Biting the hand that feeds him, 40-year-old Greek Prime Minister picked the wrong time for his adolescent revolt, pitting himself against 60-year-old German Chancellor Angela Merkel. Rising quickly the helm of the Helenic Republic Jan. 26, Tsipras’ leftist Syriza Party rose to power attacking the Eurozone, especially its main debtor Germany. Tsipras forgot quickly the 240 billion euros, taken out of the Eurozone’s hide in 2010 and 2012, promising the needed reforms to prevent the latest Greek bankruptcy. When Greece implemented capital controls June 28, closing the banks and limiting ATM withdrawals, Tsipras let the clock run out on the 2012 bailout, convinced that conducting a national referendum July 5 would give him more clout with Eurozone finance ministers for a new bailout. Tsiprass urged Greek voters to vote “no” on more austerity.
What Tsipras did completely botched any leverage Greece has left with Eurozone, pitting himself personally against Merkel and her no nonsense 71-year-old Finance Minister Wolfgang Schaeuble. When the dust settled after a resounding Tsipras “victory” July 5, he realized he had no deal at all with the Eurozone. His miscalculation due to youthful arrogance cost the Greek government billions in emergency bailout funds and debt relief. Instead of working with Eurozone finance ministers, Tsipras continued to blame Germany for Greece’s economic woes, insisting they must accept Greece’s latest bailout offer or face the so-called “Grexit” from the Eurozone. Tsipras watched Greek banks run out of cash, cause panic in the streets and realize he had lost all clout to negotiate a better deal for Greece. After presenting Greece’s latest restructuring plan July 10, Tsipras thought he won.
After reviewing Greece’s latest bailout plan, it became painfully obvious to Eurozone finance ministers that there were no guarantees of any real change. Meeting July 11 and 12 in emergency session, 18 other Eurozone finance ministers, led by Netherland’s Jeroen Dijisselbloem, put down the hammer: Either enact laws in the Greek parliament by July 15 or face eviction from the Eurozone. Demanding strict Greek austerity laws, counter to the July 5 national vote, to reform pensions and valued added taxes was only the beginning. Tsipras forced Greece into making unthinkable concessions to the EU. Tsipras so badly overplayed the losing Greek hand that he must face the consequences and resign. His insistence on a destructive national referendum with all the incendiary German-bashing rhetoric by himself and his former finance Minister Yanis Varoufakis backfired.
Getting past all the hype, a Greek exit from the Eurozone would not harm the common currency, only strengthen it. While Tsirpas used the fear of “contagion” as a bargaining chip, a third bailout would harm the Eurozone far worse. Carrying Greece’s debt into the foreseeable future costs the euro far more than cutting Greece loose and dealing with whatever temporary fallout follows. “The most important currency has been lost and that is trust,” Merkel told reporters, refusing to cave in to Greek demands. “That means that we will have tough decisions and there will be no agreement at any price,” said Merkel, referring to accepting Tsipras’s deal at the expense of the Eurozone. Tsipras erred believing he could dredge up old hatred toward the Germans to gain more leverage in the Eurozone. All 18 other countries know that Germany is indispensable to the Eurozone’s success.
Tsipras doesn’t get that once he let the 2012 bailout lapse June 30 and held his July 5 “no” referendum on more austerity, he told the Eurozone he didn’t take Greece’s impending bankruptcy seriously. “What is at play here is an attempt to humiliate Greece and the Greeks, or to overthrow the Tsipras government,” said Dimitros Papdimoulis, a Syriza member of the Strasbourg-based European Parliament, mirroring the kind of rhetoric that lost Tsipras all credibility. Refusing to implement the necessary austerity reforms in the 2010 and 2012 bailouts, Greece went broke again. Lashing out at Germany only made matters worse. Voting “no” to more austerity July 5, Panagiotis Trikokglou mirrored his prime minister’s position: “The only thing that I care about is not being humiliated by Schaeuble and the rest of them.” Tsipra’s incendiary rhetoric hit Greece with a wrecking ball.
Faced with tough choices in the Greek parliament, Tsipras must capitulate to more austerity demands or exit the Eurozone. Even if he adopts all the Eurogroup’s austerity demands, the new 80 billion bailout could face tough sledding in the German Budestag [parliament]. With Tsipras already defaulting 1.6 billion to the International Monetary Fund June 30, now facing a 7 billion euro payment July 20 and another 12 billion to the European Central Bank by Aug. 15, Greece almost certainly faces bankruptcy without the bailout. Blaming Germany for Greece’s economic problems only made a bad situation worse. Had Tsipras bit his tongue and not ripped Germany, he might have found a way out the current dilemma. With so much bad blood, Tsipras should help Greece by immediately stepping down. Bridges need to be built and he’s not the one to do it.
