09 July 2015

This Is an Interesting Analysis of the Social Dynamics among the EU Leadership

I just came across an interesting analysis of attitudes in the EU, which the author suggests that that something akin to tribalism is poisoning EU-Greece negotiations:
Against all odds, Tsipras obtained a decisive victory in yesterday’s referendum. I agree that the referendum’s question was confusing (but have you ever seen the ones asked in Italian referenda?). I agree that the No was strategically positioned before the Yes (but why should have been the other way around?). I agree that Tsipras continued insisting that a No vote would not mean an exit from the euro, when it might mean exactly that. Yet, the Greek people in spite of the extreme situation – banks closed, massive campaign of the EU leaders in favor of the yes, not-too-vailed threats of what would have happened had the No won – overwhelmingly supported Tsipras.

Does it mean that now the EU needs to accept all Tsipras’s requests? Of course, not. In an agreement, like in a marriage, it takes two. Unlike in a marriage, however, in an international agreement there is a question of legitimacy of the negotiating delegates. From day one, the EU challenged the legitimacy of Tsipras’s mandate. The kind interpretation is that the EU rejected it because of the ambiguity underlying Tsipras’s mandate: no to the Troika’s conditions, but yes to the euro. The unkind one is that the EU rejected it because Tsipras was not part of the Brussels’ elite (he did not even wear a tie). Even worse, he was challenging the legitimacy of the Brussels’ elite. You can be a crook, you can be an unelected leader and – if you are one of them – your legitimacy will never be questioned in Brussels or Frankfurt. But if you are not, not only your credentials will be challenged, you will be openly undermined even if you had democratically won a clear mandate.

As a result, from day one – everybody from Junker to the Eurogroup – was trying to make this government fall, flirting with a new coalition between the “moderate” part of Syriza and the more centrist To Potami party and making clear that the conditions offered by the Institutions (ex Troika) would be much better, if Tsipras’s government fell. This was extremely antidemocratic and underhanded. Now it cannot continue any more. Tsipras has a clear mandate. Furthermore, Tsipras’s bargaining position had been boosted by a recently released IMF paper, which confirms that Greece’s debt is not sustainable.

Now the Institutions do not need to accept Tsipras’s conditions, but they have to negotiate with him in good faith. The no vote does not necessarily mean Grexit, unless the Institutions want so. What it is different now is that the European leaders will have to take responsibility for kicking a country out (something against all the treaties). They cannot hope anymore that Tsipras will do the dirty job for them.
(emphasis original)

I'm not sure if his analysis over ties and the like make sense except as a metaphor, for what is an excess of group thing that permeates the EU leadership, but in that context, it does appear to explain a lot.

Much of what passes for "common knowledge" in the EU, is in fact a mishmash of economic theories that were discredited well before the 2nd World War, and much like the gold standard economics that exacerbated the depression and led to the rise of fascism, it appears that a similar path is being taken.

H/T Brad DeLong


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