The language used in discussing Greece’s economic dilemma is getting in the way of a solution. In business negotiations it is usually quite useful to look at the major issues and try to reframe them. This is no different when talking about economies.
Issue 1: The Greeks “rejected austerity.”
Reframe 1: The Greeks rejected the controlled austerity offered by the EU in favour of the chaos that the current Greek government has ensured for its citizens. This reframe is extremely important as the structure of the Greek government’s referendum was negligent and potentially fraudulent: they did not offer their citizens an explicit choice between two courses of action, instead they allowed one of the choices to be implicit. By doing so the Greek government betrayed their own people by hiding the risks from them.
What comes out of this reframe is that the gap in reality as understood by the Greek government and its citizens needs to be narrowed and even eradicated. This will take a lot of courage from the Greek government.
Issue 2: The Greek government was negotiating.
Reframe 2: The Greek government tried to bluff the Germans using the madman strategy and were called on it. The Greek government then bluffed their own citizens hoping to have their bluff called but were surprised when the people of Greece backed their own government’s suggestion. This government clearly doesn’t know how to negotiate and should be taken gently by the hand into a private room to receive instruction on how governments behave. The Americans might be a good candidate for this (see below).
Issue 3: The idea that there is a loss linked to any decision being made. In particular the idea that Grexit will cost Europe dearly.
Reframe 3: The cost has been accrued, it simply hasn’t been paid yet and the blame has not been apportioned. The real issue is political ass covering and a search for a solution should focus on that for once it is found the politicians of Europe will easily find an economic solution. Announcing what the current mark to market is on the cost of Greece’s economic situation would be helpful.
Issue 4: America will be furious if Greece is allowed to exit the European Union. In particular the Americans fear that an ostracised Greece would move closer to Russia.
Reframe 4: It is clear what America gains if the European Union pays the price for keeping Greece in the family. The question becomes how are the Americans willing to contribute to get a result that they want? I gave one idea earlier in this article but I think it’s going to take more than that.
Issue 5: It is all about face-saving now.
Reframe 5: For the Greek government it is beyond face-saving and as I discuss above it is about understanding how to negotiate. I want to make clear here that I am not suggesting that they change their stance, just how they presented to the world and in particular their creditors.
For the German government the issue is nicely summed up by the Diner’s Dilemma: If a group of people go out to dinner and agreed to share the expense in advance then if one of them decides to have the most expensive dish they will be subsidised by the others, thus leading to everyone ordering the expensive dish. In other words if Germany bails out one EU member then other EU members become incentivised to be fiscally irresponsible. That is a serious issue because it is a greater threat to the integrity of the European Union than is Grexit.
The idea that comes out from this reframe is to first see if Greece is willing to have a non-creditor country act as a friendly adviser at the negotiating table and second for Germany to insist that a Greek bailout require greater centralisation of EU member state fiscal policy.
I’m not suggesting that the reframed or the ideas that they point to are necessarily relevant. What I am emphasising is that reframing the issues is an important step in getting to an effective solution.