By any definition, what is going on in Greece today, or rather what is going on between Greece and outside countries and institutions, is a melodrama, a melodrama of epic proportions. What we mean by a melodrama is a dramatic encounter that is deliberately overacted by the many participants. They make threats, implicitly or sometimes explicitly. They draw public lines that cannot be crossed in the negotiations. They make dire predictions of the consequences of not following their recommendations. A melodrama heightens events and insists on moral dichotomies.

In a melodrama, the participants do just about everything they can to make others take the blame for past, present, and future negative consequences. The one thing they do not do is to confess their real priorities, and how their priorities are being served by participating in the melodrama instead of entering into sober discussions aimed at some resolution of the differences.

When and how did this particular encounter begin? The beginning date is precisely what is under contention. There are in fact at least three matters involved in the discussion: the present and future of Greece, the present and future of the eurozone, and the present and future of the European Union. Not all participants are interested in all three issues. And those that are interested have different views about them.

Let us start with Greece. In the years following 1945, the Greek economy seemed to prosper, as did that of a large number of countries. It was called the "Greek economic miracle." But after the 1970s, Greece did less well, as again did most countries. Nonetheless, until the so-called "great recession" of 2008, there were seemingly few problems for the Greek government.

Greece was admitted to the eurozone in 2000, having supposedly met its formal criteria. When after 2008 government debt rose too much and Greece was thought to be under threat of default, Greece was offered "rescue packages" by outside institutions to enable the government to meet its debt obligations. Indeed there were seven such packages between 2010 and 2013.

The price of the loans was what is called austerity. Basically, this meant that at the very same time that the high rate of unemployment was becoming higher, the safety belt was disappearing. The Greek government pledged to reduce expenditures in a number of ways — the number of persons in its employ, the size of pensions, health benefits, and unemployment benefits. In addition, the government was required to privatize many government structures. The government thus obtained a one-time injection of the sales price but it allowed the privatized structure to practice further austerity measures. All these measures were to be closely supervised by a triad of institutions — the International Monetary Fund, the European Union, and the European Central Bank.

The bottom line was that the vast majority of Greek residents had their standard of living drastically reduced in order that Greek banks not default. Since these banks were in most cases owned in part by other European banks (especially in Germany and Austria), the austerity measures served the interest of these European banks.

An anti-austerity left political movement called Syriza emerged in Greece and finally won electoral power in 2014. The program of this party was to undo or reverse the austerity measures, reject the role of the triad in supervising Greek political life, but still remain a member of the eurozone. This program has proved extremely difficult to realize because it needs a further loan (or reduction of debt payments) in order to minimize the pain felt in the very short run by Greek residents. Although the Syriza Prime Minister, Alexis Tsipras, asserts confidence that an interim deal can be arranged before a mid-May deadline, most analysts are skeptical.

If a deal is not reached, there will be a so-called Grexit (a term coined to mean Greek exit from the eurozone). The question the world is discussing is what a Grexit would mean. There are three views: a catastrophe for the entire world-economy (and especially for the European Union); a relatively minor event (except of course for Greece); and total uncertainty about what will happen (that is, how the "market" will respond).

There are many actors (and notably Germany's Finance Minister, Wolfgang Schaüble) who insist that a Grexit would be quite tolerable for the eurozone. These people are concerned primarily with one thing — that the principle of repayment of debts be an imperative priority for Greece and for everyone else in the world. Then there are actors who give priority to the survival of the eurozone and worry about a Grexit. In fact, the most notable person in this group is Germany's Chancellor Angela Merkel. She fears that a Grexit will not only lead to a disintegration of the eurozone but that in turn a collapse of the eurozone will lead to a collapse of the European Union. She is therefore willing to consider some kinds of accommodation to Syriza's offer of a compromise.

The third view — the view of total uncertainty — is however the correct one. It is the only view that takes account of the fact that the world is in a chaotic bifurcation, in which there is no way of predicting how the "market" or any other institution will react. Since most investors are consumed with uncertainty, their reactions lead to wild oscillations and frequent freezes. One has therefore to choose one's priorities. Syriza's is to minimize the pain of the great majority. This seems to me a much more admirable priority than preserving the sanctity of debt repayment.

Of course, Syriza is juggling a very difficult series of short-run choices in order to realize its priority. It may make misjudgments or, even worse, serious concessions that negate its electoral promises. The next two months will tell.


- Immanuel Wallerstein, Senior Research Scholar at Yale University, is the author of The Decline of American Power: The U.S. in a Chaotic World (New Press).

Copyright ©2015 Immanuel Wallerstein -- used by permission of Agence Global