On the face of it, the chances of a deal between the current Greek government and its creditors seems to be waning, with the public rhetoric on both sides hardening by the day. With its reform programme now having run out, Greece’s creditors are talking in terms of tougher conditions for any new deal. Meanwhile, for its part, Greece is talking tougher in terms of the debt restructuring it believes is needed.
To me, the situation is at least somewhat analogous to the Cuban Missile Crisis in 1962, which was ultimately resolved through a deal in which the Soviets removed their missiles from Cuba up-front, but with a private assurance from President Kennedy that similar US Jupiter Missiles would subsequently be removed from their bases in Turkey & Italy. Actually, at the time, the ‘deal’ was conducted in the so-called back-channels, featuring US journalist John Scali on the US side, Soviet spy Alexander Fomin on the Soviet side, and a strategically placed op ed piece suggesting the deal under the by-line of Pulitzer prize winning journalist Walter Lippmann.
Fast forward to Greece, where the role of the helpful op-ed piece may well turn out to be the IMF’s latest Debt Sustainability Analysis, which most people seem to have interpreted as suggesting firmer guidance from the IMF that debt re-jigging needs to be part of a new Greece-Eurozone understanding.
With the op-ed piece written (sort of), that just leaves the roles of Messrs. Scali & Fomin to be filled, and then finally – hopefully – we can have a workable Extend & Execute deal for Greece, and a well-deserved breather for the Greek people. Is there anyone sensible who doesn’t want that outcome?
And in that case, believe it or not, it doesn’t really matter who wins the referendum on Sunday which, try as certain elements in the Eurozone might, is only ever going to be an answer to the question set (no matter how obliquely). To attempt to do otherwise, in fact, would be about as legally dubious as the legal case for the 2003 Iraq War.
Also, when you think about again about exactly how little was achieved between Greece and the Eurozone when they were ‘in intense negotiations’, the current pre-referendum silence might be their best hope yet for a break-through.