Greek prime minister Alexis Tsipras has unwisely accused Spain and Portugal of intentionally trying to block a solution for his country’s troublesome discussions with the Eurogroup at a Syriza party meeting. The reaction has gone beyond any reasonable limit. The two targeted nations filed formal claims to the European Commission asking it to take action against Greece. One wonders why their Foreign Ministries did not warn of the utter ridicule such a step would precipitate. Worse still, the row between European Union partners might leave longstanding scars.
The Greek government is all too conscious of having failed to deliver on its election manifesto promises. That is scarcely surprising, given the attempt to restructure outstanding debt and doing away with the rescue plan was doomed from the outset. Convincing the German Bundestag on the long-term merits of such a scenario was out of question. Even Nobel Prize laureates would be at pains to achieve such a feat. Germany stood as the real blocking hurdle all through the tough negotiations.
Greece secured an agreement on favorable political terms. After all, reviewing the current rescue package represents a formidable victory for a country bound to require extra money to cover its immediate needs. It will implement a humanitarian plan for those suffering from sheer poverty and freeze privatization processes. Other promises such as offering employment for redundant civil servants, reducing the retirement age or steeply increasing the minimum wage, will have to wait. Yet the Greek government has achieved widespread support among the population for its stubborn defence of national interests.
Was it prudent to engage in a tug-of-war with its Iberian partners? Certainly not, as such conduct only helps to underline its purported failures.
Moreover, Tsipras and his finance minister, Yanis Varoufakis, are missing the point in emphasising the Greek inability to pay back its outstanding sovereign debt. They have failed to understand that the real problem lies in the credit crunch destroying domestic businesses and jobs. By declaring bankruptcy many years before the event may materialize, they are forcing the banking system to the brink of collapse. Unless they act quickly to bolster confidence in their economy, a massive recession might ensue.
Spain and Portugal have startled commission officials by filing a claim against a fellow partner. In taking such a reckless step, they are alienating themselves from Greek support in future negotiations.
Spain, for instance, faces a number of sensitive issues about its borders that may require full solidarity from EU partners. Just think about Gibraltar and cities in North Africa. No one in Brussels understands why Spain would engage such an acrimonious war of words with a country it might resort to for help in the future. Do not forget that key issues still require unanimous support.
This is even more pertinent when we consider that neither country has the power to block agreements on the European agenda. Both may show reluctance but will ultimately bend to the wish of those that really matter in EU decisionmaking: Germany, the United Kingdom and France. Others simply fail to command enough self-assurance for vetoing essential issues. Mariano Rajoy would well advised to pay lip service to actors with a willingness to ignite a crisis whose consequences the are ill-equipped to deal with.
This story originally appeared at The Corner, Spain’s only English-language financial news website, March 3, 2015.