Get­ting per­sonal with the Greek cri­sis

Financial Mirror (Cyprus) - - FRONT PAGE -

To­day’s de­ci­sion-mak­ers are sup­posed to em­brace the virtues of big data, re­lent­lessly pur­sue quan­ti­ta­tive met­rics, and then ad­here to the op­ti­mal course of ac­tion that these pow­er­ful tools sup­pos­edly in­di­cate. Yet if there is one thing that the Greek cri­sis has made clear, it is the im­por­tance of the hu­man fac­tor in ne­go­ti­a­tions. Peo­ple and their per­son­al­i­ties, and the way they per­ceive one another, can make small debts seem un­ser­vice­able or large debts dis­ap­pear with a hand­shake.

In a world that feels in­creas­ingly un­sta­ble, many seek re­as­sur­ance in the il­lu­sion of cer­tainty that data pro­vide. We want it in our jour­nal­ism. We want it in our in­vest­ment de­ci­sions. We even want gad­gets that count our ev­ery step and heart­beat. We want to bring our well­be­ing and our fu­ture fully un­der our con­trol.

But the Greek fi­nan­cial cri­sis serves as a re­minder that life is not gov­erned by data alone. In the end, out­comes may – and of­ten do – de­pend on the amor­phous yet es­sen­tial qual­i­ties of in­tegrity, trust­wor­thi­ness, and in­ter­per­sonal “chem­istry.”

The im­por­tance of such fac­tors was no less clear in the ne­go­ti­a­tions over Iran’s nu­clear pro­gramme. Whereas par­ti­san grand­stand­ing and na­tion­al­ist pos­tur­ing in the Greek ne­go­ti­a­tions have eroded con­fi­dence in the en­tire Euro­pean pro­ject, the ne­go­tia­tors on the Iran deal over­came an even deeper trust gap. With ar­guably more at stake, and de­spite the in­volve­ment of more play­ers with over­lap­ping and, at times, an­tag­o­nis­tic agen­das, en­trust­ing the process to pro­fes­sional diplo­mats, rather than elected politi­cians, clearly paid off.

There is an im­por­tant les­son here for Europe. Peo­ple se­lected to lead coun­tries or com­pa­nies must have the tech­ni­cal com­pe­tence – and the num­ber-crunch­ing sup­port teams – needed to make good de­ci­sions. But that is enough. Ef­fec­tive lead­ers must be able not only to rep­re­sent a point of view, but also to work well with oth­ers to re­alise their vi­sion. If deals – whether on bailout ar­range­ments, nu­clear pro­grammes, or cor­po­rate merg­ers – could be con­cluded on the ba­sis of quan­ti­ta­tive data alone, they would be. But they never are.

For Greece and its cred­i­tors now, the latest agree­ment is only the first step. The six months of fin­ger point­ing and brinkman­ship that pre­ceded the deal have cre­ated a moun­tain of mis­trust among lead­ers and cit­i­zens alike.

When mul­ti­ple ceasefire agree­ments fail in South Su­dan and eastern Ukraine, or a hu­man­i­tar­ian truce in Ye­men col­lapses within hours, one or more of the par­ties is said to lack “cred­i­ble com­mit­ment.” Sim­i­larly, when the Greek side pro­poses es­sen­tially the same deal that it just called a snap ref­er­en­dum to re­ject, or when the Eurogroup of eu­ro­zone fi­nance min­is­ters, fol­low­ing Ger­many’s lead, sim­ply ig­nores the un­sus­tain­abil­ity of Greece’s debt, the abil­ity to ex­e­cute any deal must be in doubt.

What will make this deal work is quick rat­i­fi­ca­tion and cred­i­ble fol­low-through in terms of day-to-day im­ple­men­ta­tion. Both sides need in­cen­tives to stick with it and de­ter­rents to de­fect­ing from it. Above all, con­di­tion­ing fur­ther, es­sen­tial debt re­lief for Greece on its ex­e­cu­tion of the deal should be used as a way to com­mit both sides.

A track record of failed im­ple­men­ta­tion – of ac­cept­ing bailouts with­out im­ple­ment­ing the re­forms needed to re­gain sol­vency – cre­ates a cli­mate in which deal mak­ing be­comes ever more dif­fi­cult. The risks are too high, es­pe­cially when ev­ery de­vel­op­ment in the talks is spun for par­ti­san ad­van­tage, to make lead­ers look smart, to la­bel win­ners and losers, or to un­der­mine progress by nit­pick­ing the data.

It is to the credit of Euro­pean lead­ers in­volved in the ne­go­ti­a­tions that they have been able to reach a deal in the face of enor­mous un­cer­tainty. They have com­mit­ted not just fi­nan­cial re­sources but also sig­nif­i­cant po­lit­i­cal cap­i­tal at a make-or­break mo­ment for Europe.

Given the lack of trust be­tween the par­ties to the deal, the sit­u­a­tion will re­main ex­tremely volatile for some time. Quan­ti­ta­tive data will be nec­es­sary to mon­i­tor Greece’s progress on car­ry­ing out the agreed re­forms, as well as to de­ter­mine the ex­tent of fur­ther debt re­lief. But nei­ther Greece nor Europe will re­gain a sense of sta­bil­ity merely be­cause the data add up. Their lead­ers’ per­sonal qual­i­ties – their un­shak­able will and de­ter­mi­na­tion to make the deal stick – must add up, too.

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