There are increasing indications that we are on the verge of an incident which could resemble the experience of last summer.
Prime Minister Alexis Tsipras believes that he can count on the support of France, the United States, the European Commission and the countries of Southern Europe. Meanwhile, he believes that the International Monetary Fund, German Finance Minister Wolfgang Schaeuble and certain Northern European governments are his rivals. At the heart of the discussion lies the social security system, tax reform, the much-discussed new privatization fund and a few other issues.
Past experience has shown that the “hawks” usually prevail in the end. Washington never truly intervened in order for the IMF’s conditions to be relaxed. France usually provides assistance when Greece is standing on the brink of disaster – although this is not always the case. The Commission has repeatedly assisted the current as well as previous Greek governments, but personal attacks and an erroneous mentality displayed by top local officials could render it neutral this time around. As far as Southern Europe is concerned, there is no doubt that Italian Prime Minister Matteo Renzi has played a decisive role in assisting Greece. No one, however, not even the new Portuguese government, wishes to identify themselves with a country and a political system which has been labeled a “special case.”
Then there’s also the European Central Bank. On an academic level, the ECB comprehends the problems with the Greek bailout, but it is very hard to imagine the organization taking a public stance against the International Monetary Fund’s participation in the program.
We must be very cautious with regard to this fight. Greece has accomplished a lot in the last few years and it would be tremendously unfair to its people for something to go terribly wrong at this point. It would be a mistake to believe that following the recapitalization of Greece’s banks the country’s partners and creditors have run out of options to exert pressure on Athens.
Recent history has shown that, unfortunately, when tensions rise, a heavy toll is taken on the country’s real economy and its investment prospects. While a tough position may lead to glory on the political level for a while, it is very damaging on the economic level.
What is most interesting as well as paradoxical is that one of the factors which have invariably determined the outcome in similar crises in the past now appears completely destabilized: German Chancellor Angela Merkel is facing a deep political crisis which is mainly due to the refugee issue and this no doubt diminishes the amount of time and political capital she wishes to spend on Greece.