Greece’s ex-minister of Finance, Yanis Varoufakis. On the other: Angela Merkel, the German Chancellor, and her own Finance Minister Wolfgang Schäuble. At stake was both Greece’s viability as a solvent state and the future of the eurozone itself. In the end Tsipras blinked. Mutti, or "mother" as the Germans affectionately (or sarcastically depending on their political orientation) call Merkel, didn’t.
After a weekend of lengthy talks Greece’s creditors finally agreed to accept the country’s latest package of proposals and authorised a third bailout, worth €86bn over three years, to prevent the country plummeting out of the eurozone. The problem for Tsipras is that the measures to which he has agreed are even harsher than the ones Greece was offered a mere two weeks ago. Tsipras has been humiliated. European Commission President Jean-Claude Juncker’s insistence that "in this compromise, there are no winners and no losers," rings hollow here in Greece. Everyone knows it’s not true.
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If that wasn’t bad enough, as part of the deal Greece now has to essentially sell €50bn of state assets to contribute to the €86bn bailout. He did manage to stave off Grexit, opening the door for both the possibility of €35bn worth of investment from the European commission and some debt restructuring, but that was about it.
Tsipras came to power promising to fight. He lost. The question now is: just how bad was the defeat? “We’ve seen the crushing of Syriza as a rebellion against European economic orthodoxy,” says Marcus Walker, a foreign correspondent at the Wall Street Journal. “We haven’t necessarily seen them crushed as party. They could split—they could evolve, the rump may morph into a more pragmatic party capable of dealing with Europe.”
“Nor can it be seen as a clear victory for Germany,” he continues. “Whether the Merkel or the Schäuble faction: all they’ve done is stamp out an insurrection. But Merkel’s main goal of keeping the eurozone together and of Greece being able to fund itself on the markets has not yet been achieved. Nor has she ensured that Germany’s bailout loans won't turn into a loss for German taxpayers. Schäuble's aim, meanwhile, is to make an example of Greece to ensure that the need for economic reforms and fiscal discipline is understood all across Europe, and that requires either implementation of reforms by Greece or Grexit. So Germany has not won the war, only a battle—and only in a negative sense. They stopped a small Balkan country from changing the way Europe works.”
This is true enough. A clear message has been sent to other leftist parties across the continent, notably Podemos in Spain, who might dare to think of challenging the eurozone’s prevailing economic wisdom and with it, Germany’s hegemony in Europe. But the continent is more divided than ever before. Swathes of people—and not just Greek—have taken to social media and TV and radio to express their solidarity with Greece in the face of what they see as punitive measures imposed on the country. Whether Syriza’s capitulation will quell dissent or stoke yet more anger from the pan-European left remains to be seen.
Tsipras meanwhile has to sell the deal to the Greek parliament by Wednesday evening. A deal may have been struck but the crisis is far from over. If EU politics has managed to retain a united front then Syriza’s political unity may be about to fracture. This will be of less concern in Brussels and Berlin. Both of these would most likely welcome the fall of Syriza—pretty much impossible given the disarray of the Greek opposition—or at least its dilution if new elections are called and a broader coalition government comes to power. The hope would be that such an eventuality might blunt Syriza’s hard left edges as the Liberal Democrats were able to do with the Tory right wing in Britain’s last coalition government.
In Greece, everything remains up in the air. No one is entirely sure how the situation will play out, or where the country will even be 48 hours from now. But if this debacle has taught Europe one thing it’s this: don’t mess with Mutti.
