Greece Week 3: It’s Politics, Stupid

All economics is politics – including in the Eurozone. The economic problems the EU faces 15 years into the existence of the Eurozone mask the deep political uncertainties of Europe’s political direction of travel.

The new Greek government’s demand for a reordering of its debt in order to ease austerity would be more convincing if the new governing party had any real political allies in Europe.

To be sure, center-left European leaders were happy to welcome Alexis Tsipras for a symbolic ceremony, what the British call “tea and sympathy.”

Everyone likes a winner

Why wouldn’t they? Everyone likes a winner, especially a photogenic, stylish and likeable guy like Tsipras. He also fits in with recognizable typology most of them share. He has been doing nothing but politics since he left university 20 years ago.

Like a Francois Hollande, Angela Merkel, David Cameron or Mariano Rajoy, Tsipras is a political apparatchik who has never done a “real” job. His only focus has been on a political career.

And this focus has benefitted him. Tsipras did not get to the stop and stay leader of the fissiparous Syriza formation without honing political skills of compromise, concession and cunning of a high order.

Some of his top aides, like the rambunctious finance minister, Yanis Varoufakis, come from the world of universities and blogs – and have less direct political experience.

But now he and Greece face the reality that politics exists not just in Greek democracy, but in the other members of the Eurozone as well. Their fellow political leaders have constantly to look over their own shoulders at what might happen if they mishandle Greece and alienate their own voters.

Collecting tea and sympathy

Varoufakis chose to make his first trip as finance minister to London. His English is fluent and vivid. What remained unclear, though, is how shaking hands with a British Tory finance minister would help Greece. It is not as if George Osborne had any influence on the Eurozone.

London was an odd destination all the more so as two of Mr. Osborne’s senior Tory party colleagues — Mayor of London Boris Johnson and the rising Culture minister Sajid Javis — said last week they were relaxed about a “Brexit” scenario following the In-Out referendum Prime Minister David Cameron has promised if he returns to Downing Street in the upcoming May election.

Until the rest of Europe knows whether or not there will be a referendum with all the likely risks of an “Out” vote, no one much is listening to London and certainly not on the matter of Greece. This sentiment is only exacerbated by the hostility of UK politicians, the media, much of business and the City toward Europe.

Italy and France are Greece’s main creditors, other than Germany.

The idea that Prime Minister Renzi and President Hollande will say to their tax-payer voters that they have to keep tightening their belts at home to reduce deficits and debt, but that Greece can relax and go on a public spending spree financed by fresh money from the rest of the EU is not in the realm of political possibility.

New elections, new allies?

The other big European countries — Spain and Poland — face elections at the end of the year. Both center-right governments embrace a fiscal consolidation and structural reform oriented economic strategy, quite independent of German policy preferences.

Spain has a Syriza-like insurgency political movement, Podemos. Spain also has rising disgust for what they call la casta – the caste of national and regional politicians of right and left who have gone in for personal enrichment and corrupt party funding that has alienated voters.

To make inroads with frustrated voters, the Spanish Socialist Party has just announced it will publish all the trips made by its members of the Cortes paid for from public funds.

That this was not the norm before shows how out of touch Spanish politics is with what an angry public now expect of their politicians.

Spain’s prime minister, Mariano Rajoy, would love to see Syriza come crashing down in order to derail Podemos with its Syriza-style demand for no more austerity and a clean-up of Spanish politics.

Rajoy is now Mrs. Merkel’s only major political ally on economic reforms in Western Europe and will whisper in her ear to be tough with Athens.

The two Polish elections for the presidency and parliament (Sjem) in May and October are likely to be won by Mrs. Merkel’s friends in the ruling Civic Platform government.

“Tea and sympathy” in Brussels as well

Despite friendly appearances (remember London-style “tea and sympathy?”), Brussels does not offer a much friendlier terrain for the new Greek government.

Mrs. Merkel has placed two center-right politicians in the EU’s two top jobs, Jean-Claude Juncker and Poland’s Donald Tusk, as presidents of the European Commission and European Council, respectively.

Like Tsipras, both are life-long professional politicians, but both have a completely different approach to politics.

From Benelux to Baltic and Nordic EU states, there is a different more Calvinist culture that believes in prudent and more balanced budgets as well as a smaller state – the opposite of the Syriza line.

It is also telling that, in the European Parliament, Syriza does not sit with the mainstream left, but rather with fringe marginal leftist parties.

Those parties are often self-absorbed, playing with their ideological hobby horses and usually pro-Putin. They have not gotten within miles of being part of a government — until their comrades in Syriza swept into power.

What matters for Greece, though, is that Syriza has not built any links with the governing parties of the democratic left in Europe.

As a result, while Syriza has plenty of support in the left-wing columnist and economic pontificator world, it is far from clear that there is real political support elsewhere in the EU.

Merkel’s mindset

Mrs. Merkel celebrates her tenth year as Germany’s Chancellor this year. She will not want that marked by Greece being forced back to using drachmas or even leaving the EU.

But if that were to happen, she will ensure that any Grexit is blamed fairly and squarely on Syriza’s refusal of the core EU concept of “compromise über Alles.”

Syriza better not forget that Merkel’s rise is due to her steel fist in a velvet glove. She is the wiliest maneuverer in the snake pit of German politics since her mentor Helmut Kohl, whom she in the end finished off as well.

The economics may be on Syriza’s side, as keeping Greece permanently in a debtor’s prison makes no sense. But the politics are not. Syriza needs to learn how to operate effectively in European politics before it’s too late.