Wall Street Journal article argues Greece planned a Grexit from the beginning

An article by Simon Nixon in the Wall Street Journal suggests senior Greek officials such as prime minister Tsipras and economy minister Yanis Varoufakis had from the beginning decided creditors would never extend reasonable terms to Greece.

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According to this narrative Greece could not simply proclaim this aim outright and work for a Grexit, since a considerable majority of Greeks wanted to remain in the euro zone. Nixon notes that Tsipras himself denies he had a deliberate plan for a Grexit and describes such accusations as lies. Politicians have been known to lie too. Nixon says if Tsipras had planned to take Greece out of the euro zone from the start of negotiations in January, he can hardly imagine what he might have done differently:He won the election on a pledge to respect the overwhelming desire of voters to remain in the eurozone, which meant he had no choice but to go through the motions of negotiating with Greece’s creditors for as along as they were willing to indulge him. If Grexit was always his goal, then his only challenge was to ensure the talks dragged on until the bailout expired, capital controls were introduced and the country defaulted, making a euro exit hard to avoid. The only risk to such a strategy was a bank run before the bailout expired, in which case politics may have intervened.

Note that Mr. Nixon's description of Tsipras' election campaign pledge leaves out a significant aspect, namely the strong anti-austerity platform that was also crucial to his campaign and consequent election of Syriza. What Tsipras and others could have done differently is to have from the very beginning of negotiations stressed that if a reasonable compromise deal was not forthcoming, Syriza had a Plan B of default and Grexit. At the same time they could have elaborated policies for a Grexit and informed Greek citizens what would be involved so that they would be prepared should no reasonable deal be possible. Instead, Varoufakis and Tsipras both said they would do whatever was necessary to reach a deal, a tactic that tells the creditors that they can demand all they want and Greece will not leave the negotiations.

Tsipras could have explained ages ago that the negotiations were going nowhere and at that point called for a referendum asking whether Greeks wanted to continue negotiations or default and return to the drachma. If a referendum had been called then it would give time for debate and have some legitimacy. The present referendum is regarded as not legitimate by many analysts and is based on a deal that is no longer even on offer since the present bailout ran out and Greece went into default at the end of June. Jim Yardley in the New York Times notes:

"Imagine the fate of your country hangs on a yes-or-no question.The question is drafted in cryptic, bureaucratic language and asks you to decide on an economic program that no longer exists. Leaders in neighboring countries are begging you to vote yes. Your government is begging you to vote no. Now you can understand what it feels like to live in Greece, land of debt, sunshine and, these days, profound political weirdness. The country is approaching one of the most important votes in its modern history on Sunday — one that could redefine its place in Europe — yet many people acknowledge they barely have a clue as to what, exactly, they are voting on."

From the first, Tsipras and Varoufakis have tried to mislead the Greek voters. For example, claiming a victory over the Troika when their only real victory was to convince officials to refer to the Troika as "the institutions." There were numerous "red lines" drawn, almost all of which were eventually withdrawn — often with a positive spin that a deal was now close. Optimism alternated with harsh criticism of creditor proposals that poisoned the negotiating atmosphere. Through all of this there is no hint of an alternative or any attempt to educate the Greek public as to what a Grexit would look like or mean for them. There was no attempt to counter those who claimed that a Grexit would be a disaster for Greece and was not a reasonable alternative.

Even when Tsipras rejected the final offer from creditors and called for a referendum, he still made last-minute attempts to broker a deal that would have made any referendum irrelevant after praising it as an exercise in democracy. Surely these actions show Tsipras still wants a deal even though Merkel and others have made it clear there will be no negotiations until after the referendum. Given the facts, evidence seems to point to many on the creditor side wishing for Greece to depart from the euro zone, while Tsipras and the Greek government are doing everything possible to remain in the zone. Those who want Greece out of the zone are playing their cards cleverly. Tsipras has created a situation where the banks closed and capital controls have been introduced before the referendum showing how Greeks will suffer from lack of a deal and no doubt encouraging a "Yes" vote.

Tsipras maintains that even if there is a "No" vote this will mean that he will have a stronger hand in dealing with creditors. This appears to indicate that he still would try again to negotiate a deal not exit from the eurozone. Nixon claims that the creditors would simply refuse to negotiate with Tsipras. That remains to be seen. The Greeks could always sideline him as they did with Varoufakis when his style appeared to be a hindrance to negotiations.

After months of promising to meet its debt obligations in full, today Tsipras said that he hoped the coming referendum on Sunday will reset bailout negotiations. He also presented new proposals that demand creditors forgive a third of Greek debt. IMF documents actually support the view that the present Greek debt load is unsustainable, but this latest proposal by Greece will no doubt be rejected. Tsipras seems to be flailing about without having any clear policy direction at all. If this is part of a strategy for a Grexit, it is badly planned and an insult to the Greek people since they have been constantly misled about what is happening, faced with conflicting statements from government officials and been kept in the dark about the planned Grexit. They have been told nothing about what a Grexit would involve. Whatever Tsipras and the Greek government planned the results are a disaster for the Greek economy and its people. Whether this results in a Grexit remains to be determined.

The latest polls show that Greeks are almost evenly split on the referendum issue. Here is the result of one of two polls quoted in the Wall Street Journal:The survey by polling institute Alco for the newspaper Ethnos found that 44.8% of respondents plan to vote “yes” in Sunday’s referendum, while 43.4% plan to vote “no.” One thousand people were surveyed between Jun 30 and July 1.This result is within the margin of error and there was a similar result in a second poll.