Greek crisis: One sentence that explains the epic disaster Syriza has been for Greece

This, from Wonkblog’s Matt O’Brien, is the pithiest summary I’ve seen of the disaster Syriza has visited upon Greece:

Syriza has incurred a lot of the costs of leaving the euro—like a financial crisis—at the same time that it’s kept the costs of staying in the euro.

That’s exactly right — and it has to count as one of the greatest policymaking failures in recent economic history.

Greece had two awful choices: Stay in the eurozone and be crushed by fiscal and monetary polices set by the Germans, or leave the eurozone and be crushed by a financial crisis.

Syriza won power in Greece by promising Greek voters a third option: Renegotiate the terms of Greece’s membership in the eurozone. That option failed almost instantly, and for a simple reason: Greece had no leverage with which to force the rest of the eurozone to renegotiate, and, if anything, Syriza’s anti-German rhetoric gave the most powerful players in the eurozone reason to toughen their negotiating position.

At this point, Syriza could have gone back to either of the original two options. But they didn’t. Instead, they managed, horribly, to combine both of the original two options into one political-economic disaster.

First, they held a referendum that both financial markets and ordinary Greeks interpreted as a poll on leaving the euro (but which Syriza promised, falsely, would just give them more leverage in negotiations), which sparked a financial crisis, and then they decided to ignore the results of the referendum, which the rest of the eurozone (correctly) took as evidence that Greece had absolutely no leverage whatsoever. The result was the eurozone forced Greece to agree to terms even worse than the ones they had initially rejected.

As O’Brien writes, “Syriza’s strategy, insofar as there was one, couldn’t have been much more of a failure.” If anything, that’s too kind. Syriza’s strategy, insofar as there was one, uncovered a method of failing that was much more complete and all-encompassing than anyone had thought possible at the start of the process.

I am no fan of the eurozone’s position toward Greece, and as I’ve written before, Greece’s negotiating partners bear some of the blame for Syriza’s rise. But the disaster Syriza has been for the Greek people cannot be overstated.