If the prime minister had handled negotiations with Greece’s international creditors differently from the onset I would bet that he would have achieved an excellent deal both for himself and, more importantly, for the country. The climate in Europe has changed significantly since the Greek elections on January 25. It has been broadly accepted that the policy of austerity has gone far enough, which is why German objections to the quantitative easing program of the European Central Bank were overruled. SYRIZA had initially been accepted as a political force that could push through bold reforms and reshape the Greek political system. Washington was well disposed toward the new government in Athens, while even the hardliners in Berlin and Brussels saw that the troika model was at its end.
Everything was in place for a realistic agreement whereby Greece would implementing around 70 percent of its reform pledges in exchange for a primary budget surplus target of 0 and many of SYRIZA’s pre-election pledges. All that was needed was for the government to make a concession in one critical area: social security reform.
Of course, after having attacked every powerful player in Europe, SYRIZA needed some time to build trust. Everyone had hoped that Prime Minister Alexis Tsipras would show strong leadership qualities and reach a successful compromise.
A lot has gone wrong since. The new government lost many friends in Europe because of its overtures to Moscow and the nationalist rhetoric adopted by certain officials. The government also lost America’s support by passing a law that may lead to the release of convicted terrorists and by its ties with Moscow. Key players like European Commission President Jean-Claude Juncker lost faith because they felt exposed and others like ECB chief Mario Draghi were targeted personally.
Tsipras’s biggest mistake was that he got carried away by the huge amount of popular support for the notion that Greece was finally pushing back. While this was great for his popularity it was less so for the country’s negotiating position and ultimately its national interest.
Meanwhile, state coffers are empty, the economy is on the brink of collapse, investors are picking up and leaving, and the state is almost at the point of collapse. To continue to function it will need more money from Europe, which will mean a new memorandum. For this happen, the government needs to rebuild bridges, win back its allies and change course. And the deal it will get will most likely be much, much worse than what it could have achieved had the whole issue been handled differently from the start.