Greece versus Eurozone – What Sophocles can teach European politicians

Here is the Sophoclean challenge for our politicians: true statesmanship is finding the courage and having the intelligence to be wise without experiencing tragedy - to see the big picture, to have the guts to change one’s mind if needed, to think ahead, and to create space for compromise. Can Eurozone decision makers live up to that challenge? A comment by Haridimos Tsoukas, Research Environment Professor of Organization Studies at Warwick Business School.

Presenting his new governments’ plans before the Greek parliament last Sunday (8/2/2015), the newly elected leftwing Prime Minister Mr. Tsipras appeared defiant. Greece will not seek an extension of the current bailout program, he said. The bailout, agreed between the ‘troika’ (EU, ECB and IMF) and Greece, has been a “toxic mistake” right from the start and its consequences for Greek society disastrous.

This is a high risk strategy. The 172 billion Euros bailout program expires on 28/2/2015 and, unless it is extended, the last (still unfinished) review of the bailout cannot be concluded and, therefore, Greece will not receive the last tranche of 7.2 billion euros owed by the troika. This is money Greece badly needs, since, without it, it will be unable to finance itself.

Given the high risk involved, why has Mr. Tsipras adopted this strategy? He has a reason. He aims to force creditors to renegotiate the entire framework of the bailout agreement between Greece and its creditors. He does not want to make a move within the current framework. He wants to change the framework itself. He wants to force a paradigm change.

Will he succeed? He has certainly forced the issue of austerity on the European agenda and he has even got carefully sympathetic comments from some Eurozone Finance ministers, such as Mr. Sapin of France. However, rhetorical sympathy aside, Greece appears isolated. Most Eurozone members want Greece to stick to the terms of the bailout it has signed.

The looming collision between Greece and the Eurozone is forcing both sides to face their moment of truth. On the one hand, the consequences of austerity have been devastating for Greece. No society can live for long with 26% unemployment (50% youth unemployment), 25% contraction of the economy, 40% decrease of spending power, radical cuts in pensions and lots of new taxes that have brought ordinary families to their knees. The analogy with the Great Depression in the 1930s is justifiably mentioned.

Tsipras has been elected, as he said in parliament, with “a strong and clear mandate to immediately end austerity and change policies”. For this to happen, the entire bailout agreement needs to be revised. What a better signal to creditors that this is what he intends than rejecting their last aid tranche? It is a bold act of defiance. Tsipras knows that his main negotiating card is a possible Grexit and the huge problems this is likely going to cause to the Eurozone and “the world economy”, as UK Treasurer Mr. Osborne recently pointed out. The dynamics of a default will be unpredictable.

On the other hand, or perhaps, better, at the other end of the table, sits Germany. Greece must keep its commitments and stick to the bailout agreed, the stern-looking Mr. Schäuble keeps saying. He knows that Greece urgently needs financing and cannot afford the stand-off too long. A country that is bankrupt is weak; its creditors have the upper hand. Playing hardball sounds a good strategy for Germany and its allies.

However, in a democratic system, the outcome of the recent Greek elections cannot be plausibly ignored. Moreover, the devastating consequences of austerity need to be squarely faced. Greek society is collapsing, political extremism is rising. Would it not be more reasonable for reality to be acknowledged rather than for ‘the plan’ to be blindly followed? How often did governments get it wrong by sticking to decisions and policies that turned out to be dysfunctional? What more evidence did the late US Secretary of Defense Robert McNamara need to see before he could change his mind about the Vietnam War? True leaders need to see the big picture and to look far ahead. I doubt this is happening right now in Europe.

Germany blames Greece (“the causes of the problem are to be found in Greece” said Mr. Schäuble recently in Berlin), while Greece blames Germany for harsh austerity. No party can bring itself to see the whole picture: the Eurozone is a badly designed edifice and Greece has a lot to blame itself for its predicament (a corrupt political system, extensive tax evasion, and rampant clientelism). The root cause of the crisis in the Eurozone is the debilitating asymmetry between economics and politics: the euro is not supported by a political community that is willing to share risks. This asymmetry creates a collective action problem: ‘you go first and I will then follow’. You first relax austerity and I will then reform myself, say the Greeks; you first undertake reform and I will then think about debt relief, say the Germans. The Greek crisis is forcing the Eurozone to wake up to its real problems. Will it?

I am skeptical. Positions seem to harden on both sides. What is worrying is the arrogance that comes with power. The Greek crisis is not just Greek, it is a Eurozone crisis. The institutions supporting the Euro need mending. A risk-sharing political community needs to gradually emerge. And countries like Greece that deviate from the European institutional norms need to engage seriously in reform. The making of community involves intelligent adjustment on both sides for the sake of a noble purpose. A compromise is needed. It is not right against wrong, but two rights clashing. The right to stick to rules agreed versus the right of a society to live decently. The art of politics is, partly, the art of crafting viable compromises between conflicting rights.

The classical Greeks were aware of this, or, to be precise, of the devastating consequences of self-righteous stubbornness. Sophocles’ Antigone is about the tragedy that is caused when the clash between right and right is mishandled. On the one hand there is the right of Creon, the King of Thebes, to formally enforce the law, while on the other hand there is the unwritten right of Antigone to bury her dead brother, even if he was a traitor to his city and, according to law, should remain unburried. By each one stubbornly sticking to his/her right, Creon and Antigone bring about tragedy to Thebes. The Messenger in the play notes that Creon’s mishandling of the case “shows the world that of all the ills afflicting men, the worst is lack of judgment”. At the end of the play, having lost his son and his wife, Creon realizes his foolishness and his poor judgment. Tragedy taught him wisdom, but, alas, it is too late! The play ends with the Chorus noting that “the mighty words of the proud are paid in full with mighty blows of fate. And at long last, those blows will teach us wisdom”.

Here is the Sophoclean challenge for our politicians: true statesmanship is finding the courage and having the intelligence to be wise without experiencing tragedy – to see the big picture, to have the guts to change one’s mind if needed, to think ahead, and to create space for compromise. Can Eurozone decision makers live up to that challenge?

*Haridimos Tsoukas is a Distinguished Research Environment Professor of Organization Studies at Warwick Business School and a Columbia Ship Management Professor of Strategic Management, University of Cyprus

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