Denis Staunton: ‘No’ victory thrills Greeks urging fightback

As the result of the Greek referendum became clear on Sunday evening, the last stanza of Shelley's great poem about political resistance, The Mask of Anarchy, started to light up Twitter: "Rise, like Lions after slumber/ In unvanquishable number!/ Shake your chains to earth like dew/ Which in sleep had fallen on you/ Ye are many - they are few."

The emphatic victory of the No side was a thrilling outcome for those across Europe, mostly on the Left, who have been hoping that Greece would lead the fight back against the economic policies of the European institutions. It was made all the more satisfying by the fact that the loudest advocates of a Yes vote included those same European institutions, the leaders of the EU's most powerful countries, most of the Greek opposition and almost all the country's privately-owned media.

Prime Minister Alexis Tsipras and his left-wing Syriza government won a resounding mandate to seek changes to the demands of Greece's lenders. And the referendum dashed the long-cherished hopes by many of his EU counterparts that Syriza would make way for a more emollient coalition including the parties of centre-right and centre-left that have misgoverned Greece for decades.

By Monday morning, however, another realisation intruded - that in the context of Greece's negotiations with her creditors, it is the creditors and their representatives who are many and the Greeks and their allies who are few. As the trickle of emergency funding for Greece's banks from the European Central Bank (ECB) threatened to run out, Tsipras found himself with little more than 48 hours to avert a collapse of the faltering Greek banking system.

Hefty compromises

For the ECB to increase the flow of funding to Greek banks, it must be persuaded that negotiations between Athens and its EU partners are back on track. For that to happen, both sides will not only have to make hefty compromises but also to change the tone of the negotiations, which have been characterised by mistrust, incompetence and confusion.

Tsipras took an important first step by accepting Yanis Varoufakis’s resignation as finance minister. Varoufakis had become a detested figure for his counterparts in the Eurogroup of finance ministers (he said yesterday that he wore their loathing with pride) and his departure can only lighten the mood of negotiations. The Greek prime minister’s hand was further strengthened by a declaration of support for his negotiating position by three Greek opposition parties, including the centre-left Pasok and the centre-right New Democracy.

When Tsipras presents Greece's new proposal to the European Council of EU leaders today, he will almost certainly accept most of the key demands of the lenders, as he agreed to do before the referendum. The question then is how far the other EU leaders push him on politically sensitive issues such as pension reform and if they are willing to make explicit a commitment to negotiate a rescheduling of Greece's debt.

Despite the harsh tone of many of the comments from EU capitals following Sunday’s referendum, there should be enough room for manoeuvre to allow for a compromise without obliging anyone to make a humiliating climbdown. And notwithstanding the cavalier way some European politicians have been talking about a Greek exit from the euro, most know that it would be a disaster - not just for Greece and the euro but for the entire European project.

In a speech at Leuven University on 4 May, European Commission President Jean-Claude Juncker warned that what he called "the Anglo-Saxon world", meaning international speculators, would seek to destroy the euro if Greece left.

‘Huge danger’

“Grexit is not an option. If Greece would accept it, if the others would accept it, that the country would exit the zone of security and prosperity constituted by the eurozone, we would be exposed to huge danger, because the Anglo-Saxon world would do everything to try to decompose, at a regular rhythm, by (the) sale, apartment by apartment, of the eurozone,” he said.

The toxic negotiations surrounding Greece's debt have already undermined solidarity among EU member-states, as the citizens one country have been played off against those of another. Thus, the poorer countries of central and eastern Europe are encouraged in their resentment of any easing of terms for the Greeks, who are in some cases more prosperous. Political leaders in northern Europe do nothing to disabuse their citizens of their lurid fantasies about profligate Greeks squandering hard-earned German or Scandinavian taxpayers' money. And centre-right governments in Spain, Portugal and Ireland who have implemented austerity programmes resist any concessions to Syriza to protect their narrow political interests at home.

The threadbare state of European solidarity is evident in the EU's feeble response to the migration crisis in the Mediterranean and its failure to agree a meaningful burden-sharing in the face of it. An impoverished Greece outside the euro but still inside the EU would send a powerful signal about the limits of the European project, inviting other potential partners to step into the breach. Russia has already suggested that Greece should join the New Development Bank it set up with Brazil, India, China and South Africa as an alternative to the International Monetary Fund. Both Russia and China could see an opportunity to extend their influence in a strategically crucial part of Europe if Greece falls further out of favour with its European partners.

Much of German chancellor Angela Merkel's political reputation is built on the perception that she has dealt successfully with every domestic and international crisis she has faced. In the current crisis over Greece she must choose between satisfying German public opinion by refusing to compromise or putting the interests of Europe - and Germany - first, by striking a deal with Tsipras.

Denis Staunton is Deputy Editor