Life is often a game and politics often the showcase. In a game the players typically have a fair chance of winning, otherwise they would not play; and the players need to interact otherwise the game cannot proceed.

Greece and the rest of the Eurozone are currently negotiating on how to proceed with Greece’s financial program. Markets are expecting a last minute agreement, a scenario common in European negotiations. However, this time the outcome may shape the future of Europe and the Eurozone.

What is at stake?

Greece wants Europe to write-off part of its debt. In addition, they want better terms for future loans. To put things in perspective, Greece owes Malta circa €80 million in debt, and an additional €100 million of Greece’s debt is guaranteed by Malta, funds which Malta could have alternatively used for repairing our roads and financing our hospital. In comparison, Germany is exposed by €56 Billion.

Europe is arguing that Greece cannot ignore their commitments towards those countries that helped them escape default the first time round. In other words, the argument is that after helping Greece for the past few years, now Greece wants countries like Malta to forget about getting paid back in full, plus, they want more money.

If there is no agreement, Greece will probably have to leave the Euro with harsh economic consequences. Probably Greece is better off agreeing to continue with austerity measures rather than defaulting.

Furthermore, if there is no agreement and Greece defaults, the contagion effect may drag other Eurozone countries towards default. Probably the Eurozone is better off agreeing to Greece’s requests rather than have Greece default.

Who are the main players?

On Greece’s side the main players are Prime Minister Alexis Tsipras and Finance Minister Yanis Varoufakis;

Alexis Tsipras is the leader of the Coalition of the Radical Left (SYRIZA). In the 1980s Tsipras was a member of the Communist Youth of Greece, he has participated in all international anti-globalization marches and has named one of his sons Ernesto as tribute to Che Guevara. Tsipras placed flowers over countrymen killed by Germans in World War II in his first official commitment as Prime Minister.

Yanis Varoufakis is a political economist and author of several books on game theory. Varoufakis has described himself as a ‘libertarian Marxist’. He also assists Valve Corporation with designing economic models in games.

On the European side the main opponents are Jeroen Dijsselbloem and Wolfgand Schauble.

Jeroen Dijsselbloem is the Dutch Minister of Finance. Since January 2013, he is also president of the Eurogroup, a meeting of the finance ministers of the Eurozone.

In February 2013, he nationalized SNS Reaal, preventing bankruptcy, however, shareholders and owners of subordinated debt were practically wiped out.

In March 2013, Dijsselbloem took the lead in negotiating and promoting the ‘Cyprus bail-in’. He was criticized for taking deposits as part of the bank rescues, previously unthinkable. Furthermore he argued that financial institutions, as well as investors will in the future be forced to better evaluate the risks of investing as the costs will have to be shared.

Wolfgang Schauble, Germany’s Federal Minister of Finance. Aged 72, Schauble is the oldest man in cabinet and the longest-serving Member of Parliament. Schauble is the most vocal proponent of European integration. Along with Chancellor Angela Merkel, however, he has often taken a hard line toward countries that have caused the Eurozone crisis.

Schauble has a reputation for tough spending control and has stood by his position that structural reforms such as overhauling labor markets in Europe are the way out of a low growth-spiral.

In the 1980s Russia asked for an apology when then Chancellor Helmut Kohl compared Gorbachev to Goebbels. Schauble is reported to have strongly advised against the apology, saying that it would be misunderstood as weakness.

The bluff

Greece is betting that the Eurozone is not ready to risk a breakup. Thus their bluff is based on the conviction that rather than risk a crisis, Eurozone countries would rather accept Greece’s conditions.

This is being interpreted as blackmail by the EU and may lead Greece towards the allegorical ‘husband cutting his jewels to spite his wife’ situation. However, the players on this side appear willing to risk all. There may not be another option if the situation in Greece is really, as depicted by Tsipras, a humanitarian crisis.

The Eurozone is projecting the impression that it is able to contain an eventual Greek exit. There is a probability that this may be possible, however, a Greek exit scenario is unpredictable at least. Another factor is that the Eurozone players appear to have been offended by what they perceive as arrogance and blackmail from Greece. Pride may play its part on this side.


A win-win outcome is practically impossible as at least one side has to give in to the other. A winner takes all situation may be possible if one side capitulates. A compromise solution would probably be the best outcome although however improbable.

From day one it was obvious that Greece would eventually be unable to repay the full amount of its debt, thus the current crisis was probably expected and prepared for by the Eurozone. Greece on the other hand is playing hardball knowing well that it can hurt Europe at a time when Europe is at its most vulnerable. Predicting who blinks first is anyone’s guess.