Cameron should back Syriza’s reform goals

Jonathan Lindsell, 10 February 2015

Barely an hour goes by without news of the standoff between Greece’s new Syriza-led government and the troika of creditors, the European Central Bank, International Monetary Fund and the European Commission. The deadlock is unsettling the markets, we are told, as Syriza asks for debt relief and those who hold Greece’s debt refuse another restructuring.

Last week Greek finance minister Yanis Varoufakis, met George Osborne in London. The Chancellor looked distinctly uncomfortable, and his press conference emphasised the situation’s ‘threat to the British economy’ and the need to avoid ‘chaos’. Osborne was not crying wolf – the Athens Stock Exchange fell 6% yesterday and 10-year bond yields rose above 10%, The Telegraph reports.

But this is not a fear Osborne should be stoking, whipping market concerns. It’s an opportunity for British politicians looking to reform the EU to show they can be constructive and dynamic. Varoufakis told Osborne he wanted Greece to ‘play within the rules’ and his party leader, Alexis Tsipras, announced soon after his election, ‘It has never been our intention to act unilaterally on Greek debt.’

Like the Conservatives, Syriza criticises Brussels for its democratic failings and intends to reform it with greater respect for nation states’ sovereignty.

Like the Conservatives, Syriza dislikes government debt. Greece now runs a surplus. A key point in Varoufakis’ plan is to go ‘cold turkey’ and reject further loans or bailouts. Syriza hates corruption and pursues a hard line on collecting taxes.

Like the Conservatives, Syriza worries that the dispute might force Greece out of the euro (Grexit), an event that could traumatise the market, even if it eventually rewarded Greece with a drachma suited to its economic strength.

This last reason alone should to change the government’s tack. David Cameron first meets Alexis Tsipras on Thursday at the European Council. Cameron should give him much more confident support, publicly asserting that the ‘Greek crisis’ is overblown and that he will do everything possible, as leader of the EU’s third largest state, to broker a compromise. This would not be an extremist step – Tsipras’ plan to delay servicing Greek debt until the economy is growing stably already has the support of Barack Obama, the IEA, and Nobel economists Joseph Stiglitz and Christopher Pissarides.

Rather than contribute to an atmosphere in which the Greek government appear to be extremist Marxists demanding free lunch, Cameron’s intervention could calm Thursday’s summit. Even a moderate compromise towards Syriza’s position would represent an important precedent for reform, and show the British electorate that the Tory narrative is true – that Brussels can be flexible when Tories are at the table. It could help avert the instability that Grexit would bring, an instability that could affect the UK election.

Finally, it would be a tactical coup. Cameron could win the respect of unlikely allies including the probable victors of Spain’s upcoming election, Podemos. He would send Chancellor Merkel the message that Britain was serious about EU renegotiation, and that Germany was not the sole gatekeeper to achieving it.