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Anastasia Balezdrova

After last night's "no" to extending the bailout programme after its expiry on 28 February stated by the government of Alexis Tsipras, Greece is perhaps entering the most critical week for its future. Shortly before the start of negotiations with the lenders, Athens declared that it would not give up its request for a bridging programme to ensure its funding for several months until the new cabinet offered its action plan.

Meanwhile, Greece's European partners have warned that the adoption of such a programme is not contemplated and that if Athens wants to continue to rely on their support it has to request an extension of the current bailout.

The current stalemate has provoked frequent comments that the probability of Greece leaving the euro zone is becoming greater each passing day. The concerns are reinforced by statements by economist and SYRIZA member Kostas Lapavitsas that "if the lenders refuse to accept our proposal or attempt to blackmail us, all options are open, for conducting both a referendum and elections in which the Greek people can express their will regarding what the next actions of the government should be."

How Brussels perceives the developments in Athens, whether Greece has allies in Europe and what could be the alleged end of the attempts of the Greek cabinet to push through its position in breach of European rules were the issues that GRReporter discussed with journalist and long-time correspondent for Bulgarian media in Brussels Veselin Zhelev.

Last week we witnessed a European tour of Greek Prime Minister Alexis Tsipras and Minister of Finance Yanis Varoufakis. What are the perceptions of European leaders and media of the new Greek cabinet?

I cannot say what the perceptions of European leaders are but I can say what the public reactions are. In short, they range from reticence to an open disagreement with the new Greek cabinet. Tsipras visited Rome, Paris and Brussels, and his Minister of Finance was in the same places, and in Frankfurt and Berlin, where he met with President of the European Central Bank Mario Draghi and his German counterpart Wolfgang Schaeuble.

I can say that Tsipras was received with a formal protocol of friendliness and solidarity in the two most influential capitals with leftist governments, Rome and Paris, but also with much restraint and a clear warning that neither Italy, nor France agree to forgive the Greek debt.

I noticed a symbolic gesture by Matteo Renzi who gave Tsipras a tie. A symbol of Tsipras as an anti-system player that is directed to his constituents is that he does not wear a tie, unlike the rest of the traditional elite. Personally, I "read" this present in the following way: "if you are in the club, you have to play by its rules." Greeks owe each Italian citizen 600 euro and 60 million Italians want their money. That is, there is no left-winged solidarity. Moreover, if Greece becomes insolvent or if the markets interpret a possible restructuring of its debt as a "credit event", i.e. as a recognised default, Italy will be the next country that will be exposed to the "contagion" the most. Indeed, now the banking union is blocking the main transmission of the contagion but it has just been created and has not yet been tested in a real situation.

In Bulgaria there is some enthusiasm due to the victory of SYRIZA which is difficult to explain. Some even wrote that it was the beginning of a new "European Spring" and Greece would change Europe. It remains to be seen. It may change it. But what I see as an objective fact so far is that Europe has changed SYRIZA, the first clear sign of the change being that Tsipras and Varoufakis have openly renounced their election promise to negotiate the debt forgiveness. The euro zone has stated at all levels that it will not happen.

I think the pressure on them will continue and they will have two options, either to accept the conditions of the lenders or for Greece to leave the euro zone, which they themselves declare that they do not want to happen. Therefore, they will have to accept a compromise. Of course, there will be very difficult negotiations. No one in Europe wants to destabilise Greece but no one will make ungrounded concessions to it either. Moreover, no one will create a political precedent in terms of breaking the rules of the euro zone.

Therefore, they will have to accept a compromise. The question is how well they will negotiate, what compromise they will achieve and what political cost SYRIZA will pay.

Alexis Tsipras said several times that SYRIZA is not trying to divide Europe without anyone asking him about that or accusing him of that. Do you think there is such a danger?

It depends on what we mean by "Europe". If we perceive it as "Europe of citizens" and "Europe of nations", objectively it is divided into rich and poor, North and South, East and West, and into lenders and debtors. This division is objective. It exists regardless of the fact that some deny it and it is a consequence of the crisis.

One of its political manifestations is the radicalisation that is taking place in some countries. This year we are yet to see phenomena like SYRIZA, in which anti-system parties come to power or occupy key posts at least, as balancers in parliaments, which determine the formation of the government.

However, I do not believe that this will dramatically change the course of Europe. European governments simply will not agree to forgive the debt of Greece to the detriment of their taxpayers. They will rather use the political precedent, namely the victory of SYRIZA, to put pressure on the more conservative governments, such as that of Germany, to tell them, "You see what your austerity policy has led to." And this is reasonable. The truth is that, years ago, this extreme policy of austerity should have been combined with measures to promote economic growth, with structural reforms that Greece lacks, in order to give people a chance and perspective. Young people are mainly rebelling against the lack of perspective, not against poverty itself, which is depressing and unbearable in some countries of course. But it is even more frightening that they do not see how they will emerge from this situation, they cannot plan their lives, which makes them easy to manipulate. All this unites them behind sellers of illusions, such as Tsipras.

Therefore, European societies are objectively divided and the plan for a European fund for strategic investment is a tool to restore economic growth and to reduce disparities between the socioeconomic conditions of the countries. Not for nothing did European Commission President Jean-Claude Juncker say that "we are last-chance Europe". Those who want to destroy this Europe, which they blame for everything, offer no alternative. What would they put in its place? Would it be Europe of borders, Europe of nationalisms, Europe, which is Putin’s partner? They offer a reasonable and somewhat understandable but ungrounded denial. They offer no real alternative and societies will soon realise this.

If we talk about Europe of states and governments, things are quite different. I think the euro zone has learnt a lot of lessons from the crisis and it has already established mechanisms that allow no country to blackmail others and to drive a wedge between them. Greece could blackmail the euro zone while George Papandreou was in power, when there was no European Stability Facility and European Banking Union. Because then Greece's exit from the euro zone would mean spreading the so-called "contagion." That is, the financial crisis would affect other countries through the transmission of the banks, through the return on their debts. This cannot happen, as I have said, because there are mechanisms that can stop it.

This means that if Greece decides to leave the euro zone, although Tsipras has said he does not want this to happen, the only injured party will be it itself and the catastrophe will be both economic and political. It will be just a loss for Europe that it may handle in economic terms.

In political terms, such an event will undoubtedly provoke shocks, but I do not believe it will destroy Europe. Moreover, I do not believe the leaders of SYRIZA are so irresponsible. If they go that far, I think that the Greeks themselves will overthrow them as they toppled Papandreou.

However, these are hypothetical scenarios. Since the negotiations themselves have not yet started, it is hard to say how they will develop. In my opinion, the most likely scenario is for finding a compromise, i.e. for the Western partners to give something to Tsipras, so that he will not return empty-handed to his voters in order for them not to destabilise his country. The new government in Athens will have to make concessions too and they will have a political cost. It will have to recognise that some of the promises with which it has won the elections cannot be kept.

Does this mean that there is no real danger of Grexit in your opinion?

I am inclined to agree with those analysts who believe that the so-called Grexit makes neither political nor economic sense.

Let us look at the economic plan. What Grexit could resolve, i.e. the internal devaluation, was achieved through drastic cuts in wages and pensions in Greece. Therefore, now it makes no sense to return to the drachma. The only thing that such a move could achieve is to make the Greeks even poorer than they already are.

As for the political consequences, is Greece interested in destabilising Europe and leaving it? What will Greece do outside Europe with borders and customs duties at them in view of the fact that it imports 85 percent of its consumption? They would not be able to pay even for petrol.

Furthermore, in purely procedural terms, the European Economic and Monetary Union is an irreversible process. If you want to leave it, you will have to leave the European Union, not the euro zone. There is a procedure for leaving the European Union, which is stipulated in the contract. I do not think that a state of the scale of Greece will make such a suicidal step, even though it is led by a person like Tsipras.

What we can actually expect is difficult negotiations that will seek a typical European solution, a compromise. But Greeks must realise that the forces are unequal. Now they are alone against all the other 18 states in the euro zone. They perceive the recent Greek elections as a rebellion against arithmetic, against common sense. Such uprisings are doomed as a rule. They can be explained, but not justified.

In the statements by Tsipras and Varoufakis we heard a clear attempt to circumvent the EU rules. How does Europe perceive this behaviour?

According to me, this is a declaration of positions in advance, which is normal. Before such difficult negotiations everybody shows off and says what he will do. However, the conversation behind the closed doors of the hall of negotiations is different and a real assessment of the capacities and forces is made.

Again, it depends on the perspective from which we judge the events. In political terms, both the President of the European Commission and Commissioner for Economic Affairs Pierre Moscovici said that they recognise the sovereign choice of the Greek people and that they will talk with the new government, pointing out at the same time that, in Europe, there are rules that all must respect. I do not see how this can be put more clearly.

Regarding the position of Tsipras and Varoufakis, in my opinion it has become unclear and variable. On the one hand, they want to change the status quo but on the other they say, "we will change it while observing the rules." This is an internal contradiction because they rebel precisely against the rules, against the so-called "memorandum" and the Troika, which are their basic structures. They say, "We do not want the Troika because it humiliates Greece, suppressing our national sovereignty. We want to speak directly with the lenders." Well, there will be no Troika, there will be some other form. For example, they can talk to the European Stability Facility. What does this change though? Does it change the ratio of debt to GDP? Does it change the structure of the Greek economy? Does it change the solvency of Greece?

Incidentally, it is a speculation that Greek debt is not sustainable. Usually they present its ratio to GDP, which is actually far above the limit at which a debt is considered sustainable, namely 120% of GDP. However, I have talked to economists who say that if the shares the Greek government holds in the Greek banks that were nationalised during the crisis were subtracted from the debt, the ratio would fall to 120%. Secondly, the large payments on the Greek debt are due after 15-20 years. There are now mainly interest payments on which Greece’s expenditure is much lower than that of Portugal and Ireland, for example. That is, not the amortisation of the debt but the cost of servicing the debt is lower than in other countries in the euro zone, which were in a position similar to that of Greece. This is difficult to defend when you sit down to talk with the lenders. They will say, "Why did Ireland have 4.6% growth last year?" And you just have nothing to say to them. "Why are you halting the privatisations since you think you will make them fairer? Markets will not wait."

And as we have previously talked about reactions, I think the most accurate and most objective is the reaction of markets. On Thursday, the European Central Bank stopped the cheap financing for the Greek government. That is, it stopped to accept Greek government bonds as collateral for refinancing. This was a result of the decision of the new government to withdraw from the agreement (memorandum). Greek bonds have anyway long been qualified in the lowest non-investment grade and this step has already classified Greece as an unreliable debtor. The ECB was accepting Greek bonds as collateral for loans because the previous government had adopted the plan and it negotiated with the Troika. The reaction of the ECB is not political, it is a market reaction.

I also think that noone in Europe will destroy the arrangements that were achieved in the Economic and Monetary Union during the crisis in terms of economic and financial management just to avoid destabilising Greece. I think that the partners will do their best for Greece to remain internally stable, to start making reforms and preserve the growth that is already noticeable this year and will continue in the following one. It would be irresponsible to waste this opportunity for all Greeks.

We are seeing a great revival of anti-European sentiment in Europe. Currently, the Greek parliament majority belongs to the Eurosceptic parties. In Spain, Podemos is already the second political force too, etc. How would you explain this reaction of European citizens and what could Europe do to change this?

As I said at first, the radicalisation of political societies is a natural consequence of the economic crisis. Traditional parties are currently paying the political price for their policies that caused the debt crisis and for the way they subsequently handled it. I do not mean that this way was infallible. To the contrary, it is the subject of much criticism.

But to destroy Europe because it was not perfect means to throw out the baby with the bath water. United Europe is not the problem, it is the solution.

The rise of anti-European and Eurosceptic movements everywhere is not new. We saw this during the European elections. Let me recall that the National Front in France won 25%, the UK Independence Party in the United Kingdom won 25% as well, the movement Five Stars in Italy was second in the elections too, although it was expected to win.

However in Italy, which has serious economic problems too (its debt is 133% of GDP and it is implementing painful reforms), the traditional left has long achieved unprecedented victory in the European elections.

I think that this anti-European reaction will not be equally strong or the same in different places. While we can expect that leftist parties and movements will represent it in southern Europe, among debtor countries, due to the high poverty and the derating of much of the left electorate and its transition to the far left, we will see the opposite in the north, in the lending countries that are the net contributors to the EU budget. There we will see protectionism, nationalism, far right movements on the rise.

The most important elections this year will be held in the UK. Polls indicate that neither of the two major parties, the Conservative and the Labour parties, will have a majority, and that Nigel Farage's party, which supports the idea of Britain exiting the EU, will most likely fail to enter parliament and play a balancing role.

That is, we can expect things that we have not seen so far or we have not seen for a long time, but at this point, I do not see how this will change the course of Europe. The main reason for this is what they offer, if it is not this Europe. It is not clear.

As for the situation in France - I have personally spoken with Marine Le Pen. She is a very intelligent politician and talented leader. She believes that she can become President of France in 10 years. I personally do not believe this because when the National Front rises, the Socialists and the right wing unite against it. The electoral system in France is such that they can stop it. I do not yet see the perspective for a candidate of the National Front to win the presidential election in France in the first round. I doubt that this is possible, especially if a charismatic politician like Nicolas Sarkozy fails to return to politics and to run for president in 2017, although it is still an open question whether he will be able to do so.
 
However, there is no doubt that the anti-system parties will rise and the system ones will pay the political price for the crisis.

Is European bureaucracy aware of how far it is from the public and is it doing something to change this?

Firstly, this question is not new. Since the existence of the European Community and subsequently the European Union, bureaucracy has been the eternal justification of all evils. We need to know something else, namely that this bureaucracy and Europe has not been created alone. It is the work of the member states and the contracts they have concluded. Nothing in the European Union can be donewithout their approval.

There is a demagogy, according to which our national government does everything that is good and everything bad comes from Brussels. That is what European politicians say when they return to their countries. When they come here, they say the opposite, "Europe is the solution." And they state this even when they take no decisions or take half-way decisions.