Thursday, July 9, 2015

French Cavalry Arrives, Deal in Sight?

The NY Times:
The French assistance appeared to be an effort to make sure the Greek proposal,, submitted just before a midnight deadline, would be as thorough and salable as possible to Greece’s creditors and would smooth the way for a compromise on a new bailout package to keep Greece afloat financially and inside the euro.
“There is a group of people who have been sent to help the Greeks, to try to transform words into action,” said a French government official with knowledge of the effort.
France has been the most steadfast major nation in Europe supporting Greece ever since Prime Minister Alexis Tsipras was ushered in to power in January on a mandate to repudiate austerity. Paris has been particularly outspoken in recent days about the need for a compromise that would help Greece and hold the eurozone together.
Have I been selling Flanby short? He has pulled out all the stops, and, together with Wolfgang Schäuble's concession that debt reduction is possible, we have the makings of a way out of this crisis:
Wolfgang Schäuble, finally gave a little on that Thursday, admitting that “debt sustainability is not feasible without a haircut,” or writedown of debt, even if he then appeared to backtrack.

Slouching Toward Grexit: That Whirligig Sarkozy, Signs of Life Among the Socialists, European Democracy, etc.

A week ago Nicolas Sarkozy had a clear position on the Greek question: throw the bums out. In his detestation of Alexis Tsipras, he seemed to recover some of the joy of the good old days, when he could direct his heavy artillery against the "socialo-communists." No doubt he thought the Greek mess provided him with a nice issue on which he could both look tough and differentiate himself from Marine Le Pen, for whom Tsipras's "resistance" to the consummately evil forces of the Europe Union is an inspiring example, despite her advocacy of Grexit, which Tsipras says he does not want, as the quickest way to destroy the European Union, which is her ultimate solution for everything.

Alas, problem: Alain Juppé, whose presumably more statesmanlike approach to politics has put him ahead of Sarkozy in the race for the Republican nomination in 2017, also came out in favor of Grexit--rather surprisingly, because one would have expected a more conciliatory position from the former prime minister. So Sarkozy seized the opportunity: he would be statesmanlike, advocating compromise, thus setting himself apart from both Juppé and Le Pen--the two people he needs to demolish if he hopes to regain the presidency.

Meanwhile, Manuel Valls made a rather rousing pro-Greece speech in the National Assembly yesterday. The dormant Socialists have aroused themselves in other ways as well. Claude Bartolone spoke out in favor of compromise. Sapin and Macron are doing their best to slow the seemingly inexorable drive to expulsion. Even Christine Lagarde is now openly calling for debt reduction to be combined with extended austerity, and US Treasury Secretary Jack Lew has added to the pressure on the EU to stop short of forcing Greece out.

But yesterday's session in the EU Parliament was not encouraging to those who think that "more democracy" is the solution to Europe's problems. The sentiment among the democratically elected representatives of the peoples of Europe was decidedly anti-Greece.

And suddenly there is political life again in Europe. Instead of a very unequal tug of war between accountants in Brussels and firebrands in Athens, we are at last beginning to hear some discussion of the historic implications of the threat to the European project that Grexit poses. It may well be too little, too late, but at least we will have heard some debate that rises above the level of whether hotels on Greek islands should pay a value-added tax of 23% or 17%.