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The Syriza government’s decision to transfer all available public sector funds to the Bank of Greece marks a political turning point. This high-risk move exposes in the clearest possible way the nature of the situation as it has evolved in the two and a half months since the February 20 agreement. The argument that was put forward then in favor of that accord was that it “bought time,” at however painful a price, so as to prepare the ground for key summer negotiations. The claim was that for a four-month period the European Central Bank would call a halt to the torture it had been imposing on the country’s economy since February 5, when it decided to terminate the most important mechanism for funding the Greek banks. As it is now generally recognized, the government was dragged into signing that unbalanced agreement through pressure from an accelerating outflow of bank deposits and the threat of bank collapse. Now, with public coffers emptying to forestall a cutoff of debt servicing and inescapable state obligations, it is evident that the only time that has been bought is time that works to the advantage of the Europe institutions and that the Greek side is exposed to an intensifying blackmail as its position deteriorates. The unprecedentedly belligerent climate at the Eurogroup meeting in Riga, with the Greek Finance Minister Yanis Varoufakis being pilloried and ridiculed by his counterparts (even those from countries of the weight of Slovakia or Slovenia) shows clearly enough how much humiliation the government has had to swallow over the last two months.

Behind the Mistake In a noteworthy statement on April 23, the deputy minister responsible for international economic relations who has now succeeded Varoufakis as the head of the Greek negotiation team Euclid Tsakalotos said characteristically: “When we put our signature on the February 20 agreement we made the mistake of not making sure that this agreement would be a signal to the European Central Bank to start the countdown for liquidity.” But this “mistake” does not have to do with some secondary aspect but with the central point of the agreement. There is a specific reason for it, and this reason is political, not technical, in character. The Greek side did not take into account what was obvious from the outset, namely that the European Central Bank and EU were not going to sit twiddling their thumbs when faced by a government of the radical left. Τhe biggest gun in their arsenal is liquidity and it was entirely logical and predictable that they would resort to it immediately. And naturally the lenders have every reason to continue “tightening the noose” (as Prime Minister Alexis Tsipras puts it) until they have forced the Greek side into total capitulation. To put it differently, if with the February 20 agreement the lenders had agreed to “ensure liquidity,” if they had delinked its provision from the specific austerity plans they seek to impose, they would simply have deprived themselves of the most significant means of exerting pressure they have at their disposal. That Tsakalotos believed they would do this smacks of extreme political naivety, if not willful blindness, particularly when a major section of his own party has been warning from the outset of the inevitability of this development. So the “mistake” results from a fundamentally wrong working hypothesis, on which the government’s whole strategy has been based from the outset: that “we will finally reach an agreement with the lenders” allowing Syriza to implement its program while staying the eurozone. This is the doomed logic of “left Europeanism.”