Showing posts with label Greece. Show all posts
Showing posts with label Greece. Show all posts

Tuesday, 14 July 2015

How to be a Bad Negotiator- Lessons From Greece

Yesterday, a deal was agreed in principle between the Greek government and the Eurozone leaders for an €86 billion euro bailout package for Greece. Despite a referendum less than 10 days ago giving a clear majority decision from the Greek people to not accept a deal proposed by the IMF and ECB, here we stand today only a few hours away from the agreement being fully completed. This deal includes spending cuts, tax increases and privatisation that the Syriza Greek government had been voted in on the promise half a year ago to prevent. Further to this common opinion is that Greece are about to accept a deal which is worse than which they could have had only two weeks ago. How did Greece end up in this position, and how have they negotiated so badly?

Unreasonable Demands


The first thing we can take away from the Greek saga is to only enter into a negotiation with someone when you think your demands are achievable or realistic, otherwise you will always end up disappointed. Going into a discussion in business or elsewhere is only worthwhile if your demands can actually be met. The clampdown on tax evasion and corruption in Greece has been a long time coming. The country is notoriously bad at supervising tax incomes and preventing fraud, and the Prime Minister’s belief that their countries tax system did not need revisiting is somewhat wide-eyed. Take the example of the Greek island of Zakynthos- ‘The Island of the Blind’:

Zakynthos, the Greek island of 40,000 has a reported rate of blindness 10 times the average rate of blindness for the rest of Europe. This has left many people pondering the question, have the citizens of Zakynthos evolved in a certain way that has left them massively susceptible to being blind? Or could this just be just a ploy to acquire the badly checked and supervised €350 a month disability payments on offer? It would seem the norm to commit benefit fraud on this island, with people from all trades claiming the payment, the Telegraphed recently interviewed a ‘blind’ 35 year old taxi-driver who had been receiving the disability payments at the same time as driving tourists around the island. Thankfully the mayor of the island may be coming to his senses after going on record conceding that “out of the 650 blind people on the island, we estimate that 600 of these are actually not blind”. In today’s world, particularly in developed countries, it should have been obvious to Greece that tax collection needed reform, and it was not worth negotiating otherwise.


Know a Good Deal When You See It


The second thing to learn from how the Greek government approached the talks is to know your ‘walk-away’ point and what you can expect from the negotiations. Greece did not anticipate what the best deal they could hope to get would be, and this has left them in a position where they have had to accept a deal worse than what they could have received two weeks ago.  As a business or as an individual it's useful to think about every possibility from different scenarios of negotiation, and come to a clear decision on at which point you would accept an offer and at which point you would ‘walk away’.

Greek Prime Minister Alexis Tsipras is on the verge of completing a deal with arrangements of
higher spending cuts and tax levels that were offered before the referendum. Further to this a senior EU official put the cost of the last two weeks of disruption at between 25 to 30 billion euros to the Greek economy, perhaps suggesting that it would have been best for the country to take the deal offered two weeks ago.

As a business when trying to reach a deal, you should do your homework on what you can achieve to make sure the conversation is productive, as well as knowing when a deal is right to accept!