Relationship troubles

Greece is in the middle of very tough negotiations with the troika. The truth is that at some point the government’s relationship with its creditors somehow went off course. It’s as if the trust which had been built over the past two years is just not there anymore. The same European officials who had hailed Greece’s primary surplus refused to do the same when the recession-ravaged economy expanded for the first time in six years. The difference in tone is hard to explain.

Perhaps the government did not weigh its strength carefully. Perhaps it overestimated the country’s ability to borrow from the markets without a safety net – and with clear political risk in sight. Or maybe its unilateral moves in revenue policy or its selective reading of the various provisions caused more reactions than it had anticipated.

According to a different interpretation, European officials are seeking any excuse to avoid making any announcements on the Greek debt, for that would incur considerable political cost.

There’s also an utterly cynical point of view which says that no bank would ever lend hard cash to a company if it felt the latter’s entire management might change at the next board meeting and that the new administration would have no idea what to do when it assumes power. In other words, Greece’s lenders might not wish to conclude the negotiations until they find out whether a new president will be elected by the current Parliament or whether an election will be held and, if so, who will win.

Where all this will lead to will become evident in the next few days. What is certain is that we’re playing with fire. Let’s hope that the government will keep its cool and the country will avoid sliding into a period of instability that could last for months and which would further stall the cautious growth everyone is hoping for. In the last few months the government has been operating in a defensive and often knee-jerk manner. Nobody talks to the people, nobody is explaining how much of what needs to be done is “monstrous” and how much is “sensible” stuff that any Greek government ought to carry out on its own initiative. Up until last June there was clearly a plan which officials fiercely supported in public. Then came fatigue, fear and a sense of introversion. It’s a difficult point in time which demands cool heads and determination.

No one’s asking the troika to make Greece’s domestic political problems its own. It would be constructive, however, if it realized that putting too much pressure on the government will lead the country into a new crisis which will not aid the economy’s stabilization and recovery, which, after all, remains its main target.

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