Greece: The dangerous game

European officials and governments are much more anxious about the Greek drama than they are admitting publicly. They fear a miscalculation in the weeks ahead could precipitate a full-blown crisis.

The past week has witnessed the opening tense and abrasive rounds. Nerves have been left frayed. The new radical-left Greek government said it would no longer negotiate with the troika: officials from the International Monetary Fund (IMF), the European Union (EU) and the European Central Bank (ECB).

That did not go down well with European officials. Greece's government also said it would refuse new loans from the EU and the IMF. That raised the question of how it would finance itself.

Ministers also began working on plans to raise the minimum wage and that led to concerns that Athens was no longer sticking to the terms of its bailout agreement.

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A majority of voters in a eurozone country have rejected the terms of a bailout agreement authored in Brussels and Berlin”. Then it was announced that the new government had hired the financial advisory firm Lazard to negotiate a big cut in Greece's debt. It led the German chancellor Angela Merkel to issue a terse statement: "I do not envisage fresh debt cancellation".

By the end of the first week, the New Greek Prime Minister, Alexis Tsipras, decided he needed to offer some reassurances. "No side," he said, "is seeking conflict, and it has never been our intention to act unilaterally on Greek debt." Greece, he said, would not renege on its debt. None of that disguises the fundamental rift.

Looking for allies

A majority of voters in a eurozone country have rejected the terms of a bailout agreement authored in Brussels and Berlin. What is at stake here is not just the fate of Greece and whether it stays in the eurozone, but the authority of Germany to define the narrative in Europe and in the eurozone.

This week the real negotiations begin. Both Mr Tsipras and his finance minister, Yanis Varoufakis, start trips looking for allies. Mr Tsipras will visit Rome on Tuesday and Paris on Wednesday, but there are no plans to visit Berlin.

There is urgency to these talks. Greece's bailout agreement expires on 28 February. If it is not extended, the European Central Bank would have to stop lending Greece money. Also, Athens would not get 7.2 billion euros, the next tranche of bailout money, without a review of its reform programme being completed.

The new government has boldly said it would not accept new IMF-EU loans, prompting questions over how long its finances would last without a deal.

So what is Alexis Tsipras's strategy and can it work?

Firstly, his government wants to negotiate directly with European governments and not through EU officials. They are making their initial pitch to Paris and Rome, because they believe those governments are more sympathetic to Mr Tsipras's argument that austerity has been a disaster for Europe. Berlin will be wary of any hints at concessions that undermine the existing bailout agreements.

Mr Tsipras will argue that Greece's debt levels at 175% of GDP are unsustainable. Although some European officials pretended otherwise, most of Europe's leaders knew that to be true. However, Athens will face significant resistance to any write-down of Greek debt. Angela Merkel has made it clear: "There has already been voluntary debt forgiveness by private creditors, banks have already slashed billions from Greece's debts".

The German voters also seem determined to resist any further concessions. 76% oppose any reduction in Greek debt. The Finns, the Dutch, the Spanish - to name just a few countries -are not open to writing off any Greek debt.

(Πηγή: www.bbc.com)