It has been little over a week since its electoral victory and SYRIZA (Coalition of the Radical Left) has already begun to back down from some of its most radical positions. Prior to the election, SYRIZA claimed that they would negotiate the forgiveness of the better part of Greece’s debt. Now Greek Finance Minister Yanis Varoufakis has told the Financial Times that the newly formed SYRIZA-led Greek government will ‘no longer call for a headline write-off of Greece’s €315bn foreign debt’.
Once his statements had been reported in the Greek press, Mr. Varoufakis tried to downplay the significance of this backtracking. He indicated that the ‘financial engineering’ that he had proposed (a ‘menu of debt swaps’ that will include two new types of bonds) will ensure that Greece’s debt will become ‘viable’. He did not deny, however, that the government has abandoned its goal of having the better part of the country’s debt forgiven.
SYRIZA has begun to back-pedal so soon after its electoral victory because its positions on this issue had disregarded one very important factor: European Union (EU) politics. When a national government wishes to re-negotiate the terms of any agreement in the EU, its chances of success depend primarily on two factors: 1) how the decision to change the terms of the agreement will be made and 2) what everyone involved wants. The decision to change the terms of Greece’s bailout programme and, by extension, the terms of its membership of the Eurozone will be made unanimously by the Heads of State and Government of Eurozone member-states. The European Commission’s Chief Spokesperson emphasised this requirement yesterday. When decisions are made unanimously and some of those involved prefer to keep things the way they are, those who prefer big changes are likely to be disappointed. In this case, the German government – among others – prefers to keep things the way they are. German Chancellor Angela Merkel made this clear when she said that she did not ‘not envisage fresh debt cancellation’ because ‘there has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece’s debt’. It remains unclear why SYRIZA has chosen to make this U-turn now. It was always clear, however, that the party’s chance of success were minimal.
Mr. Varoufakis statements are at least in some ways a positive development. They have reduced the uncertainty regarding the Greek government’s economic policy, which has already imposed significant costs on the Greek economy. They might also serve as a lesson for other national governments in the EU, who also prefer big changes to the terms of existing agreements. British Prime Minister David Cameron is the obvious candidate. Mr. Cameron has pledged to deliver a referendum on Britain’s membership of the EU, once he has negotiated a ‘new settlement’ for Britain. For Mr. Cameron, a ‘qualified’ principle of free movement of persons will be an important element of this new settlement. In this case too, the German government prefers to keep things the way they are. It has indicated that the principle of free movement ‘should not be meddled with’. Given that any new settlement will require unanimous agreement among the national governments of EU member-states, Mr. Cameron is likely to be disappointed.
In the past, Mr. Cameron has pursued ineffective strategies, such as hopelessly opposing the appointment of Jean-Claude Juncker as President of the European Commission because he did not feel that Mr. Juncker was the best person to ‘deliver reform’. If Mr. Cameron learns the lesson from the case of SYRIZA, he will pursue a different strategy. He will focus on proposing changes, which are more limited in scope than those that his grand ‘new settlement’ implies, but more likely to be conceded by those like Germany, who prefer to keep things the way they are.
Kyriakos Moumoutzis is a Lecturer in European and International Politics at King’s College London.COMMENT