Eurozone summit: the Greeks could face a fateful decision on Euro
There is a moment in the movie Gettysburg, when the Union infantry are about to be overrun by the Confederates. The Union commander throws into the fray a rag-tag regiment of farmers from Maine led by professor of rhetoric Joshua Lawrence Chamberlain. “Now we’ll see how professors fight,” says the general.
The answer is, with great recklessness. Chamberlain’s men run out of ammo but he orders a suicidal bayonet charge that saves the day.
It is my hunch that, inside every professor of anything – but especially economics – there is a Joshua Lawrence Chamberlain waiting to come out. And today might be the day.
The far left government in Greece is not looking for a strategic solution to its debt crisis today; only a four-to-six month extension of the old bailout deal, and the right to amend it, so that it can carry out around 30 per cent of the anti-austerity programme it was elected on. In pursuit of this it has retreated doggedly for the last five days.
Yesterday finance minister Yanis Varoufakis (former professor at the University of Texas) climbed down on his previous refusal to ask for an extension of the old deal – but he still wants leeway to set his own budget targets, and to implement new laws giving workers back their job contract rights.
He has allies – in the shape of Italy, France and the Dutch finance minister Jeroen Dijsselbloem who runs the Eurogroup – but these allies are reportedly pushing the conditions to “the margins of acceptability”. Meanwhile Germany is insisting that the Greek government basically surrenders.
There is, inside the ruling Syriza party, a strong left with 30 per cent of the vote that wants to leave the euro. But the party leadership does not, and convinced itself and the Greek public that if the case were presented resolutely, Greece would find allies in Europe for breathing space, and to be allowed to carry out the experiment of a non-free market government in the euro area.
We find out today who is right. Though the political class in Europe is sympathetic to Greece – as evidenced by both Dijsselbloem and Juncker becoming advocates for the Greek compromise – there is a faction of true believers who always wanted: total Greek surrender or exit.
If they get their way the team around Varoufakis will face a fateful decision.
They include Euclid Tsakalotos, an Oxford educated economics professor at Athens University, now the economics minister in the Greek foreign office, and fellow professor George Stathakis, who runs the development ministry. Key to the discussions will be Tsipras former press secretary, and now minister of state, Nikos Pappas (think Alistair Campbell).
Last night I was told that, in the working group that prepares the Eurogroup meetings, the Greek compromise was the draft basis of agreement. That keeps Greece around the table. But overnight it looks like Germany has got words into the draft the Greeks can’t accept, and the pre-meeting ended without result.
In the next few hours, something decisive has to happen. Either the Greeks cave in completely. Or they trip the crisis into a new phase.
Varoufakis and his team want to stay in the Euro: they believe, and have sold the idea to their followers, that a “good euro” is possible, in which France, Italy, the ECB boss Mario Draghi and the European left persuade Germany to abandon low growth and austerity. But there is no sentimental attachment to the euro: Varoufakis told me just before the election last month he believed the Euro would collapse within two years if it did not reform.
If they are wrong, they will have no choice but to stage the equivalent of Chamberlain’s bayonet charge. The ECB will threaten to collapse their banks. Varoufakis and co will at the very least have to put limits on ATM withdrawals, some capital controls and start looking for interim loans from Russia and China.
There’s still a chance Syriza’s finance team will stage a fighting retreat, but after three weeks of exasperating tactical talks, and their domestic popularity currently on 80 per cent, they might just be ready to fix bayonets.