So, this is basically the same deal as they refused last time, just a little worse. There is some talk that American pressure has made Merkel decide to consider a debt writedown, which they will do by extending the duration of some of the bonds. It is unclear if this will really happen.
If this deal, or some form of it even with mild debt reduction, is accepted, Greece will remain under austerity and in depression.
Syriza will say they had no mandate to leave the Euro, and it’s true they never asked for one. But they did have a mandate to not accept this bad a deal, I believe.
More to the point, they did have a mandate to end austerity, and they will have failed.
I think part of this is due to clearly delusional thinking: They really did believe that Europe would let them cut a deal which wasn’t harsh austerity.
Much is incompetence: They did not make the necessary preparations for Grexit. They had no BATNA–best alternative to a negotiated agreement. As such, they basically had to accept whatever Europe offered. If it wasn’t for American intervention, I’m not sure they’d have been able to get even what they’ll get after the referendum. (Americans intervened because a Grexit could have been the first move in Greece spiraling towards the Russian orbit.)
The rest is simple spinelessness. Cowardice. Yeah, I’m just going to say it. This is a cave.
This is a mistake politically as well. Having failed to end austerity, Syriza will not be the next government of Greece. If they had gone to Grexit and the economy had recovered by the next election, they’d be golden and probably a majority party for a generation.
I wrote what I think the consequences of Syriza blinking (I consider this them blinking) yesterday.
Please read that post. It is an important one. This failure will have huge consequences for the future of Greece, Europe, and, indeed, the world.
Enjoy your weekend, and listen to some 80s ballads.
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