Wall Street Journal: Tsipras Risks Leading Greece to Disaster


Simon Nixon of The Wall Street Journal penned a strongly worded piece, suggesting that Greek Prime Minister Alexis Tsipras and his government risked leading Greece to disaster. The full text of the piece is below.

Clock Is Ticking Down on a Greek Solution
Prime Minister Alexis Tsipras risks leading the country to disaster

Alexis Tsipras risks leading Greece to disaster—and he has just days to pull the country back from the brink.

It is three months since Mr. Tsipras forced a snap election and six weeks since he became prime minister. In that time, the Greek economy has nose-dived. A tentative recovery has been stopped in its tracks: Tax receipts fell more than €1 billion ($1.05 billion) below target in December and January, the banks have been emptied of more than €20 billion of deposits, loan defaults have risen and investment has been put on hold. Any day now, the government could run out of money.

No one knows exactly when because Athens has refused to allow eurozone officials to inspect its books. Some officials suspect that even Yanis Varoufakis, Greece’s finance minister, doesn’t know the true picture. Besides, his credibility is so badly damaged that his word is barely trusted in eurozone circles.

Cartoon of Alexis Tsipras as Sisyphus

The frustration felt across the eurozone was laid bare this week by Jeroen Dijsselbloem, the Dutch head of the Eurogroup of eurozone finance ministers. On Feb. 20, Greece thrashed out a deal with the eurozone that would allow its present bailout to be extended for four months. Since then, officials have been arguing about who would meet whom, where and on what terms. Technical work still hasn’t started. “It’s been a complete waste of time,” Mr. Dijsselbloem said at a news conference Monday.

A list of proposed reforms sent by Mr. Varoufakis to Mr. Dijsselbloem was greeted by many with ridicule. Its most striking proposal was a plan to wiretap tourists to uncover value-added-tax cheats—this from a government that spent three years preparing for office and claimed that its top priority was fighting tax evasion by oligarchs. The list suggests a government out of its depth and already out of ideas. In fact, Athens appears to have only one overriding idea: to force the eurozone to provide Greece with unconditional cash.

At first, it hoped the money would come directly or indirectly from the European Central Bank—until the ECB pointed out that it is prohibited by European treaties from financing governments. Then it tried to persuade eurozone governments to drop their insistence on reforms in exchange for loans. Now it is making deals and immediately trying to undo them, relying on textual analysis for evidence of “constructive ambiguity.”

As the clock ticks down to a Greek debt default, Athens seems to be counting on either the ECB or the Eurogroup to blink.

There is a certain logic behind this game-theory strategy: If Mr. Tsipras can force the eurozone to hand over one unconditional euro, he will have changed the nature of the currency union. More euros will follow. But this strategy has no chance of succeeding. A currency union between sovereign states can operate only on the basis of laws. Even if politicians were willing to cut deals, other agencies have little room for maneuver.

Far from being too tough on Greece, some central bankers worry that the ECB is already exceeding its mandate: They say the ECB should be ordering Greek banks to cut their holdings of Greek government debt and to raise capital, amid concerns about the damage that the economic crisis is inflicting on both their liquidity and solvency ratios.

Similarly, the International Monetary Fund can’t disburse cash to Greece without an agreed-upon bailout program based on a credible debt-sustainability analysis. It is already lending Greece multiples of its formal quota—money borrowed from some of the poorest countries in the world. And if the IMF refuses to lend, what eurozone parliament will agree to hand out cash?

Besides, the risks of ripping up the eurozone rule book to help Greece may outweigh the risks of allowing Greece to exit the zone. In 2012, the contagion risks of a Greek exit were clear, but this time, there is no sign of a spillover to Spain, Portugal and Ireland. Instead, those former crisis countries are now among Europe’s fastest-growing, with falling unemployment, accelerating foreign investment and record-low bond yields, helped by the timely launch of the ECB’s government bond-buying program.

The market is putting no pressure on the eurozone to cut a deal with Greece at any price. Indeed, the market is more likely to react negatively to any deal that fuels support for radical leftist parties in other countries similar to Greece’s Syriza.

After all, the economic consequences of radical leftist policies can be clearly seen not only in Greece, but also in Venezuela, where Syriza has turned for inspiration and whose citizens have recently had to queue for toilet paper.

That isn’t to say that anyone is complacent about the risks of a Greek euro exit. No one can predict the nature of the political backlash across Europe that will result from a possible implosion of the Greek economy; no one wants to be confronted by a full-blown humanitarian crisis inside the European Union.

A Greek exit would pose huge challenges. Most eurozone policy makers are clinging to the hope that Athens will ultimately respect eurozone rules and remain in the currency union.

Yet this decision is now largely out of the eurozone’s hands. If Greece is to remain a member, one of two things needs to happen: either Mr. Tsipras must repudiate many of his electoral promises; or Greece must repudiate Mr. Tsipras. Right now, neither of those outcomes looks likely.

The article appeared on The Wall Street Journal here.



  1. As a middle-class common Greek, I can -and I think I’m the one who does know the truth of the matter – tell you that Greeks like me, not the Greek tycoons and the natural allies of the previous governments of PASOK and NEW DEMOCRACY,we that is the greater percentage of the population, know for sure that the ‘disaster’ has befallen on us, and very harshly indeed, long before Tsipras came to power. Of course, you, away from Greece, think differently, because you find it very convenient to take the word of those who work for the interest of the ‘elite’. Well, all you have to do is look into the matter from our point of view and see that we cannot afford the basics for everyday life. Not any more! And it’s not difficult to do so. Take a look at the number of beggars that you meet in any street corner! Take a look at the services provided by public hospitals (and I’m not referring to the staff, doctors and nurses who struggle to help people in need for assistance) where they don’t even have the means to address the problems, sometimes not even the gauze to wrap you up. I could go on for ever with suggestions like that. But, I won’t! I just tell you we want our pride back! We want to feel we are the Europeans we believed we deserved to be when we wholeheartedly joined the EU. We want leaders that ‘think Greek’ , whose ancestor was Leonidas and not Ephialtes.

    • Santorini Boo on

      Very nice prose… really. But it’s far too late for prose now. I am not the #WSJ. I DO live in #Greece. I am very middle class. But the WSJ is 100% correct on this one!
      #Tsipras was an over-promising, fake, FULL OF TOTAL BS liar from the moment he crawled out from under his rock. Simple math, people!!–the numbers just NEVER added up! And while I did my best to convince everyone I could, alas, he just continued on like a steamroller spouting his total BS garbage, PREYING like a sadistic monster on vulnerable, DESPERATE middle class Greeks…
      Now I certainly don’t have all the answers myself, but I am so very disappointed Greece fell hook, line & sinker for this IDIOT.
      Now we are all royally F#&%ED.

  2. I,m a middle class Greek citizen too, live and work in Athens, taxed heavily, getting little in return and hoping that our country will be back on European corse. I’m totally disappointed by our Government and embarashed from the nonsense they communicate to our EU friends. Life is not easy in Greece with 26% unemployment but in 2014 we started seeing some light at the end of the tunnel with GDP going up for first time after years and unemployment decreasing even by 1-2%. Now we see disaster and isolation from ,Europe and this is something we cannot tolerate, Many Greeks like me believe that dignity is won by hard work and commitment to Democracy and our principles, This what we try to achieve and hope our newly elected Government will understand this before is late,

    • All I can tel you to all the Greek people in the world the even some miracle happen and wipe all the 400 billions euro today .give the Greeks no more than four years they will be in the same situation AGAIN. THINK ABOUT IT

  3. critton voutsas on

    Speaking as a second generation Greek from south Africa it still amazes me why Greeks in Greece still pursue tax avoidance, tax revenues are the fundamental money streams for any state to operate,just like any company. Complaining about the past 6 years of high taxes is not good enough,if it was done right tax collections would have been up to date for the last 40 years,and we would not be in this mess,Turkish invasions is no excuse.stop the blame game ,every other country operates on these fundamentals otherwise u land up in jail Greek or not Greek .

Leave A Reply