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!
