The Hellenes are heading for Hades – The votes of 4m cannot bind 250m voters

The twists and turns of Tsipras become ever more bizarre. “Brussels” has become used to the Athenians arriving with various “Trojan horse” proposals. But the new Finance Minister arrived in Brussels yesterday without even bothering to pretend to have a gift `horse’ with him – promising instead that it will be delivered today. However, reports suggest that horse will be no more than the proposals rejected last week – with an added demand for 30% debt relief given the emphatic decision by 4m Greek voters in Sunday’s referendum.

1. Before the referendum, Tzipras promised that he would deliver a deal within 48 hours. That promise had now been breached comprehensively.
2. He promised that money in the banks would be safe and his then-Finance Minister was reported to promise that the banks would be ‘open on Monday’ i.e. yesterday. Currently, they are expected to remain shut for at last an additional week.

A rational person would only have called a referendum if he believed he had a plan that would be accepted by the creditors if the referendum supported him. As at yesterday, it seems he did not even have a plan at all, let alone a clear path to a reasonable chance of agreement with the country’s creditors. How can the euro area negotiate with someone who appears to live in a parallel world of reality? The end-point of this `game’ is now set for Sunday, but the 7 July letter from Greek President Pavlopoulos to President Tusk engaged virtually all the Greek political establishment in this `game’. There may be no `clean hands’ the people can turn to.

Since Syriza came to power, the euro area in the form of the ECB has agreed to extend an additional €30bn of assistance to Greek banks – via ELA. On the basis of the plans advanced so far by the Greek side, most right-thinking citizens of the euro area would feel that Tsipras had tricked them. The court of public opinion seems to be moving decisively against Greece – making it very difficult for political leaders to contemplate further funding without absolute proof of performance of the strict conditions attached. The demonstrated incompetence of the Greek political and administrative system makes it rather unlikely that this performance can be proved before legal deadlines pass and defaults make it impossible to support the Greek banking system further. Hades is [probably] ahead.

My series of recent blogs on Greece are here. When Syriza came to power, I thought that they might actually break the mould of Greek politics over the last 40 years. Sadly, that hope has been proven hugely over-optimistic and a desperate situation lies ahead for the unfortunate people of Greece as the natural result of voting for the easy way out 18 times since the restoration of democracy in 1974.