Calling time, on whom?

Photographer: Louisa Gouliamaki/AFP/Getty Images

Tsipras Isn't on the Side of Democracy

Marc Champion writes editorials on international affairs. He was previously Istanbul bureau chief for the Wall Street Journal. He was also an editor at the Financial Times, the editor-in-chief of the Moscow Times and a correspondent for the Independent in Washington, the Balkans and Moscow. He is based in London.
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Recently, I asked whether the Greek government actually wants to strike a deal on its debt, or if its increasingly erratic approach to negotiations might reflect a determination to ensure that Greeks blame their creditors, not their government, for a coming meltdown.

The answer to that looks more affirmative by the day. But is Syriza's tactic working? And is the Greek argument justified?

A Greek delegation traveled to Brussels over the weekend, ostensibly to make a last-minute effort to bridge the widening differences with European creditors. Such meetings usually take all night in Europe -- if they're serious. This one lasted about 45 minutes before both sides agreed there was no point to the meeting.

Here's what Tsipras said in a statement about the abortive talks and current bailout:

One can only suspect political motives behind the fact that the institutions insist on further pension cuts, despite five years of pillaging via the memoranda. The Greek government has been negotiating with a specific plan and documented proposals. We will wait patiently till the institutions adhere to realism. Those who consider our sincere wish for a solution as well as our efforts to bridge the gap as a sign of weakness, should have in mind the following:

We are not only carrying a historical past underlined with struggles. We are carrying our people's dignity as well as the aspirations of all Europeans. We cannot ignore this responsibility. It is not a matter of ideological stubbornness. It has to do with democracy.

That's heady, if not pompous stuff -- and even Greeks don't appear to be buying it. In the latest opinion poll, a majority said they disapproved of the government's negotiating tactics, and 77 percent said they wanted Tsipras to reach a deal with the creditors. A similarly overwhelming majority of Greeks say they want to keep the euro.

Related: Greece Default Watch

The second question is whether Tsipras is right on the merits of his argument. On the issue of debt relief, as Bloomberg View has said repeatedly, yes: It's absurd for sovereign creditors to maintain the fiction before their taxpayers that they will be getting back the money they loaned to Greece; the budget surpluses required to pay back a debt amounting to almost 180 percent of gross domestic product are fantasy. Olivier Blanchard, the International Monetary Fund's chief economist, made this point in a blog post on Sunday. What Greece does need to do, he said, is to reform its uncompetitive economy. This will be true whether or not the country defaults.

At the same time, Tsipras's proposition that he's championing the hope of downtrodden masses across Europe is nonsense. Germans may be wrong and unfair to prefer losing the loans they made Greece to taking a haircut, but they have a democratic right to believe they're correct. In any case, the currency zone's poorer countries are equally adamant in resisting Greek demands.

Consider Slovakia, whose last government was pilloried by the European Commission and Germany for refusing to pay its share of the original 110 billion euro Greek bailout, in 2010. The current government, under Prime Minister Robert Fico, has been more accommodating toward Greece. Still, Fico is making it clear that Slovakia won't contribute a penny more:

Let no one ask Slovaks who earn 500 euros to 600 euros and pensions of 250 euros to 300 euros to put money together and send out a billion euros.

The average Greek pensioner receives more than twice as much per beneficiary as a Slovak one, so why should Slovak taxpayers subsidize Greece's refusal to cut its pensions burden? It's a reasonable question. The IMF is asking Syriza to reduce spending so that pensions would account for 15 percent of GDP, instead of 16 percent, mainly by lifting absurdly low retirement ages. Greece could even pay the poorest pensioners more -- if Syriza's refusal to consider pension cuts were not an ideological stand.

Europe's pension spending per beneficiary (EL denotes Greece)
Source: Eurostat

The three Baltic nations have even less reason to be sympathetic. From 2007 to 2009, Latvia lost 24 percent of its GDP -- an economic collapse as great as the one Greece has endured, but much sharper. The three countries not only stuck to their euro pegs when they could have abandoned them, refusing the potential benefits of devaluation, but also went on to join the euro -- Estonia in 2011, Latvia in 2014 and Lithuania in January of this year. And they implemented IMF-style reforms and cuts. These decisions resulted in mass emigration, and you can argue whether they were the right ones, but it's a mistake to expect the Baltics to have any sympathy with Syriza's position.

Portugal, Spain and Ireland also suffered the pain of bailout programs, and are equally unwilling to bend.

So no, Syriza is not leading the charge for the poor and oppressed across Europe -- it is demanding that Europeans poorer than Greeks help them avoid painful reforms.

Finally, is Tsipras defending democracy? Again, no. Greeks voted in January for a government that promised to deliver an end to bailout-related austerity, without a default or eventual return to the drachma. This, as must now be clear, was a false promise; to deliver it required that the creditor countries agree. Taxpayers in these countries did not get a vote on whether to loan Greece more of their money on lesser terms, and wouldn't agree if asked.

This conflict between democratic mandates, of course, raises the question of whether the euro should ever have been created. It has been no more a democratic enterprise than are Tsipras's claims. That decision, however, is in the past. The question for Greeks today is whether they think the leftist policies of Syriza will give them a better future with default, capital controls and the drachma. If Tsipras were really concerned about democracy, he'd make sure that Greeks get a vote to decide that question, before he decides it for them.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Marc Champion at mchampion7@bloomberg.net

To contact the editor on this story:
Mary Duenwald at mduenwald@bloomberg.net