The Greek crisis is about a debt that has spiralled out of control, it is also about national sovereignty. So, what is happening in Greece is exactly what prompted Nigel Farage and the UKIP party into action and David Cameron into recent EU negotiations. Farage and Cameron, however, have muddied the waters by focusing so much on immigration, something that, when pinned against the execution wall, even the prejudiced people of ANEL, Syriza's right wing coalition partners, understand is not important. Greece knows: it's about whether it is right for the EU to bully one of the smaller countries, and whether what happens in a national election has any value at all on the broader EU stage.
Many years have passed since one nation demanded such financial penalties of another. Indeed, while the peace terms were being thrashed out in Versailles, in 1918/1919, John Maynard Keyes was writing a book warning of disaster. He was right, too. Financial punishment on the scale envisioned and for the period projected would, he argued, simply produce resentment. So, when peace was negotiated in 1945, the better approach of the Marshall plan was adopted. Instead of further punishment, the West offered Germany support and a rebuilding program. What Greece needs now is not more austerity, in other words, but generous help.
Keynes was interested in the conditions for economic recovery, not ruination.
The impact of Keynes has been wider, though, because his plan of an International Clearing Union is pretty well what the IMF has become. By the end of August, Greece will be expected to pay 2 billion euros to the IMF and nearly 7 billion to the European Central bank. It cannot do this without the bailout loan promised in 2012 and probably supplemented by an additional loan.
Greece's new Government is dominated by academics who were drip-fed on the principles of Keynsian economics, so none of this is new. The man brought in to negotiate an extension, Euclid Tsakalotos was educated in Oxford, and is perceived to be less confrontational than Ianis Varoufakis. Tsakalotos aims not only to sort out the Greek debt but to reform Europe as well- "We must create a new Europe that can handle economic differences".
Today's news that Greece will not pay 300 million Euros to the IMF is a bit of a fudge, and makes use of an arrangement originally devised for Zambia in the 1980s, whereby payments will be deferred to the end of the month. At the same time, despite initial objections, Greece is preparing to sell the Piraeus port and regional airports, and while insisting that he will not cut pensions pensions, Tsipras appears to be considering measures to prevent early retirement.
Like Germany in 1919, Greece has committed to something on paper which is unreasonable and unrealistic. As Keynes said then, "... they can't possibly keep some of the terms, and general disorder and unrest will result everywhere."
Tsipras rules out a Grexit and called on the EU to be decisive so Greece can "emerge from the economic asphyxiation".
All it has got is a pause, but there is another view in Greece articulated by Kostas Lapavitsas, another academic elected into the Greek Parliament, who says Greece's only hope is to leave the Euro. He calls this "the optimal solution" that would energise small and medium enterprises. Tsipras' response is to go to Putin for an oil pipeline, and send Varoufakis to talk to Wolfgang Schäuble. But there is a limit to what talking can achieve, and what the people will accept.
