A shadow of financial default hangs over Greece.

A shadow of financial default hangs over Greece.

By E. Stanley Ukeni

It would seem that the strategy of brinksmanship being employed by the leftist leaning ruling Syriza party of the Greek government may have been overplayed in their negotiation with the country’s international creditors. Since the Syriza party won election in January with an anti-austerity platform, the Greek leftist-led coalition government has maintained a hardline position against what it views as harsh measures being imposed by its financial lenders on the Greek people. Their claim of their creditors’ imposition of stringent measures, is a reference to the conditions outlined in a cash-for-reform deal which the country’s previous government agreed to in a negotiation with the International Monetary Fund and the European Central Bank a couple of years ago.

According to the official data, Greece owes its international creditors about 242.8 billion euros. The country is unable to pay this massive debt. In other to avoid default, its previous government agreed to an austerity-based reform program in return for much needed financial assistance from the IMF and the EU. The Greek people grew increasingly weary of the harsh austerity conditions that came with the financial bailout, and in a backlash against austerity they voted-in a left-wing party in January 2015.

Alexis Tsipras emerged as the country’s Prime Minister. The new Tsipras’ government in Athens has been insisting on a more lenient restructuring of the country’s massive debt since it came into power—insisting that the Syriza party was elected by the Greeks to try and change the terms of the austere agreement that the previous Greek government entered into with the country’s lenders.

As a result of the tough austerity regime and reform demands that was stipulated in the cash-for-reform terms for financial aid from the ECB/IMF creditors, aimed at saving Greece from defaulting in its debts, Alexis Tsipras’ Syriza party was swept into office with the promise of demanding change to the austerity terms of the country’s aid package which was agreed to by the previous government.

Now, under the combative leadership of Alexis Tsipras, the Greek debt saga seems to have evolved into a cliffhanger, as Greeks, and indeed many in Europe and around the world, watch anxiously from the edge of their seats—in eager anticipation of the next twist in the fast unfolding negotiation drama between Greece’s creditors and the government I Athens. Although hoping for a dramatic last minute plot twist that would see its leaders strike a favorable deal that Greeks can live with, many in the country are uneasily resigned to the possibility of their country’s debt default, and a potential acrimonious exit from the Eurozone as a consequence.

A bad ending to this evolving drama, which sees Greece leave the single currency alliance, could easily lead to a Greek tragedy of epic proportion—an unthinkable disaster that the Greeks should be sure to avoid at all cost. I have a sense that the vast majority of the Greek populace would be willing to make short term sacrifice for long term financial stability and sustainable economic growth that will bring prosperity to all Greeks, and not just to a privileged few. Remaining in the Eurozone should be nonnegotiable for the Greek people.

Sure the proposed fiscal adjustment demands for 2015 and 2016, being proposed by its international creditors may be a bit stringent for the Greek government to sell to its core constituents—who elected the Syriza party at the beginning of 2015 on a promise to end austerity in the country, Prime Minister Alexis Tsipras needs to understand that a bold compromise with International Monetary Fund and its European partners is necessary in other to avert a colossal economic catastrophe for Greece, and perhaps for the entire global economy.

I’m certain that Tsipras is well aware that a transformative leadership requires a leader to make critical decisions for his country which might cost him significant political capital. A true leader must be willing to sacrifice persona political ambition for the greater good of his country. This is the time for him to step up and become a historic leader—very few leaders get this chance to make history in a time of historic national flux.

Prime Minister Tsipras has been gifted with this chance. Let’s hope he is bold enough to choose the path of serving the greater good of the Greek people, over the political expediency of his party. The Greek leader must not allow the far-left faction of his party to cajole him into going down in history as the leader who ignited a financial firestorm because of a misguided brinksmanship.  

Already, the impasse between Greece and its creditors is beginning to weigh on the trading platforms of financial markets around the world.

Fearing that a Greek financial default could adversely affect the still fragile global economic recovery, the US treasury Secretary, Jacob Lew, has called on all sides in the negotiation to, “in the best interest of Greece, Europe, and the global economy for Greece and its creditors to find a sustainable solution to the current impasse.”  He urged the Greek government to be more amenable to the adoption of the difficult measures stipulated in the cash-for-reform proposal by its EU partners.  

Authored by E. Stanley Ukeni, © 2015. All Rights Reserved.