SA on Greece’s slippery path

If furious Greek citizens who machine-gunned the social media hashtag #ThisIsACoup out onto the Internet this week really believe Alexis Tsipras’ deal with Europe was a coup, they should take a trip to Sudan to get a sense of what real disenfranchisement feels like. In a true garden-variety coup, a country’s citizens typically end up worse off.

But Tsipras’ deal with Europe, begrudging as it was, was really the only option the country had to unlock the freeze on its banks and give it any fighting chance of better economic prospects.

Despite talking big a week before, Tsipras ended up having to give his 18 eurozone partners just about everything they wanted.

For example, Greece will now have to privatise about €50bn in assets and agree to the sort of punishing austerity budget his government was disavowing a week earlier.

In return, Greece gets its third bailout in five years, adding to a debt load which sits at €320bn.

Rather crucially for ordinary Greek citizens, it means the European Central Bank will begin to lend to the country’s banks, winding back something of a looming debt spiral for Greece’s financial institutions.

These are hardly the features of a coup. You won’t find many people arguing that Sudan is a much better place since Omar al-Bashir ousted Ahmed al-Mirghani 26 years ago.

Of course, you can understand why Greeks are angry, with unemployment already pushing past 26%, growth forecast to fall 10% and public anger simmering over calling a referendum and then doing the opposite of what the country tells you to do.

But it’s hardly a watershed moment in European despotism that Greece has been asked to fall into line with its European partners in order to get more money. This is the standard quid pro quo of commerce.

The Europeans could simply have washed their hands of the country, leaving it to its drachma printing presses and a future glistening with all the promise of Venezuela.

This didn’t happen. Instead, Greece gets another handout it is unlikely to repay, and the panic which has gripped Athens for weeks has receded.

That very fact militates for the conclusion — bluntly stated by the Financial Times, among others — that it was actually Greece that won this round, hands down, and Germany that ended up the clear loser. All Germany got for its billions was a promise to toe the economic line according to a plan Tsipras despises. “If that is a German victory, I would hate to see a defeat,” said the FT.

This perhaps oversimplifies it. As part of the deal, Greece’s government has been told to take “ownership” of the new arrangement and work to implement the terms, unpalatable as they may be on the streets of Athens.

Greece might have won from this deal, but Tsipras’ tenure as prime minister seems destined for a grisly end.

Unemployment can only rise further after the past few horrid months, corporate profits will plunge, and his electorate will have taken no comfort from his flip-flopping on this deal.

Europe’s leaders will be equally bemused by his on-again, off-again dance. With trust shattered, they’ll be reluctant to do anything but the barest minimum to assist Greece again, which they surely will be asked to do.

For South Africans, 7 500 km away, it was easy to feel insulated from this farce. The JSE shifted down incrementally, then up when a deal was struck, but our local bourse is probably more keenly attuned to what is happening in China than Greece.

It matters, of course, partly because Europe buys 30% of our manufacturing exports. But there are some deeper lessons for SA in the to-and-fro of these European crisis talks.

For one thing, it is yet another cautionary tale of the devastating economic consequences of following a path of populism, indulging ill-thought-through leftist policies to score capital at the ballot box.

For President Jacob Zuma, more precisely, it is a cautionary tale against doing nothing while your economy slowly erodes.

Simply avoiding implementing the National Development Plan, failing to deal decisively with unemployment and allowing a series of strikes to lay waste to the remnants of the mining sector threatens to build to a devastating denouement.