CIGI Policy Brief No. 100: Greece: Playing with Matches in the Ammunition Warehouse

Abstract:

The prolonged negotiations with official creditors to conclude the second review of Greece’s third bailout increasingly resemble the catastrophic standoff with creditors in the first half of 2015 that led the country to the brink of Grexit. Back then, the newly elected radical left government led by Prime Minister Tsipras confronted creditors with demands for debt write-offs and an end to austerity. But Tsipras overplayed his hand, and the game of chicken — a standard model of conflict for two players in game theory — ended with political suicide: a third bailout agreement with harsh austerity measures, capital controls and a double-dip recession.