Greece

The Worst May Be Over for Greece, But It's Just Beginning for the Greek P.M.

Alexis Tsipras went all in and lost.

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Alexis Tsipras
Wikipedia

After seven months of wondering whether Greece's place in the eurozone could survive the election of the far-left Syriza Party's Alexis Tsipras as prime minister, we have the answer: Yes. Now the question is whether Tsipras will survive the deals he had to cut to make it happen.

Earlier today, the German parliament formally approved a third bailout for the struggling country totaling some €86 billion over the next three years. That vote was the final obstacle that needed to be overcome before the first infusion of cash could be released. Greece is now cleared to receive €13 billion first thing in the morning.

You'll notice the continent isn't wasting any time in completing the transaction, and there's a reason for that—tomorrow is also the deadline for Tsipras to make a major debt payment to the European Central Bank (ECB) that he would not be able to afford otherwise.

So the melodrama that's played out in Europe since Tsipras rose to power in January has mostly come to a close. Greece will not crash out of the currency union; after much resistance, its government gave in to the demands of the "troika" of creditors in the ECB, the International Monetary Fund, and neighboring countries. But although Tsipras was able to garner approval for the bailout deal in Greece's parliament, along the way he lost the support of many within his own party. As a result, tomorrow he'll likely call for a vote of confidence that he is by no means guaranteed to win.

From a report in Fortune late last week:

"I do not regret my decision to compromise," Tsipras said in parliament as he defended the bailout from euro zone and International Monetary Fund creditors. "We undertook the responsibility to stay alive over choosing suicide."

But the vote left the government with support from within its own coalition below the threshold of 120 votes in the 300-seat chamber, the minimum needed to command a majority and survive a confidence vote if others abstain.

In response, government officials said Tsipras was expected to call a confidence vote in parliament after Greece makes a debt payment to the European Central Bank on Aug. 20—a move that could trigger the government's collapse and snap elections.

A senior lawmaker, Makis Voridis, from the opposition New Democracy said his party would vote against Tsipras's coalition, raising the odds it would be toppled.

If there's a silver lining to the situation from Tsipras' perspective, it's that he remains broadly popular among voters. Twice this year already the Greek people have rallied to the polls to support him—first in January when he was initially elected and again last month after he called a surprise referendum over whether or not to agree to the troika's demands.

Of course, voters came out strongly against the terms and then Tsipras proceeded to agree to an even less favorable deal. So his future really does seem to hinge on how recalcitrant the electorate will be feeling come September.

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  1. I like how you put P.M. in a 4:25 post

  2. Does Greece still do the thing where they make people they don’t like drink hemlock?

  3. It ain’t over. They’ve just kicked the can, again.

    1. I was just coming in here to say that.

    2. Yes. Borrowing to pay your debts is not a plan for financial success.
      Plus, the econ-imbeciles whine that ‘the money doesn’t go to Greece! It goes to the banksters!’

  4. What the fuck is this? Reason couldn’t be bothered to have an intern gather links to news stories that they didn’t even have to write. This violates the commentariat’s social contract. I’m outraged I tell you, outraged.

    1. I see now. P.M.=PM

      But I’m still outraged I tell you!

  5. The open issue is whether this “bail-out” will be sufficient for the next three years, or whether Greece is going to burn through it faster than that.

    I’m betting they burn through it and are begging for more in less than three years. Even if they don’t, this just means they’ll another one in three years.

    I don’t think the Greek PM is the only one who needs to worry about their job. I can’t imagine this is popular in Germany.

    1. Agreed. I’ve not seen any analysis anywhere, from anyone, claiming that this latest bailout will solve Greece’s problems. Sounds like it just forestalls outright bankruptcy and Grexit again. The European MO seems to be just avoid the crisis in the near term and don’t worry about the medium or long term. So it’ll be interesting to see what happens if/when the Greeks fail to live up to the terms of the latest deal (which seems likely, since they voted against the less-severe terms that were on offer earlier this summer).

    2. There were still a few elites left in Greece that hadn’t cashed out yet. One final lifting of capital controls along with a propaganda campaign for the masses that its all fixed, and the last remaining elites can get their assets out of Greece.

    3. The left in Germany is a fractious mess like it is in England. Merkel is probably safe.

  6. You’ll notice the continent isn’t wasting any time in completing the transaction, and there’s a reason for that?tomorrow is also the deadline for Tsipras to make a major debt payment to the European Central Bank (ECB) that he would not be able to afford otherwise.

    EU: Hey! You owe me a hundred bucks tomorrow.

    G: Yeah, but I can’t afford to pay it, can you lend me a thousand? Then I can pay you that hunner I owe.

    EU: Sure, that makes sense.

  7. So, who’s going to pay for this 70 billion dollar bail out? Obviously not the Greeks. I wonder how German citizens are going to feel about those much lighter payroll checks they’re going to be receiving?

    Oh, who am I kidding. All my proggy acquaintances have long ago convinced me that all Europeans love paying more taxes and it’s only selfish Americans who don’t want to pay their fair share.

    1. If the government would just steal 90%+ of peoples income, they’d all be rich. That’s how it works.

    2. It sounds like it’s a round about way of stealing their citizens money, funneling it through Greece and giving it to their banks. At least when our government steals our money to give to the banks they don’t funnel it through Greece.

      1. Thus your government misses on all kids of multiplier effects. Why can’t you be like civilized Europeans?

        1. Exactly. If the multiplier is above 1 for running it through *one* government, imagine how much better it must be to run it through your state government, the EU government, and then the Greek government.

          That 70 billion is like 7 trillion now.

          1. Imagine if we taxed our citizens at 100% and then remitted it to them based on job, hours worked, etc.

            By the multiplier effect, that’d turn your 7.25$/hr minimum wage job into a 87$/hr job!

      2. Actually, most of the Greek bonds that were held by non-Greek banks at the beginning of the crisis are nowadays directly held by non-Greek governments. So most of the money goes from the various governments, through Greece, right back to the governments.

        However, there is one set of banks that do still hold Greek bonds — Greek banks. Because, of course, the Greek government couldn’t afford to buy back its debt from its banks, like everyone else could.

        So, mostly, what this round-and-round does is keep the Greek banks solvent (for a real price tag rather smaller than the nominal bailout numbers) without non-Greek governments directly bailing out the Greek banks (which is politically impossible in addition to being a violation of EU rules).

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