There is an adage in politics that you should never put anything to the vote unless you are sure of the outcome beforehand. On that front, the referendum Greeks will vote in this Sunday is a mistake, because the vote could go either way. If the majority votes No, as Syriza hopes, then it—hopefully—will strengthen its hand in future negotiations with the Troika. But if the majority votes Yes, then Syriza will have to capitulate to the Troika and accept its unbending policy of austerity.
But I can also understand Tsipras’s decision to throw the issue over to a vote. Syriza’s expectation, when it won the election, was that its mandate from the Greek people would enable it to bargain with the Troika, and to therefore negotiate a less onerous economic program. Reality has proved otherwise. Every time Syriza has compromised on one of its “red lines”, the Troika has demanded that it cross the red line behind it.
So what do you do in a negotiation where (a) you have no choice but to negotiate and (b) your opponent won’t negotiate?
You play whatever wildcard you have in your pack—and the only wildcard that Syriza has is that it was elected by its people, whereas the Troika’s officials were not. If the No vote wins, then it has a further right to insist that it is following the will of its people. We will return to almost daily Greek crises as each debt rollover or instalment payment arises, but Greece will have the power to legitimately threaten total default as a way of forcing the Troika to take a backwards step.
But if the vote goes against Syriza, then the political balance in Greece will shift dramatically. The Greeks will, in effect, have chosen to continue with austerity, even though just six months ago they elected a new government committed to ending it. Though Syriza will remain in power after Saturday, its spirit will have been irrevocably broken.
Some political changes will flow immediately. Yanis Varoufakis has confirmed that he will resign—while also accepting the decision of the Greek people and assisting whoever replaces him to sign the terms of capitulation that the Troika wants.
But that, as Yanis would vehemently agree, is small-scale, personal stuff. I have always found it amusing, in a perplexing way, that Schaeuble, the Troika’s chief hard man, has taken such umbrage to the left-wing Syriza and its metrosexual political leaders. Clearly he prefers to negotiate with rightwing politicians like himself. But he seems unaware that, if the Greek tragedy rolls on, he may instead have to negotiate with rightwing politicians unlike himself—the neo-Nazi Golden Dawn.
Golden Dawn is also an anti-austerity party, and before the sudden rise of Syriza, it was the premiere anti-austerity party in Greece. It came 3rd in the elections that brought Syriza to power—even though its leaders were in gaol pending a murder trial that began in May—and in the 2014 European Union elections, it scored just under 10% of the Greek vote.
If the vote goes against Syriza, and austerity is imposed once again, and if it has the same impact on Greek economy as it has had for the last five years, then ultimately, the Greeks will shift back to being anti-austerity—despite voting Yes in the referendum this Sunday. When the subsequent Greek general election is held, they could well vote for the unbending Right rather than the broken Left.
The Nazi idea of negotiation goes rather beyond quibbling over the terms of a treaty. It could start, rather than end, with default—as it did with Hitler, when he defaulted on bonds that had been sold to American investors in the early 1930s, three months after coming to power in 1933 . It could extend to, for example, storming the Athens branch of the ECB and forcing the staff to print Euros at gunpoint.
So it isn’t just Syriza that has taken a gamble with Sunday’s election. So has the Troika, by being so determined from the outset to break Syriza. If the Troika succeeds with its political program, but its economic program continues to fail, then it could end up giving birth to what European Union was always intended to bury: Nazism.
Of course this might not happen. But the Troika can’t be confident that it won’t. So it’s not just Syriza taking a step into the unknown on Sunday.
PS I will be part of a CNBC panel “Squawk Box Special – Greece Decides” discussing the referendum results live as they roll in, from 8.30-9pm London time on Sunday.
