The Greek crisis - a high stakes game marked by blindness, inexperience and rigidity

Last night, I had ABC (Australian Broadcasting Corporation) News 24 on when the press conference with European Commission President Jean-Claude Juncker came on. It wasn't appearing in my twitter feed, that was full of tweets relating to the ABC Q&A program, so I started live tweeting the conference. When the ABC suddenly dropped coverage, I managed to follow along on the BBC.

Mr Junker was obviously an annoyed man. This was a pitch to the Greek people.

The BBC coverage is quite good on this one. Before going on, this EC press release will take you to the proposals as they were at the time that the Greek Government walked out having called the referendum.  I think that these are the proposals that Mr Juncker was referring too. They are difficult to interpret properly without more knowledge than I have of the current Greek system. They seem a little clunky, a  little over-prescriptive, to me.

Based on the public presentations from the two sides, it appears that the Greek Prime Minister's position is this. The EU can't afford to let Greece exit the Euro. The costs are too high. I need a no vote (no to accepting the proposals) to strengthen my negotiating hand. On the other side, a no vote means Greece's effective exit from the Euro.

Listening to the continuing feeds last night, I was reminded of two things. The first was the nearest Australian historical equivalent, the fight between the Federal and NSW State Governments during the depression over the Lang Plan. The second was the onset of the GFC where I stayed stuck to the TV in our Shanghai hotel room watching the crisis unfold..

In parallel to the evolving Greek crisis, the Chinese Government has announced measures to try to kick-start the slowing Chinese economy, while on the other side of the world, Puerto Rico is on the point of default on its $US72 billion in public debt. Meantime, stock markets are diving.

Greece has become a very high stakes game. I am not close enough to the political dynamics to understand all the possible permutations. On the surface, the lock-in effects on each side are now such that Greece will continue in economic lock-down mode until the referendum. If the vote is yes, the Tsipras Government has indicated that it will resign. Unless an alternative Government can be formed, that means new elections and further delays. If the vote is no, then everybody is going to be looking at exit strategies.

In Australian commentary, commentators have argued that China is far more important to this country. That's true at one level. But these things are interconnected. A telling sign here is the concerns expressed by the Russian Federation about the crisis. President Putin needs a weakened EU, not an EU in economic and political crisis whose flow-on economic effects affect other economies including Russia.

From a purely domestic Australian perspective, I don't have a clear idea as to what all this might mean. Clearly, it's a matter of concern to Australia's large Greek, Greek descended community. They have a very personal stake in the problem. Money is going back to Greece to support families and prayer vigils have been held. Beyond that, I have been trying to think through the flow-on effects depending on outcomes.

I hadn't expected the Tsipras Government to adopt such a high stakes approach. Looking at the IMF/ECB/EC document from a purely professional perspective and accepting that it has come about after a series of discussions, I don't think that the Tsipras Government really had clear strategic objectives, nor defined negotiating tactics. It finally devolved down to tinkering with detail. We will all suffer as a consequence.

Maybe in the few days before the referendum, Prime Minister Tsipras may set out more than what, in the end, comes down to we were robbed. I wouldn't count on it, however.

Postscript

This graphic from the BBC sets out the current composition of Greek debt.