Alex Tsipras Gets Some Help from Obama and Hollande

At the G-8 summit, both President Obama and new French President Hollande gave a boost to Alexis Tsipras, who is expected to win Greece’s new round of elections next month, by urging Germany’s Angela Merkel  to soften her tough austerity stance and focus more on growth.  Tsipras, leader of the far left Syriza party, is campaigning on keeping Greece in the euro zone, but forcing its creditors to renegotiate the tough terms of their loans to Greece.

President Obama has to thread the needle carefully here to try to avert disaster in Europe.  If he is seen as being too much in bed with the socialist Hollande and the even-further-left Tsipras, he gives ammunition to the crazies on the American right and their Obama is a socialist/communist meme.  His support for leftists in Europe will be touted as a warning for what he will do here in a second term.

But the truth is that what needs to be done, both in Europe and the United States, is classic Keynesian economics, which both Democrats and Republicans used to accept and follow.

Greece’s Game of Chicken

It is almost certain that Greece will hold another election to try to form a government and that the leader of the Coalition of the Radical Left known as Syriza, Alxis Tsipras, will get more votes than anyone else.

So, in effect, Greece will have a communist government.  I don’t believe the Greek people have suddenly become communists, but they reject the harsh terms of the bailout deal supported by the two major mainstream parties.  Those parties got less than 40% of the vote on May 6.  The Greeks want to re-negotiate that deal for less onerous terms, and think that they can do so without being forced to leave the euro.  They are convinced they can have their baklava and eat it too.  They believe they have leverage with the IMF, the European Community, and the European Central Bank, none of which wants to see Greece default.

Angela Merkel is saying they don’t have any leverage and the deal can’t be renegotiated.  But she is in a weaker position than just a few weeks ago.  She has lost her French ally Nicolas Sarkozy, and has to deal with the Socialist Francois Hollande, who is more sympathetic to Greece.  She just lost a German regional election to the Social Democrats, who also are more sympathetic to Greece.  Her rigid policies are under attack both at home and abroad.

So we’ll see who blinks first, the Greeks or their lenders.   But the harsh terms of the loan agreement approved in February make it look more and more like the Treaty of Versailles, which also seemed like a good idea at the time, but led desperate people to support extreme leaders and ultimately to World War II.  The Germans, of all people, should understand what happens politically when you try to get blood from a stone economically.

Having defeated fascism, the U. S. was appalled at the possibility that Greece might go communist, so we gave them tremendous amounts of aid, first under the Truman Doctrine and then under the Marshall Plan, to prevent that from happening.  Almost 70 years after that successful effort, the communists are on the verge of victory in Greece.  Heck of a job, Angela.