Tsipras rejects the Euro bailout deal and appeals to the Greek public who give him an overwhelming vote of confidence. He returns to the negotiating table and accepts a harsher deal than was previously on offer. Yanis Varoufakis, who resigned, thought that a shadow currency should have been put in place and Euro leaders confronted with Grexit. But he wouldn’t have followed through either. He didn’t believe Greece had the capacity to successfully exit the Euro and establish its own currency. He said earlier today that he disagreed with Tsipras, but more enigmatically that Tsipras had been confronted with the choice of execution or capitulation and had chosen capitulation. Would Varoufakis have chosen execution?
It is impossible to overstate the difficulties confronting Tsipras and Varoufakis; the Greeks reject austerity but want to stay in the Euro. There is no space at all between that rock and the hard place. But if you have been elected you have to deal with it. They seem to have dealt with it by bluffing, and when the bluff was called Tsipras capitulated and Varoufakis made an exit.
Better by far to have brought the confrontation with their Euro masters to a head much earlier. The central issue in the negotiations should have been debt relief not a new bailout, and with open preparations for Euro-exit if the negotiations failed. Varoufakis is surely right about that. But to be credible such a strategy would have involved Syriza in an on-going argument with the Greek people about their bottom line, with the party explaining that they would lead an exit from the Euro if no agreement was reached. It is clear now that Syriza never contemplated such a step and that the negotiators on the other side of the table understood that from the beginning.