Greek Charm Offensive Is Charming No One So Far


Greek Finance Minister Yanis Varoufakis is apparently on a “charm offensive” to persuade his European counterparts—i.e., the Germans—to allow Greece to end its brutal austerity program and spend more money. The Germans, so far, are not charmed:

After a meeting in Berlin on Thursday with his German counterpart, Wolfgang Schaeuble, the two sides could not even agree on whether they had “agreed to disagree.” Schaeuble said they did. Varoufakis said they didn’t get that far. “We did not reach an agreement; it was never on the cards,” he said. “We didn’t even agree to disagree from where I’m standing.”

That’s not very promising, is it? Overall, though, my takeaway from this story is that the new Greek government, after winning office based on a very hardnosed platform of vilifying its European creditors, has decided in practice to adopt a fairly conciliatory negotiating strategy. The Times says that Varoufakis has “backed away from the party’s pledges to negotiate a debt write-down” and is instead merely seeking “a compromise that would benefit Greece and its creditors.”

So it’s sort of a good-cop-bad-cop routine: prime minister Alexis Tsipras stays in Athens and continues to insist that Greece won’t buckle under to European threats, while Varoufakis makes the rounds of finance ministries and tries to make nice.

Still, keep in mind something I mentioned a few days ago: “backing down” from demands to reduce Greece’s enormous debt doesn’t mean much, because the issue of the debt write-down has always been a bit of a charade. It’s an easy thing to demagogue, but everyone understands privately that Greece will never pay it all back. At this point, then, Greek debt is less a measure of what Greece actually owes other people than it is a crude means of political control: whenever Greece needs to roll over its debt, it’s an opportunity for Germany to hold out until they approve of Greece’s spending plans. This effectively gives them control of Greece’s budget, and they’ve insisted on huge spending cuts and a future path toward big budget surpluses.

And that’s what Varoufakis really cares about. Not the debt, which is basically just a symbol at this point, but control over Greece’s budget. He wants to reverse the austerity and increase spending, which he thinks will boost Greece’s economy and allow it to get back into growth mode. What’s more, he’s arguing—none too subtly, as it happens—that this is something important to all of Europe, not just Greece. After all, Greek unemployment is currently at 26 percent, and youth unemployment is nearly 50 percent. This is dangerous territory for any country. Here’s Varoufakis:

“Germany must and can be proud that Nazism has been eradicated here, but it’s one of history’s most cruel ironies that Nazism is rearing its ugly head in Greece, a country which put up such a fine struggle against it,” Varoufakis said. He was referring to Greece’s far-right Golden Dawn party, which came third in January’s elections and has 17 seats in the Parliament sworn in Thursday.

Translation: the Greek public won’t put up with this stuff forever. You may think Syriza is a radical far-left party, but there are worse things than far left parties. If we don’t get relief soon, the far right will be up to bat next. And that’s something nobody wants to risk.