Over the course of the crisis, Greece’s debt has become the political system’s holy grail, the cause of all causes, the dream of dreams, the one thing all governments have relied on to win over the people.
The Socialist government of George Papandreou failed to do anything about the debt because it couldn’t bring the subject up before agreeing to the private sector involvement – or PSI – debt restructuring scheme after the European Central Bank threatened to pull the plug on local banks.
There has been a lot of discussion over the scenario that the government at the time could have in turn threatened to declare bankruptcy, knowing that a large chunk of the country’s debt belonged to European banks and that the European system had not yet constructed any firewalls to protect itself from such developments. Whether such a move would have resulted in a reasonable compromise or armageddon is debatable.
The conservative government of Antonis Samaras extracted a promise from the country’s international creditors for debt reduction and got very close to success. Its failure to clinch a deal, however, was largely due to the European creditors, who should have acted on their promises when Athens achieved a primary surplus rather than let things run the course they did.
Now Alexis Tsipras’s leftist-led government started its mandate with a lot of big talk about a debt write-off and plenty of barbs against its rivals.
It has, however, started becoming more attuned to reality in recent months and there is much more serious, technocratic work being done to achieve certain measures on the debt by the end of the year. What’s being examined are technical solutions that will mean absolutely nothing to the layperson. The most spectacular reduction will come in 2018, after the German elections and – possibly – after the next Greek ones.
Tsipras has claimed that he will wear a tie when and if the debt issue is settled once and for all. He’ll obviously have to wait.
There is another important issue, however, that must be addressed. How was an entire nation and its political system swept up by such a chimera? How did we come to believe that we had a debt write-off in the bag and even dragged up the issue of German World War II reparations to try make it happen?
The section of the public that has been educated on hyperbole and histrionics will accuse Tsipras – as they did Samaras and Papandreou before that – of being a “traitor” for not fighting hard enough. The issue of debt is a classic case of how a political system can commit suicide.