What is the BATNA for Greece and the EU?

Posted on June 5th, 2015 by

First of all, for anyone who asks: what’s a BATNA? The term was coined by Roger Fisher and William Ury in their 1981 bestseller, “Getting to Yes: Negotiating Without Giving In.” It means what many of us recognise as your “walk-away position” in a negotiation; your best option if the other party refuses to negotiate with you. It stands for “Best Alternative To a Negotiated Agreement.”

It’s not necessarily the ideal outcome for you (unless your ideal outcome is something you can achieve without the cooperation of the other party). It is the best you can get out of a situation without their involvement, by walking away from a deal with them.

Knowing your BATNA is essential: to agree to any settlement, you need to understand your alternatives. If, say, you were offered a used car at one dealer’s “final price” of £6,000, then another dealer showed you a better car for £5,000, the second car would be your best alternative to the first one, on which the dealer would not “move” further.

Photo of a Used Car Garage.

A BATNA is therefore a solution to a stalled negotiation or stand-off. The current position between Greece and the EU certainly looks like a stalemate, with each side pursuing its own plan – further complicated by the motives of different EU members (not least Britain, with its own negotiations pending).

Recent history doesn’t exactly suggest that Greece has a credible BATNA in a Grexit. What does give that “walk-away” position more credibility for the other parties, the EU members, is consideration of the consequences for the rest of us. Commentators have noted, for instance, the general dread of a return to wider economic crisis – especially bitter for Britain – and a more specific fear that Greece would align itself with Russia after leaving.

David Cameron’s bargaining position in the short term, with regard to a better deal for Britain from Europe, has been strengthened by the Greek situation and the country’s views on austerity as revealed in the election. This can be seen in other members’ sudden willingness to negotiate with him since.

No participant in the broader current dealings, however, can ignore the implications for the European, if not the global, economy, should Greece exit the EU.

The latest news at the time of writing is that Greece has indicated a unilateral, defiant and unprecedented delay in its €300m payment due to the IMF – it is the first “developed” country ever to default in this manner.

In the last five minutes, investors have rushed to sell Greek government bonds. This, in turn, is driving up the yield, or interest rate, on the debt, even as I write. The implications clearly go way beyond any levity about “the cheque being in the post.” Some commentators have started to talk about the “futility” of the situation with regard to Greece remaining in the EU – even as the Greek government is vowing not to leave the euro.

This looks like the ideal situation for demonstrating that knowing the BATNA can be a good way to accelerate a conclusion, challenge delaying tactics and, when all else fails, put everyone out of their misery and “move on…”

Let’s quickly pull back and look at what’s on the table.

Relaxation of fiscal targets, for one: that is, less of the dreaded Austerity (but still apparently more than Greece is prepared to accept).

That “austerity” is a loaded word, too. Remember how it came to the fore in the recent UK elections? People who once called Gordon Brown’s budgetary tightening “prudence” suddenly got very agitated about the “cruelty” of financial strictures elsewhere. The election itself, though, sent out a message that the majority of Brits were tired of the complaining and prepared to do more living within their means.

Well, the Greeks invented rhetoric, democracy and tragedy: so we shouldn’t be too surprised if they, too, wax all tragic about their “suffering” as a bargaining chip in the quest for a political agreement. At one point, they were even asking the Germans for compensation for the war.

The English, again, might well counter that by bringing Thomas More into the debate. More, revered by Catholics as Saint, was a noted Renaissance humanist, councillor to Henry VIII, and Lord Chancellor of England from October 1529 to 16 May 1532. He was a also a lawyer, social philosopher, author and statesman. Most famously, he wrote a book with a Greek title, “Utopia”.

Utopia describes an ideal state, a “Dreamland” of leisure and learning. More coined that name, though, from the Greek for “no-place” – NowhereLand would be the best translation. It was an educated joke with a serious message: get real. More’s message for his time is relevant to ours – that it’s not “economic cruelty” to call in an overdue bill for good times; whereas it is economic cruelty to get people accustomed to a lifestyle style they can’t actually afford.

So, how far is Greece’s current BATNA – the default on debt and subsequent walk-away or Grexit from the EU – based on reality rather than posturing? How seriously should other parties take this current default?

One practical consideration is the fact that Greek pensions remain the highest as a percentage of Gross Domestic Production (the monetary value of all the finished goods and services produced within a country’s borders, usually calculated on an annual basis). We have to ask how sustainable that position is, if at all. What happens if the Greeks continue the firm stance, walk away – and their economy tanks? Look at the interest on that debt, rising as you read this.

Or look back a little further to get a historical perspective. For balance, I love Greece and its ordinary, decent people. Been going there every year for decades; also studied Ancient Greek and can get by pretty well in Demotiki, too. You can hardly blame yer average Hellene for living it up for some years before the crisis.

The real underlying problem is that the “cradle of democracy” became something of a corrupt plutocracy in recent years, an elite living the high life, with plenty of crumbs scatted to keep the masses (hoi polloi) content at the same time.

To put it bluntly, no Utopia, no Dreamland can be sustained if, for one thing, you run an economy infested with protectionist legislation that obstructs the single market (with everything from alcohol and construction to pharmacy and retail ridiculously regulated so as to defend specific corporate and vested interests). That’s less like a “free market” and more like a restricted club – with a free-for-all on the never-never to keep the excluded happy.

Nor does it really sound like “living the dream” if you consistently fail to raise female labour force participation, unlike most other countries, including Japan. Indeed, the lowest labour force proportion of women in the EU, in every one of the past 15 years, hardly marks out any Utopia most of us would acknowledge.

Nor should a Dreamland retirement age, already far too low, have been allowed to fall even further since joining the EU, even as other countries explicitly addressed higher life expectancies and longer pension durations. And does Dreamland really feature thousands of deaths going uncertified so relatives can keep claiming the deceased’s pensions? That sounds more like a nightmare.Euro & Greek Flag

Overspending on the military; a deficient legal system; nepotism; corruption; failed diplomacy. All of this is on the record and has facilitated a heady but, in the real world, unsustainable Utopia for the masses, effectively bribed by politicians with other people’s money.

Finally: the country whose language gave More “Utopia” and the rest of us Homer and Euripides shouldn’t really have PISA (language attainment) and Higher Education scores consistently in the Bottom 3 of the EU!

That’s the historic thrust of the argument from outside. And it’s a genuine pity that political shenanigans past and present have taken their toll on ordinary Greeks. The human cost of running out of money is covered on the news with depressing regularity; only last night it showed us homeless people sleeping rough on Athens park benches (and the night before covered Afghan refugees being welcomed by locals as they came ashore on a beach we regularly visit on holiday).

The problems have been caused by the politicians, as usual. So it’s at least encouraging that the emphasis from the EU as a whole has been on a solution for the future, rather than pointing at past transgressions (although those who don’t learn from the past are notoriously doomed to repeat it, as George Santayana pointed out).

All parties have clearly been thinking hard about the fall-back positions, options and creative actions. But the Greeks gave us another word, “krisis” – which actually means the moment where players are judged at the end of a drama competition. As we get into the endgame, expect to see more of the players pushing each into corners, along with an escalation in tactical threats and coercion.

Now that we’ve seen the payment delayed, there’s one last etymological point to make: that word “krisis”. It also gave us “critic” (in that context, the judge of a theatrical contest) – and “hypocrite” (which actually means someone “under the critic’s eye” – an actor). We should all look at Greece’s default and walk away – that BATNA – and ask questions about sincerity… and theatricality.