In the wake of the Greek parliament's vote to accept the severe terms of a new European bailout, the logical thing would be for Prime Minister Alexis Tsipras to step down.
After all, he may have lost his majority in parliament, and he promoted passage of the bailout while saying it was bad for Greece. That's hardly a good basis for any program to work, or for any leader to lead. Yet the prime minister's resignation would help nobody.
Tsipras is the dominant figure in a political wasteland in Greece. The only large and credible opposition party, the center-right New Democracy, has no leader at all. And Tsipras, for all the damage that his brand of radical politics has done to the Greek economy, has proved good at getting ideas across to voters.
So how could a prime minister who has lost much of his political support push through a bailout program he doesn't believe in? It may not be possible, but here are a few suggestions.
First, take advantage of Syriza's division to form a national unity government, which would remain in place until elections in no less than a year, preferably two — to allow the economy a period of political calm in which to stabilize. The major political parties need to take collective responsibility for what comes next.
Second, fill top economic posts with technocrats free of the political interests that would prompt them to undermine the bailout. These should be people who enjoy the creditors' trust - - enough that they could even address the unworkability of the current bailout and negotiate a better long-term deal for Greece. As a bonus, making concessions to technocrats would be less scary to those European governments — including Ireland, Italy, Portugal and Spain -- that fear a Syriza success would energize their own populist parties.
Tsipras could even turn to Greece's old enemy Turkey for a finance minister, as outlandish as that may sound. Kemal Dervis engineered Turkey's recovery from a deep financial crisis in 2001. Dervis has been a top international development official and, as an economist, he enjoys respect from Washington to Berlin. On debt reduction, his views are similar to those of former Greek Finance Minister Yanis Varoufakis, but in temperament he is the polar opposite. He would only need to hold the job for a year or two, but picking a Turk would show the seriousness of Greece's new commitment.
Third, 30 days after the new government is formed, hold (yet another) referendum. Tsipras would need to offer Greeks the clear choice they should have been given last time: Do you want to implement the bailout in full and in good faith, or would you rather leave the euro? This time, there should be an actual campaign, with Greeks living abroad allowed to vote. Make clear what is at stake and get a clear answer to create a mandate for the structural reforms Greece so badly needs, but until now have been blocked by vested interests.
Fourth, assuming a vote in favor of the euro, Tsipras and his new finance minister should go to Washington for talks with the International Monetary Fund. The fund is Greece's natural ally. Despite its past acquiescence to Europe's insistence against haircuts, the IMF is now insisting loudly on major debt relief for Greece. Building a relationship with the organization that Tsipras only recently smeared as "criminal" in its determination to "humiliate an entire people" will take a little face time.
The IMF's interest is in debt sustainability and reforming the Greek economy so that it can become competitive and grow. Those are Greece's interests, too. (If the country votes to leave the euro, it will still have to rely on the IMF's help — even more so.)
Finally, Tsipras and all of Greece should look for guidance to the Baltic states, which were hit as hard as Greece during the financial crisis but recovered strongly. Their important lesson: A recovery program can be effective if you take ownership of it. This wasn't a demonstration that austerity works (the Balts would have suffered less had they not volunteered for more austerity than even the IMF could stomach). Rather, it showed that ownership works. And what Greece needs now is to own the difficult process it will need to go through for its economy to recover.
If Tsipras can achieve all that, he will be more radical than he's ever been.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
To contact the author on this story: Marc Champion at [email protected]
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