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Grexodus: Óxi, Óxi, Óxi


With slightly more than half the ballots counted, “óxi” is set to win a decisive victory. Since the first estimates were released, “No” has maintained a 20 point lead over “Yes”. With a 65% turnout, Mr. Tsipras has every justification to declare a tremendous electoral victory for Syriza and his leadership.


He can thank the IMF for that, ironically enough. Throughout the week, polls indicated that the country was split down the middle. Then on Thursday, the IMF released a report that confirmed what many have been saying for a long time: Greek debt really is unsustainable and a large haircut should be included as part of any deal. That must have been the game-changer; one thing is a suspicion, and another is the senior creditor and Troika member is to publish it in a formal report.

It is hard to believe that the timing is a coincidence, for as Franklin Roosevelt once said: ” Nothing in politics is an accident. If something happens, it is because someone meant for it to.” That someone can only have been the United States, who has been quietly urging a deal for months now.

Initial reactions outside of Greece have been decidedly mixed. They show the existence of two camps: ministers from France, Italy, And Belgium have come out saying that negotiations should continue. Ireland might also fall in with the “pro-deal” party. The IMF obviously backs a deal that includes reforms and a haircut; i.e. some sugar and some crow for everyone.

On the “nein” side are the Germans, the Spanish and some of the Eastern Europeans states that have had to put through tough reform programs of their own. German comments are all cheerful things like: “the Greeks have burnt the last bridge with Europe.” That puts Angela Merkel in a bind; it is clear she would make a deal if one could be found that saved everyone’s face. But now she will likely face a party revolt if she tries to push through a deal with the exultant Greeks.

However, this is not the first time the Germans have said “nein” and then had to eat their words. In fact, the history of the Euro crisis has been Germans protesting loudly and then eventually caving in. It is possible that this will be the case again. What Germany needs is a steong enough force to “oblige” them to cave in, as good Europeans. That is the trick with the Germans, the appeal to theor historic responsibility to European peace and solidarity. And no one does that better than the French.


Mr. Hollande will pressure Angela Merkel with Germany’s historic responsibility towards a peaceful and democratic Europe

So it is noteworthy that tomorrow’s first agenda item will be a meeting between Chancellor Merkel and President Hollande of the French Republic. That will undoubtedly be followed by calls from IMF Chair Christine Lagarde, also French. President Obama and Prime Minister Renzi will also surely call and press for a deal. And it is very probable that Mr. Draghi, who has promised to do whatever it takes to save the euro, will once again act on that promise; perhaps by extending ELA support even slightly, as a clear signal of compromise.


If so, then it is likely that the Greeks will have finally succeeded in their long applied tactic of divide et impera, finding the fault line among the European positions, playing on the Russian fears of the US, and splitting them all asunder. If so, somebody will undoubtedly put up bronze statues to Messrs Tsipras and Varoufakis. Greece will stay in the euro; they will receive their desired haircut and probably some slight fiscal easing this year and next. They will have to agree to some “hard” – i.e. face-saving – reforms, but they will win substantially everything because in the end, the nuclear option paid off.

That would be disastrous for Mariano Rajoy’s Partido Popular in Spain; and it might very well provide a boost to both Marine Le Pen’s National Front and to Tory Eurosceptics in Britain. Fodder for future crises.

On the other hand, if I’m wrong, and the Franco-American pressure proves insufficient; then the Greeks really will have burnt their last bridge with Europe. If that happens, the US should have a contingency plan ready: a Marshal Plan II of humanitarian and financial assistance. The Greeks are our allies and we should help them in a time of need, even if Europe won’t – especially if Europe won’t. More cynically (or realistically) the Hellenes must be kept in the NATO orbit and such timely aid is the best guarantor of it.

One last possibility: Europe may keep Greece only to lose Germany. If the German conservatives become convinced that Mrs. Merkel will always sign the check when push comes to shove, they may revolt for real. They will not accept an unlimites exposure of German savings and funds to bail out the entire Mediterranean basin, the “Club Med” as they disparagingly say.

We may be talking about “Ausgang” next year.  As I wrote earlier today, the “Greferendum” was only the closing scene of Act 1. Act 2 in the Euro crisis is imminent.

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“Our obligations to our country never cease but with our lives.“

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