Brussels, in the shadow of Varkiza: Greek talks break down

It’s an iconic piece of footage. Bearded Greek resistance fighters queuing up, some in tears, to stack their rifles. Most Greeks have seen it, and brings out strong emotions on all sides of politics.

The symbolic disarmament of the communist resistance army that had defeated the Nazis happened 70 years ago today at a place called Varkiza, near Athens. They were supposed to get democracy in return but got, instead, goes the left wing version of the narrative, a right-wing, repressive government.

Since then, Varkiza has become a byword for surrender and betrayal – so the 70th anniversary of it was not a good time for Syriza’s leaders to do a deal with their EU creditors.

Read more: Greek government poised to ‘extend’ troika deal?

As late as 1.30am last night positive noises were coming out of the Greek camp. A basic agreement had been sketched out and was to be costed, and technically analysed for differences with the troika bailout signed in 2011.

It said, according to a version leaked to the FT, that Greece had “reiterated their unequivocal commitments to the financial obligations to all their creditors”; and that Greece had agreed to “explore the possibilities for extending and successfully concluding the present programme taking into account the new government’s plans”.

But something happened to stop it. The Syriza leadership in Athens wanted word changes, and – reportedly – the EU side then walked away. The whole process is in limbo until Monday. Greek finance minister Yanis Varoufakis took to twitter to warn that the FT’s version of events was “dubious”. A Greek government source in Brussels told me “at no time did the Greek delegation give consent” to the text leaked to the FT.

@SpiegelPeter @ftbrussels Might I suggest that you refrain from dubious claims based on even more dubious leaks? It’s rather unseemly

— Yanis Varoufakis (@yanisvaroufakis) February 12, 2015

In Athens, one friend told me, their boss called everybody together and said: get ready, the Germans are going to screw us. People who’ve avoided moving their money to euro-denominated accounts abroad until now are definitely thinking about it.

The specifics at issue are: the Greek government needs money. Tax receipts dipped in the run up to the election, and it needs to issue short term IOUs known as T-bills. Plus it has to repay 14bn euros in loans due back to the IMF, ECB and private bond holders before August.

This is solvable through an agreement to extend the Greek programme, in some form, over the summer, and by the ECB lifting its cap on the amount Greece can raise through T-bills.

But, says Oxford Economics analyst Gabriel Sterne “Greece is unlikely to make it that far unless Syriza caves in on key demands. With tax revenues drying up, the government claims that March could provide a crunch”.

The critical focus is the banks. The ECB has pulled their access to normal Eurozone funding, but is allowing up to 60bn of emergency borrowing known as ELA. If Frankurt pulls ELA, the Greek banking system will collapse. If the govenrment then still does not agree to do what the Eurozone demands, Greece will have to impose capital controls and default on the debts it is currently trying to renegotiate.

So far, two thirds of Greek bank deposits have not been withdrawn. But last nights events will certainly increase the danger of a run.

Seeing the cold text of the agreement signed, then walked away from overnight, all it did, in truth, was delay resolution of the major issue – and it is this.

On 25 January Greeks elected a government that, by its own proclamations, puts an end to the entire period of Greek history since Varkiza. It legitimises left-wing politics, removes control of the police, army and security apparatus from a two-party duopoly that reigned since the end of a military junta in 1974.

Greeks voted to change things fundamentally, and were driven by reasons both of recent penury and historic greivance.

What Europe has to decide is whether it can tolerate such a radical government of the left. All the debt engineering, and the meaningless word-forms being tapped out on laptops, is secondary to that.

The mood in Greece, where massive demos took place last night in the big cities, in support of the government, is best summed up by the placard held by one old man: “We survived ’41, we can survive this.” 1941 was the year Germany invaded.

For a technocratic, youthful generation of politicians, brought up in what playwright David Hare calls the “absence of war”, the events in Greece just do not fit the world view in which all these historic issues and grievances, and obscure Greek anniversaries were supposed to be subjects for the documentary channels, not politics.

But in Greece there is no absence of war. The politicians in power today will have sat around family tables, and in the kafeneions of the oldsters, listening to stories of war, torture, imprisonment, civil war and dictatorship for their entire formative political lives.

It’s this, not the trendy garb of the Greek finance minister , that does not compute. As I approach the portal of the Justus Lipsius building in Brussels this morning, where the drama is to be played out, there are new kinds of actors on the stage.

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