William Keegan: Echoes of Greek tragedy and comedy in eurozone debt crisis stalemate

With the stand-off between Greece and its creditors continuing, Greek Prime Minister Alexis Tsipras is due to meet German Chancellor Angela Merkel in Berlin this evening (23 March 2015) in the latest effort to resolve the deadlock.

Life continues to be extremely tough for many Greeks, but the farcical nature of so many of the proceedings can easily divert the outside world from the underlying seriousness of the situation.

As someone who benefited from reading everything from Sophoclean tragedy to the comedies of Aristophanes in his youth, I have to say that I hope there is a latter day Aristophanes over there in Athens making the most of the farcical elements – although it should be emphasised that, in common with many a satirist, Aristophanes had a serious purpose.

He would nevertheless have loved the recent episode in which, thanks to what is known as digital media, a clip of 'rock star' finance minister Yanis Varoufakis raising his middle finger in an act of apparent rude defiance towards the Germans went viral and did not help his cause with the German media and public. Of course, the clip has now since been revealed as a hoax.

Aristophanes would no doubt have loved it when a Financial Times report stated that "the saga raises questions about digital media..." Perhaps I missed something, but I am not sure that the FT got the connection between digital media and the fact that fingers, such as the one raised by Varoufakis, are also known as digits – a linguistic usage which long preceded the phrase "digital media".

Friends of Athens

Now, I know it is generally considered that the new Greek government, at almost every move, is not helping itself. Nevertheless, it is worth emphasising what the Greek prime minister and finance minister, the chief negotiators with the country's creditors, are up against – it is not just the Germans.

A real problem has arisen with other countries, especially Spain. The Spanish government, having endured savage austerity and now seeing signs of recovery, is as relentless as the Germans when it comes to concessions to the Greeks. Thus the Spanish economics minister, Luis de Guindos, has insisted: "There will not be any disbursement [of rescue funds] before there is a real test that the reforms have been approved and implemented."

To paraphrase Aristophanes in his play Wasps, the Germans and the Spanish have 'not yet fooled us into believing they are friends to Athens'.

But the Greek liquidity crisis is urgent, and potential disaster lies just around the corner unless emergency funds are provided; so-called structural reforms take time to be implemented, even in economies that do not suffer from the Greek malaise.

In spite of everything, the majority of Greeks reportedly wish to remain in he eurozone, and Mr de Guindos insists that a possible Greek exit from the eurozone "is not on the table." As he says: "There are two red lines: the first is that nobody can leave; the second is that nobody can violate the rules."

This latter is of course far too rigid an approach. There is a well known saying that rules are made to be broken, and the fact of the matter is that, as everyone knows, the rules of the eurozone have been stretched in the past, even for Germany. But so far from being reprehensible, such deviations were sensibly pragmatic.

The truth is that the strict rules for limits on budget deficits were drawn up during the Maastricht process that led to the formation of the single currency, when no one could have had any idea that the banking system would produce an economic cataclysm in 2007-08.

If the Germans and the Spanish wish to preserve the rule that no country can leave, they will have to adjust their approach to that second red line.

William Keegan is a journalist, academic, and the senior economics commentator at The Observer. He has just published his latest work – 'Mr Osborne's Economic Experiment - Austerity 1945-51 and 2010' (published by Searching Finance) – which can be purchased on Amazon.