An EU official told EUobserver that since the end of June “legal scenarios had been worked on, mainly by the European Commission, the European Council and the European Central Bank’s legal services”.

“The idea was to find measures to change the EU treaty or find ways to remove the euro from Greece for a certain period,” the official said.

In the early hours of 13 July, after 17 hours of talks and interruptions to rest, think and consult his cabinet back in Athens, the Greek prime minister Alexis Tsipras gave in and signed a deal he had refused until the last minute.

Greece would receive up to €86 billion but would have to submit to even stricter conditions and tighter controls than during the two previous programmes. Tsipras could get concessions only on the amount and use of privatisations to come.

Geopolitical risk

The Grexit option had been put on the table by German finance minister Wolfgang Schaeuble, with the support of a majority of his Eurogroup colleagues.

In Berlin, chancellor Angela Merkel had to decide between Schaeuble, who thought the eurozone could manage without Greece, and her foreign affairs minister Frank-Walter Steinmeier, for whom it was important to keep Greece for geopolitical reasons.

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“Merkel has a reputation of avoiding unknown risks, and she decided not to take a geopolitical risk,” the official said.

“Greece is of regional importance,” Jens Bastian, an independent economic analyst based in Athens, explained.

“A Greek exit from the eurozone would have been a huge security risk,” he told EUobserver. “It is a Nato country with borders to other Nato countries, and the last thing you want in the Balkans is further destabilisation.”

Regional stability is also a matter of financial transmission, Bastian said.


“There was great concern in Romania, Bulgaria, Macedonia and Serbia,” where Greek banks have subsidiaries. “The central bank governors in these countries were very closely monitoring the operations,” Bastian said, in particular when capital controls were imposed in Greece by the ECB.

“Capital controls were inevitable,” the EU official said. “Of course, they went against the principle of free circulation of capital, but it was the only way to avoid capital flight.”

The option had been “discussed by the ECB’s governing council [during spring], and the idea wasn’t pushed only by the Bundesbank.”

Varoufakis the villain

Between Tsipras’ election on 25 January and the conclusion of the bailout agreement on 14 August, 15 Eurogroup meetings, 1 Eurozone summit, 3 trilateral meetings between Tsipras, Germany’s Angela Merkel and France’s Francois Hollande, several meetings between Tsipras and European Commission president Jean-Claude Juncker and countless experts meetings were necessary.

The most dramatic moment was when eurozone finance ministers met without their Greek colleague Yanis Varoufakis on 27 June. The day before, Tsipras had called a surprise referendum on austerity.

At that time, “it was clear that Grexit was a real option,” the official said.

The dramaturgy was fuelled by the villain of the play, the outspoken and controversial Varoufakis.


After the first Eurogroup, it was already 18 [ministers] against one,” the source said. An economist turned politician at Tsipras’ request, the Greek minister ‘was not interested in doing diplomacy, he wanted grand discussions”.

According to this official close to the negotiations, “Varoufakis did not pass on the right things to Tsipras. Tsipras was not really aware of what was going on in the Eurogroup.”

As a result, “the Greek government always had a wrong assessment of its position” towards its creditors.

In July, the morning after the Greek referendum on austerity, Varoufakis resigned and Tsipras was in direct command of the talks.

Tsipras’ comebacks

The Greek PM seemed to be a political illustration of the principle inherited from ancient Greek physicist Archimedes, by which a body immersed in a fluid comes back to the surface through an equivalent force.

The 41-year-old newcomer was elected on the promise to end austerity in January, was pushed to the brink of default in June, won a referendum with a 60 percent majority in July, signed a bailout agreement and lost his majority in July and August, and won a snap election in September.

Unfazed, he renewed his coalition with Anel, a right-wing nationalist party and has so far met his commitments towards the creditors.

In November, as a symbol of Tsipras’ evolution, a Syriza MP resigned to protest against the latest set of reforms voted at the creditors’ request. Gavriil Sakellaridis was no ordinary MP. From January to August, he had been Tsipras spokesman, the PM’s voice in Athens and Brussels.

Challenges

For Greece, the Archimedes thrust is more problematic. In 2015, political uncertainties, capital flight followed by capital controls have taken their toll.

In its winter economic forecasts published in February, just 11 days after Tsipras’ victory, the European Commission banked on a 2.5 percent growth in 2015 and 3.6 percent in 2016, after a 1 percent increase of GDP in 2014.

Eight months later, in its autumn forecasts, the EU executive foresees a 1.4 percent decrease of GDP for 2016 and 1.3 percent contraction in 2016.


While public debt was expected to fall from 170 percent of GDP in 2015 to 159 percent in 2016, it is now up at 195 percent and should peak at 199.7 percent next year.