Negotiation in the Eurozone; a failure of leadership

Today, it was announced that the Greek government and the institutions of the EU had finally come to terms over a third bailout for the heavily indebted country. As an outsider with only limited information on the negotiations available, I can only speculate at the exact contents of the negotiations, but it seems clear that those elected to govern and lead Europe have catastrophically failed in their mandate to lead and engage for the betterment of the continent.

As early as February of this year, it was becoming clear that the on-going saga that has been the state of Greece was declining rapidly – by the time summer was upon us, reports of the Greek government appealing to local councils in order to meet creditor payments were in the news. With unemployment reported at a staggering 25 percent (the UK measures around 5 percent), and a rate of youth unemployment at eye-watering 50 percent, it seemed as though things could get no worse for the country.

When Syriza was elected in early 2015, I hoped that they might be able to turn around the fortunes of a country on it’s knees, but things seemed to go from bad to worse. Doubtless, you will recall the beginning of negotiations over debt, as the government fought to gain relief on it’s enormous debt mountain (a crippling 177%  of GDP as compared to the UK’s 89%), but today it seems as though the months of negotiation were for nothing.

It is truly quite amazing that after:

  1. The election of a government of the radical left (Syriza).
  2. The best efforts of Yanis Varoufakis, Greek Finance Minister (famed for his knowledge of economics and game theory).
  3. The removal of said minister after reported disagreements with EU officials.
  4. The closure of of Greek banks, the imposition of capital controls by the Greek government.
  5. A declaration by the Greek finance minister that the terms of the EU proposals amounted to nothing more than terrorism on the part of the EU.
  6. A Greek referendum on another bailout, in which the terms of another bailout were soundly rejected

That after all this drama, and all of these negotiations involving officials from the European Commission, the European Central Bank and the International Monetary Fund; today the Greek government has agreed to another bailout – the terms of which are almost exactly the same as the one rejected by the Greek people a few days ago.

The great institutions of Europe seem to be hailing this as a success of leadership – that their hard work, and endless negotiating has won a victory for Greece, but all I see in these ‘negotiations’ is a complete failure on the part of elected officials to listen to the voice of the people (or even to each other in the case of Yanis Varoufakis).

This got me to thinking about the expectations of leaders during negotiations and how we can work to negotiate more effectively. Of course, it’s unlikely that the stakes will be as high as those in the recent negotiations between Greece and it’s creditors. But the pressure could be just as intense, and we need to learn how to keep our cool and ensure that all stakeholders in a negotiation come away – if not fully satisfied, then at least with some measure of balance.

I’ve already highlighted that humility is an important trait in leaders, and I think this is one of the keys to negotiating effectively. In the Greek negotiations, it seemed to be more and more the case that the parties were becoming more emotional and divided as the weeks progressed. When we’re negotiating with another party, we often struggle to separate individual people from their positions. We tie our own egos to positions by opening negotiating with statements such as ‘I want X, Y and Z’ or ‘You think that X is better than Y, but we don’t like X’.

By using absolute statements such as this, we tie ourselves to positions before the serious work of a negotiation even begins – making it emotionally difficult to change our stance (after all, noone wants to appear ‘weak’). I would suggest that a better opening to negotiation would attempt to explore what would constitute a successful outcome of negotiation for both parties. When doing this, it’s important not to tell the other side what they think – let them express their requirements themselves, and make sure you have a clear understanding of their goals.

Furthermore, it’s important that both sides of a negotiation maintain interest in pursuing an agreed outcome. If you have a set of goals agreed to by both parties before a negotiation begins, you will be working as a team to pursue this goal – but if at any point one side attempts to adjust this agreement, you risk a partisan war breaking out, where each side races to make greater adjustments than the other in their own favour.

With the Greek negotiations, it seems obvious that the European Troika had it’s position and was entirely unwilling to adjust this. After many bailouts, and widely report tax avoidance in Greece, officials seemed unwilling to take the risk of pouring good money after bad. Likewise, Syriza seemed to approach the Troika with the opinion that they were conquering heroes, voted in to overthrow the evil European institutions destroying an innocent country through meaningless austerity.

Almost immediately, both sides had staked themselves to emotional positions – in full public view – and were unable to back down. All I see in these negotiations is the removal of a democratically elected finance minister, and the implementation of further austerity on a people that voted against it. In order to get to this point, Greek’s have had to face weeks of closed banks, capital controls and an economy that’s fallen off a cliff as a result.

I wonder how much the Greek Prime Minister, Alexander Tsipris, or his exiled finance minister Yanis Varoufakis feel they’ve achieved in these negotiations. No doubt, the powers of the Eurozone feel they have masterfully protected the valuable creditor institutions of their home constituencies, but what of the Greek people, who now face foreign operation of state assets and years more of grueling austerity as a price for the corruption and deceit of decades of Greek officials.

Maybe at the end of all this, I’m reminded that just because a man has an office, or a title, or a degree – it doesn’t make them any less than human; subject to the same bias’, prejudice and fears as the rest of us. I’m reminded that those in authority often feel that imposition of their views upon another party is their right, but that a more effective style of negotiation is to seek mutual benefit before discussing specific terms.

Above all, I’m reminded that so often, when negotiations break down it isn’t just those around the table that pay the price, but those outside the room. So the next time you’re in a negotiation – take a bit of time to focus on the outcome for both sides, rather than winning for yourself.