Was there a better way for Syriza?


Could Syriza have achieved a better outcome for Greece it they had adopted a different negotiating strategy? Many on the left are pondering this in the wake of the Greek Prime Minister’s acceptance of draconian new bailout terms. Greece is now effectively an economic colony, ruled by the European bankers and the German finance ministry. The nation’s immediate future is one of more austerity, more hardship, lower growth and an ever-rising debt.

Clearly, there was an alternative that could have been pursued: withdrawal from the euro. But the Greek government point blank refused to go down that track. As a consequence Syriza lost most of its bargaining power. In any negotiation if one party says that one particular outcome is absolutely vital to it, and the other party has the ability to deny that outcome, then the first party has little negotiating power on other outcomes. In this case Syriza said they absolutely had to stay in the euro and the European leaders, who had they power to kick them out, were consequently able to enforce their will on virtually every other point.

There seem to have been three reasons for Syriza’s unbending pro-euro stance. Firstly, there was the party’s ideological commitment to the euro as expressing its commitment to Europe. Secondly, most Greeks thought their country should stay in the euro, and Syriza’s pro-euro stance helped it win the January election and the July referendum. Thirdly, Syriza thought a transition to the drachma would be too difficult. Yesterday the Greek Reform Minister, George Katrougalous, said that an exit from the euro would have meant the “sudden death of our economy through the continuation of the closure of the banks.”

However, there are plenty of economists who argue that “Grexit” was (and still is) the best option for Greece, whatever the difficulties in a transition from euro to drachma. For a start, a devalued currency would make Greek exports and tourism more competitive. And Greece would be a sovereign country able to make its own decisions, not subject to the constraints of yesterday’s “agreement”.

As Nobel Laureate Paul Krugman put it

, “Grexit, terrifying as it is, would be better” than what the European leaders have come up with.

There is huge disappointment around the world at the setback in Greece, particularly coming so soon after a referendum where Greeks voted “no” to further austerity. But we shouldn’t get too disheartened.

Most people are shocked

by the ruthlessness and callousness of Europe’s financial and political elite. Defeats can demobilise people, but they can also inspire them to adopt better tactics and seek new solutions.