Greece is fast running out of options to solve its debt crisis

Last Tuesday, Greek finance minister Yanis Varoufakis opted for some downtime, taking himself off to the theatre. The play he opted for was Happy Days by none other than Samuel Beckett. 

The drama is about an eternal optimist sinking into a sandy mire. Varoufakis, who spent much of the week mud-wrestling with Germany’s powerful finance minister, Wolfgang Schäuble, may soon be in a position to pen some Beckettian accounts of his own.

The economist-turned-politician is known to be a follower of Game Theory as a guide to negotiation tactics. However, Varoufakis and his boss, Prime Minister Alexis Tsipras, may have been wondering at the weekend just how far their tactics have brought them.

Varoufakis is popular. He has almost 300,000 followers on Twitter, but popularity can be fleeting. If by any chance he follows Irish history, he will be aware of what befell Michael Collins after he headed off to negotiate the Treaty in London more than 90 years ago. These days, at least, the tools of technology mean that national leaders can keep much more closely in touch.

Nevertheless, both men find themselves dancing on ice that is starting to display deep cracks. On Friday, yet another deal of sorts was reached in Brussels following intensive discussions. The consensus among analysts is that the Greek government has had to give considerable ground, but that Tsipras has been allowed some wriggle room. According to The Guardian, the Greeks have been forced to accept bailout terms “not very different from those they were elected to reject”. The key difficulty for Varoufakis and his team is that they have been hamstrung by the harsh reality that a hand has begun to squeeze their country’s throat. The shadowy hand is in the form of a run on the country’s banks.

Almost €20bn in deposit withdrawals have forced the country to depend ever more on the tender mercies of the ECB just at the point when the ordinary Greek people have been most enthusiastically asserting their independence.

The decision of the ECB, almost three weeks ago, to stop taking Greek government bonds as collateral may be seen in Frankfurt as a common-sense move designed to protect its position. It added to the sense of panic in Athens, pushing three-year yields on government stock close to 20%.

The ECB is offering Athens limited emergency funding, but it was clear, last week, that the tap could be turned off at any time.

At first, the Greek team acted with defiance when Jeroen Dijsselbloem, the Dutch head of the eurogroup, proposed that the Greek credit line be extended as long as Greece stuck with the (hated) bailout programme.

The French newspaper Liberation even reported that Varoufakis and Dijsselbloem squared up to each other, man to man — a claim later denied by the Greek, who resembles Die Hard star Bruce Willis.

By Friday, however, tempers had calmed. The day before, the Greek government “offered a host of concessions to its creditors, crucially agreeing to submit to the economic supervision of the hated troika”, according to the Guardian.

Greece’s ‘Bruce Willis’ put a different spin on events. In his view, Greece would no longer have to produce a primary budget surplus (excluding interest payments) of 3%, as before. It was also being freed up to choose its own set of fiscal adjustments.

In particular, it no longer has to implement the pension cuts and Vat rises planned by its predecessors.

As Varoufakis put it, “Greece has been released from the shadow of its own austerity”.

But the government must today submit its own set of proposals to the eurogroup. These could well be rejected by the Germans, in particular, as being unrealistic, thereby propelling the eurozone back into another round of crisis talks with the February 28 end-of-bailout deadline looming ever closer.

The Germans have made it crystal clear that they do not trust Greece. Schäuble described an earlier set of proposals from Athens last week as a Trojan Horse.

The commentator Hugo Dixon urged the Tsipras to take his courage in his hands by standing up to the hardliners in Syriza while at the same time unveiling a set of radical reforms designed to win over his eurozone colleagues.

In an article published in the Greek newspaper Ekathimerini, Dixon suggested that Tsipras had “crossed the Rubicon by asking for an extension of the hated bailout programme while abandoning many election promises, there is no turning back”.

Dixon suggested that Greece could win backing from Europe for a real debt deal if it unveiled a real reform programme.

Among his suggestions: n A bad bank along the lines of Nama, with a strongly independent board designed to crack down on powerful business borrowers; n Genuine independence for the country’s tax agency, whose last boss was sacked by the former prime minister Antonis Samaras; n A tax amnesty similar to those in 1990s Ireland, combined with a crackdown on tax cheats; n The ending of the exemption from property tax of the Greek orthodox church and a crackdown on shipowner barons; n Postponing the payout of pensions to judges and top officials; n Opening up of a host of protected sectors to competition, including retailing, auditing, and the telecoms industry, with the prospect of further capital investment.

Tsipras could emerge as a real reformer along the lines of Spain’s former socialist prime minister, Felipe González. But does he have the experience, or the bottle, to unveil such a programme? That is the question.

If not, Greece could find itself on the point of unravelling , while the eurozone faces its first exit, at a point when Europe’s geopolitical position is at a point of maximum vulnerability. A Greece possibly tumbling towards near anarchy amid hyperinflation and near social breakdown is a scenario that should concern us all.

The problem is that a no-strings deal with Athens, designed to appease Syriza hardliners while letting lazy officials and tax-evading business elites off the hook, would simply send the wrong message to populaces across Europe, boosting populist politicians each offering their own version of the politician’s free lunch.

We, in Ireland, must know just where that leads us.

Alexis Tsipras and Yanis Varoufakis are starring in their own Beckettian drama, with their optimism slowly fading, writes Kyran Fitzgerald

Varoufakis and Jeroen Dijsselbloem squared up to each other, man to man