A woman stands in front of graffiti depicting a zero Euro coin in Athens on June 4. (AP Photo/Thanassis Stavrakis)

The negotiations between Greece and its creditors concerning the country’s future as a member of the euro zone have ended as theatrically — and acrimoniously— as they began. On Jan. 30, shortly after Alexis Tsipras’s Syriza party entered into a governing coalition with a party of the extreme right (Anel), Eurogroup chief Jeroen Dijsselbloem flew to Athens to meet with the new Greek finance minister, Yanis Varoufakis. After Varoufakis announced that Greece would no longer accept direct oversight of its finances by its creditors, known informally as the Troika (consisting of the International Monetary Fund, the European Commission and the European Central Bank), Dijseelbloem whispered, “You have just killed the Troika” and abruptly left a joint news conference with an awkward handshake.

On June 26, Tsipras announced that the creditors, now re-baptized “the Institutions,” had rejected Greece’s last best offer to resolve the crisis. They returned the Greek proposal heavily marked up in red ink as if it were the homework assignment of a particularly dense student. Compromises offered by the Greek side were replaced by language more acceptable to the creditors. On one of the most contentious issues in the talks, the creditors’ demands for further cuts to already pared-back pensions, a significant offer by Greece to raise taxes on certain pensions in lieu of further benefit cuts was summarily dismissed.

With time running out and a substantial loan repayment due imminently to the IMF, Tsipras interpreted this harsh response as an ultimatum. Rather than reject it outright, he announced that he would submit it to a referendum by the Greek people. He then returned to Greece and delivered a televised address to the nation in which he said the proposal by the Troika — it seems pointless to retain the euphemistic “Institutions,” even though this change of nomenclature has been one of the few concrete concessions to the Greek side by the creditors— “contravenes the founding principles and values of Europe.” Nevertheless, he said, he would abide by the vote of his people: If Greece chose to accept “this blackmail ultimatum” imposing “a strict and humiliating austerity … with no end in sight,” he would dutifully comply. What would happen in the alternative case — a negative referendum vote — was left unstated.

Let us try to unpack the political intent of the Greek prime minister’s dramatic speech. Tsipras was elected in January on a promise to challenge the Memorandum of Understanding agreed between the Troika and previous Greek governments. With that platform, he won 35 percent of the vote, which under Greek rules gave him enough seats in parliament to form a coalition government. Polls at the time showed, however, that a substantial majority of Greeks, perhaps as high as 80 percent, did not want Greece to leave the Eurozone. Hence Tsipras had a strong mandate to negotiate an alleviation of the terms of austerity, but what was he to do if the Troika, which holds all the cards — or, rather, all the cash: Greek banks do not have enough money in their vaults to operate if the ECB suspends its Emergency Liquidity Assistance — remained adamant? What is more, his own party is divided: The Left Platform believes that Greece would be better off leaving the Euro (“Grexit”) than surrendering to continued austerity.

The proposed referendum solves two problems for Tsipras, no matter what the outcome. First, if the Greek people say no to the Troika, as he has recommended, he will then have a mandate for continuing to govern come what may. And what may come is dire indeed. The banks could close at any moment, at the discretion of the ECB. A run has already begun: Greeks are understandably lining up to withdraw their savings. A forced and disorderly Grexit could follow. A period of chaos will likely ensue while the Greek government attempts to cope with the transition to a new currency and reopen its banks without ECB support. In the long run, to be sure, Greece might be better off. It will be able to reclaim national autonomy in budgetary and fiscal matters, but it will first have to suffer through a long period of hardship while it puts its finances in order—an austerity this time of its own choosing rather than in conformity with the ideology of the Troika, but austerity nonetheless.

Second, a no vote would presumably strengthen Tsipras’s hand in Brussels if he should decide to return to the negotiating table. He can say, rightly, that he made numerous concessions over months of negotiations leading up to this point but that in the end the concessions were too much for the Greek people to bear. At the moment, however, this trump card seems very weak because the Troika, angered by what it sees as a repudiation of positions to which it thought Greece had already agreed, has declared that the negotiations are at an end.

A yes vote would provide Tsipras with political cover for the only kind of agreement that the Troika seems prepared to accept at this point — an agreement that Tsipras’s enemies will describe as “surrender” — which is indeed how he himself characterized it in his speech. Although it seems unlikely that Greeks would vote to approve terms that their popular prime minister describes as “humiliating,” Reuters is reporting that “opinion polls published in Sunday newspapers pointed to a majority in favor of accepting the bailout terms.”

Tsipras’s theatrical coup is therefore politically astute. When tempers cool, the Troika may even discover that it has more to lose by routing its nemesis than by offering him a face-saving way out. Indeed, he may have found an unlikely ally in the person of one of the people most responsible for the Memorandum of Understanding that the Greeks so vehemently reject. Dominique Strauss-Kahn, who headed the IMF when the memorandum was negotiated, now admits that he made mistakes and wants to rectify them: “”My proposal is the following: Greece should get no more new financing from the EU or the IMF but it should get a generous maturity extension and significant nominal debt reduction from the official sector” (emphasis added). Maturity extension and nominal debt reduction are precisely what Tsipras and Varoufakis have insisted from the beginning are the only sensible way out of this tragic mess. Let us hope that the personal frictions that have heated these talks can be overcome long enough to allow a more rational solution to be sought.

Arthur Goldhammer is a senior affiliate of the Center for European Studies at Harvard. The translator of many works from the French, including “Thomas Piketty’s Capital in the 21st Century,” he also blogs on French politics at http://artgoldhammer.blogspot.com.

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Read more about Greece and the euro at the Monkey Cage:

Henry Farrell: Who’s lying in the negotiations over Greece and the euro?

Kathleen McNamara: The euro is an experiment in making a currency without a government. That’s why it’s in trouble.

Greece may default on its debts if a deal for more funding in exchange for fiscal reforms is not made. Here's why that matters. (Jorge Ribas/The Washington Post)