Saturday, 31 January 2015


The new Greek government.

There is an art to blackmailing. I should know because I’m pretty sure my ancestors on the Scottish border were mixed up in it, either as perpetrators or victims, along with the Nixons, Maxwells, Armstrongs, and the other feisty Border clans.

You see, "blackmail" is an old Scottish Borders word, from back in the day when the Borders was a relatively lawless zone (for around 700 years) and what little law there was, carried a price tag.

Like any business transaction – kidnapping or hostage taking, for example – it depends on offering a relative service, i.e. giving the payer some benefit over not paying. Once the benefit is eliminated, it all becomes a bit pointless. Credibility is an issue. Morality not so much.

The recent behaviour of the Greek voters in electing SYRIZA and the recent actions of the Middle Eastern pariah state of ISIS, which recently demanded ransoms for two Japanese hostages in the region of $100 million, has thrown the issue of blackmail into sharp focus.

Don't actually need the money.
The election of SYRIZA is probably the largest collective blackmail attempt in history. As for ISIS, their demands were clearly unrealistic. Any Japanese government paying such amounts would instantly create a market in Japanese citizens that might have proved too tempting to someone like myself who actually lives in Japan and would thereby have frequent opportunities to cash in. Accordingly, the Japanese hostage situation has now evolved into a more realistic case of prisoner exchange, with ISIS offering the remaining hostage in exchange for a prisoner held by the Jordanians.

The election of SYRIZA in Greece has many points in common with this, as it is essentially an attempt to blackmail the EU in general and the Germans in particular to cough up yet more money or zero interest credit (the same thing) for the dysfunctional Greek economy – or, more accurately, the bloated Greek public sector. The idea is that if the EU doesn’t kowtow to the will of the Greek voters, then Greece will default on their loans, leading to an automatic expulsion from the Euro, and the collapse of the EU. So, why wouldn’t they pay?

The problem is that even a blackmailer is a kind of businessman who lives and dies by his reputation. If paying a blackmailer results in further demands that exceed the costs of not paying anything, or consequences that are not as terrible as actually paying, then the payer will feel unmotivated. The Greeks, it seems, by opting for a government that has no concept of basic economics, has apparently crossed that line and their only hostage is now themselves. It may not have been clear on election day, but in order to blackmail the EU, Greek voters had to opt for a party that would also destroy their credibility to effectively blackmail.

A comparison with ISIS may be illustrative. If the Islamic organization really were expecting a couple of hundred million dollars from the Japanese, then they would have to have a more than triple ‘A’ credibility rating and promise that it was a one-off, something that would have had no logic with such an arbitrary act. A demand for hundreds of millions of dollars was therefore either a simple declaration of ultimate murderous intent or an attention-grabbing, opening gambit, which could be quickly discarded once negotiations began. Greece, however, is in a worse position than ISIS as they actually need the absurd amounts of money they are demanding, and can't back down and make do with a mere prisoner exchange.

Since its election, the new Greek government has been implicitly threatening “Grexit” (Greek exit from the Euro), and for five minutes after the shock result reverberated round the world, this may have conjured up images of dominoes falling and the imminent collapse of the Euro, but now it seems the fear factor has dissipated and the idea of Greece leaving – especially an insane, red-brained, frothing-at-the-mouth Greece – seems more like a positive and a boost to the credibility of the Euro, rather in the same way that hanging Admiral Byng was a boost to the Royal Navy.

It certainly looks better than continuing to throw good money after bad, and setting a precedent for rewarding any debt-ridden population that decides to vote its way out of debt commitments by voting in the electoral equivalent of the Red Death. Even ISIS seem to be behaving more responsibly than that.

Don't let the door hit you on the way out.

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